<PAGE> 1
As filed with the Securities and Exchange Commission on February 6, 1998
Registration No. 333-_____
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
CAMDEN PROPERTY TRUST
(Exact name of registrant as specified in its charter)
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TEXAS 6513 76-6088377
(State or Other Jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Incorporation or Organization) Classification Code Number) Identification No.)
</TABLE>
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:
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BRYAN L. GOOLSBY
TONI WEINSTEIN JEFFREY T. PERO
LIDDELL, SAPP, ZIVLEY, HILL & LABOON, L.L.P. LATHAM & WATKINS
2001 ROSS AVENUE, SUITE 3000 650 TOWN CENTER DRIVE, 20TH FLOOR
DALLAS, TEXAS 75201 COSTA MESA, CALIFORNIA 92626
(214) 849-5500 (714) 540-1235
FAX: (214) 849-5599 FAX: (714) 755-8290
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after the Registration Statement becomes effective.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) 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 this form is a post-effective amendment filed pursuant to Rule 462(d)
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. [ ] ___________________
CALCULATION OF REGISTRATION FEE
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====================================================================================================================================
PROPOSED PROPOSED
MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES TO BE AMOUNT TO OFFERING AGGREGATE REGISTRATION
REGISTERED BE REGISTERED PRICE PER UNIT OFFERING PRICE FEE
- ------------------------------------------------------------------------------------------------------------------------------------
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Common Shares of Beneficial Interest,
par value $.01 per share................ 15,599,262 shares (1) N/A $272,619,512 (3)(5) $80,422 (5)
Series A Cumulative Convertible Preferred
Shares of Beneficial Interest, par value
$.01 per share.......................... 4,165,000 shares (2) N/A $106,988,438 (4) $31,561
====================================================================================================================================
</TABLE>
(1) The amount of Common Shares of Beneficial Interest of the Registrant
("Camden Common Shares") to be registered is comprised of (a) 12,391,796
Camden Common Shares that may be issued in the transaction described
herein to holders of Common Stock ("Oasis Common Stock") of Oasis
Residential, Inc. ("Oasis") and (b) 3,207,466 Camden Common Shares that
are issuable upon conversion of Series A Cumulative Convertible Preferred
Shares of Beneficial Interest of the Registrant ("Camden Series A
Preferred Shares") upon exchange of such shares by the holders thereof.
(2) The amount of Camden Series A Preferred Shares to be registered is
comprised of 4,165,000 Camden Preferred Shares that may be issued in the
transaction described herein to holders of Series A Cumulative
Convertible Preferred Stock (the "Oasis Series A Preferred Stock") of
Oasis.
(3) Estimated pursuant to Rule 457(f) of the Securities Act of 1933, as
amended (the "Securities Act"), based upon the market value of shares of
Oasis Common Stock of $22.00 per share, which is the average of the high
and low sales prices of a share of Oasis Common Stock as reported by the
New York Stock Exchange (the "NYSE") on February 4, 1998.
(4) Estimated pursuant to Rule 457(f) of the Securities Act, based upon the
market value of shares of Oasis Series A Preferred Stock of $25.6875 per
share, which is the average of the high and low sales prices of a share of
Oasis Series A Preferred Stock as reported by the NYSE on February 4,
1998.
(5) Pursuant to Rule 457(i) of the Securities Act, no registration fee is
payable in respect of the Camden Common Shares that are issuable upon
conversion of the Camden Series A Preferred Shares.
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> 2
, 1998
------------
Dear Fellow Shareholders:
We cordially invite you to attend a special meeting in lieu of the
annual meeting of shareholders of Camden Property Trust ("Camden") to be held
at _____________, on _______, ______, 1998 at ____, local time.
At this meeting, you will have an opportunity to consider and vote on
the proposed merger of Oasis Residential, Inc. ("Oasis") with and into a wholly
owned subsidiary of Camden. If the proposed merger is approved and completed,
each outstanding share of Oasis Common Stock (other than shares held by Oasis
as treasury stock or owned by any subsidiary of Oasis) will be converted into
0.759 of a Common Share of Beneficial Interest of Camden and each outstanding
share of Oasis Series A Cumulative Convertible Preferred Stock (other than
share held by Oasis as treasury stock or owned by any subsidiary of Oasis) will
be converted into one Series A Cumulative Convertible Preferred Share of
Beneficial Interest of Camden.
