<PAGE> 1
As filed with the Securities and Exchange Commission on April 22, 1997.
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
CAMDEN PROPERTY TRUST
(Exact name of registrant as specified in its charter)
TEXAS 76-6088377
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
3200 SOUTHWEST FREEWAY, SUITE 1500
HOUSTON, TEXAS 77027
(713) 964-3555
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
--------------
RICHARD J. CAMPO
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
CAMDEN PROPERTY TRUST
3200 SOUTHWEST FREEWAY, SUITE 1500
HOUSTON, TEXAS 77027
(713) 964-3555
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
--------------
Copies to:
Bryan L. Goolsby
Robert A. Kuhns
Liddell, Sapp, Zivley, Hill &
LaBoon, L.L.P.
2200 Ross Avenue, Suite 900
Dallas, Texas 75201
(214) 220-4800
FAX: (214) 220-4899
--------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From
time to time after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to divided or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [x]
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=========================================================================================================================
Title of Each Class of Proposed Maximum
Securities to be Amount to be Proposed Maximum Offering Aggregate Offering Amount of
Registered Registered Price Per Share(1) Price(1) Registration Fee
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Shares of
Beneficial Interest, par 2,352,161 $27.375 $64,390,407.38 $19,512.25
value $.01 per share
=========================================================================================================================
</TABLE>
<PAGE> 2
(Footnotes from previous page)
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) on the basis of the average of the high and
low price of the Common Shares on the New York Stock Exchange on April
18, 1997.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
<PAGE> 3
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED APRIL 22, 1997
2,352,161 SHARES
CAMDEN PROPERTY TRUST
COMMON SHARES OF BENEFICIAL INTEREST
(PAR VALUE $.01 PER SHARE)
This Prospectus relates to the offer and sale from time to time of up
to 2,352,161 common shares (the "Redemption Shares") of beneficial interest,
par value $.01 per share ("Common Shares"), of Camden Property Trust (the
"Company") by certain holders thereof, or by pledgees, donees, transferees or
other successors in interest thereto (the "Selling Shareholders"). The Selling
Shareholders currently own 2,352,161 units of limited partnership interest
("Units") in Camden Operating, L.P. (the "Operating Partnership"), a Delaware
limited partnership which the Company controls through its ownership of the
sole general partner thereof and in which the Company owns a controlling
limited partnership interest through another subsidiary. The Redemption Shares
referred to in this Prospectus are the Common Shares that the Selling
Shareholders may acquire upon presentation by the Selling Shareholders of the
Units to the Operating Partnership for redemption, all in accordance with the
terms of the Operating Partnership's agreement of limited partnership, as
amended. The Company is registering the Redemption Shares pursuant to the
Company's obligations under a registration rights agreement, but the
registration of the Redemption Shares does not necessarily mean that any of the
Redemption Shares will be offered or sold by the Selling Shareholders
hereunder.
The Common Shares are listed on the New York Stock Exchange (the
"NYSE") under the symbol "CPT." To ensure that the Company maintains its
qualification as a real estate investment trust (a "REIT") under the Internal
Revenue Code of 1986, as amended (the "Code"), ownership by any person is
limited to 9.8% of the number of outstanding Common Shares, with certain
exceptions. See "Description of Securities to be Registered -- Restrictions on
Ownership."
SEE "RISK FACTORS" ON PAGE 5 FOR CERTAIN FACTORS RELEVANT TO AN INVESTMENT IN
THE COMMON SHARES.
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 Selling Shareholders from time to time may offer and sell any
Redemption Shares that may be acquired by them directly or through agents or
broker-dealers on terms to be determined at the time of sale. To the extent
required, the names of any agent or broker-dealer and applicable commissions or
discounts and any other required information with respect to any particular
offer will be set forth in an accompanying Prospectus Supplement. See "Plan of
Distribution." The Selling Shareholders reserve the right to accept or reject,
in whole or in part, any proposed purchase of the Redemption Shares to be made
directly or through agents.
The Selling Shareholders and any agents or broker-dealers that
participate with the Selling Shareholders in the distribution of the Redemption
Shares may be deemed to be "underwriters" within the meaning of the Securities
Act of 1933, as amended (the "Securities Act"), and any commissions received by
them and any profit on the resale of the Redemption Shares may be deemed to be
underwriting commissions or discounts under the Securities Act. See
"Registration Rights" for a description of certain indemnification arrangements
between the Company and the Selling Shareholders.
The Company will not receive any proceeds from the sale of the
Redemption Shares by the Selling Shareholders but has agreed to bear certain
expenses of registration of such shares under federal and state securities
laws.
The date of this Prospectus is __________, 1997
<PAGE> 4
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL NOR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE> 5
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-3 under the Securities Act and
the rules and regulations promulgated thereunder with respect to the securities
offered pursuant to this Prospectus. This Prospectus, which is part of the
Registration Statement, does not contain all of the information set forth in
the Registration Statement and the exhibits and schedules thereto. For further
information with respect to the Company and the securities, reference is made
to the Registration Statement and such exhibits and schedules. Statements
contained in this Prospectus as to the contents of any contract or other
document which is filed as an exhibit to the Registration Statement are not
necessarily complete, and each such statement is qualified in its entirety by
reference to the full text of such contract or document.
The Company is subject to the 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. The Commission also
maintains a Web site at (http://www.sec.gov) that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission. Such reports, proxy and information
statements and other information can also be inspected at the offices of the
New York Stock Exchange, 20 Broad Street, New York, New York 10005.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission (File
No. 1-12110) are incorporated by reference herein and shall be deemed to be a
part hereof:
(a) Annual Report on Form 10-K for the year ended December 31,
1996;
(b) Current Report on Form 8-K dated March 20, 1997, filed with
the Commission on March 21, 1997; 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> 6
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more
detailed information included elsewhere in this Prospectus or incorporated
herein or therein by reference. Unless the context otherwise requires, all
references in this Prospectus to the "Company" shall mean Camden Property Trust
and its subsidiaries on a consolidated basis (including Camden Operating, L.P.)
or, where the context so requires, Camden Property Trust only, and, as the
context may require, their predecessors.
This Prospectus, including incorporated documents, contains
forward-looking statements within the meaning of Section 27A of the Securities
Act and Section 21E of the Exchange Act. The Company's actual results could
differ materially from those set forth in the forward-looking statements.
Certain factors that might cause such a difference are discussed in the section
entitled "Risk Factors" on page 5 of this Prospectus.
THE COMPANY
Camden Property Trust is a self-administered and self-managed REIT
formed pursuant to the Texas Real Estate Investment Trust Act, as amended (the
"Texas REIT Act"). As of December 31, 1996, the Company owned and operated 48
multifamily properties (the "Operating Properties") containing 17,611 units
located in Houston, Dallas/Fort Worth, Austin, Corpus Christi, El Paso, Phoenix
and Tucson. The Operating Properties had a weighted average occupancy rate of
94.0% for the year ended December 31, 1996. The Company also had five
multifamily properties under development in Houston, Dallas and Phoenix (the
"Development Properties") which will, when completed, add 1,778 units to its
portfolio, and has one site in Denver which it intends to develop.
On December 16, 1996, the Company entered into an Agreement and Plan
of Merger with Paragon Group, Inc., a Maryland corporation ("Paragon"), which
was approved by the shareholders of both entities on April 15, 1997. Pursuant
to the Agreement and Plan of Merger, Paragon merged with and into a
wholly-owned subsidiary of the Company and each share of common stock, par
value $.01 per share, of Paragon was converted into the right to receive 0.64
common shares of the Company (the "Merger").
Paragon was a fully integrated REIT headquartered in Dallas, Texas
whose business was the operation, development and acquisition of multifamily
residential communities in the Southwest, Midwest, North Carolina and Florida.
Paragon was a self-administered and self-managed REIT that, as of December 31,
1996, owned (either directly or through interests in other entities) interests
in 57 multifamily residential communities totalling 15,954 apartment units (the
"Paragon Residential Properties") located in six states, with three additional
multifamily communities, totaling 856 residential units, under construction.
Paragon also had indirect minority ownership interests in three commercial
properties, including a 20% interest in a 401,625 square foot office building.
As of December 31, 1996, Paragon, through Paragon Residential Services, Inc.,
managed 77 multifamily residential communities (including the Paragon
Residential Properties) located across the United States, containing
approximately 21,696 apartment units. Subsequent to December 31, 1996 and
prior to consummation of the Merger, three of Paragon's properties containing
835 units were sold and all three of Paragon's construction properties were
substantially complete and in lease-up, resulting in 15,975 units in its
portfolio at the date of the Merger.
Paragon conducted substantially all of its business through the
Operating Partnership, which Paragon controlled through wholly-owned
subsidiaries prior to the Merger. As a result of the Merger, the Units are
redeemable for cash or the Redemption Shares on the basis of one Unit for one
share at the Company's option.
Following the Merger, the Company had an interest in a multifamily
property portfolio which totalled 35,364 units as of April 15, 1997. The
Company is vertically integrated, with operations that encompass multifamily
property acquisition, development, construction services, management,
marketing, finance, leasing, brokerage and asset management. Camden's
principal executive offices are located at 3200 Southwest Freeway, Suite 1500,
Houston, Texas 77027, and its telephone number is (713) 964-3555.
- 3 -
<PAGE> 7
RISK FACTORS
An investment in Common Shares involves various risks, and prospective
investors should carefully consider the matters discussed under "Risk Factors"
prior to any investment in the Company.
TAX STATUS OF THE COMPANY
The Company intends at all times to operate so as to qualify as a REIT
under the Code. If and as long as the Company qualifies for taxation as a
REIT, the Company generally will not be subject to federal income tax on that
portion of its ordinary income and capital gains that is currently distributed
to its shareholders. REITs are subject to a number of highly technical and
complex organizational and operational requirements. Although the Company
believes it has operated, and intends to continue to operate, in such a manner
as to qualify as a REIT under the Code, no assurance can be given that the
Company has qualified and will at all times so qualify. If the Company fails
to qualify as a REIT in any taxable year, the Company will be subject to
federal income tax (including any applicable alternative minimum tax) on its
taxable income at regular corporate rates. Even if the Company qualifies for
taxation as a REIT, the Company may be subject to certain state and local taxes
on its income and property and to federal income and excise taxes on its
undistributed income. See "Federal Income Tax Considerations."
SECURITIES TO BE OFFERED
This Prospectus relates to the possible offer and sale from time to
time of 2,352,161 Redemption Shares by the Selling Shareholders. The
Redemption Shares are Common Shares that may be issued to the Selling
Shareholders in exchange for Units of limited partnership of the Operating
Partnership that the Selling Shareholders acquired prior to the merger of
Paragon with and into a wholly-owned subsidiary of the Company. The Company is
registering the sale by the Selling Shareholders of the Redemption Shares
pursuant to its obligations under a registration rights agreement. The Company
will not receive any proceeds from the sale of any Redemption Shares.
- 4 -
<PAGE> 8
RISK FACTORS
An investment in Common Shares involves various risks. Prospective
investors should carefully consider the following information in conjunction
with the other information contained or incorporated by reference in this
Prospectus Summary and the attached Prospectus before making a decision to
purchase Common Shares.
POSSIBLE ADVERSE IMPACT OF MARKET CONDITIONS ON MARKET PRICE
The market value of the Common Shares could be substantially affected
by general market conditions, including changes in interest rates, government
regulatory action and changes in tax laws. An increase in market interest
rates may lead purchasers of the Common Shares to demand a higher annual yield
on the price paid for shares from distributions by the Company, which would
adversely affect the market price of the Common Shares.
REAL ESTATE INVESTMENT RISKS
GENERAL. Real property investments are subject to varying degrees of
risk. The yields from equity investments in real estate depend on the amount of
income generated and expenses incurred. If the Company's properties do not
generate income sufficient to meet operating expenses, debt service and capital
expenditures, the Company's ability to make distributions to its shareholders
will be adversely affected. Income from properties may be adversely affected by
the general economic climate, local conditions such as oversupply of apartments
or a reduction in demand for apartments in the area, the attractiveness of the
properties to residents, competition from other available apartments, inability
to collect rent from residents, changes in market rental rates, the need to
periodically repair, renovate and relet space, and the ability of the owner to
pay for adequate maintenance and insurance and increased operating costs
(including real estate taxes). The Company's income also would be adversely
affected if a significant number of residents were unable to pay rent or
apartments could not be rented on favorable terms. Certain significant
expenditures associated with each equity investment (such as mortgage payments,
if any, real estate taxes and maintenance costs) are generally not reduced when
circumstances cause a reduction in income from the investment. If a property is
mortgaged to secure payment of indebtedness, and if the Company is unable to
meet its mortgage payments, a loss could be sustained as a result of
foreclosure on the mortgage. In addition, income from properties and real
estate values also are affected by such factors as applicable laws, including
tax laws, interest rate levels and the availability of financing.
The Company, in the normal course of its business, is continually
evaluating a number of potential acquisitions and entering into non-binding
letters of intent and may at any time or from time to time enter into contracts
to acquire and may acquire additional properties. No assurance can be given,
however, that the Company will have the opportunity to continue to make
suitable property acquisitions on terms favorable to the Company.
ILLIQUIDITY OF REAL ESTATE. Real estate investments are relatively
illiquid and, therefore, will tend to limit the ability of the Company to vary
its portfolio promptly in response to changes in economic or other conditions.
In addition, the Code places limits on the Company's ability to sell properties
held for fewer than four years, which may affect the Company's ability to sell
properties without adversely affecting returns to shareholders.
DEPENDENCE ON GEOGRAPHICAL REGIONS. The developed properties in the
Company's current portfolio are located in the Southwestern and Southeastern
regions of the United States, as well as in the Midwest region of the United
States, and consists of multifamily properties. A decline in the economic
conditions in those regions and in the market for apartments therein may have
an adverse impact on the performance of the portfolio of the Company.
ACQUISITION RISKS. As a result of the Merger, the Company has
increased its interest in a portfolio of apartment units from 17,611 units at
December 31, 1996 to 35,364 units at April 15, 1997. Several of the properties
acquired by the Company from Paragon are in markets where the Company has not
historically managed properties. Due primarily to the number and relative
geographic diversity of its properties after the Merger, the Company may not
have adequate management or other personnel or adequate systems or other
resources to manage its portfolio or its properties to the same level of
efficiency after the Merger, which could adversely affect operations and result
in less cash available for distributions to shareholders. Additionally, one of
the anticipated benefits of the Merger is the elimination of redundant
activities in the combined
- 5 -
<PAGE> 9
organization and the resulting savings in costs and expenses. An inability to
achieve these savings could adversely affect the operating results and
financial performance of the Company.
DEVELOPMENT RISKS. As a result of the Merger, the Company obtained
ownership of Paragon's development properties. The Company will be subject to
the risks of real estate development with respect to such development
properties, including risks of lack of financing, construction delays, budget
overruns and lease-up. The Company will be subject to similar risks in
connection with any future development of other properties.
BORROWING RISKS
NO LIMITATION ON DEBT AND INCREASED INDEBTEDNESS. The Company intends
to adhere to a policy of maintaining a debt-to-total-market-capitalization
ratio of less than 50%. However, the organizational documents of the Company
do not limit the amount or percentage of indebtedness that it may incur.
Therefore, the Camden Board of Trust Managers (the "Camden Board") may change
this policy without shareholder approval. Accordingly, the Company could
become more leveraged, resulting in an increased risk of default on its
obligations and in an increase in its debt service requirements, both of which
could adversely affect the financial condition of the Company.
The Company has maintained on a quarterly basis a financial structure
with no more than 40% total debt to total market capitalization since July
1993. Any increase in the Company's total debt to total market capitalization
as a result of the Company's assumption of Paragon's debt pursuant to the
Merger may have an adverse affect on the ability of the Company to meet its
current obligations. Additionally, an increase in the Company's total debt to
total market capitalization may adversely affect the Company's ability to
access debt as well as equity capital markets in the future due to the
resulting decreased ability to service debt.
DEBT FINANCING AND EXISTING DEBT MATURITIES. The Company is subject
to the risks normally associated with debt financing, including the risk that
the Company's funds from operations might be insufficient to meet required
payments of principal and interest, the risk that existing indebtedness on its
properties (which in all cases will not have been fully amortized at maturity)
might not be able to be refinanced or that the terms of such refinancing might
not be as favorable as the terms of the existing indebtedness.
LIMITED CONTROL WITH RESPECT TO CERTAIN PROPERTIES
With respect to certain of the properties acquired from Paragon,
Paragon had invested through a joint venture, partnership or limited liability
company in which Paragon owned less than a 100% interest and was subject to
certain consent rights of the partners with respect to major decisions
affecting such properties. Although the Operating Partnership has control of
major decisions relating to most of these partially owned properties, it has
certain fiduciary responsibilities to the other partners in those partnerships
that it will need to consider when making decisions that affect those
properties.
The foregoing may result in decisions with respect to such properties
that do not fully reflect the interest of the Company and its shareholders at
such time, and may include decisions relating to the standards that the Company
is required to satisfy in order to maintain its status as a REIT for tax
purposes. Further, the Company acquired interests in some properties which the
Company may be contractually restricted from selling without the consent of
certain unrelated parties.
UNINSURED AND UNDERINSURED LOSSES COULD RESULT IN LOSS OF VALUE OF PROPERTY
The Company carries comprehensive liability, fire, flood, extended
coverage and rental loss insurance with respect to its properties and its
management believes such coverage is of the type and amount customarily
obtained for or by an owner of real property assets. Similar coverage will be
obtained for properties acquired in the future. However, there are certain
types of losses, generally of a catastrophic nature, such as losses from floods
or earthquakes, that may be uninsurable or not economically insurable. The
Camden Board exercises its discretion in determining amounts, coverage limits
and deductibility provisions of insurance, with a view to maintaining
appropriate insurance on the Company's investments at a reasonable cost and on
suitable terms. This may result in insurance coverage that in the event of a
substantial loss would not be sufficient to pay the full current market value
or current replacement cost of the Company's lost investment. Inflation,
- 6 -
<PAGE> 10
changes in building codes and ordinances, environmental considerations and
other factors also might make it infeasible to use insurance proceeds to
replace the property after such property has been damaged or destroyed.
POSSIBLE ENVIRONMENTAL LIABILITIES
Under various federal, state and local laws, ordinances and
regulations, an owner of real estate is liable for the costs of removal or
remediation of certain hazardous or toxic substances on or in such property.
Such laws often impose such liability without regard to whether the owner knew
of, or was responsible for, the presence of such hazardous or toxic substances.
The presence of such substances, or the failure to properly remediate such
substances, may adversely affect the owner's ability to sell or rent such
property or to borrow using such property as collateral. All of the properties
of the Company have been subjected to Phase I or similar environmental audits
(which involve inspection without soil sampling or ground water analysis) by
independent environmental consultants. None of the environmental audit reports
have revealed any significant environmental liability, nor is the Company aware
of any environmental liability with respect to its properties that the
Company's management believes could have a material adverse effect on the
Company's business, assets or results of operations. No assurance can be given
that existing environmental studies with respect to such properties reveal all
environmental liabilities or that any prior owner of any such property did not
create any material environmental condition not known to the Company.
COSTS OF COMPLIANCE WITH FAIR HOUSING AMENDMENTS ACT AND SIMILAR LAWS
A number of federal, state and local laws exist which may require
modifications to the properties owned by the Company or restrict certain
further renovations thereof, with respect to access thereto by disabled
persons. The Fair Housing Amendments Act (the "FHA") imposes certain
requirements related to access by physically handicapped persons on multifamily
properties first occupied after March 13, 1991 or for which construction
permits were obtained after June 15, 1990. Noncompliance with the FHA could
result in the imposition of fines or the award of damages to private litigants.
The Company believes that its properties that are subject to the FHA are in
compliance with such law.
The Americans with Disabilities Act of 1990 (the "ADA") requires
public accommodations to meet certain federal requirements related to access
and use by disabled persons. These requirements became effective in 1992.
Compliance with the ADA could require removal of structural barriers to
handicapped access in certain public areas of properties owned by the Company
where such removal is readily achievable. The ADA does not, however, consider
residential properties, such as multifamily properties, to be public
accommodations or commercial facilities, except to the extent portions of such
facilities are open to the public. Failure to comply with the ADA could result
in an imposition of fines or the award of damages to private litigants. If
required changes involve greater expenditures than the Company currently
anticipates, or if the changes must be made on a more accelerated basis than it
anticipates, the Company's ability to make expected distributions could be
adversely affected. The Company believes that its competitors face similar
costs in complying with the requirements of the ADA.
Additional and future legislation may impose other burdens or
restrictions on owners with respect to access by disabled persons. The ultimate
costs of complying with the FHA, ADA and other similar legislation are not
currently ascertainable and, while such costs are not expected to have a
material effect on the Company, such costs could be substantial. Limitations or
restrictions on the completion of certain renovations may limit application of
the Company's investment strategy in certain instances or reduce overall
returns on the Company's investments.
ADVERSE CONSEQUENCES OF FAILURE TO QUALIFY AS A REIT
The Company believes that it has operated so as to qualify as a REIT
under the Code since its formation. Although management of the Company
believes that the Company is organized and is operating in such a manner, no
assurance can be given that the Company will be able to continue to operate in
a manner so as to qualify or remain so qualified. Qualification as a REIT
involves the application of highly technical and complex Code provisions for
which there are only limited judicial or administrative interpretations and the
determination of various factual matters and circumstances not entirely within
the Company's control. For example, in order to qualify as a REIT, at least 95%
of the Company's gross income in any year must be derived from qualifying
sources and the Company must make distributions to shareholders aggregating
annually at least 95% of its REIT taxable income (excluding net capital gains).
In addition, no assurance can
- 7 -
<PAGE> 11
be given that new legislation, regulations, administrative interpretations or
court decisions will not change the tax laws with respect to qualification as a
REIT or the federal income tax consequences of such qualification. The Company,
however, is not aware of any currently pending tax legislation that would
adversely affect its ability to continue to qualify as a REIT.
For any taxable year that the Company fails to qualify as a REIT, the
Company will be subject to federal income tax (including any applicable
alternative minimum tax) on its taxable income at corporate rates. In addition,
unless entitled to relief under certain statutory provisions, the Company also
will be disqualified from treatment as a REIT for the four taxable years
following the year during which qualification is lost. This treatment would
reduce the net earnings of the Company available for investment or distribution
to shareholders because of the additional tax liability to the Company for the
year or years involved. In addition, distributions no longer would be required
to be made. To the extent that distributions to shareholders would have been
made in anticipation of the Company's qualifying as a REIT, the Company might
be required to borrow funds or to liquidate certain of its investments to pay
the applicable tax. See "Federal Income Tax Considerations."
OWNERSHIP LIMITS
In order to maintain the Company's qualification as a REIT, 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). To minimize the possibility that the Company will fail to
qualify as a REIT under this test, the Company's Amended and Restated
Declaration of Trust (the "Declaration of Trust") authorizes the Camden Board
to take such action as may be required to preserve its qualification as a REIT.
Moreover, the Declaration of Trust, subject to certain exceptions, provides
that no holder may own, or be deemed to own, more than 9.8% of the total
outstanding Shares (as defined in the Declaration of Trust) of the Company.
These ownership limits, as well as the ability of the Company to issue
other classes of equity securities, may delay, defer or prevent a change in
control of the Company and may also deter tender offers for the Common Shares,
which offers may be attractive to the shareholders, or limit the opportunity of
shareholders to receive a premium for their Common Shares that might otherwise
exist if an investor were attempting to effect a change in control of the
Company.
CONSEQUENCES OF FAILURE TO QUALIFY THE OPERATING PARTNERSHIP AS A PARTNERSHIP
If the Internal Revenue Service (the "IRS") were to challenge
successfully the tax status of the Operating Partnership as a partnership for
federal income tax purposes, the Operating Partnership would be taxable as a
corporation. In such event, since the value of the Company's ownership
interest in the Operating Partnership could exceed 5% of the value of its
assets, the Company could cease to qualify as a REIT. The same consequence
could follow from a determination that the Company owned more than 10% of the
voting stock of the Operating Partnership when treated as a corporation. In
addition, the imposition of a corporate tax on the Operating Partnership would
likely reduce the cash available for distribution to shareholders. See
"Federal Income Tax Considerations."
COMPETITION
All of the properties of the Company are located in developed areas.
There are numerous other multifamily properties and real estate companies
within the market area of each such property which compete with the Company for
residents and development and acquisition opportunities, some of whom may have
greater resources than the Company. The number of competitive multifamily
properties and real estate companies in such areas could have a material effect
on the Company's ability to rent its apartments, its ability to raise or
maintain the rents charged and its development and acquisition opportunities.
CHANGES IN POLICIES
The major policies of the Company, including its policies with respect
to acquisitions, financings, growth, operations, development, debt
capitalization and distributions, are determined by the Camden Board. The
Camden Board may from time to time amend or revise these and other policies
without a vote of the shareholders of the Company. Accordingly, shareholders
will have no control over changes in these and similar policies of the Company,
and changes in the Company's policies may not fully serve the interest of all
shareholders.
- 8 -
<PAGE> 12
THE COMPANY
Camden Property Trust is a self-administered and self-managed REIT
formed pursuant to the Texas REIT Act. Unless the context otherwise requires,
all references herein to the "Company" shall mean Camden Property Trust and its
subsidiaries, and "Centeq" shall mean Centeq Investments, Inc. and its
predecessors and related affiliates, partnerships and companies. As of
December 31, 1996, the Company owned and operated 48 Operating Properties
containing 17,611 units located in Houston, Dallas/Fort Worth, Austin, Corpus
Christi, El Paso, Phoenix and Tucson. The Operating Properties had a weighted
average occupancy rate of 94.0% for the year ended December 31, 1996. The
Company also had five Development Properties in Houston, Dallas and Phoenix
which will, when completed, add 1,778 units to its portfolio, and has one site
in Denver which it intends to develop. The Company is vertically integrated,
with operations that encompass multifamily property acquisition, development,
construction services, management, marketing, finance, leasing, brokerage and
asset management.
The Company was formed in 1993 to continue the multifamily property
acquisition, development, management and marketing operations and related
business objectives and strategies of Centeq (the "Multifamily Operations").
Upon completion of the Company's initial public offering in July 1993 and the
concurrent completion of the transactions involved in the formation of the
Company (the "Formation Transactions"), the Company succeeded to the
Multifamily Operations of Centeq and owned and operated 20 properties located
in the Houston, Dallas and Austin metropolitan areas containing 7,054 units and
owned contracts to purchase two development properties. The predecessors of
Centeq were formed in 1982 by Richard J. Campo, the Company's Chairman of the
Board of Trust Managers and Chief Executive Officer, and D. Keith Oden, the
Company's President and Chief Operating Officer, to provide real estate
services to owners and financial institutions. Centeq was involved in the
acquisition, development, management and marketing of approximately 28
multifamily properties containing 8,564 units in certain major Texas and other
markets and the development, marketing and management of a number of other
types of properties, including office facilities, high-rise condominiums and
research facilities. The Company is operated under the direction of Messrs.
Campo and Oden and a management team consisting of substantially all of the
former personnel of Centeq.
On December 16, 1996, the Company entered into an Agreement and Plan
of Merger with Paragon, which was approved by the shareholders of both entities
on April 15, 1997. Pursuant to the Agreement and Plan of Merger, Paragon
merged with and into a wholly-owned subsidiary of the Company and each share of
common stock, par value $.01 per share, of Paragon was converted into the right
to receive 0.64 Common Shares.
Paragon was a fully integrated REIT headquartered in Dallas, Texas
whose business was the operation, development and acquisition of multifamily
residential communities in the Southwest, Midwest, North Carolina and Florida.
Paragon was a self-administered and self-managed REIT that, as of December 31,
1996, owned (either directly or through interests in other entities) interests
in 57 Paragon Residential Properties totalling 15,954 apartment units located
in six states, with three additional multifamily communities, totaling 856
residential units, under construction. Paragon also had indirect minority
ownership interests in three commercial properties, including a 20% interest in
a 401,625 square foot office building. As of December 31, 1996, Paragon,
through Paragon Residential Services, Inc., managed 77 multifamily residential
communities (including the Paragon Residential Properties) located across the
United States, containing approximately 21,696 apartment units. Subsequent to
December 31, 1996 and prior to consummation of the Merger, three of Paragon's
properties containing 835 units were sold and all three of Paragon's
construction properties were substantially complete and in lease-up, resulting
in 15,975 units in its portfolio at the date of the Merger.
Paragon conducted substantially all of its business through the
Operating Partnership, which Paragon controlled through wholly-owned
subsidiaries prior to the Merger. As a result of the Merger, the Units are
redeemable for cash or the Redemption Shares on the basis of one Unit for one
share at the Company's option. Following the Merger, the Company had an
interest in a multifamily property portfolio which totalled 35,364 units as of
April 15, 1997.
The Company elected to be taxed as a REIT for federal income tax
purposes for its taxable year ended December 31, 1996, and expects to continue
to elect such status. Although the Company believes that it was organized and
has been operating in conformity with the requirements for qualification as a
REIT under the 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
- 9 -
<PAGE> 13
the Company would fail to qualify as a REIT, the Company would not be allowed a
deduction for distributions to shareholders for computing taxable income and
would be subject to federal taxation at regular corporate rates. Unless
entitled to relief under certain statutory provisions, the Company would also
be disqualified from treatment as a REIT for the four taxable years following
the year during which qualification was lost. As a result, the Company's
ability to make distributions to its shareholders would be adversely affected.
To ensure that the Company qualifies as a REIT, transfer of the Common
Shares is subject to certain restrictions and ownership of the outstanding
Shares (as defined in the Declaration of Trust) by any single person is limited
to 9.8% of the total number of outstanding Shares, subject to certain
exceptions. As provided in the Declaration of Trust, any purported transfer in
violation of the above-described ownership limitations shall be void.
The Common Shares of the Company are listed on the NYSE under the
symbol "CPT." On February 5, 1997, the Company announced an anticipated
dividend increase from $1.90 per share to $1.96 for 1997. On March 17, 1997,
the Company declared its quarterly dividend ($0.49 per Common Share) for the
first quarter of 1997. The dividend was paid on April 17, 1997 to shareholders
of record as of March 31, 1997. The Company intends to continue making regular
quarterly distributions to its shareholders. Distributions depend upon a
variety of factors, and there can be no assurance that distributions will be
made.
The Company's principal executive offices are located at 3200
Southwest Freeway, Suite 1500, Houston, Texas 77027 and its telephone number is
(713) 946-3555.
DESCRIPTION OF SECURITIES TO BE REGISTERED
The Declaration of Trust of the Company provides that the Company may
issue up to 110,000,000 shares of beneficial interest, par value $.01 per
share, consisting of 100,000,000 Common Shares and 10,000,000 preferred shares
of beneficial interest, par value $.01 per share ("Preferred Shares"). At
December 31, 1996, 16,521,366 Common Shares were issued and outstanding and no
Preferred Shares were issued and outstanding. At April 15, 1997, 26,320,099
Common Shares were issued and outstanding following the Merger.
The following description of the Common Shares sets forth certain
general terms and provisions of the Common Shares. The statements below
describing the Common Shares are in all respects subject to and qualified in
their entirety by reference to the applicable provisions of the Company's
Declaration of Trust and Amended and Restated Bylaws.
GENERAL
Subject to the provisions of the Declaration of Trust regarding Excess
Securities (as defined therein), holders of Common Shares are entitled to such
dividends, in cash, property or shares of beneficial interest, as may be
declared from time to time by the Camden Board. The Company is prohibited from
declaring or paying any dividend when the Company is unable to pay its debts as
they become due in the usual course of business or when the payment of such
dividend would result in the Company becoming unable to pay its debts as they
become due in the usual course of business. Payment and declaration of
dividends on the Common Shares and purchases of shares thereof by the Company
will be subject to certain restrictions if the Company fails to pay dividends
on the Preferred Shares. In the event of any liquidation, dissolution or
winding-up of the affairs of the Company, holders of Common Shares will be
entitled to share equally and ratably in the assets of the Company remaining
after provision for liabilities to creditors and payment of liquidation
preferences to holders of Preferred Shares or senior debt securities and
subject to the provisions of the Declaration of Trust regarding Excess
Securities. Each outstanding Common Share entitles the holder to one vote on
all matters submitted to a vote of shareholders, including the election or
removal of Trust Managers, amendments to the Declaration of Trust, proposals to
terminate, reorganize, merge or consolidate the Company or to sell or dispose
of substantially all of the Company's property and with respect to certain
business combinations. There is no cumulative voting in the election of Trust
Managers. The Company will have perpetual existence unless and until dissolved
and terminated. Upon receipt by the Company of lawful payment therefor
(including, without limitation, units of limited partnership in the Operating
Partnership upon redemption), the Redemption 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
- 10 -
<PAGE> 14
Company has no preemptive rights to subscribe for additional Common Shares or
other securities of the Company except as may be granted by the Camden Board.
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 Camden Board believes it is essential for the Company to
continue to qualify as a REIT, the Declaration of Trust, subject to certain
exceptions, provides that no holder may own, or be deemed to own by virtue of
the attribution provisions of the Code, more than 9.8% (the "Ownership Limit")
of the total outstanding Shares. The Trust Managers are not permitted to waive
the Ownership Limit. Any transfer of Shares that would: (i) create a direct or
indirect ownership of Shares in excess of the Ownership Limit; (ii) result in
the Shares being owned by fewer than 100 persons; (iii) result in the Company
being "closely held" within the meaning of Section 856(h) of the Code; or (iv)
result in the disqualification of the Company as a REIT, shall be null and
void, and the intended transferee will acquire no rights in the Shares, except
as provided in the Declaration of Trust regarding Excess Securities.
The Company's Declaration of Trust provides that Shares owned, or
deemed to be owned, or transferred to a shareholder in excess of the Ownership
Limit will automatically be deemed to be Excess Securities and as such will be
deemed to have been transferred to the Company as trustee of a trust for the
exclusive benefit of the transferees to whom such Shares may ultimately be
transferred without violating the Ownership Limit. For purposes of such
Ownership Limit, convertible securities will be treated as if such securities
had been converted in calculating the Ownership Limit. While the Excess
Securities are held in trust, they will not be entitled to vote (except as
required by law), and they will not be entitled to participate in dividends or
other distributions. Any dividend or distribution paid to a proposed
transferee of Excess Securities prior to the discovery by the Company that
Shares have been transferred in violation of the provisions of the Company's
Declaration of Trust shall be repaid to the Company upon demand. The original
transferee-shareholder may, at any time the Excess Securities are held by the
Company in trust, transfer the interest in the trust representing the Excess
Securities to any individual whose ownership of the Shares that have been
deemed to be Excess Securities would be permitted under the Ownership Limit, at
a price not in excess of the price paid by the original transferee-shareholder
for the Shares that were exchanged into Excess Securities. Immediately upon
the transfer to the permitted transferee, the Excess Securities will
automatically be deemed to be Shares of the class from which they were
converted. If the foregoing transfer restrictions are determined to be void or
invalid by virtue of any legal decision, statute, rule or regulation, then the
intended transferee-shareholder of any Excess Securities may be deemed, at the
option of the Company, to have acted as an agent on behalf of the Company in
acquiring the Excess Securities and to hold the Excess Securities on behalf of
the Company.
In addition to the foregoing transfer restrictions, the Company will
have the right, for a period of 90 days during the time any Excess Securities
are held by the Company in trust, to purchase all or any portion of the Excess
Securities from the original transferee-shareholder at the lesser of the price
paid for the Shares by the original transferee-shareholder and the market price
(as determined in the manner set forth in the Declaration of Trust) of the
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
Camden Board determines that a violative transfer has been made.
All certificates representing the Common Shares will bear a legend
referring to the restrictions described above.
Each shareholder shall upon demand be required to disclose to the
Company in writing any information with respect to the direct, indirect and
constructive ownership of beneficial interests as the Camden Board 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 Camden Board and the shareholders determine
that maintenance of REIT status is no longer in the best interest of the
Company.
- 11 -
<PAGE> 15
SHAREHOLDER LIABILITY
The Declaration of Trust provides that no shareholder shall be
personally or individually liable in any manner whatsoever for any debt, act,
omission or obligation incurred by the Company or the Camden Board. A
shareholder shall be under no obligation to the Company or to its creditors
with respect to such Shares other than the obligation to pay to the Company the
full amount of the consideration for which such Shares were issued or to be
issued. By statute, the State of Texas provides limited liability for
shareholders of a REIT organized under the Texas REIT Act.
TRANSFER AGENT AND REGISTRAR
American Stock Transfer & Trust Company or its successor is the
transfer agent and registrar for the Common Shares.
REGISTRATION RIGHTS
The registration of the Redemption Shares pursuant to the registration
statement of which this Prospectus is a part is made pursuant to the Company's
obligations with respect to certain Selling Shareholders under the terms of a
registration rights agreement dated April 15, 1997 (the "Registration Rights
Agreement"). The following summary does not purport to be complete and is
qualified in its entirety by reference to the Registration Rights Agreement.
Under the Registration Rights Agreement, the Company is obligated to
cause to be filed, within five business days after the date thereof, a
registration statement under Rule 415 under the Securities Act covering the
offer and sale by the Selling Shareholders of the Redemption Shares which the
Selling Shareholders may acquire in exchange for their Units. The Company is
further obligated to use its best efforts to cause such registration statement
to be declared effective by the Commission as soon as practicable and to keep
such registration statement continuously effective until the earlier of (i)
such time as the Form S-3 Registration Statement (or similar successor form of
registration statement) is not available to the Company for registration of the
Redemption Shares, or (ii) the later of the date on which all of such Selling
Shareholders have (A) exchanged their Units for Redemption Shares that are
registered under the Securities Act upon such redemption, (B) redeemed all of
their Units and consummated the sale of any Redemption Shares received upon
such redemption, if they receive Redemption Shares that are not registered
under the Securities Act upon such redemption or (C) consummated the sale of
all of their Redemption Shares to a person or persons, or an entity or
entities, that is not an affiliate or are not affiliates, as the case may be,
of the Company. If a Registration Statement on Form S-3 (or similar form) does
not continue to be available to the Company for registration of the Redemption
Shares, then the Selling Shareholders will be entitled to certain demand and
piggyback registration rights. As a result of the filing and effectiveness of
the Registration Statement of which this Prospectus is a part, any Redemption
Shares sold by the Selling Shareholders pursuant to this Prospectus will no
longer be entitled to the benefits of the Registration Rights Agreement.
Pursuant to the Registration Rights Agreement, the Company is
obligated to bear all expenses of effecting the registration of the Redemption
Shares (other than brokerage and sales commissions and transfer taxes of any
kind and other than for any legal and other expenses incurred by the Selling
Shareholders). The Company also has agreed to indemnify the Selling
Shareholders under the Registration Rights Agreement against certain losses,
liabilities, claims, damages and expenses arising under the securities laws in
connection with the Registration Statement or this Prospectus, subject to
certain limitations. In addition, each Selling Shareholder under the
Registration Rights Agreement has agreed to indemnify the Company and its
respective trust managers, officers and any person who controls the Company
against all losses, liabilities, claims, damages and expenses arising under the
securities laws insofar as such loss, claim, damage or expense relates to
written information furnished to the Company by such Selling Shareholder for
use in the registration statement or Prospectus or an amendment or supplement
thereto or the failure by such Selling Shareholder to deliver or cause to be
delivered this Prospectus or any amendment or supplement thereto to any
purchaser of shares covered by the Registration Statement from the Selling
Shareholders through no fault of the Company.
- 12 -
<PAGE> 16
FEDERAL INCOME TAX CONSIDERATIONS
The following is a general summary of the material federal income tax
considerations to the Company based on current law, is not tax advice and is
for general information only. The following discussion is not exhaustive of
all possible tax considerations and is not tax advice. Moreover, this summary
does not deal with all tax aspects that might be relevant to a particular
prospective holder of Common Shares in light of its individual investment or
tax circumstances; nor does it deal with particular types of holders that are
subject to special treatment under the Code, such as insurance companies,
financial institutions and broker-dealers. The Code provisions governing the
federal income tax treatment of REITs are highly technical and complex, and
this summary is qualified in its entirety by the applicable Code provisions,
rules and regulations promulgated thereunder, and administrative and judicial
interpretations thereof.
EACH PROSPECTIVE PURCHASER IS URGED TO CONSULT HIS OR HER OWN TAX
ADVISOR WITH RESPECT TO SUCH PURCHASER'S SPECIFIC FEDERAL, STATE, LOCAL,
FOREIGN AND OTHER TAX CONSEQUENCES OF THE PURCHASE, HOLDING AND SALE OF COMMON
SHARES AND OF POTENTIAL CHANGES IN APPLICABLE TAX LAWS.
The Company has elected to be taxed as a REIT under the Code. The
Company believes that is has been organized, has operated and will operate in
such a manner as to qualify for taxation as a REIT under the Code. No
assurance can be given, however, that such requirements will be met in the
future.
FEDERAL INCOME TAXATION OF THE COMPANY
If and as long as the Company qualifies for taxation as a REIT, it
generally will not be subject to federal corporate income taxes on that portion
of its ordinary income or capital gain that is currently distributed to
shareholders. The REIT provisions of the Code generally allow a REIT to deduct
dividends paid to its shareholders. This deduction for dividends paid to
shareholders substantially eliminates the federal "double taxation" on earnings
(once at the corporate level and once again at the shareholder level) that
usually results from investments in a corporation.
Even if the Company qualifies for taxation as a REIT, the Company will
be subject to federal income tax, however, as follows:
First, the Company will be taxed at regular corporate rates on
its undistributed REIT taxable income, including undistributed net
capital gains.
Second, under certain circumstances, the Company may be
subject to the "alternative minimum tax" as a consequence of its items
of tax preference to the extent that such tax exceeds its regular tax.
Third, if the Company has net income from the sale or other
disposition of "foreclosure property" that is held primarily for sale
to customers in the ordinary course of business or other
non-qualifying income from foreclosure property, it will be subject to
tax at the highest corporate rate on such income.
Fourth, if the Company has net income from prohibited
transactions (which are, in general, certain sales or other
dispositions of property held primarily for sale to customers in the
ordinary course of business, but excluding foreclosure property), such
income will be subject to a 100% tax.
Fifth, if the Company should fail to satisfy certain gross
income tests, but has nonetheless maintained its qualification as a
REIT because certain other requirements had been met, it will be
subject to a 100% tax on the net income attributable to the greater of
the amount by which the Company fails such tests, multiplied by a
fraction intended to reflect the Company's profitability.
Sixth, if the Company fails to distribute during each year at
least the sum of (i) 85% of its REIT ordinary income for such year,
(ii) 95% of its REIT capital gain net income for such year and (iii)
any undistributed taxable income from prior periods, the Company will
be subject to a 4% excise tax on the excess of such required
distributions over the distributed amount.
- 13 -
<PAGE> 17
Seventh, if the Company should acquire any asset from a C
corporation (i.e., a corporation subject to full corporate-level tax)
in a carryover-basis transaction and the Company subsequently
recognizes gain on the disposition of such asset during the ten-year
period (the "Recognition Period") beginning on the date on which the
asset was acquired by the Company, then the excess of (a) the fair
market value of the asset as of the beginning of the applicable
Recognition Period over (b) the Company's adjusted basis in such asset
as of the beginning of such Recognition Period will be subject to tax
at the highest regular corporate rate, pursuant to guidelines issued
by the IRS.
FAILURE TO QUALIFY
If the Company fails to qualify for taxation as a REIT in any taxable
year and certain relief provisions do not apply, the Company will be subject to
tax (including any applicable alternative minimum tax) on its taxable income at
regular corporate rates. Distributions to shareholders in any year in which
the Company fails to qualify as a REIT will not be deductible by the Company
nor will they be required to be made. In such event, to the extent of current
and accumulated earnings and profits, all distributions to shareholders will be
dividends, taxable as ordinary income, and subject to certain limitations of
the Code, corporate distributees may be eligible for the dividends-received
deduction. Unless the Company is entitled to relief under specific statutory
provisions, the Company also will be disqualified from taxation as a REIT for
the four taxable years following the year during which qualification was lost.
It is not possible to state whether in all circumstances the Company would be
entitled to such statutory relief. For example, if the Company fails to
satisfy the gross income tests because nonqualifying income that the Company
intentionally incurs exceeds the limit on such income, the IRS could conclude
that the Company's failure to satisfy the tests was not due to reasonable
cause.
SELLING SHAREHOLDERS
The following table provides the name of and the number of Common
Shares and Units beneficially owned by the Selling Shareholders as of April 15,
1997. The Redemption Shares set forth below as being beneficially owned as of
such date represent the Common Shares that the Selling Shareholders may acquire
upon presentation of the Units to the Operating Partnership for redemption, all
in accordance with the agreement of limited partnership of the Operating
Partnership, as amended.
The Redemption Shares offered by this Prospectus will be offered from
time to time by the Selling Shareholders named below, or by pledgees, donees,
transferees or other successors in interest hereto.
<TABLE>
<CAPTION>
COMMON SHARES
AND UNITS APPROXIMATE
BENEFICIALLY COMMON SHARES TO BE PERCENT OF ALL
OWNED AS OF COMMON SHARES BENEFICIALLY OWNED AFTER SHARES
NAME APRIL 15, 1997 OFFERED HEREBY OFFERING(1) AFTER OFFERING
- ---- -------------- -------------- ----------------------- --------------
<S> <C> <C> <C> <C>
PGI Associates, L.P. 1,407,495 1,407,495 0 *
FWP, L.P. 952,078 571,278 380,800 1.3
Gateway Mall Associates I, L.P. 240,941 240,941 0 *
Fulcor Investment Co. 21,899 21,899 0 *
Allen Gilbert 743 743 0 *
Fuller Financial Co. 26,955 26,955 0 *
WRC Holdings, Inc. 21,978 21,978 0 *
William R. Cooper(2) 1,982,461 1,693,386 289,075 1.0
Lewis A. Levey(3) 312,933 249,072 63,861 *
Don M. Shine 49,114 22,972 26,142 *
Jerry J. Bonner 16,184 1,276 14,908 *
Ward Katz 5,521 5,521 0 *
</TABLE>
- 14 -
<PAGE> 18
- -----------------------
* Less than 1%.
(1) Assumes that all shares registered hereby will be sold by the
Selling Shareholders. There is no assurance that any of the
shares will be offered or sold by the Selling Shareholders.
(2) In addition to 312,047 shares and units owned by Mr. Cooper
directly, Mr. Cooper's shares and units owned prior to the
offering and shares offered hereby include 1,407,495 units
which are held by PGI Associates, L.P., the general partner of
which is a company controlled by Mr. Cooper, and 240,941 units
held by Gateway Mall Associates, I, L.P., a partnership in
which Mr. Cooper serves as a general partner of the general
partner, and 21,978 units held by WRC Holdings, Inc. Mr.
Cooper became a trust manager following the Merger.
(3) In addition to 71,992 shares and units owned by Mr. Levey
directly, Mr. Levey's shares and units owned prior to the
offering and shares offered hereby include 240,941 units held
by Gateway Mall Associates, I, L.P., a partnership in which
Mr.Levey serves as a general partner of the general partner.
Mr. Levey became a trust manager following the Merger.
USE OF PROCEEDS
The Common Shares offered hereby are being registered for the account
of the Selling Shareholders and, accordingly, the Company will not receive any
of the proceeds from the sale of the Redemption Shares by the Selling
Shareholders.
PLAN OF DISTRIBUTION
This Prospectus relates to the offer and sale from time to time of up
to an aggregate of 2,352,161 Redemption Shares by the Selling Shareholders, or
by pledgees, donees, transferees or other successors in interest thereto. If
the Selling Shareholders present Units to the Operating Partnership for
redemption, the Company may, at its election, acquire such Units in exchange
for Redemption Shares in accordance with the terms of the Operating
Partnership's agreement of limited partnership, as amended. The Company is
registering the Redemption Shares pursuant to the Company's obligations under a
registration rights agreement, but the registration of the Redemption Shares
does not necessarily mean that any of the Redemption Shares will be offered or
sold by the Selling Shareholders thereunder. The Company will not receive any
proceeds from the offering of the Redemption Shares by the Selling
Shareholders.
The distribution of the Redemption Shares may be effected from time to
time in one or more underwritten transactions at a fixed price or prices, which
may be changed, or at market prices prevailing at the time of sale, at prices
related to such prevailing market prices or at negotiated prices. Any such
underwritten offering may be on a "best efforts" or a "firm commitment" basis.
In connection with any such underwritten offering, underwriters or agents may
receive compensation in the form of discounts, concessions or commissions from
the Selling Shareholders. Underwriters may sell the Redemption Shares 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 act as agents.
The Selling Shareholders and any underwriters, dealers or agents that
participate in the distribution of the Redemption Shares may be deemed to be
"underwriters" within the meaning of the Securities Act, and any profit on the
sale of the Redemption Shares by them and any discounts, commissions or
concessions received by any such underwriters, dealers or agents might be
deemed to be underwriting discounts and commissions under the Securities Act.
At a time a particular offer of Redemption Shares is made by the
Selling Shareholders, a Prospectus Supplement, if required, will be distributed
that will set forth the names of any underwriters, dealers or agents and any
discounts, commissions and other terms constituting compensation from the
Selling Shareholders and any other required information.
The sale of Redemption Shares by the Selling Shareholders may also be
effected from time to time by selling Redemption Shares directly to purchasers
or to or through broker-dealers. In connection with any such sale, any such
broker-dealer may act as agent for the Selling Shareholders or may purchase
from the Selling Shareholders all or a portion of the Redemption Shares as
principal, and may be made pursuant to any of the methods described below.
Such sales may be made on the NYSE or other exchanges on which the Common
Shares are then traded, in the over-the-counter market,
- 15 -
<PAGE> 19
in negotiated transactions or otherwise at prices and at terms then prevailing
or at prices related to the then-current market prices or at prices otherwise
negotiated.
The Redemption Shares may also be sold in one or more of the following
transactions: (a) block transactions in which a broker-dealer may sell all or a
portion of such shares as agent but may position and resell all or a portion of
the block as principal to facilitate the transaction; (b) purchases by any such
broker-dealer as principal and resale by such broker-dealer for its own account
pursuant to a Prospectus Supplement; (c) a special offering, an exchange
distribution or a secondary distribution in accordance with applicable NYSE or
other stock exchange rules; (d) ordinary brokerage transactions and
transactions in which any such broker-dealer solicits purchasers; (e) sales "at
the market" to or through a market maker or into an existing trading market, on
an exchange or otherwise, for such shares; and (f) sales in other ways not
involving market makers or established trading markets, including direct sales
to purchasers. In effecting sales, broker-dealers engaged by the Selling
Shareholders may arrange for other broker-dealers to participate.
Broker-dealers will receive commissions or other compensation from the Selling
Shareholders in amounts to be negotiated immediately prior to the sale that
will not exceed those customary in the types of transactions involved.
Broker-dealers may also receive compensation from purchasers of the Redemption
Shares which is not expected to exceed that customary in the types of
transactions involved.
In order to comply with the securities laws of certain states, if
applicable, the Redemption Shares may be sold only through registered or
licensed brokers or dealers. In addition, in certain states, Redemption Shares
may not be sold unless they have been registered or qualified for sale in such
state or an exemption from such registration or qualification requirement is
available and is complied with.
All expenses incident to the offering and sale of the Redemption
Shares, other than commissions, discounts and fees of underwriters,
broker-dealers or agents, shall be paid by the Company. The Company has agreed
to indemnify the Selling Shareholders against certain losses, claims, damages
and liabilities, including liabilities under the Securities Act. See
"Registration Rights."
LEGAL MATTERS
Certain legal matters relating to the validity of the Common Shares
offered hereby will be passed upon for the Company by Liddell, Sapp, Zivley,
Hill & LaBoon, L.L.P., Dallas, Texas.
EXPERTS
The consolidated financial statements and the related financial
statement schedule of the Company as of December 31, 1996 and 1995 and for each
of the three years in the period ended December 31, 1996 included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1996 and
incorporated by reference in this Prospectus have been audited by Deloitte &
Touche LLP, independent auditors, as stated in their reports which are
incorporated herein by reference, and have been so incorporated in reliance
upon the reports of such firm given upon their authority as experts in
accounting and auditing.
- 16 -
<PAGE> 20
================================================================================
No dealer, salesperson or other individual has been authorized to give any
information or make any representations not contained in this Prospectus in
connection with the offering covered by this Prospectus. If given or made,
such information or representation must not be relied upon as having been
authorized by the Company or the Selling Shareholders. This Prospectus does
not constitute an offer to sell, or a solicitation of an offer to buy, the
Common Shares in any jurisdiction where, or to any person to whom, it is
unlawful to make such offer or solicitation. Neither the delivery of this
Prospectus nor any sale made hereunder shall, under any circumstances, create
an implication that there has not been any change in the facts set forth in
this Prospectus or in the affairs of the Company since the date hereof.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Available Information . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Incorporation of Certain Documents
by Reference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Prospectus Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
The Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Description of Securities to be Registered . . . . . . . . . . . . . . . 10
Registration Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Federal Income Tax Considerations . . . . . . . . . . . . . . . . . . . . 13
Selling Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
</TABLE>
================================================================================
================================================================================
2,352,161 SHARES
CAMDEN PROPERTY
TRUST
Common Shares of
Beneficial Interest
(Par Value $.01 Per Share)
--------------------------
PROSPECTUS
--------------------------
________ , 1997
================================================================================
<PAGE> 21
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the estimated expenses in connection
with the offering contemplated by this Registration Statement:
<TABLE>
<S> <C>
SEC Registration Fee . . . . . . . . . . . . . . . . . . . . . . . . . $19,512
Blue Sky Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . 5,000
Accounting Fees and Expenses . . . . . . . . . . . . . . . . . . . . . 5,000
Legal Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . 5,000
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 488
-------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $35,000
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Subsection (B) of Section 9.20 of the Texas Real Estate Investment
Trust Act, as amended (the "Act"), empowers a real estate investment trust to
indemnify any person who was, is, or is threatened to be made a named defendant
or respondent in any threatened, pending, or completed action, suit, or
proceeding, whether civil, criminal, administrative, arbitrative, or
investigative, any appeal in such an action, suit, or proceeding, or any
inquiry or investigation that can lead to such an action, suit or proceeding
because the person is or was a trust manager, officer, employee or agent of the
real estate investment trust or is or was serving at the request of the real
estate investment trust as a trust manager, director, officer, partner,
venturer, proprietor, trustee, employee, agent, or similar functionary of
another real estate investment trust, corporation, partnership, joint venture,
sole proprietorship, trust, employee benefit plan, or other enterprise against
expenses (including court costs and attorney fees), judgments, penalties, fines
and settlements if he conducted himself in good faith and reasonably believed
his conduct was in or not opposed to the best interests of the real estate
investment trust and, in the case of any criminal proceeding, had no reasonable
cause to believe that his conduct was unlawful.
The Act further provides that, except to the extent otherwise
permitted by the Act, a person may not be indemnified in respect of a
proceeding in which the person is found liable on the basis that personal
benefit was improperly received by him or in which the person is found liable
to the real estate investment trust. Indemnification pursuant to Subsection (B)
of Section 9.20 of the Act is limited to reasonable expenses actually incurred
and may not be made in respect of any proceeding in which the person has been
found liable for willful or intentional misconduct in the performance of his
duty to the real estate investment trust.
Subsection (C) of Section 15.10 of the Act provides that a trust
manager shall not be liable for any claims or damages that may result from his
acts in the discharge of any duty imposed or power conferred upon him by the
real estate investment trust, if, in the exercise of ordinary care, he acted in
good faith and in reliance upon information, opinions, reports, or statements,
including financial statements and other financial data, concerning the real
estate investment trust, that were prepared or presented by officers or
employees of the real estate investment trust, legal counsel, public
accountants, investment bankers, or certain other professionals, or a committee
of trust manager of which the trust manager is not a member. In addition, no
trust manager shall be liable to the real estate investment trust for any act,
omission, loss, damage, or expense arising from the performance of his duty to
a real estate investment trust, save only for his own willful misfeasance,
willful malfeasance or gross negligence.
Article Sixteen of the Company's Amended and Restated Declaration of
Trust provides that the Company shall indemnify officers and Trust managers, as
set forth below:
(a) The Company shall indemnify, to the extent permitted
by Texas law in accordance with the Company's Bylaws,
every person who is or was a trust manager or officer
of the Company or its corporate predecessor and any
person who is or was serving at the request of the
Company or its corporate predecessor as a director,
officer, partner, venturer, proprietor, trustee,
employee, agent or similar functionary of another
foreign or domestic corporation, partnership, joint
venture, sole
II-1
<PAGE> 22
proprietorship, trust, employee benefit plan or other
enterprise with respect to all costs and expenses
incurred by such person as a result of such person
being made or threatened to be made a defendant or
respondent in a proceeding by reason of his holding or
having held a position named above in this paragraph.
(b) If the indemnification provided in paragraph (a) is
either (i) insufficient to cover all costs and
expenses incurred by any person named in such
paragraph as a result of such person being made or
threatened to be made a defendant or respondent in a
proceeding by reason of his holding or having held a
position named in such paragraph or (ii) not permitted
by Texas law, the Company shall indemnify, to the
fullest extent that indemnification is permitted by
Texas law, every person who is or was a trust manager
or officer of the Company or its corporate predecessor
and any person who is or was serving at the request of
the Company or its corporate predecessor as a
director, officer, partner, venturer, proprietor,
trustee, employee, agent or similar functionary of
another foreign or domestic corporation, partnership,
joint venture, sole proprietorship, trust, employee
benefit plan or other enterprise with respect to all
costs and expenses incurred by such person as a result
of such person being made or threatened to be made a
defendant or respondent in a proceeding by reason of
his holding or having held a position named above in
this paragraph.
The Company's Bylaws provide that the Company may indemnify any trust
manager or officer of the Company who was, is or is threatened to be made a
party to any suit or proceeding, whether civil, criminal, administrative,
arbitrative or investigative, because the person is or was a trust manager,
officer, employee or agent of the Company, or is or was serving at the request
of the Company in the same or another capacity in another corporation or
business association, against judgments, penalties, fines, settlements and
reasonable expenses actually incurred if it is determined that the person: (i)
conducted himself in good faith, (ii) reasonably believed that, in the case of
conduct in his official capacity, his conduct was in the best interests of the
Company, and that, in all other cases, his conduct was at least not opposed to
the best interests of the Company, and (iii) in the case of any criminal
proceeding, had no reasonable cause to believe his conduct was unlawful;
provided that, if the person is found liable to the Company, or is found liable
on the basis that personal benefit was improperly received by the person, the
indemnification (A) is limited to reasonable expenses actually incurred by the
person in connection with the proceeding and (B) will not be made in respect of
any proceeding in which the person shall have been found liable for willful or
intentional misconduct in the performance of his duty to the Company.
ITEM 16. EXHIBITS.
4.1 Amended and Restated Declaration of Trust, as amended (filed
as Exhibit 3.1 to the Company's Annual Report on Form 10-K for
the year ended December 31, 1993 (File No. 1-12110) and
incorporated herein by reference)
4.2 Amended and Restated Bylaws of the Company (filed as Exhibit
3.1 to the Company's Current Report on Form 8-K dated October
31, 1996 (File No. 1-12110) and incorporated herein by
reference)
4.3 Specimen certificate for Common Shares (filed as Exhibit 4.1
to the Company's Registration Statement on Form S-11 filed
September 15, 1993 (No. 33-68736) and incorporated herein by
reference)
5.1 Opinion of Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P. as to
the legality of the securities being registered
8.1 Opinion of Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P. as to
certain tax matters
23.1 Consent of Deloitte & Touche LLP
23.2 Consent of Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P.
(included in Exhibit 5.1 hereto)
23.3 Consent of Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P.
(included in Exhibit 8.1 hereto)
24.1 Power of Attorney (included on signature page)
99.1 Registration Rights Agreement dated April 15, 1997 among
Camden Property Trust, Camden Operating, L.P. and certain
investors set forth therein
99.2 Third Amended and Restated Agreement of Limited Partnership of
Camden Operating, L.P.
II-2
<PAGE> 23
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this
Registration Statement:
(i) To include any prospectus required by
Section 10(a)(3) of the Securities Act of
1933, as amended (the "Securities Act");
(ii) To reflect in the prospectus any facts or
events arising after the effective date of
the registration statement (or the most
recent post-effective amendment thereof)
which, individually or in the aggregate,
represent a fundamental change in the
information set forth in the Registration
Statement;
(iii) To include any material information with
respect to the plan of distribution not
previously disclosed in the registration
statement or any material change to such
information in the Registration Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed
by the registrant pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), that are
incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability
under the Securities Act, each such post- effective
amendment shall be deemed to be a new registration
statement relating to the securities offered therein,
and the offering of such securities at that time
shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being
registered which remain unsold at the termination of
the offering.
(b) The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities
Act, each filing of the registrant's annual report pursuant to
Section 13(a) or 15(d) of the Exchange Act (and, where
applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to trust managers, directors,
officers and controlling persons of the registrant pursuant to
the provisions described in Item 15 of this Registration
Statement or otherwise, the registrant has been advised that
in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities
(other than in payment by the registrant of expenses incurred
or paid by a trust manager, director, officer or controlling
person in the successful defense of any action, suit or
proceeding) is asserted against the registrant by such trust
manager, director, officer or controlling person in connection
with the securities being registered hereby, the registrant
will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
II-3
<PAGE> 24
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Houston, State of Texas, on the 22nd day of
April, 1997.
CAMDEN PROPERTY TRUST
By: /s/ G. Steven Dawson
-----------------------------------
G. Steven Dawson
Senior Vice President-Finance,
Chief Financial Officer, Treasurer
and Assistant Secretary
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Richard J. Campo, D. Keith Oden
and G. Steven Dawson, and each of them, his true and lawful attorneys-in-fact
and agents, with full power of substitution and resubstitution, for him, and on
his behalf and in his name, place and stead, in any and all capacities, to
sign, execute and file this Registration Statement under the Securities Act of
1933, as amended, and any or all amendments (including, without limitation,
post-effective amendments), with all exhibits and any and all documents
required to be filed with respect thereto, with the Securities and Exchange
Commission or any regulatory authority, granting unto such attorneys-in-fact
and agents, and each of them, full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises in order to effectuate the same, as fully to all intents and purposes
as he himself might or could do if personally present, hereby ratifying and
confirming all that such attorneys-in-fact and agents, or any of them, or their
substitute or substitutes, may lawfully do or cause to be done.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Richard J. Campo Chairman of the Board of Trust Managers April 21, 1997
- ------------------------------ and Chief Executive Officer
Richard J. Campo (Principal Executive Officer)
/s/ D. Keith Oden President, Chief Operating Officer and April 21, 1997
- ------------------------------ Trust Manager
D. Keith Oden
</TABLE>
II-4
<PAGE> 25
<TABLE>
<S> <C> <C>
/s/ G. Steven Dawson Senior Vice President-Finance, Chief April 21, 1997
- ------------------------------ Financial Officer, Treasurer and Assistant
G. Steven Dawson Secretary
(Principal Financial and Accounting
Officer)
/s/ William R. Cooper Trust Manager April 21, 1997
- ------------------------------
William R. Cooper
/s/ George R. Hrdlicka Trust Manager April 21, 1997
- ------------------------------
George R. Hrdlicka
/s/ Lewis A. Levey Trust Manager April 21, 1997
- ------------------------------
Lewis A. Levey
/s/ F. Gardner Parker Trust Manager April 21, 1997
- ------------------------------
F. Gardner Parker
/s/ Steven A. Webster Trust Manager April 21, 1997
- ------------------------------
Steven A. Webster
</TABLE>
<PAGE> 26
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number
- -------
<S> <C>
4.1 Amended and Restated Declaration of Trust, as amended (filed as Exhibit 3.1 to the Company's Annual
Report on Form 10-K for the year ended December 31, 1993 (File No. 1-12110) and incorporated herein by
reference)
4.2 Amended and Restated Bylaws of the Company (filed as Exhibit 3.1 to the Company's Current Report on
Form 8-K dated October 31, 1996 (File No. 1-12110) and incorporated herein by reference)
4.3 Specimen certificate for Common Shares (filed as Exhibit 4.1 to the Company's Registration Statement on
Form S-11 filed September 15, 1993 (No. 33-68736) and incorporated herein by reference)
5.1 Opinion of Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P. as to the legality of the securities being
registered
8.1 Opinion of Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P. as to certain tax matters
23.1 Consent of Deloitte & Touche LLP
23.2 Consent of Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P. (included in Exhibit 5.1 hereto)
23.3 Consent of Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P. (included in Exhibit 8.1 hereto)
24.1 Power of Attorney (included on signature page)
99.1 Registration Rights Agreement dated April 15, 1997 among Camden Property Trust, Camden Operating, L.P.
and certain investors set forth therein
99.2 Third Amended and Restated Agreement of Limited Partnership of Camden Operating, L.P.
</TABLE>
<PAGE> 1
EXHIBIT 5.1
April 22, 1997
Camden Property Trust
3200 Southwest Freeway
Suite 1500
Houston, Texas 77027
Re: Camden Property Trust/Registration Statement on Form S-3
Gentlemen:
We have acted as securities counsel to Camden Property Trust, a Texas
real estate investment trust (the "Company"), in connection with the proposed
offering and sale from time to time of up to 2,352,161 common shares of
beneficial interest of the Company, par value $.01 per share (the "Camden
Common Shares") by certain holders thereof and the registration under the
Securities Act of 1933, as amended, of the Camden Common Shares by means of the
Registration Statement on Form S-3 (the "Registration Statement"), as filed
with the Securities and Exchange Commission (the "Commission").
We have examined and are familiar with originals or copies, certified
or otherwise identified to our satisfaction, of such documents, corporate
records, certificates of public officials and other instruments as we have
deemed necessary or advisable in connection with this opinion, including (a)
the Amended and Restated Declaration of Trust of the Company and the Bylaws of
the Company, as amended to date, (b) minutes of the proceedings of the Board of
Trust Managers of the Company, (c) the Registration Rights Agreement dated
April 15, 1997 between the Company, Camden Operating, L.P. and certain limited
partnership unitholders, and (d) the Registration Statement. In our
examination, we have assumed the genuineness of all signatures, the legal
capacity of natural persons, the authenticity of all documents submitted to us
as originals, the conformity to original documents of all documents submitted
to us as certified or photostatic copies, the authenticity of the originals of
such copies and the authenticity of telegraphic or telephonic confirmations of
public officials and others. As to facts material to our opinion, we have
relied upon certificates or telegraphic or telephonic confirmations of public
officials and certificates, documents, statements and other information of the
Company or representatives or officers thereof.
<PAGE> 2
Camden Property Trust
April 22, 1997
Page 2
The opinions set forth herein are subject to the qualification that we
are admitted to practice law in the State of Texas and we express no opinion as
to laws other than the law of the State of Texas and the federal law of the
United States of America.
Based upon the foregoing, and subject to the assumption,
qualifications and limitations hereinabove and hereinafter stated, it is our
opinion that the Camden Common Shares have been duly authorized and, assuming
(a) that the Registration Statement shall have been declared effective by the
Commission, and (b) the Camden Common Shares shall have been issued and
delivered to the unitholders of Camden Operating, L.P. upon redemption of their
units in accordance with the limited partnership agreement of Camden Operating,
L.P., as amended and restated to date, we are of the opinion that the Camden
Common Shares, when issued, shall be validly issued, fully paid and
nonassessable.
This opinion is rendered as of the date hereof, and we undertake no,
and disclaim any, obligation to advise you of any change in or any new
development that might affect any matters or opinions set forth herein.
We consent to the reference to our Firm under the heading "Legal
Matters" in the Prospectus included in the Registration Statement, and to the
filing of this opinion as Exhibit 5.1 to the Registration Statement.
Very truly yours,
/s/ LIDDELL, SAPP, ZIVLEY, HILL & LaBOON, L.L.P.
<PAGE> 1
EXHIBIT 8.1
April 22, 1997
Camden Property Trust
3200 Southwest Freeway
Suite 1500
Houston, Texas 77027
Ladies and Gentlemen:
We have acted as counsel to Camden Property Trust, a Texas real estate
investment trust (the "Company"), in connection with the proposed offering and
sale from time to time of up to 2,352,161 common shares of beneficial interest
of the Company, par value $.01 per share (the "Camden Common Shares") by
certain holders thereof and the registration under the Securities Act of 1933,
as amended, of the Camden Common Shares by means of the Registration Statement
on Form S-3 (such Registration Statement, the Prospectus forming a part thereof
and all exhibits thereto shall be collectively referred to herein as the
"Registration Statement"), as filed with the Securities and Exchange
Commission.
The opinions set forth in this letter are based on relevant provisions
of the Internal Revenue Code of 1986, as amended (the "Code"), Treasury
Regulations thereunder (including proposed and temporary Regulations), and
interpretations of the foregoing as expressed in court decisions,
administrative determinations, and the legislative history as of the date
hereof. These provisions and interpretations are subject to change, which may
or may not be retroactive in effect, that might result in modifications of our
opinion.
In rendering the following opinion, we have examined such statutes,
regulations, records, certificates and other documents as we have considered
necessary or appropriate as a basis for such opinion, including the following:
(1) the Registration Statement (including all amendments made thereto through
the date hereof); (2) the Amended and Restated Declaration of Trust and the
Bylaws of the Company, as amended to date; and (3) certain written
representations of the Company contained in a letter addressed to Liddell,
Sapp, Zivley, Hill & LaBoon, L.L.P., dated on or about the date hereof (the
"Representation Letter").
In our examination, we have assumed the genuineness of all signatures,
the legal capacity of natural persons, the authenticity of all documents
submitted to us as originals, the conformity
<PAGE> 2
Camden Property Trust
April 22, 1997
Page 2
to original documents of all documents submitted to us as certified or
photostatic copies, the authenticity of the originals of such copies and the
authenticity of telegraphic or telephonic confirmations of public officials and
others. As to facts material to our opinion, we have relied upon certificates
or telegraphic or telephonic confirmations of public officials as well as the
Representation Letter and other certificates, documents, statements and other
information of the Company or representatives or officers thereof.