Also at this meeting, you will have an opportunity to consider and
vote on the election of the members of Camden's Board of Trust Managers and on
the ratification of Deloitte & Touche LLP as the independent auditors of Camden
for the year ending December 31, 1998.
These proposals are explained in detail in the attached Joint Proxy
Statement/Prospectus. I urge you to read it carefully.
The Board of Trust Managers of Camden has unanimously approved the
proposed merger and unanimously recommends that you vote in favor of the
matters to be presented at the Special Meeting.
It is important that your shares be represented at the Special
Meeting. Therefore, even if you plan to attend the Special Meeting in person,
please complete, date, sign and promptly return the proxy in the envelope
provided or vote via facsimile at (713) 234-2287. Your vote is important,
regardless of the number of shares that you own. Your promptly completing,
signing and returning the proxy saves our company the expense of costly proxy
solicitation. Should you have any questions, please contact Investor Relations
at (800) 922-6336.
On behalf of the Board of Trust Managers, I urge you to vote FOR
approval of the proposals.
Sincerely,
Richard J. Campo
Chairman of the Board of Trust Managers
and Chief Executive Officer
<PAGE> 3
CAMDEN PROPERTY TRUST
3200 Southwest Freeway, Suite 1500
Houston, Texas 77027
NOTICE OF SPECIAL MEETING IN LIEU OF THE ANNUAL MEETING OF SHAREHOLDERS
To Be Held on ______, _________, 1998
NOTICE IS HEREBY GIVEN that a special meeting in lieu of the annual
meeting of shareholders (the "Special Meeting") of Camden Property Trust, a
Texas real estate investment trust ("Camden"), will be held at _________________
______, on __________, ________, 1998 at ____, local time, for the following
purposes:
1. To consider and vote upon the merger of Oasis Residential,
Inc., a Nevada corporation ("Oasis"), with and into Camden Subsidiary
II, Inc. a Delaware corporation and a wholly owned subsidiary of
Camden ("Merger Sub"), to be effected pursuant to the Agreement and
Plan of Merger, dated December 16, 1997, as amended by Amendment No.
1, dated as of February 4, 1998, among Camden, Merger Sub and Oasis,
which provides, among other things, that each outstanding share of
Common Stock, par value $.01 per share, of Oasis (other than shares
held by Oasis as treasury stock or owned by any subsidiary of Oasis)
will be converted into 0.759 of a Common Share of Beneficial Interest,
par value $.01 per share ("Camden Common Shares"), of Camden, and each
outstanding share of Series A Cumulative Convertible Preferred Stock,
par value $.01 per share, of Oasis (other than shares held by Oasis as
treasury stock or owned by any subsidiary of Oasis) will be converted
into one Series A Cumulative Convertible Preferred Share of Beneficial
Interest, par value $.01 per share, of Camden;
2. To consider and vote upon the election of seven members of
Camden's Board of Trust Managers;
3. To consider and vote upon the ratification of Deloitte &
Touche LLP as independent auditors of Camden for the year ending
December 31, 1998;
4. To approve the postponement or adjournment of the Special
Meeting for the solicitation of additional votes, if necessary; and
5. To transact such other business as properly may come
before such meeting or any adjournment thereof.
Only holders of record of Camden Common Shares at the close of
business on ________1998, the record date for the Special Meeting, are entitled
to notice of and to vote at the Special Meeting.
By Order of the Board of Trust Managers,
G. Steven Dawson
Senior Vice President-Finance,
Chief Financial Officer, Treasurer
and Assistant Secretary
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE SPECIAL
MEETING. PLEASE SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD IN THE
ACCOMPANYING POSTAGE-PAID ENVELOPE OR VOTE VIA FACSIMILE AT (713) 234-2287 SO
THAT YOUR SHARES WILL BE REPRESENTED AT THE SPECIAL MEETING. SHAREHOLDERS
ATTENDING THE MEETING MAY VOTE PERSONALLY ON ALL MATTERS THAT ARE CONSIDERED,
IN WHICH EVENT THE SIGNED PROXIES WILL BE REVOKED.