For purposes of rendering our opinion, we have not made an independent
investigation of the facts set forth in any of the above-referenced documents,
including the Registration Statement and the Representation Letter. We have
consequently relied upon your representations that the information presented in
such documents or otherwise furnished to us accurately and completely describes
all material facts relevant to our opinions.
Based upon, and subject to the foregoing and the next paragraph below
and provided that the Company filed a proper election to be taxed as a real
estate investment trust ("REIT") with its timely filed federal income tax
return for the taxable year ending December 31, 1993, which has not been
terminated or revoked, we are of the opinion that:
1. The Company has qualified as a REIT for the taxable year
ending December 31, 1996.
2. The discussion in the Registration Statement under the heading
"Federal Income Tax Considerations," to the extent that it describes matters of
law or legal conclusions, is correct in all material respects.
We express no opinion with respect to the transactions described
herein and in the Registration Statement other than those set forth herein. We
assume no obligation to advise you of any changes in our opinion subsequent to
the delivery of this opinion letter. The Company's qualification and taxation
as a REIT depend upon the Company's ability to meet on a continuing basis,
through actual annual operating and other results, the various requirements
under the Code with regard to, among other things, the sources of its income,
the composition of its assets, the level of its distributions to shareholders,
and the diversity of its share ownership. Liddell, Sapp, Zivley, Hill &
LaBoon, L.L.P. will not review the Company's compliance with these
requirements on a continuing basis. Accordingly, no assurance can be given
that the actual results of the Company's operations, the sources of its income,
the nature of its assets, the level of its distributions to shareholders and
the diversity of its share ownership for any given taxable year will satisfy
the requirements under the Code for qualification and taxation as a REIT.
Additionally, you should recognize that our opinions are not binding on the IRS
and that the IRS may disagree with the opinions contained herein.
This opinion letter has been prepared solely for your benefit in
connection with the filing of the Registration Statement. The opinions herein
may not be used or relied upon by any other
<PAGE> 3
Camden Property Trust
April 22, 1997
Page 3
person or for any other purpose and may not be disclosed, quoted, filed with a
governmental agency or otherwise referred to without our prior written consent.
We hereby consent to the use and filing of this opinion as an exhibit to the
Registration Statement and to all references to us in the Registration
Statement.
Very truly yours,
/s/ Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P.
<PAGE> 1
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Camden Property Trust on Form S-3 of our reports dated February 21, 1997,
included and incorporated by reference in the Annual Report on Form 10-K of
Camden Property Trust for the year ended December 31, 1996, and to the
reference to us under the heading "Experts" in the Prospectus, which is part of
this Registration Statement.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
Houston, Texas
April 21, 1997
<PAGE> 1
EXHIBIT 99.1
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and
entered into as of April 15, 1997 by and among CAMDEN PROPERTY TRUST, a Texas
real estate investment trust ("Camden"), CAMDEN OPERATING, L.P. (formerly known
as Paragon Group L.P.), a Delaware limited partnership (the "Operating
Partnership"), and the parties set forth in Exhibit A attached hereto (the
"Investors").
WHEREAS, Paragon Group, Inc., a Maryland corporation ("Paragon") has
filed and caused to become effective a registration statement on Form S-3
(Registration No. 333-3598) registering under the Securities Act of 1933, as
amended (the "Act"), the resale of certain shares of common stock of Paragon
(the "Paragon Stock") that are currently outstanding or that may be issued upon
redemption of units of limited partnership interest of the Operating
Partnership (the "Units") pursuant to the Registration Rights and Lock-up
Agreement dated as of July 27, 1994 among Paragon, the Operating Partnership
and the Investors (the "Paragon Registration Rights Agreement"), the Stock
Purchase Agreement dated as of July 20, 1994 between Paragon and FWP, L.P.
("FWP") (such agreement hereinafter referred to as the "FWP Stock Purchase
Agreement"), and the Stock Purchase Agreement dated as of July 20, 1994 between
Paragon and William R. Cooper ("Cooper") (such agreement hereinafter referred
to as the "Cooper Stock Purchase Agreement");
WHEREAS, Camden, Camden Subsidiary, Inc. ("Camden Sub") and Paragon
have entered into the Agreement and Plan of Merger dated December 16, 1996 (the
"Merger Agreement") pursuant to which Paragon will merge with and into Camden
Sub (the "Merger");
WHEREAS, upon consummation of the Merger and related transactions, the
Paragon Stock will be converted into shares of beneficial interest, par value
$.01 per share, of Camden ("Camden Shares") and the general partner of the
Operating Partnership will have the right to issue Camden Common Stock instead
of Paragon Stock upon the redemption of Units by the Investors under the Third
Amended and Restated Agreement of Limited Partnership of the Operating
Partnership (the "Operating Partnership Agreement");
WHEREAS, in order to permit the Investors to freely offer and sell at
any time the Camden Shares that may be issued upon redemption of Units upon or
after the Merger and to permit FWP to freely offer and sell following ninety
(90) days after the Merger the Camden Shares that it receives in the Merger
(all such Camden Shares being hereinafter referred to as "Registrable Shares"),
Camden has agreed to provide the Investors (including FWP) with the
registration rights provided herein (the "Registration Rights").
NOW, THEREFORE, the parties hereto, in consideration of the foregoing,
the mutual covenants and agreements hereinafter set forth, and other good and
valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, hereby agree as follows:
<PAGE> 2
1. Registration Rights.
The Investors shall be entitled to registration of the
Registrable Shares under the Act upon and subject to the terms and conditions
set forth herein (the "Registration Rights").
1(a) Initial Registrations.
(i) Camden Shares Issued Upon Redemption of Units.
Within five (5) business days after the date hereof, Camden shall
cause to be filed with the Securities and Exchange Commission (the
"SEC") a shelf registration statement ("Registration Statement") and
related prospectus ("Prospectus") that comply in all material respects
with applicable SEC rules providing for registration under the Act of
the offer and sale by the Investors of the total number of Registrable
Shares that the Investors would own if they were to redeem all Units
owned by them, for which a sale by such Investors has not been
consummated. Camden shall (subject to Section 1(g) hereof) use its
best efforts to cause the Registration Statement to be declared
effective by the SEC as soon as practicable. Camden shall use its
reasonable efforts to keep a Registration Statement pursuant to this
paragraph effective until the earlier of (i) such time as Form S-3 (or
similar successor form of registration statement) is not available to
Camden for registration of the Registrable Shares, or (ii) the later
of the date on which all of such Investors have (A) exchanged their
Units for Registrable Shares that are registered under the Securities
Act upon such redemption, (B) redeemed all of their Units and
consummated the sale of any Registrable Shares received upon such
redemption, if they receive Registrable Shares that are not registered
under the Securities Act or (C) consummated the sale of all of their
Registrable Shares to a person or persons, or an entity or entities,
that is not an affiliate, or are not affiliates as the case may be, of
Camden.
(ii) Camden Shares Issued in the Merger. Subject to
Section 1(g) hereof, Camden shall cause to be filed with the SEC, no
later than forty-five (45) days after the date hereof, and shall use
its best efforts to cause to be declared effective by the SEC ninety
(90) days after the date hereof, a shelf Registration Statement and
related Prospectus that comply in all material respects with
applicable SEC rules providing for registration under the Act of the
offer and sale by FWP of all Registrable Shares received in the
Merger. Camden shall use its reasonable efforts to keep a
Registration Statement pursuant to this paragraph effective until the
earlier of (i) such time as Form S-3 (or similar successor form of
registration statement) is not available to Camden for registration of
such Registrable Shares, or (ii) the date on which FWP has consummated
the sale of all of such Registrable Shares to a person or persons, or
an entity or entities, that is not an affiliate, or are not affiliates
(as the case may be), of Camden. The Registration Rights granted to
FWP pursuant to this Section 1(a)(ii) shall not be available to Cooper
for Camden Shares issued to him in the Merger. The parties intend
that FWP and Cooper shall be entitled at any time after the date
hereof to offer and sell Camden
- 2 -
<PAGE> 3
Shares issued in the Merger pursuant to Rule 145 of the Rules and
Regulations under the Act.
1(b) Registration Rights if Form S-3 is Not Available. If
Form S-3 (or similar form) is not available (or does not continue to be
available) to Camden for registration of the Registrable Shares, then the
Investors (including FWP) shall have the following rights:
(i) Demand Right. Upon the written request of one or
more Investors holding 32,000 (A) Units or (B) Registrable Shares (or
such lesser number of Units or Registrable Shares as shall constitute
all Units and Registrable Shares owned by an Investor). Camden shall
file a Registration Statement on an appropriate form under the Act for
all of the Registrable Shares requested to be registered. Camden
shall (subject to Section 1(g) hereof) file any Registration Statement
required by this paragraph with the SEC within 30 days of receipt of
the requisite Investor request and shall use its reasonable efforts to
cause such Registration Statement to be declared effective by the SEC
as soon as practicable thereafter. Camden shall (subject to Section
1(g) hereof) use its reasonable efforts to keep each such Registration
Statement effective until the earlier of (i) the date that is nine (9)
months after the date of effectiveness of the Registration Statement
(plus the number of days, if any, during which Investors were not
permitted to make offers or sales under the Registration Statement by
reason of Section 1(g)), or (ii) the later of (A) the date on which
such Investor has redeemed all of its Units, if it receives
Registrable Shares that are registered under the Securities Act upon
such redemption, (B) the date on which such Investor has redeemed all
of its Units and consummated the sale of any Registrable Shares
received upon such redemption, if it receives Registrable Shares that
are not registered under the Securities Act or (C) in connection with
Registrable Shares received in the Merger, the date on which such
Investor has consummated the sale of such Registrable Shares to a
person or entity that is not an affiliate of Camden. An Investor
shall be entitled to make or join in a demand pursuant to this Section
1(b)(i) a maximum of two (2) times; provided, that any such demand
shall be for the lesser of (i) Units or Camden Shares with a value of
at least $500,000 or (ii) all of the Units or Camden Shares owned by
such Investor; provided further that if no Registration Statement is
declared effective with respect to a demand which an Investor has made
or joined in, or if such Registration Statement covers Units and
Camden Shares with a value of at least $2,000,000, that demand shall
not be counted for purposes of this limit.
(ii) Piggyback Rights. If Camden at any time proposes to
file a Registration Statement (other than in connection with an
exchange offer or a Registration Statement on Form S-4 or S-8 or other
form of Registration Statement that would not permit registration of
the Registrable Shares for sale to the public) under the Act with
respect to any of its Camden Shares or any security convertible into
or exchangeable or exercisable for Camden Shares, whether or not for
sale for its own account, on a form and in a manner which would permit
the registration of Registrable Shares for sale to the
- 3 -
<PAGE> 4
public under the Act, Camden shall give written notice of the proposed
registration to the holders of Registrable Shares not later than the
earlier to occur of (i) the fifth day following receipt by Camden of
notice of exercise of any demand registration rights or (ii) 30 days
prior to the filing thereof. The holders of Registrable Shares shall
have the right to request that all or any part of the Registrable
Shares be included in the registration by giving written notice to
Camden within 15 days after the giving of the notice by Camden;
provided, however, that (A) if the registration relates to an
underwritten primary offering on behalf of Camden and the managing
underwriters of the offering determine in good faith that the
aggregate amount of securities of Camden which those holders and
Camden propose to include in the Registration Statement exceeds the
maximum amount of securities that could practicably be included
therein, Camden will include in the registration, first, the
securities which Camden proposes to sell, second, pro rata, any
securities of any existing holders of other piggyback registration
rights and the Registrable Shares of the Investors, and third, the
securities of any subsequent holders of other piggyback registration
rights, and (B) if the registration is an underwritten secondary
registration on behalf of any of the other security holders of Camden
and the managing underwriters determine in good faith that the
aggregate amount of securities which the holders of Registrable Shares
and such security holders propose to include in the registration
exceeds the maximum amount of securities that could practicably be
included therein, Camden will include in the registration, first, the
securities to be sold for the account of any other holders entitled to
demand registration, second, the Registrable Shares of the Investors
and third, other securities to be sold for the account of other
holders electing to include (but not being entitled to demand
inclusion of) securities in the registration. (It is understood,
however, that the underwriters shall have the right to terminate
entirely the participation therein of the holders of Registrable
Shares if the underwriters eliminate entirely the participation in the
registration of all the other holders electing to include (but not be
entitled to demand inclusion of) securities in the registration.) If
the registration is not an underwritten registration, then all of the
Registrable Shares requested to be included in the registration shall
be included. Registrable Shares proposed to be registered and sold
pursuant to an underwritten offering for the account of the holders of
Registrable Shares shall be sold to prospective underwriters selected
or approved by Camden and on the terms and subject to the conditions
of one or more underwriting agreements negotiated between Camden, the
holders of Registrable Shares and any other holders demanding
registration and the prospective underwriters. Camden may withdraw
any Registration Statement at any time before it becomes effective, or
postpone the offering of securities, without obligation or liability
to the holders of Registrable Shares. Registrable Shares need not be
included in any Registration Statement pursuant to this provision if
in the opinion of counsel to Camden reasonably acceptable to the
holders of Registrable Shares registration under the Act is not
required for public distribution of the Registrable Shares.
- 4 -
<PAGE> 5
1(c) Inability to Deliver Registered Shares. Whenever an
Investor notifies Camden that the Investor intends to exercise a right of
exchange, Camden shall deliver to the Investor within five business days a
statement as to whether registered Camden Shares are immediately available and
if registered shares are not immediately available, an estimate of the time
when registered shares will be available. If Camden estimates that registered
shares will be available after 30 days, then the Investor will have the option
to exchange Units for unregistered shares, or to wait until registered shares
become available; provided, however, Camden shall not be obligated to issue
unregistered shares unless there are available exemptions from registration
under the Act and from qualification under applicable state securities laws.
The determination as to whether an exemption is available in accordance with
the foregoing shall be made by Camden in its sole discretion. If Camden issues
unregistered shares, then for a period of three years holders of those
unregistered shares shall have the right to request inclusion of those shares
in any registration statement filed in accordance with this Agreement, to the
same extent as holders of Registrable Shares.
1(d) Additional Registration Procedures.
(i) Camden will provide to Investors a reasonable number
of copies of any final Prospectus and any amendments or supplements
thereto.
(ii) Camden will use its reasonable efforts to register or
qualify the Registrable Shares under such other securities or blue sky
laws of such jurisdictions as any Investor reasonably requests and do
any and all other acts and things which may be reasonably necessary or
advisable in connection with the issuance to (if such shares are
registered for issuance) or the disposition of (if such shares are
registered for resale) the Registrable Shares owned by that Investor;
provided that Camden will not be required to (i) qualify generally to
do business in any jurisdiction where it would not otherwise be
required to qualify but for this subparagraph, (ii) subject itself to
taxation in any such jurisdiction, (iii) consent to general service of
process in any such jurisdiction, or (iv) qualify Registrable Shares
in a given jurisdiction where qualification would require Camden to
register as a broker or dealer in that jurisdiction.
(iii) Camden will cause all Registrable Shares to be listed
on each securities exchange on which similar securities issued by
Camden are listed and to be qualified for trading on each system on
which similar securities issued by Camden are from time to time
qualified.
1(e) Cooperation. Each Investor agrees to provide in a
timely manner information regarding the proposed distribution by that Investor
of the Registrable Shares and all other information reasonably requested by
Camden in connection with preparation of and for inclusion in the Registration
Statement.
- 5 -
<PAGE> 6
1(f) Additional Shares. The parties agree that any
Registration Statement may register shares that are not Registrable Shares but
are Camden Shares held by others, or to be issued to others, and subject to
registration rights; provided, however, that the other shares to be registered
are to be or were received in exchange for Units.
1(g) Suspension of Offering. Notwithstanding the
foregoing provisions of this Agreement, Camden shall not be required to file a
Registration Statement or to keep the Registration Statement effective if the
negotiation or consummation of a transaction by Camden or its subsidiaries is
pending or an event has occurred, which negotiation, consummation or event
would require additional disclosure by Camden in the Registration Statement of
material information which Camden has a bona fide business purpose for keeping
confidential and the nondisclosure of which in the Registration Statement might
cause the Registration Statement to fail to comply with applicable disclosure
requirements; provided, however, that Camden may not delay, suspend or withdraw
the Registration Statement for such reason more than twice in any 12-month
period or for more than 60 days at any one time. Upon receipt of any notice
from Camden of the happening of any event during the period the Registration
Statement is effective which is of a type specified in the preceding sentence
or as a result of which the Registration Statement or related Prospectus
contains any untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made (in the case of the
Prospectus) not misleading, Investors agree that they will immediately
discontinue offers and sales of the Registrable Shares under the Registration
Statement until Investors receive copies of a supplemented or amended
Prospectus that corrects the misstatement(s) or omission(s) referred to above
and receive notice that any post-effective amendment has become effective. If
so directed by Camden, Investors will deliver to Camden any copies of the
Prospectus covering the Registrable Shares in their possession at the time of
receipt of such notice.
1(h) Expenses. Camden shall pay all expenses incident to
the performance by it of its obligations under this Agreement, including (i)
all SEC or stock exchange registration, listing and filing fees, (ii) all
expenses incurred in connection with the preparation, printing and distributing
of any Registration Statement and Prospectus, and (iii) fees and disbursements
of counsel for Camden and of the independent public accountants of Camden.
Investors shall be responsible for the payment of any and all other expenses
incurred by them in connection with the exchange of their Units and sale of
their Registrable Shares, including, without limitation, brokerage and sales
commissions, fees and disbursements of Investors' counsel, and any transfer
taxes relating to the sale or disposition of the Registrable Shares by
Investors.
1(i) Effect on Existing Paragon Agreements. Except for
the registration rights granted under the Paragon Registration Rights
Agreement, the FWP Stock Purchase Agreement and the Cooper Stock Purchase
Agreement, which registration rights shall terminate upon the execution and
delivery of this Agreement, such agreements and the rights and obligations of
the parties thereunder shall continue in full force and effect.
- 6 -
<PAGE> 7
2. Indemnification; Contribution.
2(a) Indemnification by Camden. Camden agrees to
indemnify and hold harmless each Investor and each person, if any, who controls
any Investor within the meaning of Section 15 of the Act as follows:
(i) against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, arising out of any untrue
statement or alleged untrue statement of a material fact contained in
the Registration Statement (or any amendment thereto) pursuant to
which the Registrable Shares were registered under the Act, including
all documents incorporated therein by reference, or the omission or
alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein not misleading or
arising out of any untrue statement or alleged untrue statement of a
material fact contained in any Prospectus (or any amendment or
supplement thereto), including all documents incorporated therein by
reference, or the omission or alleged omission therefrom of a material
fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, to the extent of the aggregate
amount paid in settlement of any litigation, or investigation or
proceeding by any governmental agency or body, commenced or
threatened, or of any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or
omission, if such settlement is effected with the written consent of
Camden, which shall not be unreasonable withheld; and
(iii) against any and all expense whatsoever, as incurred
(including reasonable fees and disbursements of counsel), reasonably
incurred in investigating, preparing or defending against any
litigation, or investigation or proceeding by any governmental agency
or body, commenced or threatened, in each case whether or not a party,
or any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, to the
extent that any such expense is not paid under subparagraph (i) or
(ii) above;
provided, however, that the indemnity provided pursuant to this Section 2(a)
does not apply to any Investor with respect to any loss, liability, claim,
damage or expense to the extent arising out of (x) any untrue statement or
omission made in reliance upon and in conformity with written information
furnished to Camden by that Investor expressly for use in the Registration
Statement (or any amendment thereto) or the Prospectus (or any amendment or
supplement thereto) or (y) that Investor's failure to deliver an amended or
supplemental Prospectus provided by Camden if such loss, liability, claim,
damage or expense would not have arisen had such delivery occurred.
- 7 -
<PAGE> 8
2(b) Indemnification by Investors. Each Investor agrees
to indemnify and hold harmless Camden, and each of its directors and officers
(including each director and officer of Camden who signed the Registration
Statement), and each person, if any, who controls Camden within the meaning of
Section 15 of the Act, to the same extent as the indemnity contained in Section
2(a) hereof (except that any settlement described in Section 2(a)(ii) shall be
effected with the written consent of the Investor), but only insofar as such
loss, liability, claim, damage or expense arises out of or is based upon (x)
any untrue statement or omission, or alleged untrue statement or omission, made
in the Registration Statement (or any amendment thereto) or any Prospectus (or
any amendment or supplement thereto) in reliance upon and in conformity with
written information furnished to Camden by that Investor expressly for use in
the Registration Statement (or any amendment thereto) or the Prospectus (or any
amendment or supplement thereto) or (y) that Investor's failure to deliver an
amended or supplemental Prospectus provided by Camden if the loss, liability,
claim, damage or expense would not have arisen had such delivery occurred.
2(c) Conduct of Indemnification Proceedings. The
indemnified party shall give reasonably prompt notice to the indemnifying party
of any action or proceeding commenced against it in respect of which indemnity
may be sought hereunder, but failure to so notify the indemnifying party (i)
shall not relieve it from any liability which it may have under the indemnity
agreement provided in Section 2(a) or 2(b) above, unless and to the extent it
did not otherwise learn of such action and the lack of notice by the
indemnified party results in the forfeiture by the indemnifying party of
substantial rights and defenses and (ii) shall not, in any event, relieve the
indemnifying party from any obligations to the indemnified party other than the
indemnification obligation provided under Section 2(a) or 2(b) above. If the
indemnifying party so elects within a reasonable time after receipt of notice,
the indemnifying party may assume the defense of the action or proceeding at
the indemnifying party's own expense with counsel chosen by the indemnifying
party and approved by the indemnified party, which approval shall not be
unreasonably withheld; provided, however, that, if the indemnified party
reasonably determines upon advice of counsel that a conflict of interest exists
where it is advisable for the indemnified party to be represented by separate
counsel or that, upon advice of counsel, there may be legal defenses available
to it which are different from or in addition to those available to the
indemnifying party, then the indemnifying party shall not be entitled to assume
such defense and the indemnified party shall be entitled to separate counsel at
the indemnifying party's expense, provided, however, it is understood that the
indemnifying party shall not be liable for the fees, charges and disbursements
of more than one separate firm. If the indemnifying party is not entitled to
assume the defense of the action or proceeding as a result of the proviso to
the preceding sentence, the indemnifying party's counsel shall be entitled to
conduct the indemnifying party's defense and counsel for the indemnified party
shall be entitled to conduct the defense of the indemnified party, it being
understood that both such counsel will cooperate with each other to conduct the
defense of the action or proceeding as efficiently as possible. If the
indemnifying party is not so entitled to assume the defense of the action or
does not assume the defense, after having received the notice referred to in
the first sentence of this paragraph, the indemnifying party will pay the
reasonable fees and expenses of
- 8 -
<PAGE> 9
counsel for the indemnified party. In that event, however, the indemnifying
party will not be liable for any settlement effected without the written
consent of the indemnifying party. If an indemnifying party is entitled to
assume, and assumes, the defense of an action or proceeding in accordance with
this paragraph, the indemnifying party shall not be liable for any fees and
expenses of counsel for the indemnified party incurred thereafter in connection
with that action or proceeding. Unless and until a final judgment that an
indemnified party is not entitled to the costs of defense under the foregoing
provision, the indemnifying party shall reimburse promptly as they are
incurred, the indemnified party's costs of defense.
2(d) Contribution. To provide for just and equitable
contribution in circumstances in which the indemnity agreement provided for in
this Section 2 is for any reason held to be unenforceable although applicable
in accordance with its terms, Camden and each Investor shall contribute to the
aggregate losses, liabilities, claims, damages and expenses of the nature
contemplated by the indemnity agreement incurred by Camden and each Investor,
in such proportion as is appropriate to reflect the relative fault of Camden on
the one hand and of the Investor on the other, in connection with the
statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and indemnified
party shall be determined by reference to, among other things, whether the
action in question, including any untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact, has
been made by, or relates to information supplied by, the indemnifying party or
the indemnified party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent the action.
The parties hereto agree that it would not be just or
equitable if contribution pursuant to this Section 2(d) were determined by pro
rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately
preceding paragraph. Notwithstanding the provisions of this Section 2(d), no
Investor shall be required to contribute any amount in excess of the lesser of
(i) the amount by which the total price at which the Registrable Shares of that
Investor were sold to the public or (ii) the amount of any damages which that
Investor would otherwise have been required to pay by reason of the untrue
statement or omission.
Notwithstanding the foregoing, no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 2(d), each person,
if any, who controls an Investor within the meaning of Section 15 of the Act
shall have the same rights to contribution as that Investor, and each director
of Camden, each officer of Camden who signed the Registration Statement and
each person, if any, who controls Camden within the meaning of Section 15 of
the Act shall have the same rights to contribution as Camden.
- 9 -
<PAGE> 10
3. Miscellaneous.
3(a) Amendments and Waivers. The provisions of this
Agreement may not be amended, modified, supplemented or waived without the
written consent of Camden and Investors holding at least two-thirds (2/3) of
the then outstanding unregistered Registrable Shares and/or Units.
3(b) Notices. All notices and other communications
provided for or permitted hereunder shall be made in writing by hand delivery,
registered first-class mail (return receipt requested), telex, telecopier, or
any courier guaranteeing overnight delivery, to each Investor at the address
indicated on the records of Camden and the Operating Partnership and to Camden
at the address indicated below:
Camden Property Trust
3200 Southwest Freeway, Suite 1500
Houston, Texas 77027
All notices and communications shall be deemed to
have been duly given: at the time delivered by hand, if personally delivered;
three (3) business days after being deposited in the mail, postage prepaid, if
mailed; when answered back, if telexed; when receipt is acknowledged, if
telecopied; or at the time delivered, if delivered by an air courier
guaranteeing overnight delivery.
3(c) Assignment; Successors and Assigns. This Agreement
and the rights granted hereunder may not be assigned by any Investor without
the written consent of Camden; provided, however, that the rights granted
hereunder may be assigned by any Investor in connection with a transfer of
Registrable Shares or Units (i) to any affiliate of such Investor, (ii) to any
stockholder, partner, member or other owner of such Investor, (iii) to any
other Investor and (iv) to any other person to which Units may be transferred
without the consent of the general partner pursuant to the Operating
Partnership Agreement. Any permitted assignee of an Investor hereunder shall
be entitled to all of the benefits of this Agreement.
3(d) Governing Law. The laws of the State of Texas shall
govern all questions concerning the relative rights of Camden and its
shareholders and questions concerning the construction, validity and
interpretation of this Agreement, without giving effect to any choice of law or
conflict of law provision or rule (whether of the State of Texas or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of Texas.
3(e) Specific Performance. The parties hereto acknowledge
that there would be no adequate remedy at law if any party fails to perform any
of its obligations hereunder, and accordingly agree that each party, in
addition to any other remedy to which it may be entitled at law or in equity,
shall be entitled to compel specific performance of the obligations of any
- 10 -
<PAGE> 11
other party under this Agreement in accordance with the terms and conditions of
this Agreement in any court of the United States or any State thereof having
jurisdiction.
3(f) If any provision of this Agreement is held to be
illegal, invalid or unenforceable under any current or future law, and if the
rights or obligations of the parties under this Agreement would not be
materially and adversely affected thereby, such provision shall be fully
separable, and this Agreement shall be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part thereof,
the remaining provisions of this Agreement shall remain in full force and
effect and shall not be affected by the illegal, invalid or unenforceable
provision or by its severance therefrom. In lieu of such illegal, invalid or
unenforceable provision, there shall be added automatically as a part of this
Agreement, a legal, valid and enforceable provision as similar in terms to such
illegal, invalid or unenforceable provision as may be possible, and the parties
hereto request the court or any arbitrator to whom disputes relating to this
Agreement are submitted to reform the otherwise illegal, invalid or
unenforceable provision in accordance with this Section 3(f).
3(g) Descriptive Headings. The descriptive headings of
this Agreement are inserted for convenience only and do not constitute a part
of this Agreement.
3(h) Entire Agreement. This Agreement is intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties
hereto in respect of the subject matter contained herein. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such subject matter.
3(i) Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, any one of which need not contain
the signatures of more than one party, but all such counterparts taken together
will constitute one and the same Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be duly executed on its behalf as of the date first written above.
CAMDEN PROPERTY TRUST,
a Texas Real Estate Investment Trust
By: /s/ Richard J. Campo
-----------------------------------
Name: Richard J. Campo
---------------------------------
Title: Chairman of the Board and Chief
Executive Officer
- 11 -
<PAGE> 12
CAMDEN OPERATING, L.P.
By: CPT-GP, Inc.,
General Partner
By: /s/ D. Keith Oden
--------------------------------
Name: D. Keith Oden
------------------------------
Title: President
-----------------------------
INVESTORS:
PGI ASSOCIATES, L.P.
By: Texas PGI, Inc., a Texas corporation
General Partner
By: /s/ William R. Cooper
--------------------------------
Name: William R. Cooper
------------------------------
Title:
-----------------------------
FWP, L.P.
By: FW Genpar Inc.
General Partner
By: /s/ Thomas R. Delatour, Jr.
--------------------------------
Thomas R. Delatour, Jr.
WRC HOLDINGS, INC.
By: /s/ William R. Cooper
-----------------------------------
William R. Cooper, President
- 12 -
<PAGE> 13
GATEWAY MALL ASSOCIATES I, L.P.
By: Block 184 Associates, L.P.
General Partner
By: St. Louis Gateway One
Partners Company, L.P.
Managing General Partner
By: /s/ Lewis A. Levey
---------------------------
Lewis A. Levey,
Managing General Partner
FULCOR INVESTMENT CO.
By: /s/ Irving Fuller
-----------------------------------
Irving Fuller, General Partner
By: /s/ Bruce Corwin
-----------------------------------
Bruce Corwin, General Partner
/s/ Allen Gilbert
--------------------------------------
Allen Gilbert
FULLER FINANCIAL CO.
By: /s/ Irving Fuller
-----------------------------------
Irving Fuller
/s/ William R. Cooper
---------------------------------------
William R. Cooper
- 13 -
<PAGE> 14
/s/ Lewis A. Levey
---------------------------------------
Lewis A. Levey
/s/ Don M. Shine
---------------------------------------
Don M. Shine
/s/ Jerry J. Bonner
---------------------------------------
Jerry J. Bonner
/s/ Ward A. Katz
---------------------------------------
Ward A. Katz
- 14 -
<PAGE> 15
EXHIBIT A
INVESTORS
<TABLE>
<CAPTION>
Number of Registrable Number of Registrable
Shares Based on Units Shares Based on Camden Shares
Owned Owned
Investor After the Merger After the Merger
-------- ---------------- ----------------
<S> <C> <C>
PGI Associates, L.P. 1,407,495 0
FWP, L.P. 571,278 380,800
Gateway Mall Associates I, L.P. 240,941 0
Fulcor Investment Co. 21,899 0
Allen Gilbert 743 0
Fuller Financial Co. 26,955 0
WRC Holdings, Inc. 21,978 0
William R. Cooper 22,972 0
Lewis A. Levey 8,131 0
Don M. Shine 22,972 0
Jerry J. Bonner 1,276 0
Ward A. Katz 5,521 0
</TABLE>
*Assumes .64 Exchange Ratio.
<PAGE> 1
EXHIBIT 99.2
-----------------------------------------
THIRD AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
CAMDEN OPERATING, L.P.
DATED AS OF APRIL 15, 1997
-----------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I DEFINED TERMS ........................................................................................2
ARTICLE II ORGANIZATIONAL MATTERS ..............................................................................13
Section 2.1 Organization..........................................................................13
Section 2.2 Name..................................................................................13
Section 2.3 Registered Office and Agent; Principal Office.........................................13
Section 2.4 Power of Attorney.....................................................................13
Section 2.5 Term..................................................................................14
ARTICLE III PURPOSE............................................................................................15
Section 3.1 Purpose and Business..................................................................15
Section 3.2 Powers................................................................................15
ARTICLE IV CAPITAL CONTRIBUTIONS AND ISSUANCES
OF PARTNERSHIP INTERESTS.........................................................................................16
Section 4.1 Capital Contributions of the Partners.................................................16
Section 4.2 Issuances of Partnership Interests....................................................17
Section 4.3 Minimum Percentage Interest of General Partner........................................18
Section 4.4 No Preemptive Rights..................................................................18
Section 4.5 Other Contribution Provisions.........................................................18
Section 4.6 No Interest on Capital................................................................19
ARTICLE V DISTRIBUTIONS.........................................................................................19
Section 5.1 Requirement and Characterization of Distributions.....................................19
Section 5.2 Amounts Withheld......................................................................22
Section 5.3 Distributions Upon Liquidation........................................................22
Section 5.4 Amendments to Reflect Issuance of Additional Partnership
Interests.............................................................................22
ARTICLE VI ALLOCATIONS..........................................................................................22
Section 6.1 Allocations For Capital Account Purposes..............................................22
Section 6.2 Amendments to Allocations to Reflect Issuance of Additional
Partnership Interests.................................................................24
ARTICLE VII MANAGEMENT AND OPERATIONS OF BUSINESS ............................................................24
Section 7.1 Management ...........................................................................24
Section 7.2 Certificate of Limited Partnership....................................................27
Section 7.3 Restrictions on General Partner's Authority...........................................28
Section 7.4 Reimbursement of the General Partner..................................................28
Section 7.5 Outside Activities of the General Partner.............................................29
Section 7.6 Contracts with Affiliates.............................................................30
Section 7.7 Indemnification.......................................................................30
Section 7.8 Liability of the General Partner......................................................32
Section 7.9 Other Matters Concerning the General Partner..........................................33
</TABLE>
(i)
<PAGE> 3
<TABLE>
<S> <C>
Section 7.10 Title to Partnership Assets...........................................................34
Section 7.11 Reliance by Third Parties.............................................................34
ARTICLE VIII RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS .......................................................35
Section 8.1 Limitation of Liability...............................................................35
Section 8.2 Management of Business................................................................35
Section 8.3 Outside Activities of Limited Partners................................................35
Section 8.4 Return of Capital.....................................................................35
Section 8.5 Rights of Limited Partners Relating to the Partnership................................36
Section 8.6 Redemption Right......................................................................37
ARTICLE IX BOOKS, RECORDS, ACCOUNTING AND REPORTS .............................................................39
Section 9.1 Records and Accounting................................................................39
Section 9.2 Fiscal Year...........................................................................40
Section 9.3 Reports...............................................................................40
ARTICLE X TAX MATTERS .........................................................................................40
Section 10.1 Preparation of Tax Returns............................................................40
Section 10.2 Tax Elections.........................................................................41
Section 10.3 Tax Matters Partner...................................................................41
Section 10.4 Organizational Expenses...............................................................42
Section 10.5 Withholding...........................................................................42
ARTICLE XI TRANSFERS AND WITHDRAWALS ...........................................................................43
Section 11.1 Transfer..............................................................................43
Section 11.2 Transfers of Partnership Interests of General Partner.................................43
Section 11.3 Limited Partners' Rights to Transfer..................................................44
Section 11.4 Substituted Limited Partners..........................................................45
Section 11.5 Assignees.............................................................................46
Section 11.6 General Provisions....................................................................46
ARTICLE XII ADMISSION OF PARTNERS...............................................................................47
Section 12.1 Admission of Successor General Partner................................................47
Section 12.2 Admission of Additional Limited Partners..............................................47
Section 12.3 Amendment of Agreement and Certificate of Limited Partnership.........................48
ARTICLE XIII DISSOLUTION AND LIQUIDATION........................................................................48
Section 13.1 Dissolution...........................................................................48
Section 13.2 Winding Up............................................................................49
Section 13.3 Compliance with Timing Requirements of Regulations....................................51
Section 13.4 Deemed Distribution and Recontribution................................................51
Section 13.5 Rights of Limited Partners............................................................51
Section 13.6 Notice of Dissolution.................................................................51
Section 13.7 Termination of Partnership and Cancellation of Certificate of
Limited Partnership...................................................................51
Section 13.8 Reasonable Time for Winding Up........................................................52
Section 13.9 Waiver of Partition...................................................................52
</TABLE>
(ii)
<PAGE> 4
<TABLE>
<S> <C>
Section 13.10 Liability of Liquidator...............................................................52
ARTICLE XIV AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS........................................................52
Section 14.1 Amendments............................................................................52
Section 14.2 Meetings of the Partners..............................................................54
ARTICLE XV GENERAL PROVISIONS...................................................................................55
Section 15.1 Addresses and Notice..................................................................55
Section 15.2 Titles and Captions...................................................................55
Section 15.3 Pronouns and Plurals..................................................................55
Section 15.4 Further Action........................................................................55
Section 15.5 Binding Effect........................................................................55
Section 15.6 Creditors.............................................................................55
Section 15.7 Waiver................................................................................56
Section 15.8 Counterparts..........................................................................56
Section 15.9 Applicable Law........................................................................56
Section 15.10 Invalidity of Provisions..............................................................56
Section 15.11 Entire Agreement......................................................................56
Section 15.12 Guaranty by CPT.......................................................................56
Section 15.13 No Rights as Shareholders.............................................................56
Section 15.14 Limitation to Preserve REIT Status....................................................57
</TABLE>
(iii)
<PAGE> 5
EXHIBIT A
PARTNERS AND
PARTNERSHIP INTERESTS
EXHIBIT B
CAPITAL ACCOUNT MAINTENANCE
EXHIBIT C
SPECIAL ALLOCATION RULES
EXHIBIT D
NOTICE OF REDEMPTION
(iv)
<PAGE> 6
THIRD AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
CAMDEN OPERATING, L.P.
This Third Amended and Restated Agreement of Limited Partnership,
Dated as of , 1997, is entered into by and among CPT-GP, Inc. ("CPT GP"),
a Delaware corporation and a wholly owned subsidiary of Camden Subsidiary, Inc.
("Camden Subsidiary"), a Delaware corporation, in turn a wholly owned
subsidiary of Camden Property Trust ("CPT"), a Texas real estate investment
trust, as the General Partner of the Partnership, and (i) PGI Associates, L.P.,
("PGI Associates") a Texas limited partnership, (ii) CPT-LP, Inc. ("CPT LP"), a
Delaware corporation and a wholly owned subsidiary of Camden Subsidiary, and
(iii) FWP, L.P., a Texas limited partnership, each as a Limited Partner,
together with those other Persons whose names are set forth on Exhibit A
attached hereto as additional Limited Partners and any other Persons who become
Partners in the Partnership as provided herein. CPT is a party to this
Agreement solely for purposes of Sections 4.2.B, 5.1.C, 7.4, 7.5, 7.7, 7.8,
8.6, 11.2, and 15.12.
WHEREAS, the Partnership was formed on December 31, 1993, and on July
27, 1994, the Partnership adopted the First Amended and Restated Agreement of
Limited Partnership of Paragon Group L.P. and on November 1, 1994, the
Partnership adopted the Second Amended and Restated Agreement of Limited
Partnership of Paragon Group L.P. (the "Prior Agreement"); and
WHEREAS, the Partnership desires to amend and restate the Prior
Agreement to change the name of the Partnership to Camden Operating, L.P. and
to implement various other changes in connection with the merger of Paragon
Group, Inc., the former parent corporation of CPT GP, with Camden Subsidiary
pursuant to the Merger Agreement (as defined);
WHEREAS, in connection with this amendment and restatement, the
Partnership desires to restate the number of Partnership Units held by each
Partner so that, after giving effect to this amendment and restatement, the
number of Partnership Units held by each Partner shall be equal to the product
of (i) the number of Partnership Units held by such Partner immediately prior
to the Effective Date multiplied by (ii) the fraction of a share of CPT that
each holder of one share of Paragon Group, Inc. received in connection with the
merger of Paragon Group, Inc. with Camden Subsidiary pursuant to the Merger
Agreement (determined without regard to provisions of the Merger Agreement
related to fractional shares);
NOW, THEREFORE, in consideration of the mutual covenants set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby amend
and restate the Prior Agreement in its entirety and agree to continue the
Partnership as a limited partnership under the Delaware Revised Uniform Limited
Partnership Act, as amended from time to time, as follows:
- 1 -
<PAGE> 7
ARTICLE I
DEFINED TERMS
The following definitions shall be for all purposes, unless otherwise
clearly indicated to the contrary, applied to the terms used in this Agreement.
"Act" means the Delaware Revised Uniform Limited Partnership Act, as
it may be amended from time to time, and any successor to such statute.
"Additional Limited Partner" means a Person admitted to the
Partnership as a Limited Partner pursuant to Section 12.2 hereof and who is
shown as such on the books and records of the Partnership.
"Adjusted Capital Account" means the Capital Account maintained for
each Partner as of the end of each Partnership Year (i) increased by any
amounts which such Partner is obligated to restore pursuant to any provision of
this Agreement or is deemed to be obligated to restore pursuant to the
penultimate sentences of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5)
and (ii) decreased by the items described in Regulations Sections
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) and 1.704-1(b)(2)(ii)(d)(6).
The foregoing definition of Adjusted Capital Account is intended to comply with
the provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall be
interpreted consistently therewith.
"Adjusted Capital Account Deficit" means, with respect to any Partner,
the deficit balance, if any, in such Partner's Adjusted Capital Account as of
the end of the relevant Partnership Year.
"Adjusted Property" means any property the Carrying Value of which has
been adjusted pursuant to Exhibit B hereto. [Once an Adjusted Property is
deemed distributed by, and recontributed to, the Partnership for federal income
tax purposes upon a termination thereof pursuant to Section 708 of the Code,
such property shall thereafter constitute a Contributed Property until the
Carrying Value of such property is further adjusted pursuant to Section 1.D of
Exhibit B hereto.] [TO BE DELETED IF PROPOSED REGULATIONS ARE ADOPTED.]
"Affiliate" means, with respect to any Person, (i) any Person directly
or indirectly controlling, controlled by or under common control with such
Person, (ii) any Person owning or controlling ten percent (10%) or more of the
outstanding voting interests of such Person, (iii) any Person of which such
Person owns or controls ten percent (10%) or more of the voting interests or
(iv) any officer, director, general partner or trustee of such Person or any
Person referred to in clauses (i), (ii), and (iii) above. For purposes of this
definition, "control," when used with respect to any Person, means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise,
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Agreed Value" means (i) in the case of any Contributed Property, the
704(c) Value of such property as of the time of its contribution to the
Partnership, reduced by any liabilities either assumed by the Partnership upon
such contribution or to which such property is subject when contributed; and
(ii) in the case of any property distributed to a Partner by the Partnership,
the Partnership's Carrying
- 2 -
<PAGE> 8
Value of such property at the time such property is distributed, reduced by any
indebtedness either assumed by such Partner upon such distribution or to which
such property is subject at the time of distribution as determined under
Section 752 of the Code and the Regulations thereunder.
"Agreement" means this Third Amended and Restated Agreement of Limited
Partnership, as it may be amended, supplemented or restated from time to time.
"Assignee" means a Person to whom one or more Partnership Units have
been transferred in a manner permitted under this Agreement, but who has not
become a Substituted Limited Partner, and who has the rights set forth in
Section 11.5 hereof.
"Available Cash" means, with respect to any period for which such
calculation is being made:
(a) all cash received by the Partnership from whatever source
(excluding the proceeds of any Capital Contribution) plus the amount of any
reduction (including, without limitation, a reduction resulting because the
General Partner determines such amounts are no longer necessary) in reserves of
the Partnership, which reserves are referred to in clause (b)(iv) below;
(b) less the sum of the following (except to the extent made with the
proceeds of any Capital Contribution):
(i) all interest, principal and other debt payments made
during such period by the Partnership,
(ii) all cash expenditures (including capital expenditures)
made by the Partnership during such period (including any
payments made by the Partnership as the result of the exercise
by a Limited Partner of the Redemption Right),
(iii) investments in any entity (including loans made
thereto) to the extent that such investments are permitted under
this Agreement and are not otherwise described in clauses (b)(i)
or (ii),
(iv) the amount of any increase in reserves (whether for
contingencies, working capital or otherwise) established during
such period which the General Partner determines is necessary or
appropriate in its reasonable discretion, and
(v) all distributions previously made by the Partnership
with respect to such period.
Notwithstanding the foregoing, Available Cash shall not include any
cash received or reductions in reserves, or take into account any disbursements
made or reserves established, after commencement of the dissolution and
liquidation of the Partnership.
"Book-Tax Disparities" means, with respect to any item of Contributed
Property or Adjusted Property, as of the date of any determination, the
difference between the Carrying Value of such Contributed Property or Adjusted
Property and the adjusted basis thereof for federal income tax purposes as of
such date. A Partner's share of the Partnership's Book-Tax Disparities in all
of its
- 3 -
<PAGE> 9
Contributed Property and Adjusted Property will be reflected by the difference
between such Partner's Capital Account balance as maintained pursuant to
Exhibit B hereto and the hypothetical balance of such Partner's Capital Account
computed as if it had been maintained, with respect to each such Contributed
Property or Adjusted Property, strictly in accordance with federal income tax
accounting principles.
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in New York, New York are authorized or required by law
to close.
"Capital Account" means the Capital Account maintained for a Partner
pursuant to Exhibit B hereto. The Capital Account balance of each Partner who
is a Partner on the Effective Date shall be set forth opposite such Partner's
name on Exhibit A hereto.
"Capital Contribution" means, with respect to any Partner, any cash,
cash equivalents or the Agreed Value of Contributed Property which such Partner
contributes or is deemed to contribute to the Partnership pursuant to Section
4.1, 4.2, or 4.3 hereof.
"Carrying Value" means (i) with respect to a Contributed Property or
Adjusted Property, the 704(c) Value of such property reduced (but not below
zero) by all Depreciation with respect to such Contributed Property or Adjusted
Property, as the case may be, charged to the Partners' Capital Accounts and
(ii) with respect to any other Partnership property, the adjusted basis of such
property for federal income tax purposes, all as of the time of determination.
The Carrying Value of any property shall be adjusted from time to time in
accordance with Exhibit B hereto, and to reflect changes, additions or other
adjustments to the Carrying Value for dispositions and acquisitions of
Partnership properties, as deemed appropriate by the General Partner.
"Cash Amount" means an amount of cash equal to the Value on the
Valuation Date of the Shares Amount.
"Certificate" means the Certificate of Limited Partnership relating to
the Partnership filed in the office of the Delaware Secretary of State, as
amended from time to time in accordance with the terms hereof and the Act.
"Class A" has the meaning set forth in Section 5.1.D hereof.
"Class A Share" has the meaning set forth in Section 5.1.D hereof.
"Class A Unit" means any Partnership Unit that is not specifically
designated by the General Partner as being of another specified class of
Partnership Units.
"Class B" has the meaning set forth in Section 5.1.D hereof.
"Class B Share" has the meaning set forth in Section 5.1.D hereof.
"Class B Unit" means a Partnership Unit that is specifically
designated by the General Partner as being a Class B Unit.
- 4 -
<PAGE> 10
"Code" means the Internal Revenue Code of 1986, as amended and in
effect from time to time, as interpreted by the applicable regulations
thereunder. Any reference herein to a specific section or sections of the Code
shall be deemed to include a reference to any corresponding provision of future
law.
"Consent" means the consent or approval of a proposed action by a
Partner given in accordance with Section 14.2 hereof.
"Consent of the Outside Limited Partners" means the Consent of Limited
Partners (excluding for this purpose any Limited Partner Interests held by the
General Partner, by CPT LP, by any Person of which either the General Partner
or CPT LP owns or controls more than fifty percent (50%) of the voting
interests, or by any Person owning or controlling, directly or indirectly, more
than fifty percent (50%) of the outstanding voting interests of either the
General Partner or CPT LP) holding Percentage Interests that are greater than
fifty percent (50%) of the aggregate Percentage Interests of all Limited
Partners who are not excluded for the purposes hereof.
"Contributed Property" means each property or other asset contributed
to the Partnership, in such form as may be permitted by the Act, but excluding
cash contributed or deemed contributed to the Partnership [(and also excluding
deemed contributions to the Partnership on termination and recontribution
thereof pursuant to Section 708 of the Code)]. [TO BE DELETED IF PROPOSED
REGULATIONS ARE ADOPTED.] Once the Carrying Value of a Contributed Property is
adjusted pursuant to Exhibit B hereto, such property shall no longer constitute
a Contributed Property for purposes of Exhibit B hereto, but shall be deemed an
Adjusted Property for such purposes.
"Conversion Factor" means 1.0; provided that in the event that the
General Partner Entity (i) declares or pays a dividend on its outstanding
Shares in Shares or makes a distribution to all holders of its outstanding
Shares in Shares, (ii) subdivides its outstanding Shares or (iii) combines its
outstanding Shares into a smaller number of Shares, the Conversion Factor shall
be adjusted by multiplying the Conversion Factor by a fraction, the numerator
of which shall be the number of Shares issued and outstanding on the record
date for such dividend, distribution, subdivision or combination (assuming for
such purposes that such dividend, distribution, subdivision or combination has
occurred as of such time) and the denominator of which shall be the actual
number of Shares (determined without the above assumption) issued and
outstanding on the record date for such dividend, distribution, subdivision or
combination and; provided further that in the event that one entity shall cease
to be the General Partner Entity (the "Predecessor Entity") and another entity
shall become the General Partner Entity (the "Successor Entity"), the
Conversion Factor shall be adjusted by multiplying the Conversion Factor by a
fraction, the numerator of which is the Value of one Share of the Predecessor
Entity, determined as of the time immediately prior to when the Successor
Entity becomes the General Partner Entity, and the denominator of which is the
Value of one Share of the Successor Entity, determined as of that same date.
(For purposes of the second proviso in the preceding sentence, in the event
that any shareholders of the Predecessor Entity will receive consideration in
connection with the transaction in which the Successor Entity becomes the
General Partner Entity, the numerator in the fraction described above for
determining the adjustment to the Conversion Factor (that is, the Value of one
Share of the Predecessor Entity) shall be the sum of the greatest amount of
cash and the fair market value of any securities and other consideration that
the holder of one Share in the Predecessor Entity could have received in such
transaction (determined without regard to any provisions governing fractional
shares)). Any adjustment to the Conversion
- 5 -
<PAGE> 11
Factor shall become effective immediately after the effective date of the event
giving rise thereto, retroactive to the record date, if any, for such event; it
being intended that (x) adjustments to the Conversion Factor are to be made in
order to avoid unintended dilution or anti-dilution as a result of transactions
in which Shares are issued, redeemed, or exchanged without a corresponding
issuance, redemption or exchange of Partnership Units and (y) if a Specified
Redemption Date shall fall between the record date and the effective date of
any event of the type described above, that the Conversion Factor applicable to
such redemption shall be adjusted to take into account such event.
"Debt" means, as to any Person, as of any date of determination, (i)
all indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services, (ii) all amounts owed by such Person to banks or
other Persons in respect of reimbursement obligations under letters of credit,
surety bonds and other similar instruments guaranteeing payment or other
performance of obligations by such Person, (iii) all indebtedness for borrowed
money or for the deferred purchase price of property or services secured by any
lien on any property owned by such Person, to the extent attributable to such
Person's interest in such property, even though such Person has not assumed or
become liable for the payment thereof, and (iv) obligations of such Person
incurred in connection with entering into a lease which, in accordance with
generally accepted accounting principles, should be capitalized.
"Declaration of Trust" means the Amended and Restated Declaration of
Trust of CPT filed in the office of the Secretary of State of Texas on July 19,
1993, as amended, or other organizational document governing CPT or any
successor General Partner Entity, as amended or restated from time to time.
"Depreciation" means, for each Partnership Year, an amount equal to
the federal income tax depreciation, amortization, or other cost recovery
deduction allowable with respect to an asset for such year, except that if the
Carrying Value of an asset differs from its adjusted basis for federal income
tax purposes at the beginning of such year or other period, Depreciation shall
be an amount which bears the same ratio to such beginning Carrying Value as the
federal income tax depreciation, amortization, or other cost recovery deduction
for such year bears to such beginning adjusted tax basis; provided, however,
that if the federal income tax depreciation, amortization, or other cost
recovery deduction for such year is zero, Depreciation shall be determined with
reference to such beginning Carrying Value using any reasonable method selected
by the General Partner.
"Distribution Period" has the meaning set forth in Section 5.1.D
hereof.
"Effective Date" means the date on which the merger of Paragon Group,
Inc. with Camden Subsidiary, as contemplated by the Merger Agreement, is
consummated.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"General Partner" means CPT GP, a Delaware corporation, or its
successors as general partner of the Partnership.
- 6 -
<PAGE> 12
"General Partner Entity" means CPT; provided, however, that if (i) the
shares of beneficial interest (or other comparable common equity interests) of
CPT or any successor General Partner Entity are at any time not Publicly Traded
and (ii) the shares of common stock (or other comparable equity interests) of
an entity that owns, directly or indirectly, fifty percent (50%) or more of the
shares of common stock (or other comparable equity interests) of either the
General Partner, CPT, or any other successor General Partner Entity are
Publicly Traded, the term "General Partner Entity" shall refer to such entity
whose shares of common stock (or other comparable equity securities) are
Publicly Traded.
"General Partner Payment" has the meaning set forth in Section 15.14
hereof.
"General Partner Interest" means a Partnership Interest held by the
General Partner in the capacity of a general partner. A General Partner
Interest may be expressed as a number of Partnership Units.
"IRS" means the Internal Revenue Service, which administers the
internal revenue laws of the United States.
"Immediate Family" means, with respect to any natural Person, such
natural Person's spouse, parent's, descendants, nephews, nieces, brothers and
sisters.
"Incapacity" or "Incapacitated" means, (i) as to any individual
Partner, death, total physical disability or entry by a court of competent
jurisdiction adjudicating such Partner incompetent to manage such Person's
affairs or estate, (ii) as to any corporation which is a Partner, the filing of
a certificate of dissolution, or its equivalent, for the corporation or the
revocation of its charter, (iii) as to any partnership which is a Partner, the
dissolution and commencement of winding up of the partnership, (iv) as to any
trustee of a trust which is a Partner, the termination of the trust (but not
the substitution of a new trustee) or (v) as to any Partner, the bankruptcy of
such Partner. For purposes of this definition, bankruptcy of a Partner shall be
deemed to have occurred when (a) the Partner commences a voluntary proceeding
seeking liquidation, reorganization or other relief of or against such Partner
under any bankruptcy, insolvency or other similar law now or hereafter in
effect, (b) the Partner is adjudged as bankrupt or insolvent, or a final and
nonappealable order for relief under any bankruptcy, insolvency or similar law
now or hereafter in effect has been entered against the Partner, (c) the
Partner executes and delivers a general assignment for the benefit of the
Partner's creditors, (d) the Partner files an answer or other pleading
admitting or failing to contest the material allegations of a petition filed
against the Partner in any proceeding of the nature described in clause (b)
above, (e) the Partner seeks, consents to or acquiesces in the appointment of a
trustee, receiver or liquidator for the Partner or for all or any substantial
part of the Partner's properties, (f) any proceeding seeking liquidation,
reorganization or other relief of or against such Partner under any bankruptcy,
insolvency or other similar law now or hereafter in effect has not been
dismissed within one hundred twenty (120) days after the commencement thereof,
(g) the appointment without the Partner's consent or acquiescence of a trustee,
receiver or liquidator that has not been vacated or stayed within ninety (90)
days of such appointment or (h) an appointment referred to in clause (g) is not
vacated within ninety (90) days after the expiration of any such stay.
"Indemnitee" means (i) any Person made a party to a proceeding or
threatened with being made a party to a proceeding by reason of the Person's
status as (A) the General Partner, (B) a
- 7 -
<PAGE> 13
Limited Partner or (C) a director, officer, employee or agent of the
Partnership or the General Partner or an Affiliate and (ii) such other Persons
(including Affiliates of the General Partner, a Limited Partner or the
Partnership) as the General Partner may designate from time to time (whether
before or after the event giving rise to potential liability), in its sole and
absolute discretion.
"Limited Partner" means PGI Associates, CPT LP, FWP, L.P. and any
other Person named as a Limited Partner in Exhibit A attached hereto, as such
Exhibit may be amended and restated from time to time, or any Substituted
Limited Partner or Additional Limited Partner, in such Person's capacity as a
Limited Partner in the Partnership.
"Limited Partner Interest" means a Partnership Interest held by a
Limited Partner in the Partnership in the capacity of a limited partner
representing a fractional part of the Partnership Interests of all Limited
Partners. A Limited Partner Interest may be expressed as a number of
Partnership Units.
"Liquidating Event" has the meaning set forth in Section 13.1 hereof.
"Liquidator" has the meaning set forth in Section 13.2.A hereof.
"Merger Agreement" means the Agreement and Plan of Merger, dated as of
December 16, 1996, among Paragon Group, Inc., CPT, and Camden Subsidiary.
"Net Income" means, for any taxable period, the excess, if any, of the
Partnership's items of income and gain for such taxable period over the
Partnership's items of loss and deduction for such taxable period. The items
included in the calculation of Net Income shall be determined in accordance
with Exhibit B hereto. If an item of income, gain, loss or deduction that has
been included in the initial computation of Net Income is subjected to the
special allocation rules in Exhibit C hereto, Net Income or the resulting Net
Loss, whichever the case may be, shall be recomputed without regard to such
item.
"Net Loss" means, for any taxable period, the excess, if any, of the
Partnership's items of loss and deduction for such taxable period over the
Partnership's items of income and gain for such taxable period. The items
included in the calculation of Net Loss shall be determined in accordance with
Exhibit B hereto. If an item of income, gain, loss or deduction that has been
included in the initial computation of Net Loss is subjected to the special
allocation rules in Exhibit C hereto, Net Loss or the resulting Net Income,
whichever the case may be, shall be recomputed without regard to such item.
"New Securities" means any rights, options, warrants or convertible or
exchangeable securities having the right to subscribe for or purchase Shares or
other shares of capital stock (or other comparable equity interest) of the
General Partner Entity.
"Nonrecourse Built-in Gain" means, with respect to any Contributed
Properties or Adjusted Properties that are subject to a mortgage or negative
pledge securing a Nonrecourse Liability, the amount of any taxable gain that
would be allocated to the Partners pursuant to Section 2.B of Exhibit C hereto
if such properties were disposed of in a taxable transaction in full
satisfaction of such liabilities and for no other consideration.
- 8 -
<PAGE> 14
"Nonrecourse Deductions" has the meaning set forth in Regulations
Section 1.704-2(b)(1), and the amount of Nonrecourse Deductions for a
Partnership Year shall be determined in accordance with the rules of
Regulations Section 1.704-2(c).
"Nonrecourse Liability" has the meaning set forth in Regulations
Section 1.752-1(a)(2).
"Notice of Redemption" means a Notice of Redemption substantially in
the form of Exhibit D hereto.
"Partner" means the General Partner or a Limited Partner, and
"Partners" means the General Partner and the Limited Partners.
"Partner Minimum Gain" means an amount, with respect to each Partner
Nonrecourse Debt, equal to the Partnership Minimum Gain that would result if
such Partner Nonrecourse Debt were treated as a Nonrecourse Liability,
determined in accordance with Regulations Section 1.704-2(i)(3).
"Partner Nonrecourse Debt" has the meaning set forth in Regulations
Section 1.704-2(b)(4).
"Partner Nonrecourse Deductions" has the meaning set forth in
Regulations Section 1.704-2(i)(2), and the amount of Partner Nonrecourse
Deductions with respect to a Partner Nonrecourse Debt for a Partnership Year
shall be determined in accordance with the rules of Regulations Section
1.704-2(i)(2).
"Partnership" means the limited partnership formed under the Act and
continued upon the terms and conditions set forth in this Agreement, and any
successor thereto.
"Partnership Interest" means a Limited Partner Interest or the General
Partner Interest and includes any and all benefits to which the holder of such
may be entitled as provided in this Agreement, together with all obligations of
such Person to comply with the terms and provisions of this Agreement. A
Partnership Interest may be expressed as a number of Partnership Units.
"Partnership Minimum Gain" has the meaning set forth in Regulations
Section 1.704-2(b)(2), and the amount of Partnership Minimum Gain, as well as
any net increase or decrease in Partnership Minimum Gain, for a Partnership
Year shall be determined in accordance with the rules of Regulations Section
1.704-2(d).
"Partnership Record Date" means the record date established by the
General Partner either (i) for the distribution of Available Cash pursuant to
Section 5.1 hereof, which record date shall be the same as the record date
established by the General Partner Entity for a distribution to its
shareholders, or (ii) if applicable, for determining the Partners entitled to
vote on or consent to any proposed action for which the Consent or approval of
the Partners is sought pursuant to Section 14.2 hereof.
"Partnership Unit" means a fractional, undivided share of the
Partnership Interests of all Partners issued pursuant to Sections 4.1 and 4.2
hereof, and includes Class A Units, Class B Units and any other classes or
series of Partnership Units established after the date hereof. The number of
Partnership Units outstanding and the Percentage Interests in the Partnership
represented by such
- 9 -
<PAGE> 15
Partnership Units are set forth in Exhibit A hereto, as such Exhibit may be
amended and restated from time to time. The term Partnership Units as used in
this Agreement refers to the Partnership Units as restated on the Effective
Date pursuant to Section 4.1.A. The ownership of Partnership Units may be
evidenced by a certificate in a form approved by the General Partner.
"Partnership Year" means the fiscal year of the Partnership, which
shall be the calendar year.
"Percentage Interest" means, as to a Partner holding a class of
Partnership Interests, its interest in such class, determined by dividing the
Partnership Units of such class owned by such Partner by the total number of
Partnership Units of such class then outstanding as specified in Exhibit A
attached hereto, as such exhibit may be amended and restated from time to time,
multiplied by the aggregate Percentage Interest allocable to such class of
Partnership Interests. In the event that the Partnership shall at any time have
outstanding more than one class of Partnership Interests, the Percentage
Interest attributable to each class of Partnership Interests, relative to other
classes of Partnership Interests, shall be determined by the General Partner,
using its reasonable discretion, based upon the relative economic rights of
such classes of Partnership Interests.
"Person" means a natural person, partnership (whether general or
limited), trust, estate, association, corporation, limited liability company,
unincorporated organization, custodian, nominee or any other individual or
entity in its own or any representative capacity.
"Prior Agreement" means the Second Amended and Restated Agreement of
Limited Partnership of Paragon Group L.P., dated as of November 1, 1994, as
amended and restated prior to the date hereof, which Prior Agreement is amended
and restated in its entirety by this Agreement.
"Publicly Traded" means listed or admitted to trading on the New York
Stock Exchange, the American Stock Exchange or another national securities
exchange or designated for quotation on the NASDAQ National Market System, or
any successor to any of the foregoing.
"Recapture Income" means any gain recognized by the Partnership
(computed without regard to any adjustment required by Sections 734, 743, and
754 of the Code) upon the disposition of any property or asset of the
Partnership, which gain is characterized as ordinary income because it
represents the recapture of deductions previously taken with respect to such
property or asset.
"Redeeming Partner" has the meaning set forth in Section 8.6.A hereof.
"Redemption Amount" means either the Cash Amount or the Shares Amount,
as determined by the General Partner in its sole and absolute discretion;
provided that in the event that the Shares are not Publicly Traded at the time
a Redeeming Partner exercises its Redemption Right, the Redemption Amount shall
be paid only in the form of the Cash Amount unless the Redeeming Partner and
the General Partner agree to the contrary.
"Redemption Right" has the meaning set forth in Section 8.6.A hereof.
"Regulations" means the Income Tax Regulations promulgated under the
Code, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
- 10 -
<PAGE> 16
"REIT" means a real estate investment trust under Sections 856 through
859 of the Code.
"Residual Gain" or "Residual Loss" means any item of gain or loss, as
the case may be, of the Partnership recognized for federal income tax purposes
resulting from a sale, exchange or other disposition of Contributed Property or
Adjusted Property, to the extent such item of gain or loss is not allocated
pursuant to Section 2.B.(1)(b) or 2.B.(2)(b) of Exhibit C hereto to eliminate
Book-Tax Disparities.
"Securities Act" means the Securities Act of 1933, as amended.
"704(c) Value" means with respect to any Contributed Property the fair
market value of such property at the time of contribution as determined by the
General Partner using such reasonable method of valuation as it may adopt.
Subject to Exhibit B hereto, the General Partner shall, in its sole and
absolute discretion, use such method as it deems reasonable and appropriate to
allocate the aggregate of the 704(c) Values of Contributed Properties in a
single or integrated transaction among each separate property on a basis
proportional to their fair market values.
"Share" means a share of beneficial interest (or other comparable
common equity interest) of the General Partner Entity. Shares may be issued in
one or more classes or series in accordance with the terms of the Declaration
of Trust (or, if CPT is not the General Partner Entity, the organizational
documents of the General Partner Entity). In the event that there is more than
one class or series of Shares, the term "Shares" shall, as the context
requires, be deemed to refer to the class or series of Shares that correspond
to the class or series of Partnership Interests, if any, for which the
reference to Shares is made.
"Shares Amount" means a number of Shares equal to the product of the
number of Partnership Units offered for redemption by a Redeeming Partner times
the Conversion Factor; provided that, in the event the General Partner Entity
issues to all holders of Shares rights, options, warrants or convertible or
exchangeable securities entitling such holders to subscribe for or purchase
Shares or any other securities or property (collectively, the "rights"), then
the Shares Amount shall also include such rights that a holder of that number
of Shares would be entitled to receive.
"Specified Redemption Date" means the tenth Business Day after receipt
by the General Partner of a Notice of Redemption; provided that if the Shares
are not Publicly Traded, the Specified Redemption Date means the thirtieth
Business Day after receipt by the General Partner of a Notice of Redemption.
"Subsidiary" means, with respect to any Person, any corporation,
limited liability company, partnership or joint venture, or other entity of
which a majority of (i) the voting power of the voting equity securities or
(ii) the outstanding equity interests is owned, directly or indirectly, by such
Person.
"Substituted Limited Partner" means a Person who is admitted as a
Limited Partner to the Partnership pursuant to Section 11.4 hereof.
"Terminating Capital Transaction" means any sale or other disposition
of all or substantially all of the assets of the Partnership for cash or a
related series of transactions that, taken together,
- 11 -
<PAGE> 17
result in the sale or other disposition of all or substantially all of the
assets of the Partnership for cash.
"Termination Transaction" has the meaning set forth in Section 11.2.B
hereof.
"Unrealized Gain" means, with respect to any item of Partnership
property as of any date of determination, the excess, if any, of (i) the fair
market value of such property (as determined under Exhibit B hereto) as of such
date, over (ii) the Carrying Value of such property (prior to any adjustment to
be made pursuant to Exhibit B hereto) as of such date.
"Unrealized Loss" means, with respect to any item of Partnership
property as of any date of determination, the excess, if any, of (i) the
Carrying Value of such property (prior to any adjustment to be made pursuant to
Exhibit B hereto) as of such date, over (ii) the fair market value of such
property (as determined under Exhibit B hereto) as of such date.
"Valuation Date" means the date of receipt by the General Partner of a
Notice of Redemption or, if such date is not a Business Day, the first Business
Day thereafter.
"Value" means, with respect to any outstanding Shares of the General
Partner Entity that are Publicly Traded, the average of the daily market price
for the ten (10) consecutive trading days immediately preceding the date with
respect to which value must be determined or, if such date is not a Business
Day, the immediately preceding Business Day. The market price for each such
trading day shall be the closing price, regular way, on such day, or if no such
sale takes place on such day, the average of the closing bid and asked prices
on such day. In the event that the outstanding Shares of the General Partner
Entity are Publicly Traded and the Shares Amount includes rights that a holder
of Shares would be entitled to receive, then the Value of such rights shall be
determined by the General Partner acting in good faith on the basis of such
quotations and other information as it considers, in its reasonable judgment,
appropriate. In the event that the Shares of the General Partner Entity are not
Publicly Traded, the Value of the Shares Amount per Partnership Unit offered
for redemption (which will be the Cash Amount payable pursuant to Section 8.6A
hereof) means the amount that a holder of one Partnership Unit would receive if
each of the assets of the Partnership were to be sold for its fair market value
on the Specified Redemption Date, the Partnership were to pay all of its
outstanding liabilities, and the remaining proceeds were to be distributed to
the Partners in accordance with Section 13.2. Such Value shall be determined by
the General Partner, acting in good faith and based upon a commercially
reasonable estimate of the net amount of cash that would be received by the
Partnership if each asset of the Partnership were sold to an unrelated
purchaser in an arms' length transaction where neither the purchaser nor the
seller were under economic compulsion to enter into the transaction and all
Partnership Debt was paid in full.
- 12 -
<PAGE> 18
ARTICLE II
ORGANIZATIONAL MATTERS
SECTION 2.1 ORGANIZATION
The Partnership is a limited partnership organized pursuant to the
provisions of the Act and upon the terms and conditions set forth in the Prior
Agreement, as amended prior to the date hereof. The Partners hereby continue
the Partnership and amend and restate the Prior Agreement, as amended prior to
the date hereof in its entirety. Except as expressly provided herein to the
contrary, the rights and obligations of the Partners and the administration and
termination of the Partnership shall be governed by the Act. The Partnership
Interest of each Partner shall be personal property for all purposes.
SECTION 2.2 NAME
The name of the Partnership is Camden Operating, L.P. The
Partnership's business may be conducted under any other name or names deemed
advisable by the General Partner, including the name of the General Partner or
any Affiliate thereof. The words "Limited Partnership," "L.P.," "Ltd." or
similar words or letters shall be included in the Partnership's name where
necessary for the purposes of complying with the laws of any jurisdiction that
so requires. The General Partner in its sole and absolute discretion may change
the name of the Partnership at any time and from time to time and shall notify
the Limited Partners of such change in the next regular communication to the
Limited Partners.