Houston, Texas
____________, 1998
<PAGE> 4
, 1998
------------
Dear Fellow Stockholders:
We cordially invite you to attend a special meeting of stockholders of
Oasis Residential, Inc. ("Oasis") to be held at _____________, on _______,
______, 1998 at ____, local time.
At this meeting, you will have an opportunity to consider and vote on
the proposed merger of Oasis with and into a wholly owned subsidiary of Camden
Property Trust ("Camden"). If the proposed merger is approved and completed,
each outstanding share of Oasis Common Stock (other than shares held by Oasis
as treasury stock or owned by any subsidiary of Oasis) will be converted into
0.759 of a Common Share of Beneficial Interest of Camden and each outstanding
share of Oasis Series A Cumulative Convertible Preferred Stock (other than
shares held by Oasis treasury stock or owned by any subsidiary of Oasis) will
be converted into one Series A Cumulative Convertible Preferred Share of
Beneficial Interest of Camden. The proposal to approve the merger is explained
in detail in the attached Joint Proxy Statement/Prospectus. I urge you to read
it carefully.
The Board of Directors of Oasis has unanimously approved the proposed
merger and unanimously recommends that you vote in favor of the matters to be
presented at the Special Meeting.
It is important that your shares be represented at the Special
Meeting. Therefore, even if you plan to attend the Special Meeting in person,
please complete, date, sign and promptly return the proxy in the envelope
provided or vote via facsimile at (702) 435-9445. Your vote is important,
regardless of the number of shares that you own. Your promptly completing,
signing and returning the proxy saves our company the expense of costly proxy
solicitation. Should you have any questions, please contact Mr. John Clayton,
Chief Financial Officer of Oasis, at (702) 436-2009.
On behalf of the Board of Directors, I urge you to vote FOR approval
of the proposal.
Sincerely,
Scott S. Ingraham
President and
Chief Executive Officer
<PAGE> 5
OASIS RESIDENTIAL, INC.
4041 EAST SUNSET ROAD
HENDERSON, NEVADA 89014
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To Be Held on ______, _________, 1998
NOTICE IS HEREBY GIVEN that a special meeting of stockholders (the
"Special Meeting") of Oasis Residential, Inc., a Nevada corporation ("Oasis"),
will be held at _______________________, on __________, ________, 1998 at ____,
local time, for the following purposes:
1. To consider and vote upon the merger of Oasis with and
into Camden Subsidiary II, Inc. ("Merger Sub"), a Delaware corporation
and a wholly owned subsidiary of Camden Property Trust, a Texas real
estate investment trust ("Camden"), to be effected pursuant to the
Agreement and Plan of Merger, dated December 16, 1997, as amended by
Amendment No. 1, dated as of February 4, 1998, among Camden, Merger
Sub and Oasis, which provides, among other things, that each
outstanding share of Common Stock, par value $.01 per share ("Oasis
Common Stock"), of Oasis (other than shares held by Oasis as treasury
stock or owned by any subsidiary of Oasis) will be converted into
0.759 of a Common Share of Beneficial Interest, par value $.01 per
share, of Camden, and each outstanding share of Series A Cumulative
Convertible Preferred Stock, par value $.01 per share, of Oasis (other
than shares held by Oasis as treasury stock or owned by any subsidiary
of Oasis) will be converted into one Series A Cumulative Convertible
Preferred Share of Beneficial Interest, par value $.01 per share, of
Camden;
2. To approve the postponement or adjournment of the Special
Meeting for the solicitation of additional votes, if necessary; and
3. To transact such other business as properly may come
before such meeting or any adjournment thereof.
Only holders of record of shares of Oasis Common Stock at the close of
business on ________1998, the record date for the Special Meeting, are entitled
to notice of and to vote at the Special Meeting.
By Order of the Board of Directors,
Allan O. Hunter, Jr.