SECTION 2.3 REGISTERED OFFICE AND AGENT; PRINCIPAL OFFICE
The registered office of the Partnership in the State of Delaware
shall be located at National Registered Agents, Inc., 9 East Loockerman Street,
Dover, Delaware 19901 and the registered agent for service of process on the
Partnership in the State of Delaware at such registered office shall be
National Registered Agents, Inc. The principal office of the Partnership shall
be 3200 Southwest Freeway, Suite 1500, Houston, Texas 77027, or such other
place as the General Partner may from time to time designate by notice to the
Limited Partners. The Partnership may maintain offices at such other place or
places within or outside the State of Delaware as the General Partner deems
advisable.
SECTION 2.4 POWER OF ATTORNEY
A. General. Each Limited Partner and each Assignee who
accepts Partnership Units (or any rights, benefits or privileges associated
therewith) is deemed to irrevocably constitute and appoint the General Partner,
any Liquidator and authorized officers and attorneys-in-fact of each, and each
of those acting singly, in each case with full power of substitution, as its
true and lawful agent and attorney-in-fact, with full power and authority in
its name, place and stead to:
(1) execute, swear to, acknowledge, deliver,
file and record in the appropriate public offices (a) all certificates,
documents and other instruments (including, without limitation, this Agreement
and the Certificate and all amendments or restatements thereof) that the
- 13 -
<PAGE> 19
General Partner or any Liquidator deems appropriate or necessary to form,
qualify or continue the existence or qualification of the Partnership as a
limited partnership (or a partnership in which the limited partners have
limited liability) in the State of Delaware and in all other jurisdictions in
which the Partnership may or plans to conduct business or own property, (b) all
instruments that the General Partner or any Liquidator deems appropriate or
necessary to reflect any amendment, change, modification or restatement of this
Agreement in accordance with its terms, (c) all conveyances and other
instruments or documents that the General Partner or any Liquidator deems
appropriate or necessary to reflect the dissolution and liquidation of the
Partnership pursuant to the terms of this Agreement, including, without
limitation, a certificate of cancellation, (d) all instruments relating to the
admission, withdrawal, removal or substitution of any Partner pursuant to, or
other events described in, Article XI, XII or XIII hereof or the Capital
Contribution of any Partner and (e) all certificates, documents and other
instruments relating to the determination of the rights, preferences and
privileges of Partnership Interests; and
(2) execute, swear to, seal, acknowledge and
file all ballots, consents, approvals, waivers, certificates and other
instruments appropriate or necessary, in the sole and absolute discretion of
the General Partner or any Liquidator, to make, evidence, give, confirm or
ratify any vote, Consent, approval, agreement or other action which is made or
given by the Partners hereunder or is consistent with the terms of this
Agreement or appropriate or necessary, in the sole discretion of the General
Partner or any Liquidator, to effectuate the terms or intent of this Agreement.
Nothing contained in this Section 2.4 shall be construed as
authorizing the General Partner or any Liquidator to amend this Agreement
except in accordance with Article XIV hereof or as may be otherwise expressly
provided for in this Agreement.
B. Irrevocable Nature. The foregoing power of attorney
is hereby declared to be irrevocable and a power coupled with an interest, in
recognition of the fact that each of the Partners will be relying upon the
power of the General Partner or any Liquidator to act as contemplated by this
Agreement in any filing or other action by it on behalf of the Partnership, and
it shall survive and not be affected by the subsequent Incapacity of any
Limited Partner or Assignee and the transfer of all or any portion of such
Limited Partner's or Assignee's Partnership Units and shall extend to such
Limited Partner's or Assignee's heirs, successors, assigns and personal
representatives. Each such Limited Partner or Assignee hereby agrees to be
bound by any representation made by the General Partner or any Liquidator,
acting in good faith pursuant to such power of attorney; and each such Limited
Partner or Assignee hereby waives any and all defenses which may be available
to contest, negate or disaffirm the action of the General Partner or any
Liquidator, taken in good faith under such power of attorney. Each Limited
Partner or Assignee shall execute and deliver to the General Partner or the
Liquidator, within fifteen (15) days after receipt of the General Partner's or
Liquidator's request therefor, such further designations, powers of attorney
and other instruments as the General Partner or the Liquidator, as the case may
be, deems necessary to effectuate this Agreement and the purposes of the
Partnership.
SECTION 2.5 TERM
The term of the Partnership commenced on December 31 1993, the date on
which the Certificate was filed in the office of the Secretary of State of the
State of Delaware in accordance
- 14 -
<PAGE> 20
with the Act, and shall continue until December 31, 2093, unless the
Partnership is dissolved sooner pursuant to the provisions of Article XIII
hereof or as otherwise provided by law.
ARTICLE III
PURPOSE
SECTION 3.1 PURPOSE AND BUSINESS
The purpose and nature of the business to be conducted by the
Partnership is (i) to conduct any business that may be lawfully conducted by a
limited partnership organized pursuant to the Act; provided, however, that such
business shall be limited to and conducted in such a manner as to permit the
General Partner Entity at all times to be classified as a REIT, unless the
General Partner Entity ceases to qualify, or is not qualified, as a REIT for
any reason or reasons not related to the business conducted by the Partnership;
(ii) to enter into any partnership, joint venture, limited liability company or
other similar arrangement to engage in any of the foregoing or the ownership of
interests in any entity engaged, directly or indirectly, in any of the
foregoing; and (iii) to do anything necessary or incidental to the foregoing.
In connection with the foregoing, and without limiting the General Partner
Entity's right in its sole discretion to cease qualifying as a REIT, the
Partners acknowledge that the status of the General Partner Entity as a REIT
inures to the benefit of all the Partners and not solely the General Partner or
its Affiliates.
SECTION 3.2 POWERS
The Partnership is empowered to do any and all acts and things
necessary, appropriate, proper, advisable, incidental to or convenient for the
furtherance and accomplishment of the purposes and business described herein
and for the protection and benefit of the Partnership, including, without
limitation, full power and authority, directly or through its ownership
interest in other entities, to enter into, perform and carry out contracts of
any kind, borrow money and issue evidences of indebtedness whether or not
secured by mortgage, deed of trust, pledge or other lien, acquire, own, manage,
improve and develop real property, and lease, sell, transfer and dispose of
real property; provided, however, that the Partnership shall not take, or shall
refrain from taking, any action which, in the judgment of the General Partner,
in its sole and absolute discretion, (i) could adversely affect the ability of
the General Partner Entity to continue to qualify as a REIT, (ii) could subject
the General Partner Entity to any additional taxes under Section 857 or Section
4981 of the Code or (iii) could violate any law or regulation of any
governmental body or agency having jurisdiction over the General Partner Entity
or its securities, unless such action (or inaction) shall have been
specifically consented to by the General Partner in writing.
- 15 -
<PAGE> 21
ARTICLE IV
CAPITAL CONTRIBUTIONS AND ISSUANCES
OF PARTNERSHIP INTERESTS
SECTION 4.1 CAPITAL CONTRIBUTIONS OF THE PARTNERS
A. Capital Contributions to the Partnership Prior to or
on the Effective Date. The Partners previously made Capital Contributions to
the Partnership, as set forth in the books and records of the Partnership. On
the Effective Date, the General Partner shall complete Exhibit A hereto to
reflect the Capital Accounts, the Partnership Units assigned to each Partner
and the Percentage Interest in the Partnership represented by such Partnership
Units. On the Effective Date, the Partnership shall restate the number of
Partnership Units held by each Partner so that, after giving effect to such
restatement, the number of Partnership Units held by each Partner shall be
equal to the product of (i) the number of Partnership Units held by such
Partner immediately prior to the Effective Date multiplied by (ii) the fraction
of a share of CPT that each holder of one share of Paragon Group, Inc. received
in connection with the merger of Paragon Group, Inc. with Camden Subsidiary
pursuant to the Merger Agreement (determined without regard to provisions of
the Merger Agreement related to fractional shares). The number of Partnership
Units, as restated, held by each Partner shall be set forth on Exhibit A
hereto. The Capital Accounts of the Partners and the Carrying Values of the
Partnership's Assets shall be restated as of the Effective Date pursuant to
Section I.D of Exhibit B hereto to reflect the Capital Contributions made prior
to or on the Effective Date, with each Partner having a Capital Account on the
Effective Date, after giving effect to any Capital Contributions to be made on
the Effective Date, equal to the product of (i) the number of Partnership Units
owned by such Partner multiplied by (ii) the Value, on the Effective Date, of
one (1) Share.
B. General Partner Interest. A number of Partnership
Units held by the General Partner equal to one percent (1%) of all outstanding
Partnership Units from time to time shall be deemed to be the Partnership Units
of the General Partner and shall be the General Partner Interest. All other
Partnership Units held by the General Partner shall be deemed to be Limited
Partner Interests and shall be held by the General Partner in its capacity as a
Limited Partner in the Partnership.
C. Capital Contributions By Merger. To the extent the
Partnership acquires any property by the merger of any other Person into the
Partnership, Persons who receive Partnership Interests in exchange for their
interests in the Person merging into the Partnership shall become Partners and
shall be deemed to have made Capital Contributions as provided in the
applicable merger agreement and as set forth in Exhibit A hereto, as amended by
the General Partner in good faith in connection with such merger.
D. No Obligation to Make Additional Capital
Contributions. Except as provided in Section 10.5 hereof, the Partners shall
have no obligation to make any additional Capital Contributions or provide any
additional funding to the Partnership (whether in the form of loans, repayments
of loans or otherwise). No Partner shall have any obligation to restore any
deficit that may exist in its Capital Account, either upon a liquidation of the
Partnership or otherwise.
- 16 -
<PAGE> 22
SECTION 4.2 ISSUANCES OF PARTNERSHIP INTERESTS
A. General. The General Partner is hereby authorized to
cause the Partnership from time to time to issue to Partners (including the
General Partner and its Affiliates) or other Persons (including, without
limitation, in connection with the contribution of property to the Partnership)
Partnership Units in one or more classes, or in one or more series of any of
such classes, with such designations, preferences and relative, participating,
optional or other special rights, powers and duties, including rights, powers
and duties senior to Limited Partner Interests, all as shall be determined by
the General Partner in its sole and absolute discretion, including, without
limitation, (i) the allocations of items of Partnership income, gain, loss,
deduction and credit to each such class or series of Partnership Interests,
(ii) the right of each such class or series of Partnership Interests to share
in Partnership distributions and (iii) the rights of each such class or series
of Partnership Interests upon dissolution and liquidation of the Partnership.
In the event that the Partnership issues Partnership Interests pursuant to this
Section 4.2.A, the General Partner shall make such amendments to this Agreement
(including but not limited to the amendments described in Section 5.4, Section
6.2 and Section 8.6.E hereof) as it deems necessary to reflect the issuance of
such additional Partnership Interests.
B. Additional Capital Contributions by the General
Partner. The General Partner may make Capital Contributions to the Partnership
at such times and in such amounts as the General Partner, in its sole and
absolute discretion, may determine to be advisable, but under no circumstances
shall the General Partner be obligated to make any such Capital Contribution.
In exchange for each such Capital Contribution, the Partnership shall issue to
the General Partner (i) that number of Class A or Class B Units equal to (a)
the amount of the Capital Contribution divided by (b) the per Partnership Unit
fair market value, as determined by the General Partner, in its reasonable
judgment, of the underlying assets of the Partnership, or (ii) additional
Partnership Units or other Partnership Interests, other than Class A or Class B
Units, in one or more classes, or one or more series of any such classes, with
such designations, preferences and relative, participating, optional or other
special rights, powers and duties, including rights, powers and duties senior
to Limited Partner Interests, all as shall be determined by the General Partner
in its reasonable judgment, including, without limitation, (x) the allocations
of items of Partnership income, gain, loss, deduction and credit to each such
class or series of Partnership Interests, (y) the rights of each such class or
series of Partnership Interests to share in Partnership distributions, and (z)
the rights of each such class or series of Partnership Interests upon
dissolution and liquidation of the Partnership; provided that in connection
with an issuance of Partnership Units and/or Partnership Interests pursuant to
clause (ii) of this Section 4.2.B, (1) such Partnership Units and/or
Partnership Interests are issued in connection with an issuance of shares of
the General Partner Entity, which shares have designations, preferences and
other rights such that the economic interests created thereby are substantially
similar to the designations, preferences and other rights of the additional
Partnership Units and/or Partnership Interests issued to the General Partner in
accordance with clause (ii) of this Section 4.2.B, and (2) the General Partner
shall make a Capital Contribution to the Partnership in an amount equal to the
proceeds raised in connection with the issuance of such Shares.
C. No Requirement that General Partner Entity
Contribute Proceeds of Equity Offerings. The General Partner Entity may issue
additional Shares or rights, options, warrants or convertible or exchangeable
securities containing the right to subscribe for or purchase Shares ("New
Securities") at such times and in such amounts and for such consideration as
the General Partner
- 17 -
<PAGE> 23
Entity, in its sole and absolute discretion, determines. Under no circumstances
shall the General Partner Entity be obligated to contribute to the Partnership
all or any part of the proceeds from any issuance of such New Securities or
from the exercise of rights, contained in such New Securities, and the General
Partner Entity may, in its sole and absolute discretion, retain all such
proceeds, to be used by the General Partner Entity as it determines, in its
sole and absolute discretion, to be advisable.
D. Classes of Partnership Units. Subject to Section
4.2.A above, the Partnership shall have two classes of Partnership Units
entitled "Class A Units" and "Class B Units." Either Class A Units or Class B
Units, at the election of the General Partner, in its sole and absolute
discretion, may be issued to newly admitted Partners in exchange for the
contribution by such Partners of cash, real estate partnership interests,
stock, notes or other assets or consideration; provided, that any Partnership
Unit that is not specifically designated by the General Partner as being of a
particular class shall be deemed to be a Class A Unit. Each Class B Unit shall
be converted automatically into a Class A Unit on the day immediately following
the Partnership Record Date for the Distribution Period (as defined in Section
5.1.D hereof) in which such Class B Unit was issued, without the requirement
for any action by either the Partnership or the Partner holding the Class B
Unit.
SECTION 4.3 MINIMUM PERCENTAGE INTEREST OF GENERAL PARTNER
The provisions of Section 4.2 shall be applied so that in all events
the Percentage Interest of the General Partner shall be equal to at least
1.00%. In the event the issuance of additional Partnership Units pursuant to
Section 4.2.A would (but for this Section 4.3) have the effect of reducing the
Percentage Interest of the General Partner to less than 1.00%, CPT LP shall
transfer Partnership Units to the General Partner (and, as of the effective
date of such issuance, CPT LP shall be deemed to hold Partnership Units for the
benefit of the General Partner) to the extent necessary to cause the General
Partner's Percentage Interest, after giving effect to such issuance, to be
equal to at least 1.00%. In the event any additional Capital Contributions are
made or deemed made to the Partnership by the General Partner and CPT LP
pursuant to Section 4.2.B, such additional Capital Contributions or deemed
Capital Contributions shall be allocated between the General Partner and CPT LP
in the amounts necessary to cause the General Partner's Percentage Interest,
after giving effect to such Capital Contributions, to be equal to at least
1.00%.
SECTION 4.4 NO PREEMPTIVE RIGHTS
Except to the extent expressly granted by the Partnership pursuant to
another agreement (as determined in good faith by the General Partner), no
Person shall have any preemptive, preferential or other similar right with
respect to (i) additional Capital Contributions or loans to the Partnership or
(ii) issuance or sale of any Partnership Units or other Partnership Interests.
SECTION 4.5 OTHER CONTRIBUTION PROVISIONS
In the event that any Partner is admitted to the Partnership and is
given a Capital Account in exchange for services rendered to the Partnership,
such transaction shall be treated by the Partnership and the affected Partner
as if the Partnership had compensated such Partner in cash, and the Partner
- 18 -
<PAGE> 24
had contributed such cash to the capital of the Partnership, unless the General
Partner and such affected Partner specifically agree otherwise.
SECTION 4.6 NO INTEREST ON CAPITAL
No Partner shall be entitled to interest on its Capital Contributions
or its Capital Account.
ARTICLE V
DISTRIBUTIONS
SECTION 5.1 REQUIREMENT AND CHARACTERIZATION OF DISTRIBUTIONS
A. General. The General Partner shall distribute at
least quarterly Available Cash in such amount as shall be determined by the
General Partner in its reasonable discretion (subject to Section 5.1.C below),
to the Partners who are Partners on the Partnership Record Date, with such
distribution to be made as provided in Sections 5.1.B, 5.1.D and 5.1.E below.
Notwithstanding anything to the contrary contained herein, in no event may a
Partner receive a distribution of Available Cash with respect to a Partnership
Unit for a quarter or shorter period if such Partner is entitled to receive a
distribution with respect to a Share for which such Partnership Unit has been
redeemed or exchanged. Unless otherwise expressly provided for herein or in an
agreement at the time a new class of Partnership Interests is created in
accordance with Article IV hereof, no Partnership Interest shall be entitled to
a distribution in preference to any other Partnership Interest. The General
Partner shall make such reasonable efforts, as determined by it in its sole and
absolute discretion and consistent with the qualification of the General
Partner Entity as a REIT, to distribute Available Cash to Limited Partners so
as to preclude any such distribution or portion thereof from being treated as
part of a sale of property of the Partnership by a Limited Partner under
Section 707 of the Code or the Regulations thereunder; provided that the
General Partner and the Partnership shall not have liability to a Limited
Partner under any circumstances as a result of any distribution to a Limited
Partner being so treated.
B. Method.
(i) Each holder of Partnership Interests that are
entitled to any preference in distribution shall be entitled
to a distribution in accordance with the rights of any such
class of Partnership Interests (and, within such class, pro
rata in proportion to the respective Percentage Interests on
such Partnership Record Date); and
(ii) To the extent there is Available Cash remaining
after the payment of any preference in distribution in
accordance with the foregoing clause (i), with respect to
Partnership Interests that are not entitled to any preference
in distribution, pro rata to each such class in accordance
with the terms of such class (and, within each such class,
pro rata in proportion to the respective Percentage Interests
on such Partnership Record Date).
C. Conduct of Partnership Operations to Maintain Level
of Distributions. The General Partner intends to use reasonable efforts to
cause the Partnership to operate in a manner
- 19 -
<PAGE> 25
(including, without limitation, incurring Debt, establishing and maintaining
cash reserves, and undertaking and financing recurring and non-recurring
capital expenditures) that enables the Partnership to maintain a distribution
rate per Class A Unit that is equal to the distribution rate per Share of the
General Partner Entity (after taking into account any appropriate adjustments
in Class A Units and Shares to reflect stock splits, stock dividends, and other
similar adjustments and to reflect the effect of any other transactions
resulting in a change in the Conversion Factor). The General Partner shall act
in good faith in attempting to accomplish the foregoing objective, but there is
no assurance that such objective will be accomplished, and neither the General
Partner nor the Partnership shall have any liability for the failure to achieve
such objective so long as the General Partner acts in good faith. In
furtherance of the foregoing, the General Partner and the General Partner
Entity further agree that if there is any loan or advance outstanding from the
Partnership to the General Partner Entity or to any Affiliate of the General
Partner or the General Partner Entity and the Partnership is unable to make a
distribution with respect to the Class A Units in the amount contemplated by
the first sentence of this Section 5.1.C, the General Partner and the General
Partner Entity shall immediately cause such loan(s) and advance(s) to be repaid
to the extent necessary to provide the Partnership with the funds to make such
contemplated distributions. Furthermore, in the event the General Partner
determines that the distribution rate per Class A Unit for any calendar quarter
will not at least equal the distribution rate per Share of the General Partner
Entity (as described above) for the same quarter, then, at least ten (10)
Business Days prior to the record date to determine holders of Shares of the
General Partner Entity eligible to receive such distribution, the General
Partner shall provide notice to the Limited Partners identifying the projected
distribution per Unit and the projected distribution per Share for such
calendar quarter. Such notice shall be subject to the same limitations,
restrictions, and covenants as set forth in Section 8.5.C with respect to
extraordinary transactions.
D. Distributions When Class B Units Are Outstanding.
If for any quarter or shorter period with respect to which a distribution is to
be made (a "Distribution Period") Class B Units are outstanding on the
Partnership Record Date for such Distribution Period, the General Partner shall
allocate the Available Cash with respect to such Distribution Period available
for distribution with respect to the Class A Units and Class B Units
collectively between the Partners who are holders of Class A Units ("Class A")
and the Partners who are holders of Class B Units ("Class B") as follows:
(1) Class A shall receive that portion of the
Available Cash (the "Class A Share") determined by multiplying the amount of
Available Cash by the following fraction:
A x Y
---------------
(A x Y)+(B x X)
(2) Class B shall receive that portion of the
Available Cash (the "Class B Share") determined by multiplying the amount of
Available Cash by the following fraction:
B x X
---------------
(A x Y)+(B x X)
- 20 -
<PAGE> 26
(3) For purposes of the foregoing formulas,
(i) "A" equals the number of Class A Units outstanding on the Partnership
Record Date for such Distribution Period; (ii) "B" equals the number of Class B
Units outstanding on the Partnership Record Date for such Distribution Period;
(iii) "Y" equals the number of days in the Distribution Period; and (iv) "X"
equals the number of days in the Distribution Period for which the Class B
Units were issued and outstanding.
The Class A Share shall be distributed among Partners holding Class A
Units on the Partnership Record Date for the Distribution Period in accordance
with the number of Class A Units held by each Partner on such Partnership
Record Date. In no event may a Partner receive a distribution of Available Cash
with respect to a Class A Unit if a Partner is entitled to receive a
distribution out of such Available Cash with respect to a Share for which such
Class A Unit has been redeemed or exchanged. The Class B Share shall be
distributed among the Partners holding Class B Units on the Partnership Record
Date for the Distribution Period in accordance with the number of Class B Units
held by each Partner on such Partnership Record Date. In no event shall any
Class B Units be entitled to receive any distribution of Available Cash for any
Distribution Period ending prior to the date on which such Class B Units are
issued.
E. Distributions When Class B Units Have Been Issued on
Different Dates. In the event that Class B Units which have been issued on
different dates are outstanding on the Partnership Record Date for any
Distribution Period, then the Class B Units issued on each particular date
shall be treated as a separate series of Partnership Units for purposes of
making the allocation of Available Cash for such Distribution Period among the
holders of Partnership Units (and the formula for making such allocation, and
the definitions of variables used therein, shall be modified accordingly).
Thus, for example, if two series of Class B Units are outstanding on the
Partnership Record Date for any Distribution Period, the allocation formula for
each series, "Series B1" and "Series B2" would be as follows:
(1) Series B1 shall receive that portion of the
Available Cash determined by multiplying the amount of Available Cash by the
following fraction:
B1 x X1
---------------------------
(A x Y)+(B1 x X1)+(B2 x X2)
(2) Series B2 shall receive that portion of the
Available Cash determined by multiplying the amount of Available Cash by the
following fraction:
B2 x X2
---------------------------
(A x Y)+(B1 x X1)+(B2 x X2)
(3) For purposes of the foregoing formulas the
definitions set forth in Section 5.1.C.3 above remain the same except that (i)
"B1" equals the number of Partnership Units in Series B1 outstanding on the
Partnership Record Date for such Distribution Period; (ii) "B2" equals the
number of Partnership Units in Series B2 outstanding on the Partnership Record
Date for such Distribution Period; (iii) "X1" equals the number of days in the
Distribution Period for which the Partnership Units in Series B1 were issued
and outstanding; and (iv) "X2" equals the number of days in the Distribution
Period for which the Partnership Units in Series B2 were issued and
outstanding.
- 21 -
<PAGE> 27
F. Minimum Distributions if General Partner Entity Not
Publicly Traded Entity. In addition (and without regard to the amount of
Available Cash), if the Shares of the General Partner Entity are not Publicly
Traded, the Partnership shall make cash distributions with respect to the Class
A Units at least annually for each taxable year of the Partnership beginning
prior to the fifteenth (15th) anniversary of the Effective Date in an aggregate
amount with respect to each such taxable year at least equal to 95% of the
Partnership's taxable income for such year allocable to the Class A Units, with
such distributions to be made not later than 60 days after the end of such
year; provided, however, neither the General Partner nor any of its Affiliates
shall be obligated to make any Capital Contributions, loans, advances or other
funds available to the Partnership (other than to repay any outstanding loans
or advances from the Partnership to the General Partner or its Affiliates) in
order to satisfy the distribution requirement of this Section 5.1.F.
Notwithstanding Section 14.1.C.(iii), this Section 5.1.F may be amended with
the Consent of the Outside Limited Partners.
SECTION 5.2 AMOUNTS WITHHELD
All amounts withheld pursuant to the Code or any provisions of any
state or local tax law and Section 10.5 hereof with respect to any allocation,
payment or distribution to the General Partner, the Limited Partners or
Assignees shall be treated as amounts distributed to the General Partner,
Limited Partners or Assignees pursuant to Section 5.1 above for all purposes
under this Agreement.
SECTION 5.3 DISTRIBUTIONS UPON LIQUIDATION
Proceeds from a Terminating Capital Transaction and any other cash
received or reduction in reserves made after commencement of the liquidation of
the Partnership shall be distributed to the Partners in accordance with Section
13.2 hereof.
SECTION 5.4 AMENDMENTS TO REFLECT ISSUANCE OF ADDITIONAL
PARTNERSHIP INTERESTS
In the event that the Partnership issues additional Partnership
Interests to the General Partner or any Additional Limited Partner pursuant to
Article IV hereof, the General Partner shall make such amendments to this
Article V as it deems necessary to reflect the issuance of such additional
Partnership Interests.
ARTICLE VI
ALLOCATIONS
SECTION 6.1 ALLOCATIONS FOR CAPITAL ACCOUNT PURPOSES
For purposes of maintaining the Capital Accounts and in determining
the rights of the Partners among themselves, the Partnership's items of income,
gain, loss and deduction (computed in accordance with Exhibit B hereto) shall
be allocated among the Partners in each taxable year (or portion thereof) as
provided herein below.
A. Net Income. After giving effect to the special
allocations set forth in Section 1 of Exhibit C and Section 6.2 below, Net
Income shall be allocated (i) first, to the General Partner to the extent that
Net Losses previously allocated to the General Partner pursuant to the last
sentence
- 22 -
<PAGE> 28
of Section 6.1.B below exceed Net Income previously allocated to the General
Partner pursuant to this clause (i) of Section 6.1.A, (ii) second, to the
holders of any Partnership Interests that are entitled to any preference in
distribution in accordance with the rights of any such class of Partnership
Interests until each such Partnership Interest has been allocated, on a
cumulative basis pursuant to this clause (ii), Net Income equal to the amount
of distributions received which are attributable to the preference of such
class of Partnership Interests (and, within such class, pro rata in proportion
to the respective Percentage Interests as of the last day of the period for
which such allocation is being made) and (iii) third, with respect to
Partnership Interests that are not entitled to any preference in the allocation
of Net Income, pro rata to each such class in accordance with the terms of such
class (and, within such class, pro rata in proportion to the respective
Percentage Interests as of the last day of the period for which such allocation
is being made).
B. Net Losses. After giving effect to the special
allocations set forth in Section 1 of Exhibit C and Section 6.2, Net Losses
shall be allocated (i) first, to the holders of any Partnership Interests that
are entitled to any preference in distribution in accordance with the rights of
any such class of Partnership Interests to the extent that any prior
allocations of Net Income to such class of Partnership Interests pursuant to
Section 6.1.A(ii) above exceed, on a cumulative basis, distributions with
respect to such Partnership Interests pursuant to clause (i) of Section 5.1.B
hereof (and, within such class, pro rata in proportion to the respective
Percentage Interests as of the last day of the period for which such allocation
is being made) and (ii) second, with respect to classes of Partnership
Interests that are not entitled to any preference in distribution, pro rata to
each such class in accordance with the terms of such class (and, within such
class, pro rata in proportion to the respective Percentage Interests as of the
last day of the period for which such allocation is being made); provided that
Net Losses shall not be allocated to any Limited Partner pursuant to this
Section 6.1.B to the extent that such allocation would cause such Limited
Partner to have an Adjusted Capital Account Deficit (or increase any existing
Adjusted Capital Account Deficit) at the end of such taxable year (or portion
thereof). All Net Losses in excess of the limitations set forth in this Section
6.1.B shall be allocated to the General Partner.
C. Allocation of Nonrecourse Debt. For purposes of
Regulations Section 1.752-3(a), the Partners agree that Nonrecourse Liabilities
of the Partnership in excess of the sum of (i) the amount of Partnership
Minimum Gain and (ii) the total amount of Nonrecourse Built-in Gain shall be
allocated among the Partners in accordance with their respective Percentage
Interests.
D. Recapture Income. Any gain allocated to the
Partners upon the sale or other taxable disposition of any Partnership asset
shall, to the extent possible after taking into account other required
allocations of gain pursuant to Exhibit C hereto, be characterized as Recapture
Income in the same proportions and to the same extent as such Partners have
been allocated any deductions directly or indirectly giving rise to the
treatment of such gains as Recapture Income.
E. Allocations by General Partner to Reflect Economic
Rights. In the event the General Partner shall determine, in its good faith
judgment, that it is necessary to modify the manner in which the Partnership's
items of income, gain, loss and deduction shall be allocated among the Partners
in a taxable year (or portion thereof) in order to cause such allocation to
reflect accurately the relative economic rights of the Partners, the General
Partner may make such a modification; provided that such modification is not
reasonably expected to have an adverse effect on the amounts distributable to
any Partner pursuant to Section 13.2 hereof upon the dissolution of the
Partnership
- 23 -
<PAGE> 29
(assuming for this purpose that such distributions are intended to be made as
set forth in Article V hereof).
SECTION 6.2 AMENDMENTS TO ALLOCATIONS TO REFLECT ISSUANCE OF
ADDITIONAL PARTNERSHIP INTERESTS
In the event that the Partnership issues additional Partnership
Interests to the General Partner or any Additional Limited Partner pursuant to
Article IV hereof, the General Partner shall make such amendments to this
Article VI as it deems necessary to reflect the terms of the issuance of such
additional Partnership Interests, including making preferential allocations to
classes of Partnership Interests that are entitled thereto.
ARTICLE VII
MANAGEMENT AND OPERATIONS OF BUSINESS
SECTION 7.1 MANAGEMENT
A. Powers of General Partner. Except as otherwise
expressly provided in this Agreement, all management powers over the business
and affairs of the Partnership are and shall be exclusively vested in the
General Partner, and no Limited Partner shall have any right to participate in
or exercise control or management power over the business and affairs of the
Partnership. The General Partner may not be removed by the Limited Partners
with or without cause. In addition to the powers now or hereafter granted a
general partner of a limited partnership under applicable law or which are
granted to the General Partner under any other provision of this Agreement, the
General Partner, subject to Sections 7.3 and 7.6 below, shall have full power
and authority to do all things deemed necessary or desirable by it to conduct
the business of the Partnership, to exercise all powers set forth in Section
3.2 hereof and to effectuate the purposes set forth in Section 3.1 hereof,
including, without limitation:
(1) the making of any expenditures, the lending
or borrowing of money (including, without limitation, making prepayments on
loans and borrowing money to permit the Partnership to make distributions to
its Partners in such amounts as will permit the General Partner Entity (as long
as the General Partner Entity qualifies as a REIT) to avoid the payment of any
federal income tax (including, for this purpose, any excise tax pursuant to
Section 4981 of the Code) and to make distributions to its shareholders
sufficient to permit the General Partner Entity to maintain REIT status), the
assumption or guarantee of, or other contracting for, indebtedness and other
liabilities, the issuance of evidences of indebtedness (including the securing
of same by deed to secure debt, mortgage, deed of trust or other lien or
encumbrance on the Partnership's assets) and the incurring of any obligations
the General Partner deems necessary for the conduct of the activities of the
Partnership;
(2) the making of tax, regulatory and other
filings, or rendering of periodic or other reports to governmental or other
agencies having jurisdiction over the business or assets of the Partnership;
- 24 -
<PAGE> 30
(3) the acquisition, disposition, mortgage,
pledge, encumbrance, hypothecation or exchange of any or all of the assets of
the Partnership (including the exercise or grant of any conversion, option,
privilege or subscription right or other right available in connection with any
assets at any time held by the Partnership) or the merger or other combination
of the Partnership with or into another entity, on such terms as the General
Partner deems proper (all of the foregoing subject to any prior approval only
to the extent required by Section 7.3 hereof);
(4) the use of the assets of the Partnership
(including, without limitation, cash on hand) for any purpose consistent with
the terms of this Agreement and on any terms it sees fit, including, without
limitation, the financing of the conduct of the operations of the Partnership
or any of the Partnership's Subsidiaries, the lending of funds to other Persons
(including, without limitation, the General Partner, the General Partner
Entity, and the Subsidiaries of either the General Partner or the General
Partner Entity) and the repayment of obligations of the Partnership and its
Subsidiaries and any other Person in which the Partnership has an equity
investment and the making of capital contributions to its Subsidiaries;
(5) the management, operation, leasing,
landscaping, repair, alteration, demolition or improvement of any real property
or improvements owned by the Partnership or any Subsidiary of the Partnership;
(6) the negotiation, execution, and performance
of any contracts, conveyances or other instruments that the General Partner
considers useful or necessary to the conduct of the Partnership's operations or
the implementation of the General Partner's powers under this Agreement,
including contracting with contractors, developers, consultants, accountants,
legal counsel, other professional advisors and other agents and the payment of
their expenses and compensation out of the Partnership's assets;
(7) the distribution of Partnership cash or
other Partnership assets in accordance with this Agreement;
(8) the holding, managing, investing and
reinvesting of cash and other assets of the Partnership;
(9) the collection and receipt of revenues and
income of the Partnership;
(10) the establishment of one or more divisions
of the Partnership, the selection and dismissal of employees of the
Partnership, any division of the Partnership, or the General Partner
(including, without limitation, employees having titles such as "president,"
"vice president," "secretary" and "treasurer") and agents, outside attorneys,
accountants, consultants and contractors of the General Partner, the
Partnership, or any division of the Partnership and the determination of their
compensation and other terms of employment or hiring;
(11) the maintenance of such insurance for the
benefit of the Partnership and the Partners as it deems necessary or
appropriate;
(12) the formation of, or acquisition of an
interest in, and the contribution of property to, any corporation, limited or
general partnerships, joint ventures, limited liability
- 25 -
<PAGE> 31
companies or other relationships that it deems desirable (including, without
limitation, the acquisition of interests in, and the contributions of property
to its Subsidiaries and any other Person in which it has an equity investment
from time to time);
(13) the control of any matters affecting the
rights and obligations of the Partnership, including the settlement,
compromise, submission to arbitration or any other form of dispute resolution
or abandonment of any claim, cause of action, liability, debt or damages due or
owing to or from the Partnership, the commencement or defense of suits, legal
proceedings, administrative proceedings, arbitrations or other forms of dispute
resolution, the representation of the Partnership in all suits or legal
proceedings, administrative proceedings, arbitrations or other forms of dispute
resolution, the incurring of legal expense and the indemnification of any
Person against liabilities and contingencies to the extent permitted by law;
(14) the undertaking of any action in connection
with the Partnership's direct or indirect investment in its Subsidiaries or any
other Person (including, without limitation, the contribution or loan of funds
by the Partnership to such Persons), the incurrence of indebtedness on behalf
of such Persons or the guarantee of the obligations of such Persons;
(15) the determination of the fair market value
of any Partnership property distributed in kind, using such reasonable method
of valuation as the General Partner may adopt;
(16) the exercise, directly or indirectly,
through any attorney-in-fact acting under a general or limited power of
attorney, of any right, including the right to vote, appurtenant to any assets
or investment held by the Partnership;
(17) the exercise of any of the powers of the
General Partner enumerated in this Agreement on behalf of or in connection with
any Subsidiary of the Partnership or any other Person in which the Partnership
has a direct or indirect interest, individually or jointly with any such
Subsidiary or other Person;
(18) the exercise of any of the powers of the
General Partner enumerated in this Agreement on behalf of any Person in which
the Partnership does not have any interest pursuant to contractual or other
arrangements with such Person;
(19) the making, executing and delivering of any
and all deeds, leases, notes, deeds to secure debt, mortgages, deeds of trust,
security agreements, conveyances, contracts, guarantees, warranties,
indemnities, waivers, releases or other legal instruments or agreements in
writing necessary or appropriate in the judgment of the General Partner for the
accomplishment of any of the powers of the General Partner under this
Agreement;
(20) the distribution of cash to acquire
Partnership Units held by a Limited Partner in connection with a Limited
Partner's exercise of its Redemption Right under Section 8.6 hereof; and
(21) the amendment and restatement of Exhibit A
hereto to reflect accurately at all times the Capital Accounts, Partnership
Units, and Percentage Interests of the Partners as the same are adjusted from
time to time to the extent necessary to reflect redemptions, Capital
- 26 -
<PAGE> 32
Contributions, the issuance of Partnership Units, the admission of any
Additional Limited Partner or any Substituted Limited Partner or otherwise, as
long as the matter or event being reflected in Exhibit A hereto otherwise is
authorized by this Agreement.