Executive Vice President,
Chief Operating Officer and Secretary
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE SPECIAL
MEETING. PLEASE SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD IN THE
ACCOMPANYING POSTAGE-PAID ENVELOPE OR VOTE VIA FACSIMILE AT SO THAT YOUR SHARES
WILL BE REPRESENTED AT THE SPECIAL MEETING. STOCKHOLDERS ATTENDING THE SPECIAL
MEETING MAY VOTE PERSONALLY ON ALL MATTERS THAT ARE CONSIDERED, IN WHICH EVENT
THE SIGNED PROXIES WILL BE REVOKED.
Las Vegas, Nevada
____________, 1998
<PAGE> 6
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 or the e
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 the registration or qualification under the securities laws of any such
state.
Subject to Completion, dated February 6, 1998
CAMDEN PROPERTY TRUST
PROSPECTUS
-------------------
CAMDEN PROPERTY TRUST
AND
OASIS RESIDENTIAL, INC.
--------------------
JOINT PROXY STATEMENT
FOR
SPECIAL MEETING IN LIEU OF THE ANNUAL MEETING OF SHAREHOLDERS OF
CAMDEN PROPERTY TRUST
AND
SPECIAL MEETING OF STOCKHOLDERS OF
OASIS RESIDENTIAL, INC.
TO BE HELD ON ________, 1998
------------------------
This Joint Proxy Statement/Prospectus constitutes the proxy statement
of each of Camden Property Trust, a Texas real estate investment trust
("Camden"), and Oasis Residential, Inc., a Nevada corporation ("Oasis"),
relating to the solicitation of proxies for use at the Special Meeting in Lieu
of Annual Meeting of the shareholders of Camden (the "Camden Special Meeting")
and the Special Meeting of stockholders of Oasis (the "Oasis Special Meeting"
and, together with the Camden Special Meeting, the "Special Meetings")
scheduled to be held on ________, 1998 and the prospectus of Camden relating to
Common Shares of Beneficial Interest, par value $.01 per share, of Camden (the
"Camden Common Shares"), and the Series A Cumulative Convertible Preferred
Shares of Beneficial Interest, par value $.01 per share, of Camden (the "Camden
Series A Preferred Shares" and, together with the Camden Common Shares, the
"Camden Shares"), that may be issued in connection with the proposed merger
(the "Merger") of Oasis with and into Camden Subsidiary II, Inc., a Delaware
corporation and a wholly owned subsidiary of Camden ("Merger Sub"), pursuant to
the Agreement and Plan of Merger, dated December 16, 1997, as amended by
Amendment No. 1, dated as of February 4, 1998, among Camden, Merger Sub and
Oasis (the "Merger Agreement"). Camden has filed a registration statement with
the Securities and Exchange Commission (the "Commission") with respect to the
Camden Shares to be so issued.
No person has been authorized to give any information or to make any
representation other than those contained in this Joint Proxy
Statement/Prospectus in connection with the solicitation of proxies or the
offering of securities made by this Joint Proxy Statement/Prospectus and, if
given or made, such information or representation must not be relied upon as
having been authorized by Camden or Oasis. Neither the delivery of this Joint
Proxy Statement/Prospectus nor any distribution of securities made hereunder
shall under any circumstance create any implication that there has been no
change in the information set forth herein since the date of this Joint Proxy
Statement/Prospectus. This Joint Proxy Statement/Prospectus does not constitute
an offer to sell, or a solicitation of an offer to buy, any securities, or the
solicitation of a proxy, by anyone in any jurisdiction in which such offer or
solicitation is not authorized or in which the person making such offer or
solicitation is not qualified to do so or to anyone to whom it is unlawful to
make such solicitation.
This Joint Proxy Statement/Prospectus and the accompanying proxy cards
are first being mailed to shareholders of Camden and Oasis on , 1998.
SEE RISK FACTORS BEGINNING ON PAGE 7 FOR A DISCUSSION OF CERTAIN
MATTERS THAT SHOULD BE CONSIDERED IN EVALUATING THE MERGER.
NEITHER THE MERGER NOR THESE SECURITIES HAVE 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 JOINT PROXY
STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Joint Proxy Statement/Prospectus is ________, 1998.