B. No Approval by Limited Partners. Each of the Limited
Partners agrees that the General Partner is authorized to execute, deliver and
perform the above-mentioned agreements and transactions on behalf of the
Partnership without any further act, approval or vote of the Partners,
notwithstanding any other provision of this Agreement (except as provided in
Section 7.3), the Act or any applicable law, rule or regulation, to the full
extent permitted under the Act or other applicable law. The execution, delivery
or performance by the General Partner or the Partnership of any agreement
authorized or permitted under this Agreement shall not constitute a breach by
the General Partner of any duty that the General Partner may owe the
Partnership or the Limited Partners or any other Persons under this Agreement
or of any duty stated or implied by law or equity.
C. Insurance. At all times from and after the date
hereof, the General Partner, at the expense of the Partnership, may cause the
Partnership to obtain and maintain (i) casualty, liability and other insurance
on the properties of the Partnership, (ii) liability insurance for the
Indemnitees hereunder and (iii) such other insurance as the General Partner, in
its reasonable discretion, determines to be necessary.
D. Working Capital and Other Reserves. At all times
from and after the date hereof, the General Partner may cause the Partnership
to establish and maintain working capital reserves in such amounts as the
General Partner, in its sole and absolute discretion, deems appropriate and
reasonable from time to time.
E. No Obligations to Consider Tax Consequences of
Limited Partners. In exercising its authority under this Agreement, the General
Partner may, but shall be under no obligation to, take into account the tax
consequences to any Partner (including the General Partner) of any action taken
(or not taken) by it. The General Partner and the Partnership shall not have
liability to a Limited Partner for monetary damages or otherwise for losses
sustained, liabilities incurred or benefits not derived by such Limited Partner
in connection with such decisions, provided that the General Partner has acted
in good faith and pursuant to its authority under this Agreement.
SECTION 7.2 CERTIFICATE OF LIMITED PARTNERSHIP
PGI Associates, as the original general partner of the Partnership,
has previously filed the Certificate with the Secretary of State of Delaware
which Certificate was amended to reflect the admission of the General Partner
to the Partnership and the withdrawal of PGI Associates as a general partner.
The General Partner shall use all reasonable efforts to cause to be filed such
other certificates or documents as may be reasonable and necessary or
appropriate for the formation, continuation, qualification and operation of a
limited partnership (or a partnership in which the limited partners have
limited liability) in the State of Delaware and any other state, the District
of Columbia or other jurisdiction in which the Partnership may elect to do
business or own property. To the extent that such action is determined by the
General Partner to be reasonable and necessary or appropriate, the General
Partner shall file amendments to and restatements of the Certificate and do all
the things to maintain the Partnership as a limited partnership (or a
partnership in which the limited partners have limited liability) under the
laws of the State of Delaware and each other state,
- 27 -
<PAGE> 33
the District of Columbia or other jurisdiction in which the Partnership may
elect to do business or own property. Subject to the terms of Section 8.5.A(4)
hereof, the General Partner shall not be required, before or after filing, to
deliver or mail a copy of the Certificate or any amendment thereto to any
Limited Partner.
SECTION 7.3 RESTRICTIONS ON GENERAL PARTNER'S AUTHORITY
A. Consent Required. The General Partner may not take
any action in contravention of an express prohibition or limitation of this
Agreement or any action that reasonably could be expected to cause the
Partnership not to qualify as a "partnership" for federal income tax purposes
without the written Consent of (i) all of the Limited Partners (including
Limited Partner Interests held by the General Partner) or (ii) such lower
percentage of the Limited Partner Interests as may be specifically provided for
under a provision of this Agreement or the Act.
B. Sale of All Assets of the Partnership. Except as
provided in Article XIII hereof, the General Partner may not sell, exchange,
transfer or otherwise dispose of all or substantially all of the Partnership's
assets in a single transaction or a series of related transactions (including
by way of merger, consolidation or other combination with any other Persons)
(i) if such sale, merger, or other transaction is in connection with a
Termination Transaction permitted under Section 11.2.B, or if the transaction
is a merger in which the Partnership will be the surviving entity and any
changes to the Partnership Agreement resulting in connection therewith have
received the approvals of the Partners required under Section 14.1 (treating
all such changes in connection with such merger as amendments for the purposes
thereof), without the Consent of the Partners holding two-thirds (2/3) or more
of the then outstanding Partnership Units (including any Partnership Units held
by the General Partner and CPT LP), or (ii) otherwise, without the Consent of
the Outside Limited Partners.
SECTION 7.4 REIMBURSEMENT OF THE GENERAL PARTNER
A. No Compensation. Except as provided in this Section
7.4 and elsewhere in this Agreement (including the provisions of Articles V and
VI hereof regarding distributions, payments and allocations to which it may be
entitled), the General Partner shall not be compensated for its services as
general partner of the Partnership.
B. Responsibility for Partnership Expenses. The
Partnership shall be responsible for and shall pay all expenses relating to the
Partnership's organization, the ownership of its assets and its operations. The
General Partner shall be reimbursed on a monthly basis, or such other basis as
the General Partner may determine in its good faith discretion, for all
expenses it, the General Partner Entity, Camden Subsidiary and/or CPT LP incur
relating to the operation of, or for the benefit of, the Partnership. The
General Partner shall determine in good faith the amount of expenses incurred
by it related to the operation of, or for the benefit of, the Partnership. In
the event that certain expenses are incurred for the benefit of both the
Partnership and other entities (including the General Partner or the General
Partner Entity or any of their respective Subsidiaries), such expenses will be
allocated to the Partnership and such other entities in such a manner as the
General Partner in its good faith discretion deems fair and reasonable. Such
reimbursements shall be in addition to any reimbursement to the General
Partner, the General Partner Entity, Camden Subsidiary and/or CPT LP pursuant
to Section 10.3.C hereof and as a result of indemnification pursuant to Section
7.7
- 28 -
<PAGE> 34
below. All payments and reimbursements hereunder shall be characterized for
federal income tax purposes as expenses of the Partnership incurred on its
behalf, and not as expenses of the General Partner, the General Partner Entity
Camden Subsidiary and/or CPT LP.
C. Partnership Interest Issuance Expenses. The General
Partner shall also be reimbursed for all expenses it incurs relating to any
issuance of additional Partnership Interests, Debt of the Partnership, or
rights, options, warrants or convertible or exchangeable securities of the
Partnership pursuant to Article IV hereof (including, without limitation, all
costs, expenses, damages and other payments resulting from or arising in
connection with litigation related to any of the foregoing), all of which
expenses are considered by the Partners to constitute expenses of, and for the
benefit of, the Partnership.
D. Reimbursement not a Distribution. If and to the
extent any reimbursement made pursuant to this Section 7.4 is determined for
federal income tax purposes not to constitute a payment of expenses of the
Partnership, the amount so determined shall constitute a guaranteed payment
with respect to capital within the meaning of Section 707(c) of the Code, shall
be treated consistently therewith by the Partnership and all Partners and shall
not be treated as a distribution for purposes of computing the Partners'
Capital Accounts.
SECTION 7.5 OUTSIDE ACTIVITIES OF THE GENERAL PARTNER
A. General. The General Partner shall devote to the
Partnership such time as may be necessary for the proper performance of its
duties as General Partner, but the General Partner is not required, and is not
expected, to devote its full time to the performance of such duties. Subject to
any agreement entered into pursuant to Section 7.6.D hereof and any other
agreements entered into by the General Partner or its Affiliates with the
Partnership or a Subsidiary, the General Partner, the General Partner Entity,
and any officer, director, employee, agent, trustee, Affiliate or shareholder
of the General Partner or the General Partner Entity shall be entitled to and
may have business interests and engage in business activities in addition to
those relating to the Partnership (including, without limitation, owning and
operating real estate and incurring indebtedness in its own name, whether or
not the proceeds of such indebtedness are used for the benefit of the
Partnership), including, without limitation, engaging in other business
interests and activities in direct or indirect competition with the
Partnership. Neither the Partnership nor any Partners shall have any right by
virtue of this Agreement or the partnership relationship established hereby in
or to such other ventures or activities or to the income or proceeds derived
therefrom, and the pursuit of such ventures, even if competitive with the
business of the Partnership, shall not be deemed wrongful or improper. Neither
the General Partner, the General Partner Entity, nor any Affiliate of the
General Partner or the General Partner Entity shall be obligated to present any
particular opportunity to the Partnership even if such opportunity is of a
character which, if presented to the Partnership, could be taken by the
Partnership, and, regardless of whether or not such opportunity is competitive
with the Partnership, the General Partner, the General Partner Entity, or any
Affiliate of the General Partner or the General Partner Entity shall have the
right to take for its own account (individually or as a trustee, partner or
fiduciary), or to recommend to others, any such particular opportunity. The
General Partner, the General Partner Entity, and any Affiliates of the General
Partner and the General Partner Entity may acquire Limited Partner Interests
and shall be entitled to exercise all rights of a Limited Partner relating to
such Limited Partner Interests.
- 29 -
<PAGE> 35
B. Purchases of Shares by the General Partner or the
General Partner Entity. The General Partner and/or the General Partner Entity
may, from time to time in their/its sole and absolute discretion, purchase
and/or redeem Shares (including, without limitation, in connection with a stock
repurchase or similar program). In the event that the General Partner or the
General Partner Entity purchases and/or redeems Shares, then the General
Partner or the General Partner Entity, as the case may be, shall purchase
and/or redeem such Shares with its own funds and not from the proceeds of any
sale of Partnership Units to the Partnership; provided, however, that if the
Partnership purchases Partnership Units pro rata from all Partners, with their
consent, the General Partner or the General Partner Entity may use the proceeds
it receives from any such sale of Partnership Units to purchase and/or redeem
Shares.
SECTION 7.6 CONTRACTS WITH AFFILIATES
A. Permitted Transactions. Subject to Section 7.6.B
below, the Partnership may lend or contribute funds to, borrow funds from, and
enter into any other transactions with, the Partnership's Subsidiaries or other
Persons in which it has an equity investment, on terms and conditions
established in the sole and absolute discretion of the General Partner. The
foregoing authority shall not create any right or benefit in favor of any
Subsidiary or any other Person in which the Partnership has an equity
investment.
B. Transactions with Certain Affiliates. Except as
expressly permitted by this Agreement, the Partnership shall not, directly or
indirectly, sell, transfer or convey any property to, or purchase any property
from, or borrow funds from, or lend funds to, any Partner or any Affiliate of
the General Partner or the General Partner Entity, except pursuant to
transactions that are on terms that are fair and reasonable and no less
favorable to the Partnership than would be obtained from an unaffiliated third
party, as determined by the General Partner in its reasonable judgment.
C. Benefit Plans. The General Partner, in its sole and
absolute discretion and without the approval of the Limited Partners, may
propose and adopt on behalf of the Partnership employee benefit plans funded by
the Partnership for the benefit of employees of the General Partner, the
Partnership, Subsidiaries of the Partnership or any Affiliate of any of them in
respect of services performed, directly or indirectly, for the benefit of the
Partnership or any of the Partnership's Subsidiaries.
D. Conflict Avoidance. The General Partner is
expressly authorized to enter into, in the name and on behalf of the
Partnership, a right of first opportunity arrangement and other conflict
avoidance agreements with various Affiliates of the Partnership and General
Partner on such terms as the General Partner, in its sole and absolute
discretion, believes are advisable.
SECTION 7.7 INDEMNIFICATION
A. General. The Partnership shall indemnify each
Indemnitee from and against any and all losses, claims, damages, liabilities,
joint or several, expenses (including, without limitation, attorneys fees and
other legal fees and expenses), judgments, fines, settlements and other amounts
arising from or in connection with any and all claims, demands, actions, suits
or proceedings, civil, criminal, administrative or investigative incurred by
the Indemnitee and relating to the Partnership, or its operations, as set forth
in this Agreement, in which any such Indemnitee
- 30 -
<PAGE> 36
may be involved, or is threatened to be involved, as a party or otherwise,
unless it is established by a final determination of a court of competent
jurisdiction that: (i) the act or omission of the Indemnitee was material to
the matter giving rise to the proceeding and either was committed in bad faith
or was the result of active and deliberate dishonesty, (ii) the Indemnitee
actually received an improper personal benefit in money, property or services
or (iii) in the case of any criminal proceeding, the Indemnitee had reasonable
cause to believe that the act or omission was unlawful. Without limitation, the
foregoing indemnity shall extend to any liability of any Indemnitee, pursuant
to a loan guarantee, contractual obligations for any indebtedness or other
obligations or otherwise, for any indebtedness of the Partnership or any
Subsidiary of the Partnership (including, without limitation, any indebtedness
which the Partnership or any Subsidiary of the Partnership has assumed or taken
subject to), and the General Partner is hereby authorized and empowered, on
behalf of the Partnership, to enter into one or more indemnity agreements
consistent with the provisions of this Section 7.7 in favor of any Indemnitee
having or potentially having liability for any such indebtedness. The
termination of any proceeding by judgment, order or settlement does not create
a presumption that the Indemnitee did not meet the requisite standard of
conduct set forth in this Section 7.7.A. The termination of any proceeding by
criminal conviction or upon a plea of nolo contendere or its equivalent, or an
entry of an order of probation prior to judgment, creates a rebuttable
presumption that the Indemnitee acted in a manner contrary to that specified in
this Section 7.7.A with respect to the subject matter of such proceeding. Any
indemnification pursuant to this Section 7.7 shall be made only out of the
assets of the Partnership, and any insurance proceeds from the liability policy
covering the General Partner and any Indemnitees, and neither the General
Partner nor any Limited Partner shall have any obligation to contribute to the
capital of the Partnership or otherwise provide funds to enable the Partnership
to fund its obligations under this Section 7.7.
B. Advancement of Expenses. Reasonable expenses
expected to be incurred by an Indemnitee shall be paid or reimbursed by the
Partnership in advance of the final disposition of any and all claims, demands,
actions, suits or proceedings, civil, criminal, administrative or investigative
made or threatened against an Indemnitee upon receipt by the Partnership of (i)
a written affirmation by the Indemnitee of the Indemnitee's good faith belief
that the standard of conduct necessary for indemnification by the Partnership
as authorized in this Section 7.7.A has been met and (ii) a written undertaking
by or on behalf of the Indemnitee to repay the amount if it shall ultimately be
determined that the standard of conduct has not been met.
C. No Limitation of Rights. The indemnification
provided by this Section 7.7 shall be in addition to any other rights to which
an Indemnitee or any other Person may be entitled under any agreement, pursuant
to any vote of the Partners, as a matter of law or otherwise, and shall
continue as to an Indemnitee who has ceased to serve in such capacity unless
otherwise provided in a written agreement pursuant to which such Indemnitee is
indemnified.
D. Insurance. The Partnership may purchase and
maintain insurance on behalf of the Indemnitees and such other Persons as the
General Partner shall determine against any liability that may be asserted
against or expenses that may be incurred by such Person in connection with the
Partnership's activities, regardless of whether the Partnership would have the
power to indemnify such Person against such liability under the provisions of
this Agreement.
E. Benefit Plan Fiduciary. For purposes of this
Section 7.7, (i) the Partnership shall be deemed to have requested an
Indemnitee to serve as fiduciary of an employee benefit plan
- 31 -
<PAGE> 37
whenever the performance by it of its duties to the Partnership also imposes
duties on, or otherwise involves services by, it to the plan or participants or
beneficiaries of the plan, (ii) excise taxes assessed on an Indemnitee with
respect to an employee benefit plan pursuant to applicable law shall constitute
fines within the meaning of this Section 7.7 and (iii) actions taken or omitted
by the Indemnitee with respect to an employee benefit plan in the performance
of its duties for a purpose reasonably believed by it to be in the interest of
the participants and beneficiaries of the plan shall be deemed to be for a
purpose which is not opposed to the best interests of the Partnership.
F. No Personal Liability for Limited Partners. In no
event may an Indemnitee subject any of the Partners to personal liability by
reason of the indemnification provisions set forth in this Agreement.
G. Interested Transactions. An Indemnitee shall not be
denied indemnification in whole or in part under this Section 7.7 because the
Indemnitee had an interest in the transaction with respect to which the
indemnification applies if the transaction was otherwise permitted by the terms
of this Agreement.
H. Benefit. The provisions of this Section 7.7 are for
the benefit of the Indemnitees, their heirs, successors, assigns and
administrators and shall not be deemed to create any rights for the benefit of
any other Persons. Any amendment, modification or repeal of this Section 7.7,
or any provision hereof, shall be prospective only and shall not in any way
affect the Partnership's obligation to any Indemnitee under this Section 7.7 as
in effect immediately prior to such amendment, modification or repeal with
respect to claims arising from or related to matters occurring, in whole or in
part, prior to such amendment, modification or repeal, regardless of when such
claims may arise or be asserted.
I. Indemnification Payments Not Distributions. If and
to the extent any payments to any Partner pursuant to this Section 7.7
constitute gross income to such Partner (as opposed to the repayment of
advances made on behalf of the Partnership), such amounts shall constitute
guaranteed payments within the meaning of Section 707(c) of the Code, shall be
treated consistently therewith by the Partnership and all Partners, and shall
not be treated as distributions for purposes of computing the Partners' Capital
Accounts.
SECTION 7.8 LIABILITY OF THE GENERAL PARTNER
A. General. Notwithstanding anything to the contrary
set forth in this Agreement, neither the General Partner, the General Partner
Entity, nor the directors and officers of the General Partner, the General
Partner Entity, or any Affiliate of the foregoing, shall be liable for monetary
damages to the Partnership, any Partners or any Assignees for losses sustained,
liabilities incurred or benefits not derived as a result of errors in judgment
or mistakes of fact or law or of any act or omission if the General Partner
acted in good faith.
B. No Obligation to Consider Separate Interests of
Limited Partners or Shareholders. The Limited Partners expressly acknowledge
that the General Partner is acting on behalf of the Partnership, CPT LP, the
General Partner Entity, Camden Subsidiary and the General Partner Entity's
shareholders collectively, that the General Partner is under no obligation to
consider the separate interests of the Limited Partners (including, without
limitation, the tax consequences to
- 32 -
<PAGE> 38
Limited Partners or Assignees) in deciding whether to cause the Partnership to
take (or decline to take) any actions, and that none of the General Partner,
the General Partner Entity, or any Affiliate of the foregoing, shall be liable
for monetary damages or otherwise for losses sustained, liabilities incurred or
benefits not derived by Limited Partners in connection with such decisions,
provided that the General Partner has acted in good faith.
C. Actions of Agents. Subject to its obligations and
duties as General Partner set forth in Section 7.1.A above, the General Partner
may exercise any of the powers granted to it by this Agreement and perform any
of the duties imposed upon it hereunder either directly or by or through its
agents. None of the General Partner, the General Partner Entity, or any
Affiliate of the foregoing, shall be responsible for any misconduct or
negligence on the part of any such agent appointed by the General Partner in
good faith.
D. Effect of Amendment. Any amendment, modification or
repeal of this Section 7.8 or any provision hereof shall be prospective only
and shall not in any way affect the limitations on the liability of the General
Partner, the General Partner Entity, or any Affiliate of the foregoing, to the
Partnership and the Limited Partners under this Section 7.8 as in effect
immediately prior to such amendment, modification or repeal with respect to
claims arising from or relating to matters occurring, in whole or in part,
prior to such amendment, modification or repeal, regardless of when such claims
may arise or be asserted.
SECTION 7.9 OTHER MATTERS CONCERNING THE GENERAL PARTNER
A. Reliance on Documents. The General Partner may rely
and shall be protected in acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice, request, consent,
order, bond, debenture or other paper or document believed by it in good faith
to be genuine and to have been signed or presented by the proper party or
parties.
B. Reliance on Advisors. The General Partner may
consult with legal counsel, accountants, appraisers, management consultants,
investment bankers, architects, engineers, environmental consultants and other
consultants and advisors selected by it, and any act taken or omitted to be
taken in reliance upon the opinion of such Persons as to matters which the
General Partner reasonably believes to be within such Person's professional or
expert competence shall be conclusively presumed to have been done or omitted
in good faith and in accordance with such opinion.
C. Action Through Agents. The General Partner shall
have the right, in respect of any of its powers or obligations hereunder, to
act through any of its duly authorized officers and a duly appointed attorney
or attorneys-in-fact. Each such attorney shall, to the extent provided by the
General Partner in the power of attorney, have full power and authority to do
and perform all and every act and duty which is permitted or required to be
done by the General Partner hereunder.
D. Actions to Maintain REIT Status or Avoid Taxation of
the General Partner Entity. Notwithstanding any other provisions of this
Agreement or the Act, any action of the General Partner on behalf of the
Partnership or any decision of the General Partner to refrain from acting on
behalf of the Partnership undertaken in the good faith belief that such action
or omission is necessary or advisable in order (i) to protect the ability of
the General Partner Entity to continue to qualify as
- 33 -
<PAGE> 39
a REIT or (ii) to allow the General Partner Entity to avoid incurring any
liability for taxes under Section 857 or 4981 of the Code, is expressly
authorized under this Agreement and is deemed approved by all of the Limited
Partners.
SECTION 7.10 TITLE TO PARTNERSHIP ASSETS
Title to Partnership assets, whether real, personal or mixed and
whether tangible or intangible, shall be deemed to be owned by the Partnership
as an entity, and no Partner, individually or collectively, shall have any
ownership interest in such Partnership assets or any portion thereof. Title to
any or all of the Partnership assets may be held in the name of the
Partnership, the General Partner or one or more nominees, as the General
Partner may determine, including Affiliates of the General Partner. The General
Partner hereby declares and warrants that any Partnership assets for which
legal title is held in the name of the General Partner or any nominee or
Affiliate of the General Partner shall be held by the General Partner for the
use and benefit of the Partnership in accordance with the provisions of this
Agreement; provided, however, that the General Partner shall use its best
efforts to cause beneficial and record title to such assets to be vested in the
Partnership as soon as reasonably practicable. All Partnership assets shall be
recorded as the property of the Partnership in its books and records,
irrespective of the name in which legal title to such Partnership assets is
held.
SECTION 7.11 RELIANCE BY THIRD PARTIES
Notwithstanding anything to the contrary in this Agreement, any Person
dealing with the Partnership shall be entitled to assume that the General
Partner has full power and authority, without consent or approval of any other
Partner or Person, to encumber, sell or otherwise use in any manner any and all
assets of the Partnership, to enter into any contracts on behalf of the
Partnership and to take any and all actions on behalf of the Partnership, and
such Person shall be entitled to deal with the General Partner as if the
General Partner were the Partnership's sole party in interest, both legally and
beneficially. Each Limited Partner hereby waives any and all defenses or other
remedies which may be available against such Person to contest, negate or
disaffirm any action of the General Partner in connection with any such
dealing. In no event shall any Person dealing with the General Partner or its
representatives be obligated to ascertain that the terms of this Agreement have
been complied with or to inquire into the necessity or expedience of any act or
action of the General Partner or its representatives. Each and every
certificate, document or other instrument executed on behalf of the Partnership
by the General Partner or its representatives shall be conclusive evidence in
favor of any and every Person relying thereon or claiming thereunder that (i)
at the time of the execution and delivery of such certificate, document or
instrument, this Agreement was in full force and effect, (ii) the Person
executing and delivering such certificate, document or instrument was duly
authorized and empowered to do so for and on behalf of the Partnership, and
(iii) such certificate, document or instrument was duly executed and delivered
in accordance with the terms and provisions of this Agreement and is binding
upon the Partnership.
- 34 -
<PAGE> 40
ARTICLE VIII
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
SECTION 8.1 LIMITATION OF LIABILITY
The Limited Partners shall have no liability under this Agreement
except as expressly provided in this Agreement, including Section 10.5 hereof,
or under the Act.
SECTION 8.2 MANAGEMENT OF BUSINESS
No Limited Partner or Assignee (other than the General Partner, any of
its Affiliates or any officer, director, employee, partner, agent or trustee of
the General Partner, the Partnership or any of their Affiliates, in their
capacity as such) shall take part in the operation, management or control
(within the meaning of the Act) of the Partnership's business, transact any
business in the Partnership's name or have the power to sign documents for or
otherwise bind the Partnership. The transaction of any such business by the
General Partner, any of its Affiliates or any officer, director, employee,
partner, agent or trustee of the General Partner, the Partnership or any of
their Affiliates, in their capacity as such, shall not affect, impair or
eliminate the limitations on the liability of the Limited Partners or Assignees
under this Agreement.
SECTION 8.3 OUTSIDE ACTIVITIES OF LIMITED PARTNERS
Subject to any agreements entered into pursuant to Section 7.6.D
hereof and to any other agreements entered into by a Limited Partner or its
Affiliates with the Partnership or a Subsidiary, any Limited Partner and any
officer, director, employee, agent, trustee, Affiliate or shareholder of any
Limited Partner shall be entitled to and may have business interests and engage
in business activities in addition to those relating to the Partnership,
including business interests and activities in direct or indirect competition
with the Partnership. Neither the Partnership nor any Partners shall have any
rights by virtue of this Agreement in any business ventures of any Limited
Partner or Assignee. None of the Limited Partners nor any other Person shall
have any rights by virtue of this Agreement or the partnership relationship
established hereby in any business ventures of any other Person, and such
Person shall have no obligation pursuant to this Agreement to offer any
interest in any such business ventures to the Partnership, any Limited Partner
or any such other Person, even if such opportunity is of a character which, if
presented to the Partnership, any Limited Partner or such other Person, could
be taken by such Person.
SECTION 8.4 RETURN OF CAPITAL
Except pursuant to the right of redemption set forth in Section 8.6
below, no Limited Partner shall be entitled to the withdrawal or return of its
Capital Contribution, except to the extent of distributions made pursuant to
this Agreement or upon termination of the Partnership as provided herein.
Except to the extent provided by Exhibit C hereto or as permitted by Sections
4.2.B, 5.1.B(i), 6.1.A(ii) and 6.1.B(i) hereof or otherwise expressly provided
in this Agreement, no Limited Partner or Assignee shall have priority over any
other Limited Partner or Assignee either as to the return of Capital
Contributions or as to profits, losses, distributions or credits.
- 35 -
<PAGE> 41
SECTION 8.5 RIGHTS OF LIMITED PARTNERS RELATING TO THE
PARTNERSHIP
A. General. In addition to other rights provided by
this Agreement or by the Act, and except as limited by Section 8.5.D below,
each Limited Partner shall have the right, for a purpose reasonably related to
such Limited Partner's Partnership Interest, upon written demand with a
statement of the purpose of such demand and at such Limited Partner's own
expense:
(i) to obtain a copy of the most recent annual and
quarterly reports filed with the Securities and Exchange
Commission by the General Partner Entity pursuant to the
Exchange Act;
(ii) to obtain a copy of the Partnership's federal,
state and local income tax returns for each Partnership Year;
(iii) to obtain a current list of the name and last
known business, residence or mailing address of each Partner;
(iv) to obtain a copy of this Agreement and the
Certificate and all amendments thereto, together with
executed copies of all powers of attorney pursuant to which
this Agreement, the Certificate and all amendments thereto
have been executed; and
(v) to obtain true and full information regarding
the amount of cash and a description and statement of any
other property or services contributed by each Partner to the
Partnership and which each Partner has agreed to contribute
to the Partnership in the future, and the date on which each
became a Partner.
B. Notice of Conversion Factor. The Partnership shall
notify each Limited Partner upon request of the then current Conversion Factor
and any changes that have been made thereto.
C. Notice of Extraordinary Transaction of General
Partner Entity. Neither the General Partner nor the General Partner Entity
shall make any extraordinary distributions of cash or property to its
shareholders, or effect a merger (including, without limitation, a triangular
merger), a sale of all or substantially all of its assets, or any other similar
extraordinary transaction without notifying the Limited Partners of its
intention to make such distribution or effect such merger, sale, or other
extraordinary transaction at least ten (10) Business Days prior to the record
date to determine shareholders eligible to receive such distribution or to vote
upon the approval of such merger, sale, or other extraordinary transaction (or,
if no such record date is applicable, at least ten (10) business days before
consummation of such merger, sale, or other extraordinary transaction). In
addition, pursuant to Section 5.1.C, the General Partner must provide notice to
the Limited Partners prior to making a distribution per Share to the
shareholders of the General Partner Entity that is not equal to the
distribution per Unit to be made to the Limited Partners for the same calendar
quarter. This provision for such notice shall not be deemed either (i) to
permit any transaction that otherwise is prohibited by this Agreement or
requires a Consent of the Partners or (ii) to require a Consent of the Limited
Partners to a transaction that does not otherwise require Consent under this
Agreement. Each Limited Partner agrees, as a condition to the receipt of the
notice pursuant hereto, to keep confidential the information set forth therein
until such time as the General Partner Entity has made
- 36 -
<PAGE> 42
public disclosure thereof and to use such information during such period of
confidentiality solely for purposes of determining whether or not to exercise
the Redemption Right; provided that a Limited Partner may disclose such
information to its attorney, accountant and/or financial advisor for purposes
of obtaining advice with respect to such exercise so long as such attorney,
accountant and/or financial advisor agrees to receive and hold such information
subject to this confidentiality requirement.
D. Confidentiality. Notwithstanding any other
provision of this Section 8.5, the General Partner may keep confidential from
the Limited Partners, for such period of time as the General Partner determines
in its sole and absolute discretion to be reasonable, any information that (i)
the General Partner reasonably believes to be in the nature of trade secrets or
other information the disclosure of which the General Partner in good faith
believes is not in the best interests of the Partnership or could damage the
Partnership or its business or (ii) the Partnership is required by law or by
agreements with unaffiliated third parties to keep confidential.
SECTION 8.6 REDEMPTION RIGHT
A. General.
(i) Subject to Section 8.6.C below, a Limited
Partner, on or after the date one (1) year after the issuance
of a Partnership Unit to a Limited Partner pursuant to
Article IV hereof (or pursuant to a prior version of this
Agreement), or such other period as may be specified by the
General Partner with respect to Partnership Units issued
after the Effective Date, the holder of a Partnership Unit if
other than the General Partner, CPT LP, the General Partner
Entity or any Subsidiary of the foregoing) shall have the
right (the "Redemption Right") to require the Partnership to
redeem on a Specified Redemption Date all or a portion of the
Partnership Units held by such Limited Partner at a
redemption price equal to and in the form of the Cash Amount
to be paid by the Partnership. The Redemption Right shall be
exercised pursuant to a Notice of Redemption delivered to the
Partnership (with a copy to the General Partner) by the
Limited Partner who is exercising the Redemption Right (the
"Redeeming Partner"). A Limited Partner may not exercise the
Redemption Right for less than one thousand (1,000)
Partnership Units or, if such Redeeming Partner holds less
than one thousand (1,000) Partnership Units, for less than
all of the Partnership Units held by such Redeeming Partner.
(ii) The Redeeming Partner shall have no right with
respect to any Partnership Units so redeemed to receive any
distributions paid after the Specified Redemption Date.
(iii) The Assignee of any Limited Partner may
exercise the rights of such Limited Partner pursuant to this
Section 8.6, and such Limited Partner shall be deemed to have
assigned such rights to such Assignee and shall be bound by
the exercise of such rights by such Limited Partner's
Assignee. In connection with any exercise of the such rights
by such Assignee on behalf of such Limited Partner, the Cash
Amount shall be paid by the Partnership directly to such
Assignee and not to such Limited Partner.
- 37 -
<PAGE> 43
(iv) In the event that the General Partner provides
notice to the Limited Partners, pursuant to Section 8.5.C or
Section 5.1.C, with respect to Partnership Units outstanding
on the Effective Date, the Redemption Right shall be
exercisable, without regard to whether the Partnership Units
have been outstanding for one year, during the period
commencing on the date on which the General Partner provides
such notice and ending on the record date to determine
shareholders eligible to receive such distribution or to vote
upon the approval of such merger, sale, or other
extraordinary transaction (or, if no such record date is
applicable, at least ten (10) business days before the
consummation of such merger, sale, or other extraordinary
transaction). In the event that this subparagraph (iv)
applies, the Specified Redemption Date is the date on which
the Partnership and the General Partner receive notice of
exercise of the Redemption Right, rather than ten (10)
Business Days after receipt of the Notice of Redemption.