<PAGE> 7
AVAILABLE INFORMATION
Both Camden and Oasis are subject to the informational requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, file reports, proxy statements and other information with
the Commission. Such reports, proxy statements and other information filed by
Camden and Oasis with the Commission can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at its Regional Offices at Suite
1400, 500 West Madison Street, Chicago, Illinois 60661 and Suite 1300, 7 World
Trade Center, New York, New York 10048, and can also be inspected and copied at
the offices of the New York Stock Exchange, Inc. (the "NYSE"), 20 Broad Street,
New York, New York 10005. Copies of such material can be obtained from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, upon payment of the prescribed fees. The Commission
maintains a Web site that contains reports, proxy and information statements
and other information regarding Camden and Oasis and other registrants that
have been filed electronically with the Commission. The address of such site is
http://www.sec.gov.
THIS JOINT PROXY STATEMENT/PROSPECTUS INCORPORATES DOCUMENTS BY
REFERENCE THAT ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS
(OTHER THAN EXHIBITS TO SUCH DOCUMENTS UNLESS SUCH EXHIBITS ARE SPECIFICALLY
INCORPORATED BY REFERENCE) ARE AVAILABLE WITHOUT CHARGE TO ANY PERSON,
INCLUDING ANY BENEFICIAL OWNER, TO WHOM THIS JOINT PROXY STATEMENT/PROSPECTUS
IS DELIVERED, UPON REQUEST FROM THE OFFICE OF THE SECRETARY, CAMDEN PROPERTY
TRUST, 3200 SOUTHWEST FREEWAY, SUITE 1500, HOUSTON, TEXAS 77027 (TELEPHONE
(713) 964-3555; FAX (713) 964-3599) AND THE OFFICE OF THE SECRETARY, OASIS
RESIDENTIAL, INC., 4041 EAST SUNSET ROAD, HENDERSON, NEVADA 89014 (TELEPHONE
(702) 435-9800; FAX (702)435-9445). IN ORDER TO ALLOW ADEQUATE TIME FOR
DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY ______, 1998.
This Joint Proxy Statement/Prospectus is part of a registration
statement on Form S-4 (together with all amendments and exhibits, the
"Registration Statement") filed by Camden with the Commission under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
Camden Shares to be issued in connection with the Merger. This Joint Proxy
Statement/Prospectus does not contain all the information set forth or
incorporated by reference in the Registration Statement and the exhibits and
schedules relating thereto, certain parts of which are omitted in accordance
with the rules of the Commission. For further information, reference is made to
the Registration Statement and the exhibits filed or incorporated as a part
thereof, which are on file at the offices of the Commission and may be obtained
upon payment of fee prescribed by the Commission, or which may be examined
without charge at the offices of the Commission. Statements contained in this
Joint Proxy Statement/Prospectus, or in any document incorporated in this Joint
Proxy Statement/Prospectus by reference, as to the contents of any contract or
other document referred to herein or therein are not necessarily complete, and
in each instance reference is made to the copy of such contract or other
document filed as an exhibit to the Registration Statement or such other
document; each such statement is qualified in its entirety by such reference.
All information contained in this Joint Proxy Statement/Prospectus
with respect to Camden and its subsidiaries has been supplied by Camden, and
all information with respect to Oasis and its subsidiaries has been supplied by
Oasis. Unless the context otherwise requires, all references in this Joint
Proxy Statement/Prospectus to "Camden" will mean Camden Property Trust and its
subsidiaries on a consolidated basis (including Camden Operating, L.P. (the
"Operating Partnership")) or, where the context so requires, Camden Property
Trust only, and as the context may require, their predecessors; and all
references in this Joint Proxy Statement/Prospectus to "Oasis" will mean Oasis
Residential, Inc. and its subsidiaries on a consolidated basis or, where the
context so requires, Oasis Residential, Inc. only and, as the context may
require, their predecessors.
<PAGE> 8
TABLE OF CONTENTS
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INCORPORATION OF CERTAIN INFORMATION BY REFERENCE..........................................................1
SUMMARY....................................................................................................2
The Companies.....................................................................................2
Special Meetings; Votes Required..................................................................3
Risk Factors......................................................................................4
The Merger........................................................................................4
Background of the Merger..........................................................................4
Reasons for the Merger; Recommendations of the Boards.............................................4
Opinions of Financial Advisors....................................................................4
Regulatory Matters................................................................................5
Conditions to Consummation of the Merger; Effective Time of the Merger; Termination Fees..........5
The Spin-Off......................................................................................5
Management, Operations and Headquarters After the Merger..........................................5
Dividends.........................................................................................5
Anticipated Accounting Treatment..................................................................6
Interests of Certain Persons in the Merger........................................................6
Federal Income Tax Consequences of the Merger.....................................................6
Dissenters' Rights................................................................................6
RISK FACTORS...............................................................................................7
Share Price Fluctuations..........................................................................7
Effect of Market Interest Rates on Price of Camden Common Shares..................................7
Benefits to Certain Directors and Officers of Oasis; Possible Conflicts of Interest...............7
Loss of Rights by Oasis Stockholders..............................................................7
Loss of Benefits if the Spin-Off Fails to Occur; Dependence on the Las Vegas Market...............7
Termination Payments if the Merger Fails to Occur.................................................8
Real Estate Investment Risks......................................................................8
No Limitation on Amount of Debt that May be Incurred and Possible Inability to Repay Debt.........9
Limited Control with Respect to Certain Properties................................................9
Uninsured and Underinsured Losses Could Result in Loss of Value of Property.......................9
Possible Environmental Liabilities................................................................9
Costs of Compliance with Fair Housing Amendments Act and Similar Laws............................10
Adverse Consequences of Failure to Qualify as a REIT.............................................10
Ownership Limits.................................................................................11
Competition......................................................................................11
Changes in Policies..............................................................................11
EQUIVALENT PER SHARE DATA.................................................................................12
COMPARATIVE MARKET PRICES.................................................................................13
Camden...........................................................................................13
Oasis............................................................................................13
SELECTED HISTORICAL AND UNAUDITED PRO FORMA COMBINED
FINANCIAL AND PROPERTY DATA............................................................................14
THE SPECIAL MEETINGS......................................................................................18
The Merger.......................................................................................18
Camden Special Meeting...........................................................................18
Oasis Special Meeting............................................................................19
THE MERGER................................................................................................20
Background of the Merger.........................................................................20
Reasons for the Merger; Recommendations of the Boards............................................24
Opinions of Financial Advisors...................................................................28
Interests of Certain Persons in the Merger.......................................................36
Headquarters ....................................................................................37
Dividends........................................................................................37
</TABLE>
<PAGE> 9
<TABLE>
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Anticipated Accounting Treatment.................................................................37
Resales of Camden Shares.........................................................................37
Dissenters' Rights...............................................................................38
Regulatory Matters...............................................................................38
NYSE Listing.....................................................................................38
Effect of the Merger on Oasis Debt Securities....................................................38
MANAGEMENT OF CAMDEN......................................................................................39
Board of Trust Managers of Camden................................................................39
Committees of the Camden Board...................................................................40
Compensation of Trust Managers...................................................................40
Meetings of the Camden Board and Committees......................................................41
Executive Officers of Camden.....................................................................41
Compensation Committee Report on Executive Officer Compensation..................................42
Executive Compensation...........................................................................42
Performance Graph................................................................................42
Certain Relationships and Transactions...........................................................44
THE SPIN-OFF..............................................................................................44
THE MERGER AGREEMENT......................................................................................45
The Merger.......................................................................................45
Camden Board of Trust Managers...................................................................46
Representations and Warranties...................................................................46
Certain Covenants................................................................................47
Indemnification..................................................................................49
Conditions to Consummation of the Merger.........................................................49
Termination......................................................................................50