B. General Partner Assumption of Right.
(i) If a Limited Partner has delivered a Notice of
Redemption, the General Partner Entity may, in its sole and
absolute discretion (subject to any limitations on ownership
and transfer of Shares set forth in the Articles of
Incorporation), elect to assume directly and satisfy a
Redemption Right by paying to the Redeeming Partner either
the Cash Amount or the Shares Amount, as the General Partner
Entity determines in its sole and absolute discretion
(provided that payment of the Redemption Amount in the form
of Shares shall be in Shares registered under Section 12 of
the Exchange Act and listed for trading on the exchange or
national market on which the Shares are Publicly Traded, and
provided further that in the event that the Shares are not
Publicly Traded at the time a Redeeming Partner exercises its
Redemption Right, the Redemption Amount shall be paid only in
the form of the Cash Amount unless the Redeeming Partner and
the General Partner, in their sole and absolute discretion,
consent to payment of the Redemption Amount in the form of
the Shares Amount), on the Specified Redemption Date,
whereupon the General Partner Entity shall acquire the
Partnership Units offered for redemption by the Redeeming
Partner and shall be treated for all purposes of this
Agreement as the owner of such Partnership Units. Unless the
General Partner Entity, in its sole and absolute discretion,
shall exercise its right to assume directly and satisfy the
Redemption Right, neither the General Partner nor the General
Partner Entity shall have any obligation to the Redeeming
Partner or to the Partnership with respect to the Redeeming
Partner's exercise of the Redemption Right. In the event the
General Partner Entity shall exercise its right to satisfy
the Redemption Right in the manner described in the first
sentence of this Section 8.6.B and shall fully perform its
obligations in connection therewith, the Partnership shall
have no right or obligation to pay any amount to the
Redeeming Partner with respect to such Redeeming Partner's
exercise of the Redemption Right, and each of the Redeeming
Partner, the Partnership and the General Partner shall, for
federal income tax purposes, treat the transaction between
the General Partner and the Redeeming Partner as a sale of
the Redeeming Partner's Partnership Units to the General
Partner.
- 38 -
<PAGE> 44
(ii) In the event that the General Partner Entity
determines to pay the Redeeming Partner the Redemption Amount
in the form of Shares, the total number of Shares to be paid
to the Redeeming Partner in exchange for the Redeeming
Partner's Partnership Units shall be the applicable Shares
Amount. In the event this amount is not a whole number of
Shares, the Redeeming Partners shall be paid (i) that number
of Shares which equals the nearest whole number less than
such amount plus (ii) an amount of cash which the General
Partner determines, in its reasonable discretion, to
represent the fair value of the remaining fractional Share
which would otherwise be payable to the Redeeming Partner.
(iii) Each Redeeming Partner agrees to execute such
documents as the General Partner may reasonably require in
connection with the issuance of Shares upon exercise of the
Redemption Right.
C. Exceptions to Exercise of Redemption Right.
Notwithstanding the provisions of Sections 8.6.A and 8.6.B above, a Partner
shall not be entitled to exercise the Redemption Right pursuant to Section
8.6.A above if (but only so long as) the delivery of Shares to such Partner on
the Specified Redemption Date (i) would be prohibited under the Articles of
Incorporation or (ii) as long as the Shares are Publicly Traded, would be
prohibited under applicable federal or state securities laws or regulations (in
each case regardless of whether the General Partner would in fact assume and
satisfy the Redemption Right).
D. No Liens on Partnership Units Delivered for
Redemption. Each Limited Partner covenants and agrees with the General Partner
that all Partnership Units delivered for redemption shall be delivered to the
Partnership or the General Partner, as the case may be, free and clear of all
liens, and, notwithstanding anything contained herein to the contrary, neither
the General Partner nor the Partnership shall be under any obligation to
acquire Partnership Units which are or may be subject to any liens. Each
Limited Partner further agrees that, in the event any state or local property
transfer tax is payable as a result of the transfer of its Partnership Units to
the Partnership or the General Partner, such Limited Partner shall assume and
pay such transfer tax.
E. Additional Partnership Interests. In the event that
the Partnership issues Partnership Interests to any Additional Limited Partner
pursuant to Article IV hereof, the General Partner shall make such amendments
to this Section 8.6 as it determines are necessary to reflect the issuance of
such Partnership Interests (including setting forth any restrictions on the
exercise of the Redemption Right with respect to such Partnership Interests).
ARTICLE IX
BOOKS, RECORDS, ACCOUNTING AND REPORTS
SECTION 9.1 RECORDS AND ACCOUNTING
The General Partner shall keep or cause to be kept at the principal
office of the Partnership appropriate books and records with respect to the
Partnership's business, including, without limitation, all books and records
necessary to provide to the Limited Partners any information, lists and copies
of documents required to be provided pursuant to Section 9.3 below. Any records
- 39 -
<PAGE> 45
maintained by or on behalf of the Partnership in the regular course of its
business may be kept on, or be in the form of, punch cards, magnetic tape,
photographs, micrographics or any other information storage device, provided
that the records so maintained are convertible into clearly legible written
form within a reasonable period of time. The books of the Partnership shall be
maintained on an accrual basis in accordance with generally accepted accounting
principles for financial reporting purposes and in accordance with tax
accounting principles for tax reporting purposes.
SECTION 9.2 FISCAL YEAR
The fiscal year of the Partnership shall be the calendar year.
SECTION 9.3 REPORTS
A. Annual Reports. As soon as practicable, but in no
event later than the date on which the General Partner Entity mails its annual
report to its stockholders, the General Partner shall cause to be mailed to
each Limited Partner an annual report, as of the close of the most recently
ended Partnership Year, containing financial statements of the Partnership, or
of the General Partner Entity if such statements are prepared on a consolidated
basis with the Partnership, for such Partnership Year, presented in accordance
with generally accepted accounting principles, such statements to be audited by
a nationally recognized firm of independent public accountants selected by the
General Partner.
B. Quarterly Reports. If and to the extent that the
General Partner Entity mails quarterly reports to its stockholders, as soon as
practicable, but in no event later than the date on which such reports are
mailed, the General Partner shall cause to be mailed to each Limited Partner a
report containing unaudited financial statements, as of the last day of such
calendar quarter, of the Partnership, or of the General Partner Entity if such
statements are prepared solely on a consolidated basis with the Partnership,
and such other information as may be required by applicable law or regulation,
or as the General Partner determines to be appropriate.
ARTICLE X
TAX MATTERS
SECTION 10.1 PREPARATION OF TAX RETURNS
The General Partner shall arrange for the preparation and timely
filing of all returns of Partnership income, gains, deductions, losses and
other items required of the Partnership for federal and state income tax
purposes and shall use all reasonable efforts to furnish, within ninety (90)
days of the close of each taxable year, the tax information reasonably required
by Limited Partners for federal and state income tax reporting purposes.
- 40 -
<PAGE> 46
SECTION 10.2 TAX ELECTIONS
Except as otherwise provided herein, the General Partner shall, in its
sole and absolute discretion, determine whether to make any available election
pursuant to the Code. The General Partner shall have the right to seek to
revoke any such election (including, without limitation, the election under
Section 754 of the Code previously made) upon the General Partner's
determination in its sole and absolute discretion that such revocation is in
the best interests of the Partners.
SECTION 10.3 TAX MATTERS PARTNER
A. General. The General Partner shall be the "tax
matters partner" of the Partnership for federal income tax purposes. Pursuant
to Section 6223(c)(3) of the Code, upon receipt of notice from the IRS of the
beginning of an administrative proceeding with respect to the Partnership, the
tax matters partner shall furnish the IRS with the name, address, taxpayer
identification number and profit interest of each of the Limited Partners and
any Assignees; provided, however, that such information is provided to the
Partnership by the Limited Partners.
B. Powers. The tax matters partner is authorized, but
not required:
(1) to enter into any settlement with the IRS
with respect to any administrative or judicial proceedings for the adjustment
of Partnership items required to be taken into account by a Partner for income
tax purposes (such administrative proceedings being referred to as a "tax
audit" and such judicial proceedings being referred to as "judicial review"),
and in the settlement agreement the tax matters partner may expressly state
that such agreement shall bind all Partners, except that such settlement
agreement shall not bind any Partner (i) who (within the time prescribed
pursuant to the Code and Regulations) files a statement with the IRS providing
that the tax matters partner shall not have the authority to enter into a
settlement agreement on behalf of such Partner or (ii) who is a "notice
partner" (as defined in Section 6231(a)(8) of the Code) or a member of a
"notice group" (as defined in Section 6223(b)(2) of the Code);
(2) in the event that a notice of a final
administrative adjustment at the Partnership level of any item required to be
taken into account by a Partner for tax purposes (a "final adjustment") is
mailed to the tax matters partner, to seek judicial review of such final
adjustment, including the filing of a petition for readjustment with the Tax
Court or the filing of a complaint for refund with the United States Claims
Court or the District Court of the United States for the district in which the
Partnership's principal place of business is located;
(3) to intervene in any action brought by any
other Partner for judicial review of a final adjustment;
(4) to file a request for an administrative
adjustment with the IRS at any time and, if any part of such request is not
allowed by the IRS, to file an appropriate pleading (petition or complaint) for
judicial review with respect to such request;
(5) to enter into an agreement with the IRS to
extend the period for assessing any tax which is attributable to any item
required to be taken into account by a Partner for tax purposes, or an item
affected by such item; and
- 41 -
<PAGE> 47
(6) to take any other action on behalf of the
Partners of the Partnership in connection with any tax audit or judicial review
proceeding to the extent permitted by applicable law or regulations.
The taking of any action and the incurring of any expense by the tax
matters partner in connection with any such proceeding, except to the extent
required by law, is a matter in the sole and absolute discretion of the tax
matters partner and the provisions relating to indemnification of the General
Partner set forth in Section 7.7 hereof shall be fully applicable to the tax
matters partner in its capacity as such.
C. Reimbursement. The tax matters partner shall receive
no compensation for its services. All third party costs and expenses incurred
by the tax matters partner in performing its duties as such (including legal
and accounting fees and expenses) shall be borne by the Partnership. Nothing
herein shall be construed to restrict the Partnership from engaging an
accounting firm or a law firm to assist the tax matters partner in discharging
its duties hereunder, as long as the compensation paid by the Partnership for
such services is reasonable.
SECTION 10.4 ORGANIZATIONAL EXPENSES
The Partnership shall elect to deduct expenses, if any, incurred by it
in organizing the Partnership ratably over a sixty (60) month period as
provided in Section 709 of the Code.
SECTION 10.5 WITHHOLDING
Each Limited Partner hereby authorizes the Partnership to withhold
from or pay on behalf of or with respect to such Limited Partner any amount of
federal, state, local, or foreign taxes that the General Partner determines
that the Partnership is required to withhold or pay with respect to any amount
distributable or allocable to such Limited Partner pursuant to this Agreement,
including, without limitation, any taxes required to be withheld or paid by the
Partnership pursuant to Section 1441, 1442, 1445, or 1446 of the Code. Any
amount paid on behalf of or with respect to a Limited Partner shall constitute
a recourse loan by the Partnership to such Limited Partner, which loan shall be
repaid by such Limited Partner within fifteen (15) days after notice from the
General Partner that such payment must be made unless (i) the Partnership
withholds such payment from a distribution which would otherwise be made to the
Limited Partner or (ii) the General Partner determines, in its sole and
absolute discretion, that such payment may be satisfied out of the available
funds of the Partnership which would, but for such payment, be distributed to
the Limited Partner. Any amounts withheld pursuant to the foregoing clauses (i)
or (ii) shall be treated as having been distributed to such Limited Partner.
Each Limited Partner hereby unconditionally and irrevocably grants to the
Partnership a security interest in such Limited Partner's Partnership Interest
to secure such Limited Partner's obligation to pay to the Partnership any
amounts required to be paid pursuant to this Section 10.5. In the event that a
Limited Partner fails to pay any amounts owed to the Partnership pursuant to
this Section 10.5 when due, the General Partner may, in its sole and absolute
discretion, elect to make the payment to the Partnership on behalf of such
defaulting Limited Partner, and in such event shall be deemed to have loaned
such amount to such defaulting Limited Partner and shall succeed to all rights
and remedies of the Partnership as against such defaulting Limited Partner. In
such event the General Partner shall have the right to receive distributions
that would otherwise be distributable to such defaulting Limited Partner until
such time as such loan, together with all interest
- 42 -
<PAGE> 48
thereon, has been paid in full, and any such distributions so received by the
General Partner shall be treated as having been distributed to the defaulting
Limited Partner and immediately paid by the defaulting Limited Partner to the
General Partner in repayment of such loan. Any amounts payable by a Limited
Partner hereunder shall bear interest at the lesser of (A) the base rate on
corporate loans at large United States money center commercial banks, as
published from time to time in the Wall Street Journal, plus four (4)
percentage points or (B) the maximum lawful rate of interest on such
obligation, such interest to accrue from the date such amount is due (i.e.,
fifteen (15) days after demand) until such amount is paid in full. Each Limited
Partner shall take such actions as the Partnership or the General Partner shall
request in order to perfect or enforce the security interest created hereunder.
ARTICLE XI
TRANSFERS AND WITHDRAWALS
SECTION 11.1 TRANSFER
A. Definition. The term "transfer," when used in this
Article XI with respect to a Partnership Interest or a Partnership Unit, shall
be deemed to refer to a transaction by which the General Partner purports to
assign all or any part of its General Partner Interest to another Person or by
which a Limited Partner purports to assign all or any part of its Limited
Partner Interest to another Person, and includes a sale, assignment, gift,
pledge, encumbrance, hypothecation, mortgage, exchange or any other disposition
by law or otherwise. The term "transfer" when used in this Article XI does not
include (i) any redemption or repurchase of Partnership Units by the
Partnership from a Partner (including the General Partner) otherwise permitted
under this Agreement or (ii) any acquisition of Partnership Units from a
Limited Partner (other than CPT LP) by the General Partner Entity or the
General Partner pursuant to Section 8.6 hereof or otherwise.
B. General. No Partnership Interest shall be
transferred, in whole or in part, except in accordance with the terms and
conditions set forth in this Article XI. Any transfer or purported transfer of
a Partnership Interest not made in accordance with this Article XI shall be
null and void.
SECTION 11.2 TRANSFERS OF PARTNERSHIP INTERESTS OF GENERAL
PARTNER
A. Neither the General Partner, CPT LP, nor the General
Partner Entity may transfer any of its Partnership Interest (except for a
transfer of Partnership Units by CPT LP to the General Partner pursuant to
Section 4.3 or in connection with a transaction described in Section 11.2.B
below or as otherwise expressly permitted under this Agreement), nor shall the
General Partner withdraw as General Partner except in connection with a
transaction described in Section 11.2.B below.
B. Neither the General Partner, CPT LP, nor the General
Partner Entity shall engage in any merger (including a triangular merger),
consolidation or other combination with or into another person, sale of all or
substantially all of its assets or any reclassification, recapitalization or
change of outstanding Shares (other than a change in par value, or from par
value to no par value,
- 43 -
<PAGE> 49
or as a result of a subdivision or combination as described in the definition
of "Conversion Factor") ("Termination Transaction"), unless either:
(i) the Termination Transaction has been
approved by the Consent of the Outside Limited Partners; or
(ii) in connection with such Termination
Transaction, all Limited Partners either will receive, or
will have the right to elect to receive, for each Partnership
Unit an amount of cash, securities, or other property equal
to the product of the Conversion Factor and the greatest
amount of cash, securities or other property paid to a holder
of Shares corresponding to such Partnership Unit in
consideration of one such Share at any time during the period
from and after the date on which the Termination Transaction
is consummated (as determined by the General Partner, in its
reasonable judgment); provided that if, in connection with
the Termination Transaction, a purchase, tender or exchange
offer shall have been made to and accepted by the holders of
more than fifty percent (50%) of the outstanding Shares, each
holder of Partnership Units must receive, or must have the
right to elect to receive, the greatest amount of cash,
securities, or other property which such holder would have
received had it exercised the Redemption Right and received
Shares in exchange for its Partnership Units immediately
prior to the expiration of such purchase, tender or exchange
offer and had thereupon accepted such purchase, tender or
exchange offer.
SECTION 11.3 LIMITED PARTNERS' RIGHTS TO TRANSFER
A. General. Except to the extent expressly permitted in
Sections 11.3.B and 11.3.C or in connection with the exercise of a Redemption
Right pursuant to Section 8.6, a Limited Partner may not transfer all or any
portion of its Partnership Interest, or any of such Limited Partner's economic
rights as a Limited Partner, without the prior written consent of the General
Partner, which consent may be withheld by the General Partner, in its sole and
absolute discretion, for any reason or for no reason. Any transfer otherwise
permitted under Section 11.3.B and 11.3.C shall be subject to the conditions
set forth in Sections 11.3.D, 11.3.E, and 11.3.F, and all permitted transfers
shall be subject to Section 11.4.
B. Incapacitated Limited Partners. If a Limited Partner
is subject to Incapacity, the executor, administrator, trustee, committee,
guardian, conservator or receiver of such Limited Partner's estate shall have
all the rights of a Limited Partner, but not more rights than those enjoyed by
other Limited Partners for the purpose of settling or managing the estate and
such power as the Incapacitated Limited Partner possessed to transfer all or
any part of its interest in the Partnership. The Incapacity of a Limited
Partner, in and of itself, shall not dissolve or terminate the Partnership.
C. Permitted Transfers. A Limited Partner (other than
CPT LP) may transfer, with or without the consent of the General Partner, all
or a portion of its Partnership Units (i) in the case of a Limited Partner who
is an individual, to a member of his Immediate Family, any trust formed solely
for the benefit of himself and/or members of his Immediate Family, or any
partnership, limited liability company, joint venture, corporation or other
business entity comprised only of himself and/or members of his Immediate
Family and entities the ownership interests in which are owned by or for the
benefit of himself and/or members of his Immediate Family, (ii) in the case of
a Limited Partner
- 44 -
<PAGE> 50
which is a trust, to the beneficiaries of such trust, (iii) in the case of a
Limited Partner which is a partnership, limited liability company, joint
venture, corporation or other business entity to which Partnership Units were
transferred pursuant to (i) above, to its partners, owners, or stockholders, as
the case may be, who are members of the Immediate Family of or are actually the
Person(s) who transferred Partnership Units to it pursuant to (i) above, (iv)
in the case of a Limited Partner which owned Partnership Units as of the
Effective Date and which is a partnership, limited liability company, joint
venture, corporation or other business entity, to its partners, owners, or
stockholders, as the case may be, or the Persons owning the beneficial
interests in any of its partners, owners or stockholders which are entities, in
each case, as of the Effective Date, (v) pursuant to a gift or other transfer
without consideration, (vi) pursuant to applicable laws of descent or
distribution, (vii) to another Limited Partner, and (viii) pursuant to a grant
of security interest or other encumbrance affected in a bona fide transaction
or as a result of the exercise of remedies related thereto, subject to the
provisions of Section 11.3.F hereof. A trust or other entity will be considered
formed "solely for the benefit" of a Partner's Immediate Family even though
some other Person has a remainder interest under or with respect to such trust
or other entity. A Limited Partner that makes a transfer under this Section
11.3.C, shall provide written notice to the General Partner of such transfer.
D. No Transfers Violating Securities Laws. The General
Partner may prohibit any transfer of Partnership Units by a Limited Partner if,
in the opinion of legal counsel to the Partnership, such transfer would require
filing of a registration statement under the Securities Act or would otherwise
violate any federal, or state securities laws or regulations applicable to the
Partnership or the Partnership Unit.
E. No Transfers Affecting Tax Status of Partnership. No
transfer of Partnership Units by a Limited Partner may be made to any Person if
(i) in the opinion of legal counsel for the Partnership, it would result in the
Partnership being treated as an association taxable as a corporation for
federal income tax purposes or would result in a termination of the Partnership
for federal income tax purposes, (ii) in the opinion of legal counsel for the
Partnership, it would adversely affect the ability of the General Partner
Entity to continue to qualify as a REIT or would subject the General Partner
Entity to any additional taxes under Section 857 or Section 4981 of the Code or
(iii) such transfer is effectuated through an "established securities market"
or a "secondary market (or the substantial equivalent thereof)" within the
meaning of Section 7704 of the Code.
F. No Transfers to Holders of Nonrecourse Liabilities.
No pledge or transfer of any Partnership Units may be made to a lender to the
Partnership or any Person who is related (within the meaning of Section
1.752-4(b) of the Regulations) to any lender to the Partnership whose loan
constitutes a Nonrecourse Liability without the consent of the General Partner,
in its sole and absolute discretion; provided that as a condition to such
consent the lender will be required to enter into an arrangement with the
Partnership and the General Partner to exchange or redeem for the Redemption
Amount any Partnership Units in which a security interest is held
simultaneously with the time at which such lender would be deemed to be a
partner in the Partnership for purposes of allocating liabilities to such
lender under Section 752 of the Code.
SECTION 11.4 SUBSTITUTED LIMITED PARTNERS
A. Consent of General Partner. No Limited Partner
shall have the right to substitute a transferee as a Limited Partner in its
place (whether or not the transfer of the Limited
- 45 -
<PAGE> 51
Partner's Partnership Interest is permitted under Section 11.3). The General
Partner shall, however, have the right to consent to the admission of a
transferee of the interest of a Limited Partner pursuant to this Section 11.4
as a Substituted Limited Partner, which consent may be given or withheld by the
General Partner in its sole and absolute discretion and for any reason or no
reason. The General Partner's failure or refusal to permit a transferee of any
such interests to become a Substituted Limited Partner shall not give rise to
any cause of action against the Partnership or any Partner.
B. Rights of Substituted Limited Partner. A transferee
who has been admitted as a Substituted Limited Partner in accordance with this
Article XI shall have all the rights and powers and be subject to all the
restrictions and liabilities of a Limited Partner under this Agreement. The
admission of any transferee as a Substituted Limited Partner shall be
conditioned upon the transferee executing and delivering to the Partnership an
acceptance of all the terms and conditions of this Agreement (including,
without limitation, the provisions of Section 2.4 and such other documents or
instruments as may be required to effect the admission).
C. Amendment and Restatement of Exhibit A. Upon the
admission of a Substituted Limited Partner, the General Partner shall amend and
restate Exhibit A hereto to reflect the name, address, Capital Account, number
of Partnership Units, and Percentage Interest of such Substituted Limited
Partner and to eliminate or adjust, if necessary, the name, address, Capital
Account and Percentage Interest of the predecessor of such Substituted Limited
Partner (and any other Partner, as necessary.)
SECTION 11.5 ASSIGNEES
If the General Partner, in its sole and absolute discretion, does not
consent to the admission of any permitted transferee under Section 11.3 above
as a Substituted Limited Partner, as described in Section 11.4 above, such
transferee shall be considered an Assignee for purposes of this Agreement. An
Assignee shall be entitled to all the rights of an assignee of a limited
partner interest under the Act, including the right to receive distributions
from the Partnership and the share of Net Income, Net Losses, gain, loss and
Recapture Income attributable to the Partnership Units assigned to such
transferee, and shall have the rights granted to the Limited Partners under
Section 8.6, but shall not be deemed to be a holder of Partnership Units for
any other purpose under this Agreement, and shall not be entitled to vote such
Partnership Units in any matter presented to the Limited Partners for a vote
(such Partnership Units being deemed to have been voted in the same manner as
CPT LP voted, or if CPT LP is not eligible to vote, then as recommended by the
General Partner). In the event any such transferee desires to make a further
assignment of any such Partnership Units, such transferee shall be subject to
all the provisions of this Article XI to the same extent and in the same manner
as any Limited Partner desiring to make an assignment of Partnership Units. The
General Partner shall have no liability under any circumstances with respect to
any Assignee as to which it does not have notice.
SECTION 11.6 GENERAL PROVISIONS
A. Withdrawal of Limited Partner. No Limited Partner
may withdraw from the Partnership other than as a result of a permitted
transfer of all of such Limited Partner's Partnership Units in accordance with
this Article XI or pursuant to redemption of all of its Partnership Units under
Section 8.6 hereof.
- 46 -
<PAGE> 52
B. Termination of Status as Limited Partner. Any
Limited Partner who shall transfer all of its Partnership Units in a transfer
permitted pursuant to this Article XI or pursuant to redemption of all of its
Partnership Units under Section 8.6 hereof shall cease to be a Limited Partner.
C. Timing of Transfers. Transfers pursuant to this
Article XI may only be made on the first day of a fiscal quarter of the
Partnership, unless the General Partner otherwise agrees.
D. Allocations. If any Partnership Interest is
transferred during any quarterly segment of the Partnership's fiscal year in
compliance with the provisions of this Article XI or redeemed or transferred
pursuant to Section 8.6 hereof, Net Income, Net Losses, each item thereof and
all other items attributable to such interest for such fiscal year shall be
divided and allocated between the transferor Partner and the transferee Partner
by taking into account their varying interests during the fiscal year in
accordance with Section 706(d) of the Code, using the interim closing of the
books method (unless the General Partner, in its sole and absolute discretion,
elects to adopt a daily, weekly, or a monthly proration method, in which event
Net Income, Net Losses, each item thereof and all other items attributable to
such interest for such fiscal year shall be prorated based upon the applicable
method selected by the General Partner). Solely for purposes of making such
allocations, each of such items for the calendar month in which the transfer or
redemption occurs shall be allocated to the Person who is a Partner as of
midnight on the last day of said month. All distributions of Available Cash
attributable to any Partnership Unit with respect to which the Partnership
Record Date is before the date of such transfer, assignment or redemption shall
be made to the transferor Partner or the Redeeming Partner, as the case may be,
and, in the case of a transfer or assignment other than a redemption, all
distributions of Available Cash thereafter attributable to such Partnership
Unit shall be made to the transferee Partner.
ARTICLE XII
ADMISSION OF PARTNERS
SECTION 12.1 ADMISSION OF SUCCESSOR GENERAL PARTNER
A successor to all of the General Partner's General Partner Interest
pursuant to Section 11.2 hereof who is proposed to be admitted as a successor
General Partner shall be admitted to the Partnership as the General Partner,
effective upon such transfer. Any such transferee shall carry on the business
of the Partnership without dissolution. In each case, the admission shall be
subject to the successor General Partner's executing and delivering to the
Partnership an acceptance of all of the terms and conditions of this Agreement
and such other documents or instruments as may be required by Limited Partners
holding a majority of the Percentage Interests held by the Limited Partners to
effect the admission.
SECTION 12.2 ADMISSION OF ADDITIONAL LIMITED PARTNERS
A. General. No Person shall be admitted as an
Additional Limited Partner without the consent of the General Partner, which
consent shall be given or withheld in the General Partner's sole and absolute
discretion. A Person who makes a Capital Contribution to the Partnership in
accordance with this Agreement, including, without limitation, pursuant to
Section 4.1.C hereof, or
- 47 -
<PAGE> 53
who exercises an option to receive Partnership Units shall be admitted to the
Partnership as an Additional Limited Partner only with the consent of the
General Partner, which consent may be given its sole and absolute discretion,
and only upon furnishing to the General Partner (i) evidence of acceptance in
form satisfactory to the General Partner of all of the terms and conditions of
this Agreement, including, without limitation, the power of attorney granted in
Section 15.11 hereof and (ii) such other documents or instruments as may be
required in the discretion of the General Partner in order to effect such
Person's admission as an Additional Limited Partner. The admission of any
Person as an Additional Limited Partner shall become effective on the date upon
which the name of such Person is recorded on the books and records of the
Partnership, following the consent of the General Partner to such admission.
B. Allocations to Additional Limited Partners. If any
Additional Limited Partner is admitted to the Partnership on any day other than
the first day of a Partnership Year, then Net Income, Net Losses, each item
thereof and all other items allocable among Partners and Assignees for such
Partnership Year shall be allocated among such Additional Limited Partner and
all other Partners and Assignees by taking into account their varying interests
during the Partnership Year in accordance with Section 706(d) of the Code,
using the interim closing of the books method (unless the General Partner, in
its sole and absolute discretion, elects to adopt a daily, weekly or monthly
proration method, in which event Net Income, Net Losses, and each item thereof
would be prorated based upon the applicable period selected by the General
Partner). Solely for purposes of making such allocations, each of such items
for the calendar month in which an admission of any Additional Limited Partner
occurs shall be allocated among all the Partners and Assignees including such
Additional Limited Partner. All distributions of Available Cash with respect to
which the Partnership Record Date is before the date of such admission shall be
made solely to Partners and Assignees other than the Additional Limited
Partner, and all distributions of Available Cash thereafter shall be made to
all the Partners and Assignees including such Additional Limited Partner.
SECTION 12.3 AMENDMENT OF AGREEMENT AND CERTIFICATE OF LIMITED
PARTNERSHIP
For the admission to the Partnership of any Partner, the General
Partner shall take all steps necessary and appropriate under the Act to amend
the records of the Partnership (including an amendment and restatement of
Exhibit A hereto) and, if necessary, to prepare as soon as practical an
amendment of this Agreement and, if required by law, shall prepare and file an
amendment to the Certificate and may for this purpose exercise the power of
attorney granted pursuant to Section 2.4 hereof.
ARTICLE XIII
DISSOLUTION AND LIQUIDATION
SECTION 13.1 DISSOLUTION
The Partnership shall not be dissolved by the admission of Substituted
Limited Partners or Additional Limited Partners or by the admission of a
successor General Partner in accordance with the terms of this Agreement. Upon
the withdrawal of the General Partner, any successor General Partner shall
continue the business of the Partnership. The Partnership shall dissolve, and
its affairs shall be wound up, upon the first to occur of any of the following
("Liquidating Events") :
- 48 -
<PAGE> 54
(i) the expiration of its term as provided in
Section 2.5 hereof;
(ii) an event of withdrawal of the General Partner,
as defined in the Act (other than an event of bankruptcy), unless, within
ninety (90) days after the withdrawal a "majority in interest" (as defined
below) of the remaining Partners Consent in writing to continue the business of
the Partnership and to the appointment, effective as of the date of withdrawal,
of a substitute General Partner;
(iii) through December 31, 2043, an election to
dissolve the Partnership made by the General Partner with the Consent of
Limited Partners holding two-thirds (2/3) or more of the Partnership Units then
held by Limited Partners (including Partnership Units held by the General
Partner as a Limited Partner and Units held by CPT LP);
(iv) on or after January 1, 2044, an election to
dissolve the Partnership made by the General Partner, in its sole and absolute
discretion;
(v) entry of a decree of judicial dissolution of
the Partnership pursuant to the provisions of the Act;
(vi) the sale of all or substantially all of the
assets and properties of the Partnership for cash or for marketable securities;
or
(vii) a final and non-appealable judgment is
entered by a court of competent jurisdiction ruling that the General Partner is
bankrupt or insolvent, or a final and non-appealable order for relief is
entered by a court with appropriate jurisdiction against the General Partner,
in each case under any federal or state bankruptcy or insolvency laws as now or
hereafter in effect, unless prior to or within ninety days after of the entry
of such order or judgment a "majority in interest" (as defined below) of the
remaining Partners Consent in writing to continue the business of the
Partnership and to the appointment, effective as of a date prior to the date of
such order or judgment, of a substitute General Partner.
As used herein, a "majority in interest" shall refer to Partners (excluding the
General Partner) who hold more than fifty percent (50%) of the outstanding
Percentage Interests.
SECTION 13.2 WINDING UP
A. General. Upon the occurrence of a Liquidating Event,
the Partnership shall continue solely for the purposes of winding up its
affairs in an orderly manner, liquidating its assets, and satisfying the claims
of its creditors and Partners. No Partner shall take any action that is
inconsistent with, or not necessary to or appropriate for, the winding up of
the Partnership's business and affairs. The General Partner (or, in the event
there is no remaining General Partner, any Person elected by a majority in
interest of the Limited Partners (the "Liquidator")) shall be responsible for
overseeing the winding up and dissolution of the Partnership and shall take
full account of the Partnership's liabilities and property and the Partnership
property shall be liquidated as promptly as is consistent with obtaining the
fair value thereof, and the proceeds therefrom (which may, to the
- 49 -
<PAGE> 55
extent determined by the General Partner, include equity or other securities of
the General Partner or any other entity) shall be applied and distributed in
the following order:
(1) First, to the payment and discharge of all of
the Partnership's debts and liabilities to creditors other than the Partners;
(2) Second, to the payment and discharge of all of
the Partnership's debts and liabilities to the Partners; and
(3) The balance, if any, to the Partners in
accordance with their Capital Accounts, after giving effect to all
contributions, distributions, and allocations for all periods.
The General Partner shall not receive any additional compensation for any
services performed pursuant to this Article XIII.
B. Deferred Liquidation. Notwithstanding the provisions
of Section 13.2.A above which require liquidation of the assets of the
Partnership, but subject to the order of priorities set forth therein, if prior
to or upon dissolution of the Partnership the Liquidator determines that an
immediate sale of part or all of the Partnership's assets would be impractical
or would cause undue loss to the Partners, the Liquidator may, in its sole and
absolute discretion, defer for a reasonable time the liquidation of any assets
except those necessary to satisfy liabilities of the Partnership (including to
those Partners as creditors) or distribute to the Partners, in lieu of cash, as
tenants in common and in accordance with the provisions of Section 13.2.A
above, undivided interests in such Partnership assets as the Liquidator deems
not suitable for liquidation. Any such distributions in kind shall be made only
if, in the good faith judgment of the Liquidator, such distributions in kind
are in the best interest of the Partners, and shall be subject to such
conditions relating to the disposition and management of such properties as the
Liquidator deems reasonable and equitable and to any agreements governing the
operation of such properties at such time. The Liquidator shall determine the
fair market value of any property distributed in kind using such reasonable
method of valuation as it may adopt.
C. Liquidating Trust. In the discretion of the General
Partner, a pro rata portion of the distributions that would otherwise be made
to the General Partner and Limited Partners pursuant to this Article XIII may
be: (A) distributed to a trust established for the benefit of the General
Partner and Limited Partners for the purposes of liquidating Partnership
assets, collecting amounts owed to the Partnership and paying any contingent or
unforeseen liabilities or obligations of the Partnership or of the General
Partner arising out of or in connection with the Partnership (in which case the
assets of any such trust shall be distributed to the General Partner and
Limited Partners from time to time, in the reasonable discretion of the General
Partner, in the same proportions as the amount distributed to such trust by the
Partnership would otherwise have been distributed to the General Partner and
Limited Partners pursuant to this Agreement); or (B) withheld to provide a
reasonable reserve for Partnership liabilities (contingent or otherwise) and to
reflect the unrealized portion of any installment obligations owed to the
Partnership, provided that such withheld amounts shall be distributed to the
General Partner and Limited Partners in the manner and order of priority set
forth in Section 13.2.A as soon as practicable.
- 50 -
<PAGE> 56
SECTION 13.3 COMPLIANCE WITH TIMING REQUIREMENTS OF REGULATIONS
Subject to Section 13.4 below, in the event the Partnership is
"liquidated" within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g),
distributions shall be made pursuant to this Article XIII to the General
Partner and Limited Partners who have positive Capital Accounts in compliance
with Regulations Section 1.704-1(b)(2)(ii)(b)(2). If any Partner has a deficit
balance in its Capital Account (after giving effect to all contributions,
distributions and allocations for all taxable years, including the year during
which such liquidation occurs), such Partner shall have no obligation to make
any contribution to the capital of the Partnership with respect to such
deficit, and such deficit shall not be considered a debt owed to the
Partnership or to any other Person for any purpose whatsoever.
SECTION 13.4 DEEMED DISTRIBUTION AND RECONTRIBUTION
Notwithstanding any other provision of this Article XIII, in the event
the Partnership is deemed liquidated within the meaning of Regulations Section
1.704-1(b)(2)(ii)(g) but no Liquidating Event has occurred, the Partnership's
property shall not be liquidated, the Partnership's liabilities shall not be
paid or discharged and the Partnership's affairs shall not be wound up.