Expenses and Termination Fees....................................................................50
Extension, Waiver and Amendment..................................................................51
VOTING AGREEMENTS.........................................................................................53
Oasis Voting Agreement...........................................................................53
Camden Voting Agreement..........................................................................53
CAMDEN PROPERTY TRUST UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS................................54
CAMDEN PROPERTY TRUST UNAUDITED PRO FORMA COMBINED BALANCE SHEET..........................................57
BUSINESS OF CAMDEN........................................................................................61
General..........................................................................................61
Operating Strategy...............................................................................61
Financial Strategy...............................................................................62
Markets and Competition..........................................................................63
The Camden Properties............................................................................64
Camden Portfolio Summary.........................................................................64
BUSINESS OF OASIS.........................................................................................68
General..........................................................................................68
Recent Developments..............................................................................68
Business Strategy................................................................................69
Certain Pending Complaints.......................................................................70
Property Operations..............................................................................70
Oasis Portfolio Summary..........................................................................71
SECURITY OWNERSHIP........................................................................................74
Camden...........................................................................................74
Oasis............................................................................................75
DESCRIPTION OF CAMDEN SECURITIES..........................................................................77
Camden Common Shares.............................................................................77
Camden Preferred Shares..........................................................................77
Restrictions on Transfer.........................................................................82
Certain Federal Income Tax Considerations to Holders of Camden Series A Preferred Shares.........82
COMPARATIVE RIGHTS OF SHAREHOLDERS........................................................................86
Capitalization...................................................................................86
</TABLE>
<PAGE> 10
<TABLE>
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Voting Rights....................................................................................86
Voting Power.....................................................................................87
Trust Managers and Directors.....................................................................87
Power to Call Special Meetings; Action by Written Consent........................................88
Amendment of Charter Documents...................................................................88
Mergers..........................................................................................88
Certain Business Combinations....................................................................89
Control Share Acquisitions.......................................................................90
REIT Qualification Provisions....................................................................90
Indemnification..................................................................................91
Trust Manager and Director Liability.............................................................92
FEDERAL INCOME TAX CONSIDERATIONS.........................................................................92
Tax Considerations Relating to the Merger........................................................92
Continuity of Interest Assumption................................................................93
Cash in Lieu of Fractional Shares................................................................93
Pre-Merger Dividend..............................................................................93
Taxation of Camden...............................................................................94
Requirements for Qualification...................................................................95
Failure to Qualify...............................................................................98
Taxation of Taxable U.S. Shareholders............................................................99
Taxation of U.S. Shareholders on the Disposition of Common Shares...............................100
Capital Gains and Losses........................................................................100
Taxation of Tax-Exempt Shareholders.............................................................101
Taxation of Non-U.S. Shareholders...............................................................101
Other Tax Consequences..........................................................................102
RATIFICATION OF INDEPENDENT AUDITORS.....................................................................102
EXPERTS..................................................................................................103
LEGAL OPINIONS...........................................................................................103
SHAREHOLDER PROPOSALS....................................................................................103
OTHER MATTERS............................................................................................103
</TABLE>
Annex I Agreement and Plan of Merger
Annex II Form of Designation, Preferences and Rights of Series A
Cumulative Convertible Preferred Shares of Beneficial Interest
Annex III Opinion of Donaldson, Lufkin & Jenrette Securities Corporation
Annex IV Opinion of Merrill Lynch & Co.
<PAGE> 11
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents (File No. 1-12110) filed by Camden with the
Commission under the Exchange Act are hereby incorporated by reference in this
Joint Proxy Statement/Prospectus: (i) Camden's Annual Report on Form 10-K for
the year ended December 31, 1997; (ii) Camden's Current Report on Form 8-K
filed on February 5, 1998; and (iii) Camden's Registration Statement on Form
8-A.
The following documents (File No.1-12428) filed by Oasis with the
Commission under the Exchange Act are hereby incorporated by reference in this
Joint Proxy Statement/Prospectus: (i) Oasis' Annual Report on Form 10-K for the
year ended December 31, 1996; (ii) Oasis' Quarterly Report on Form 10-Q for the
quarter ended March 31, 1997; (iii) Oasis' Quarterly Report on Form 10-Q for
the quarter ended June 30, 1997; (iv) Oasis' Quarterly Report on Form 10-Q for
the quarter ended September 30, 1997; (v) Oasis' Current Report on Form 8-K
filed on November 6, 1997; (vi) Oasis' Current Report on Form 8-K filed on
November 18, 1996; (vii) Oasis' Current Report on Form 8-K filed on November
19, 1996; (viii) Oasis' Current Report on Form 8-K filed on November 26, 1996;
(ix) Current Report on Form 8-