Instead, for federal income tax purposes and for purposes of maintaining
Capital Accounts pursuant to Exhibit B hereto, the Partnership shall be deemed
to have distributed its assets in kind to the General Partner and Limited
Partners, who shall be deemed to have assumed and taken such assets subject to
all Partnership liabilities, all in accordance with their respective Capital
Accounts. Immediately thereafter, the General Partner and Limited Partners
shall be deemed to have recontributed the Partnership assets in kind to the
Partnership, which shall be deemed to have assumed and taken such assets
subject to all such liabilities.
SECTION 13.5 RIGHTS OF LIMITED PARTNERS
Except as otherwise provided in this Agreement, each Limited Partner
shall look solely to the assets of the Partnership for the return of its
Capital Contributions and shall have no right or power to demand or receive
property other than cash from the Partnership. Except as otherwise provided in
this Agreement, no Limited Partner shall have priority over any other Partner
as to the return of its Capital Contributions, distributions, or allocations.
SECTION 13.6 NOTICE OF DISSOLUTION
In the event a Liquidating Event occurs or an event occurs that would,
but for provisions of an election or objection by one or more Partners pursuant
to Section 13.1 above, result in a dissolution of the Partnership, the General
Partner shall, within thirty (30) days thereafter, provide written notice
thereof to each of the Partners.
SECTION 13.7 TERMINATION OF PARTNERSHIP AND CANCELLATION OF
CERTIFICATE OF LIMITED PARTNERSHIP
Upon the completion of the liquidation of the Partnership cash and
property as provided in Section 13.2 above, all Partnership Units shall be
cancelled, including the Redemption Right associated therewith, the Partnership
shall be terminated, the Certificate and all qualifications of the
- 51 -
<PAGE> 57
Partnership as a foreign limited partnership in jurisdictions other than the
State of Delaware shall be canceled, and such other actions as may be necessary
to terminate the Partnership shall be taken.
SECTION 13.8 REASONABLE TIME FOR WINDING UP
A reasonable time shall be allowed for the orderly winding up of the
business and affairs of the Partnership and the liquidation of its assets
pursuant to Section 13.2 above, in order to minimize any losses otherwise
attendant upon such winding-up, and the provisions of this Agreement shall
remain in effect among the Partners during the period of liquidation.
SECTION 13.9 WAIVER OF PARTITION
Each Partner hereby waives any right to partition of the Partnership
property.
SECTION 13.10 LIABILITY OF LIQUIDATOR
The Liquidator shall be indemnified and held harmless by the
Partnership from and against any and all claims, liabilities, costs, damages,
and causes of action of any nature whatsoever arising out of or incidental to
the Liquidator's taking of any action authorized under or within the scope of
this Agreement; provided, however, that the Liquidator shall not be entitled to
indemnification, and shall not be held harmless, where the claim, demand,
liability, cost, damage or cause of action at issue arises out of (A) a matter
entirely unrelated to the Liquidator's action or conduct pursuant to the
provisions of this Agreement or (B) the proven willful misconduct or gross
negligence of the Liquidator.
ARTICLE XIV
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS
SECTION 14.1 AMENDMENTS
A. General. Amendments to this Agreement may be
proposed by the General Partner or by any Limited Partners holding twenty-five
percent (25%) or more of the Partnership Interests. Following such proposal
(except an amendment pursuant to Section 14.1.B below), the General Partner
shall submit any proposed amendment to the Limited Partners. The General
Partner shall seek the written vote of the Partners on the proposed amendment
or shall call a meeting to vote thereon and to transact any other business that
it may deem appropriate. For purposes of obtaining a written vote, the General
Partner may require a response within a reasonable specified time, but not less
than fifteen (15) days, and failure to respond in such time period shall
constitute a vote which is consistent with the General Partner's recommendation
with respect to the proposal. Except as provided in Section 14.1.B, 14.1.C or
14.1.D below, a proposed amendment shall be adopted and be effective as an
amendment hereto if it is approved by the General Partner and it receives the
Consent of Partners holding a majority of the Partnership Units then held by
Limited Partners (including Limited Partner Interests held by the General
Partner and CPT LP).
B. Amendments Not Requiring Limited Partner Approval.
Notwithstanding Section 14.1.A or Section 14.1.C hereof, the General Partner
shall have the power, without the
- 52 -
<PAGE> 58
Consent of the Limited Partners, to amend this Agreement as may be required to
facilitate or implement any of the following purposes:
(1) to add to the obligations of the General
Partner or surrender any right or power granted to the General Partner or any
Affiliate of the General Partner for the benefit of the Limited Partners;
(2) to reflect the admission, substitution,
termination, or withdrawal of any Partner in accordance with this Agreement;
(3) to set forth the designations, rights, powers,
duties, and preferences of the holders of any additional Partnership Interests
issued pursuant to Article IV hereof (including, without limitation, to reflect
amendments expressly permitted under Sections 5.4, 6.2, and 8.6.E);
(4) to reflect a change that does not adversely
affect any of the Limited Partners in any material respect, or to cure any
ambiguity, correct or supplement any provision in this Agreement not
inconsistent with law or with other provisions, or make other changes with
respect to matters arising under this Agreement that will not be inconsistent
with law or with the provisions of this Agreement or as may be expressly
provided by any other provisions of this Agreement; and
(5) to satisfy any requirements, conditions, or
guidelines contained in any order, directive, opinion, ruling or regulation of
a federal, state or local agency or contained in federal, state or local law.
The General Partner shall notify the Limited Partners when any action under
this Section 14.1.B is taken.
C. Other Amendments Requiring Certain Limited Partner
Approval. Notwithstanding anything in this Section 14.1 to the contrary, this
Agreement shall not be amended without the Consent of such Partner adversely
affected if such amendment would (i) convert a Limited Partner's interest in
the Partnership into a general partner's interest, (ii) modify the limited
liability of a Limited Partner, (iii) alter rights of Partners to receive
distributions pursuant to Article V or the allocations specified in Article VI
(except as permitted pursuant to Sections 4.2, 5.1.F, 5.4, 6.2 and 14.1(B)(3)),
(iv) amend Section 8.6 or any defined terms set forth in Article I that relate
to the Redemption Right (except as permitted in Section 8.6.E), (v) cause the
termination of the Partnership prior to the time set forth in Sections 2.5 or
13.1, or (vi) amend this Section 14.1.C.
D. Amendments Requiring Limited Partner Approval
(Excluding General Partner and CPT LP). Notwithstanding Section 14.1.A or
Section 14.1.B hereof, the General Partner shall not amend Sections 4.2.A, 7.5,
7.6, 11.2, 13.1, 14.1.C or 14.2 without the Consent of the Outside Limited
Partners.
E. Amendment and Restatement of Exhibit A Not An
Amendment. Notwithstanding anything in this Article XIV or elsewhere in this
Agreement to the contrary, any amendment and restatement of Exhibit A hereto by
the General Partner to reflect events or changes otherwise authorized or
permitted by this Agreement, whether pursuant to Section 7.1.A(21) hereof
- 53 -
<PAGE> 59
or otherwise, shall not be deemed an amendment of this Agreement and may be
done at any time and from time to time, as necessary by the General Partner
without the Consent of the Limited Partners.
SECTION 14.2 MEETINGS OF THE PARTNERS
A. General. Meetings of the Partners may be called by
the General Partner and shall be called upon the receipt by the General Partner
of a written request by Limited Partners holding twenty-five percent (25%) or
more of the Partnership Interests. The call shall state the nature of the
business to be transacted. Notice of any such meeting shall be given to all
Partners not less than seven (7) days nor more than thirty (30) days prior to
the date of such meeting. Partners may vote in person or by proxy at such
meeting. Whenever the vote or Consent of Partners is permitted or required
under this Agreement, such vote or Consent may be given at a meeting of
Partners or may be given in accordance with the procedure prescribed in Section
14.1.A above. Except as otherwise expressly provided in this Agreement, the
Consent of holders of a majority of the Percentage Interests held by Limited
Partners (including Limited Partner Interests held by the General Partner)
shall control.
B. Actions Without a Meeting. Any action required or
permitted to be taken at a meeting of the Partners may be taken without a
meeting if a written consent setting forth the action so taken is signed by a
majority of the Percentage Interests of the Partners (or such other percentage
as is expressly required by this Agreement). Such consent may be in one
instrument or in several instruments, and shall have the same force and effect
as a vote of a majority of the Percentage Interests of the Partners (or such
other percentage as is expressly required by this Agreement). Such consent
shall be filed with the General Partner. An action so taken shall be deemed to
have been taken at a meeting held on the effective date so certified.
C. Proxy. Each Limited Partner may authorize any Person
or Persons to act for him by proxy on all matters in which a Limited Partner is
entitled to participate, including waiving notice of any meeting, or voting or
participating at a meeting. Every proxy must be signed by the Limited Partner
or its attorney-in-fact. No proxy shall be valid after the expiration of eleven
(11) months from the date thereof unless otherwise provided in the proxy. Every
proxy shall be revocable at the pleasure of the Limited Partner executing it,
such revocation to be effective upon the Partnership's receipt of written
notice thereof.
D. Conduct of Meeting. Each meeting of Partners shall
be conducted by the General Partner or such other Person as the General Partner
may appoint pursuant to such rules for the conduct of the meeting as the
General Partner or such other Person deems appropriate in its sole discretion.
- 54 -
<PAGE> 60
ARTICLE XV
GENERAL PROVISIONS
SECTION 15.1 ADDRESSES AND NOTICE
Any notice, demand, request or report required or permitted to be
given or made to a Partner or Assignee under this Agreement shall be in writing
and shall be deemed given or made when delivered in person or when sent by
first class United States mail or by other means of written communication to
the Partner or Assignee at the address set forth in Exhibit A hereto or such
other address as the Partners shall notify the General Partner in writing. Such
communications shall be deemed sufficiently given, served, sent or received for
all purposes at such time as delivered to the addressee (with the return
receipt or delivery receipt being deemed conclusive evidence of such delivery)
or at such time as delivery is refused by the addressee upon presentation.
SECTION 15.2 TITLES AND CAPTIONS
All article or section titles or captions in this Agreement are for
convenience only. They shall not be deemed part of this Agreement and in no way
define, limit, extend or describe the scope or intent of any provisions hereof.
Except as specifically provided otherwise, references to "Articles" and
"Sections" are to Articles and Sections of this Agreement.
SECTION 15.3 PRONOUNS AND PLURALS
Whenever the context may require, any pronoun used in this Agreement
shall include the corresponding masculine, feminine or neuter forms, and the
singular form of nouns, pronouns and verbs shall include the plural and vice
versa.
SECTION 15.4 FURTHER ACTION
The parties shall execute and deliver all documents, provide all
information and take or refrain from taking action as may be necessary or
appropriate to achieve the purposes of this Agreement.
SECTION 15.5 BINDING EFFECT
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their heirs, executors, administrators, successors, legal
representatives and permitted assigns.
SECTION 15.6 CREDITORS
Other than as expressly set forth herein with regard to any
Indemnitee, none of the provisions of this Agreement shall be for the benefit
of, or shall be enforceable by, any creditor of the Partnership.
- 55 -
<PAGE> 61
SECTION 15.7 WAIVER
No failure by any party to insist upon the strict performance of any
covenant, duty, agreement or condition of this Agreement or to exercise any
right or remedy consequent upon a breach thereof shall constitute waiver of any
such breach or any other covenant, duty, agreement or condition.
SECTION 15.8 COUNTERPARTS
This Agreement may be executed in counterparts, all of which together
shall constitute one agreement binding on all the parties hereto,
notwithstanding that all such parties are not signatories to the original or
the same counterpart. Each party shall become bound by this Agreement
immediately upon affixing its signature hereto.
SECTION 15.9 APPLICABLE LAW
This Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of Delaware, without regard to the principles
of conflicts of law.
SECTION 15.10 INVALIDITY OF PROVISIONS
If any provision of this Agreement is or becomes invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not be affected thereby.
SECTION 15.11 ENTIRE AGREEMENT
This Agreement contains the entire understanding and agreement among
the Partners with respect to the subject matter hereof and supersedes the Prior
Agreement and any prior written oral understandings or agreements among them
with respect thereto.
SECTION 15.12 GUARANTY BY CPT
CPT hereby unconditionally and irrevocably guarantees to the Limited
Partners the performance by the General Partner of the General Partner's
obligations under this Agreement. This guarantee, which shall be binding upon
the successors and assigns of CPT, is exclusively for the benefit of the
Limited Partners and shall not extend to the benefit of any creditor of the
Partnership.
SECTION 15.13 NO RIGHTS AS SHAREHOLDERS
Nothing contained in this Agreement shall be construed as conferring
upon the holders of the Partnership Units any rights whatsoever as shareholders
of the General Partner Entity, including, without limitation, any right to
receive dividends or other distributions made to shareholders of the General
Partner Entity or to vote or to consent or receive notice as shareholders in
respect to any meeting of shareholders for the election of directors of the
General Partner Entity or any other matter.
- 56 -
<PAGE> 62
SECTION 15.14 LIMITATION TO PRESERVE REIT STATUS
To the extent that any amount paid or credited to the General Partner
or its officers, directors, employees or agents pursuant to Section 7.4 or
Section 7.7 hereof would constitute gross income to the General Partner Entity
for purposes of Section 856(c)(2) or 856(c)(3) of the Code (a "General Partner
Payment"), as determined by the General Partner, then, notwithstanding any
other provision of this Agreement, the amount of such General Partner Payments
for any fiscal year shall not exceed the lesser of:
(i) an amount equal to the excess, if any, of (a)
4.20% of the General Partner Entity's total gross income (but
not including the amount of any General Partner Payments) for
the fiscal year which is described in subsections (A) though
(H) of Section 856(c)(2) of the Code over (b) the amount of
gross income (within the meaning of Section 856(c)(2) of the
Code) derived by the General Partner Entity from sources
other than those described in subsections (A) through (H) of
Section 856(c)(2) of the Code (but not including the amount
of any General Partner Payments); or
(ii) an amount equal to the excess, if any of (a)
25% of the General Partner Entity's total gross income (but
not including the amount of any General Partner Payments) for
the fiscal year which is described in subsections (A) through
(I) of Section 856(c)(3) of the Code over (b) the amount of
gross income (within the meaning of Section 856(c)(3) of the
Code) derived by the General Partner Entity from sources
other than those described in subsections (A) through (I) of
Section 856(c)(3) of the Code (but not including the amount
of any General Partner Payments);
provided, however, that General Partner Payments in excess of the amounts set
forth in subparagraphs (i) and (ii) above may be made if the General Partner
Entity, as a condition precedent, obtains an opinion of tax counsel that the
receipt of such excess amounts would not adversely affect the General Partner
Entity's ability to qualify as a REIT. To the extent General Partner Payments
may not be made in a year due to the foregoing limitations, such General
Partner Payments shall carry over and be treated as arising in the following
year, provided, however, that such amounts shall not carry over for more than
five years, and if not paid within such five year period, shall expire;
provided further, that (i) as General Partner Payments are made, such payments
shall be applied first to carry over amounts outstanding, if any, and (ii) with
respect to carry over amounts for more than one Partnership Year, such payments
shall be applied to the earliest Partnership Year first.
- 57 -
<PAGE> 63
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
GENERAL PARTNER:
CPT-GP, INC.
By: /s/ D. Keith Oden
------------------------------------
Name: D. Keith Oden
Title: President
LIMITED PARTNERS:
By: CPT-GP, Inc., as Attorney-in-Fact
for the Limited Partners
By: /s/ D. Keith Oden
--------------------------------
Name: D. Keith Oden
Title: President
CAMDEN PROPERTY TRUST, for purposes of
Section 4.2.B, 5.1.C, 7.4, 7.5, 7.7,
7.8, 8.6, 11.2 and 15.12
By: /s/ Richard J. Campo
------------------------------------
Name: Richard J. Campo
Title: Chairman of the Board and Chief
Executive Officer
- 58 -
<PAGE> 64
EXHIBIT A
PARTNERS AND PARTNERSHIP INTERESTS
<TABLE>
<CAPTION>
Name and Class A Class B Agreed Capital Percentage
Address of Partner Partnership Units* Partnership Units* Account** Interest
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
GENERAL PARTNER:
CPT-GP, Inc. 118,185.60 $ 3,173,283.36 1.00%
7557 Rambler Road
Suite 1200
Dallas, Texas
LIMITED PARTNERS:
CPT-LP, Inc. 9,348,160.00 250,998,096.00 79.10%
7557 Rambler Road
Suite 1200
Dallas, Texas 75231
PGI Associates, L.P. 1,407,494.40 37,791,224.64 11.91%
7551 Rambler Road
Suite 700
Dallas, Texas 75231
FWP, L.P. 571,278.08 15,338,816.45 4.83%
201 Main Street
Fort Worth, Texas 76102
Gateway Mall 240,941.44 6,469,277.66 2.04%
Associates I, L.P.
12400 Olive Street
Suite 100
St. Louis, Missouri 63141
Fuller Financial Corporation 26,955.52 723,755.75 0.23%
8727 W. Third Street
Suite 208
Los Angeles, California 90048
William R. Cooper 22,972.16 616,802.50 0.19%
7557 Rambler Road
Suite 700
Dallas, Texas 75231
Don M. Shine 22,972.16 616,802.50 0.19%
7557 Rambler Road
Suite 700
Dallas, Texas 75231
</TABLE>
- 1 -
<PAGE> 65
<TABLE>
<CAPTION>
Name and Class A Class B Agreed Capital Percentage
Address of Partner Partnership Units* Partnership Units* Account** Interest
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Fulcor Investment Co. 21,899.52 588,002.11 0.19%
8727 W. Third Street
Suite 208
Los Angeles, California 90048
WRC Holdings, Inc. 21,978.24 590,115.74 0.19%
7557 Rambler Road
Suite 700
Dallas, Texas 75231
Lewis A. Levey 8,131.84 218,339.90 0.07%
12400 Olive Street
St. Louis, Missouri 63141
Ward Katz 5,521.91 148,263.28 .05%
4600 West 87th Terrace
Shawnee Mission, Kansas 66207
Jerry J. Bonner 1,276.80 34,282.08 0.01%
7557 Rambler Road
Suite 700
Dallas, Texas 75231
Allen Gilbert 743.04 19,950.63 0.01%
114 South Glenroy Avenue
Los Angeles, California 90049
-----------------------------------------------------------------------------
TOTAL 11,818,510.71 -0- $317,327,012.56 100.00%
</TABLE>
* The Partnership Units are as restated as of the Effective Date, as set
forth in Section 4.1.A. Such restatement was applied in the same
manner to each Partner and did not result in a change to any Partner's
Percentage Interest.
** As of the Effective Date.
- 2 -
<PAGE> 66
EXHIBIT B
CAPITAL ACCOUNT MAINTENANCE
1. Capital Accounts of the Partners
A. The Partnership shall maintain for each Partner a separate Capital
Account in accordance with the rules of Regulations Section l.704-l(b)(2)(iv).
Such Capital Account shall be increased by (i) the amount of all Capital
Contributions and any other deemed contributions made by such Partner to the
Partnership pursuant to this Agreement and (ii) all items of Partnership income
and gain (including income and gain exempt from tax) computed in accordance
with Section 1.B hereof and allocated to such Partner pursuant to Section 6.1
of the Agreement and Exhibit C hereof, and decreased by (x) the amount of cash
or Agreed Value of all actual and deemed distributions of cash or property made
to such Partner pursuant to this Agreement and (y) all items of Partnership
deduction and loss computed in accordance with Section 1.B hereof and allocated
to such Partner pursuant to Section 6.1 of the Agreement and Exhibit C hereof.
B. For purposes of computing the amount of any item of income, gain,
deduction or loss to be reflected in the Partners' Capital Accounts, unless
otherwise specified in this Agreement, the determination, recognition and
classification of any such item shall be the same as its determination,
recognition and classification for federal income tax purposes determined in
accordance with Section 703(a) of the Code (for this purpose all items of
income, gain, loss or deduction required to be stated separately pursuant to
Section 703(a)(1) of the Code shall be included in taxable income or loss),
with the following adjustments:
(1) Except as otherwise provided in Regulations Section
1.704-1(b)(2)(iv)(m), the computation of all items of income, gain, loss and
deduction shall be made without regard to any election under Section 754 of the
Code which may be made by the Partnership, provided that the amounts of any
adjustments to the adjusted bases of the assets of the Partnership made
pursuant to Section 734 of the Code as a result of the distribution of property
by the Partnership to a Partner (to the extent that such adjustments have not
previously been reflected in the Partners' Capital Accounts) shall be reflected
in the Capital Accounts of the Partners in the manner and subject to the
limitations prescribed in Regulations Section l.704-1(b)(2)(iv) (m)(4).
(2) The computation of all items of income, gain, and deduction
shall be made without regard to the fact that items described in Sections
705(a)(l)(B) or 705(a)(2)(B) of the Code are not includable in gross income or
are neither currently deductible nor capitalized for federal income tax
purposes.
(3) Any income, gain or loss attributable to the taxable
disposition of any Partnership property shall be determined as if the adjusted
basis of such property as of such date of disposition were equal in amount to
the Partnership's Carrying Value with respect to such property as of such date.
(4) In lieu of the depreciation, amortization, and other cost
recovery deductions taken into account in computing such taxable income or
loss, there shall be taken into account Depreciation for such fiscal year.
- 1 -
<PAGE> 67
(5) In the event the Carrying Value of any Partnership Asset
is adjusted pursuant to Section 1.D hereof, the amount of any such adjustment
shall be taken into account as gain or loss from the disposition of such asset.
(6) Any items specially allocated under Section 2 of Exhibit C
hereof shall not be taken into account.
C. Generally, a transferee (including any Assignee) of a Partnership
Unit shall succeed to a pro rata portion of the Capital Account of the
transferor [; provided, however, that if the transfer causes a termination of
the Partnership under Section 708(b)(1)(B) of the Code, the Partnership's
properties shall be deemed, solely for federal income tax purposes, to have
been distributed in liquidation of the Partnership to the holders of the
Partnership Units (including transferees) and recontributed by such Partnership
in reconstitution of the Partnership. In such event, the Carrying Value of
Partnership properties shall be adjusted immediately prior to such deemed
distribution pursuant to Section 1.D (2) hereof]. [TO BE DELETED IF PROPOSED
REGULATIONS ARE ADOPTED.] The Capital Accounts of such reconstituted
Partnership shall be maintained in accordance with the principles of this
Exhibit B.
D.
(1) Consistent with the provisions of Regulations Section
1.704-1(b)(2)(iv)(f), and as provided in Section 1.D(2), the Carrying Values of
all Partnership assets shall be adjusted upward or downward to reflect any
Unrealized Gain or Unrealized Loss attributable to such Partnership property,
as of the times of the adjustments provided in Section 1.D(2) hereof, as if
such Unrealized Gain or Unrealized Loss had been recognized on an actual sale
of each such property and allocated pursuant to Section 6.1 of the Agreement.
(2) Such adjustments shall be made as of the following times:
(a) immediately prior to the acquisition of an additional interest in the
Partnership by any new or existing Partner in exchange for more than a de
minimis Capital Contribution; (b) immediately prior to the distribution by the
Partnership to a Partner of more than a de minimis amount of property as
consideration for an interest in the Partnership; and (c) immediately prior to
the liquidation of the Partnership within the meaning of Regulations Section
1.704-l(b)(2)(ii)(g), provided however that adjustments pursuant to clauses (a)
and (b) above shall be made only if the General Partner determines that such
adjustments are necessary or appropriate to reflect the relative economic
interests of the Partners in the Partnership.
(3) In accordance with Regulations Section 1.704-l(b)(2)(iv)(e),
the Carrying Value of Partnership assets distributed in kind shall be adjusted
upward or downward to reflect any Unrealized Gain or Unrealized Loss
attributable to such Partnership property, as of the time any such asset is
distributed.
(4) In determining Unrealized Gain or Unrealized Loss for purposes
of this Exhibit B, the aggregate cash amount and fair market value of all
Partnership assets (including cash or cash equivalents) shall be determined by
the General Partner using such reasonable method of valuation as it may adopt,
or in the case of a liquidating distribution pursuant to Article XIII of the
Agreement, shall be determined and allocated by the Liquidator using such
reasonable methods of valuation as it may adopt. The General Partner, or the
Liquidator, as the case may be, shall allocate such
- 2 -
<PAGE> 68
aggregate fair market value among the assets of the Partnership in such manner
as it determines in its sole and absolute discretion to arrive at a fair market
value for individual properties.
E. The provisions of the Agreement (including this Exhibit B and the
other Exhibits to the Agreement) relating to the maintenance of Capital
Accounts are intended to comply with Regulations Section 1.704-1(b), and shall
be interpreted and applied in a manner consistent with such Regulations. In the
event the General Partner shall determine that it is prudent to modify the
manner in which the Capital Accounts, or any debits or credits thereto
(including, without limitation, debits or credits relating to liabilities which
are secured by contributed or distributed property or which are assumed by the
Partnership, the General Partner, or the Limited Partners) are computed in
order to comply with such Regulations, the General Partner may make such
modification without regard to Article XIV of the Agreement, provided that it
is not likely to have a material effect on the amounts distributable to any
Person pursuant to Article XIII of the Agreement upon the dissolution of the
Partnership. The General Partner also shall (i) make any adjustments that are
necessary or appropriate to maintain equality between the Capital Accounts of
the Partners and the amount of Partnership capital reflected on the
Partnership's balance sheet, as computed for book purposes, in accordance with
Regulations Section l.704-l(b)(2)(iv)(q), and (ii) make any appropriate
modifications in the event unanticipated events might otherwise cause this
Agreement not to comply with Regulations Section l.704-1(b).
2. No Interest
No interest shall be paid by the Partnership on Capital Contributions
or on balances in Partners' Capital Accounts.
3. No Withdrawal
No Partner shall be entitled to withdraw any part of its Capital
Contribution or Capital Account or to receive any distribution from the
Partnership, except as provided in Articles IV, V, VII and XIII of the
Agreement.
- 3 -
<PAGE> 69
EXHIBIT C
SPECIAL ALLOCATION RULES
1. Special Allocation Rules.
Notwithstanding any other provision of the Agreement or this Exhibit
C, the following special allocations shall be made in the following order:
A. Minimum Gain Chargeback. Notwithstanding the provisions of Section
6.1 of the Agreement or any other provisions of this Exhibit C, if there is a
net decrease in Partnership Minimum Gain during any Partnership Year, each
Partner shall be specially allocated items of Partnership income and gain for
such year (and, if necessary, subsequent years) in an amount equal to such
Partner's share of the net decrease in Partnership Minimum Gain, as determined
under Regulations Section 1.704-2(g). Allocations pursuant to the previous
sentence shall be made in proportion to the respective amounts required to be
allocated to each Partner pursuant thereto. The items to be so allocated shall
be determined in accordance with Regulations Section 1.704-2(f)(6). This
Section 1.A is intended to comply with the minimum gain chargeback requirements
in Regulations Section 1.704-2(f) and for purposes of this Section 1.A only,
each Partner's Adjusted Capital Account Deficit shall be determined prior to
any other allocations pursuant to Section 6.1 of this Agreement with respect to
such Partnership Year and without regard to any decrease in Partner Minimum
Gain during such Partnership Year.
B. Partner Minimum Gain Chargeback. Notwithstanding any other
provision of Section 6.1 of this Agreement or any other provisions of this
Exhibit C (except Section 1.A hereof), if there is a net decrease in Partner
Minimum Gain attributable to a Partner Nonrecourse Debt during any Partnership
Year, each Partner who has a share of the Partner Minimum Gain attributable to
such Partner Nonrecourse Debt, determined in accordance with Regulations
Section 1.704-2(i) (5), shall be specially allocated items of Partnership
income and gain for such year (and, if necessary, subsequent years) in an
amount equal to such Partner's share of the net decrease in Partner Minimum
Gain attributable to such Partner Nonrecourse Debt, determined in accordance
with Regulations Section 1.704-2(i) (5). Allocations pursuant to the previous
sentence shall be made in proportion to the respective amounts required to be
allocated to each General Partner and Limited Partner pursuant thereto. The
items to be so allocated shall be determined in accordance with Regulations
Section 1.704-2(i) (4). This Section 1.B is intended to comply with the minimum
gain chargeback requirement in such Section of the Regulations and shall be
interpreted consistently therewith. Solely for purposes of this Section 1.B,
each Partner's Adjusted Capital Account Deficit shall be determined prior to
any other allocations pursuant to Section 6.1 of the Agreement or this Exhibit
with respect to such Partnership Year, other than allocations pursuant to
Section 1.A hereof.
C. Qualified Income Offset. In the event any Partner unexpectedly
receives any adjustments, allocations or distributions described in Regulations
Sections 1.704-l(b)(2)(ii)(d)(4), l.704-1(b)(2)(ii)(d)(5), or
1.704-l(b)(2)(ii)(d)(6), and after giving effect to the allocations required
under Sections 1.A and 1.B hereof with respect to such Partnership Year, such
Partner has an Adjusted Capital Account Deficit, items of Partnership income
and gain (consisting of a pro rata portion of each item of Partnership income,
including gross income and gain for the Partnership Year) shall be specially
allocated to such Partner in an amount and manner sufficient to eliminate, to
the extent required by the Regulations, its Adjusted Capital Account Deficit
created by such
- 1 -
<PAGE> 70
adjustments, allocations or distributions as quickly as possible. This Section
1.C is intended to constitute a "qualified income offset" under Regulations
Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
D. Gross Income Allocation. In the event that any Partner has an
Adjusted Capital Account Deficit at the end of any Partnership Year (after
taking into account allocations to be made under the preceding paragraphs
hereof with respect to such Partnership Year), each such Partner shall be
specially allocated items of Partnership income and gain (consisting of a pro
rata portion of each item of Partnership income, including gross income and
gain for the Partnership Year) in an amount and manner sufficient to eliminate,
to the extent required by the Regulations, its Adjusted Capital Account
Deficit.
E. Nonrecourse Deductions. Nonrecourse Deductions for any Partnership
Year shall be allocated to the Partners in accordance with their respective
Percentage Interests. If the General Partner determines in its good faith
discretion that the Partnership's Nonrecourse Deductions must be allocated in a
different ratio to satisfy the safe harbor requirements of the Regulations
promulgated under Section 704(b) of the Code, the General Partner is
authorized, upon notice to the Limited Partners, to revise the prescribed ratio
for such Partnership Year to the numerically closest ratio which would satisfy
such requirements.
F. Partner Nonrecourse Deductions. Any Partner Nonrecourse Deductions
for any Partnership Year shall be specially allocated to the Partner who bears
the economic risk of loss with respect to the Partner Nonrecourse Debt to which
such Partner Nonrecourse Deductions are attributable in accordance with
Regulations Sections 1.704-2(b)(4) and 1.704-2(i).
G. Code Section 754 Adjustments. To the extent an adjustment to the
adjusted tax basis of any Partnership asset pursuant to Section 734(b) or
743(b) of the Code is required, pursuant to Regulations Section
1.704-l(b)(2)(iv)(m), to be taken into account in determining Capital Accounts,
the amount of such adjustment to the Capital Accounts shall be treated as an
item of gain (if the adjustment increases the basis of the asset) or loss (if
the adjustment decreases such basis), and such item of gain or loss shall be
specially allocated to the Partners in a manner consistent with the manner in
which their Capital Accounts are required to be adjusted pursuant to such
Section of the Regulations.
2. Allocations for Tax Purposes
A. Except as otherwise provided in this Section 2, for federal income
tax purposes, each item of income, gain, loss and deduction shall be allocated
among the Partners in the same manner as its correlative item of "book" income,
gain, loss or deduction is allocated pursuant to Section 6.1 of the Agreement
and Section 1 of this Exhibit C.
B. In an attempt to eliminate Book-Tax Disparities attributable to a
Contributed Property or Adjusted Property, items of income, gain, loss, and
deduction shall be allocated for federal income tax purposes among the Partners
as follows:
(1)(a) In the case of a Contributed Property, such items
attributable thereto shall be allocated among the
Partners consistent with the principles of
- 2 -
<PAGE> 71
Section 704(c) of the Code to take into account the
variation between the 704(c) Value of such property
and its adjusted basis at the time of contribution
(taking into account Section 2.C of this Exhibit C);
and
(b) any item of Residual Gain or Residual Loss
attributable to a Contributed Property shall be
allocated among the Partners in the same manner as its
correlative item of "book" gain or loss is allocated
pursuant to Section 6.1 of the Agreement and Section 1
of this Exhibit C.
(2)(a) In the case of an Adjusted Property, such items shall
(i) first, be allocated among the Partners in a
manner consistent with the principles of Section
704(c) of the Code to take into account the Unrealized
Gain or Unrealized Loss attributable to such property
and the allocations thereof pursuant to Exhibit B;
(ii) second, in the event such property was
originally a Contributed Property, be allocated among
the Partners in a manner consistent with Section
2.B(1) of this Exhibit C; and
(b) any item of Residual Gain or Residual Loss
attributable to an Adjusted Property shall be
allocated among the Partners in the same manner its
correlative item of "book" gain or loss is allocated
pursuant to Section 6.1 of the Agreement and Section 1
of this Exhibit C.
C. To the extent Regulations promulgated pursuant to Section 704(c) of
the Code permit a Partnership to utilize alternative methods to eliminate the
disparities between the Carrying Value of property and its adjusted basis, the
General Partner shall, subject to the following, have the authority to elect
the method to be used by the Partnership and such election shall be binding on
all Partners. With respect to any Contributed Properties held by the
Partnership on the Effective Date, the Partnership shall elect to use the
"traditional method" set forth in Treasury Regulation ss. 1.704- 3(b).
- 3 -
<PAGE> 72
EXHIBIT D
NOTICE OF REDEMPTION
The undersigned hereby irrevocably (i) redeems _________ Partnership
Units in Camden Operating, L.P. in accordance with the terms of the Third
Amended and Restated Agreement of Limited Partnership of Camden Operating,
L.P., as amended, and the Redemption Right referred to therein, (ii) surrenders
such Partnership Units and all right, title and interest therein and (iii)
directs that the Cash Amount or Shares Amount (as determined by the General
Partner) deliverable upon exercise of the Redemption Right be delivered to the
address specified below, and if Shares are to be delivered, such Shares be
registered or placed in the name(s) and at the address(es) specified below. The
undersigned hereby represents, warrants, and certifies that the undersigned (a)
has marketable and unencumbered title to such Partnership Units, free and clear
of the rights of or interests of any other person or entity, (b) has the full
right, power and authority to redeem and surrender such Partnership Units as
provided herein and (c) has obtained the consent or approval of all persons or
entities, if any, having the right to consult or approve such redemption and
surrender.
Dated: Name of Limited Partner:
---------------------
----------------------------------------
(Signature of Limited Partner)
----------------------------------------
(Street Address)
----------------------------------------
(City) (State) (Zip Code)
Signature Guaranteed by:
----------------------------------------
IF SHARES ARE TO BE ISSUED, ISSUE TO:
Name:
--------------------------------
Please insert social security or identifying number:
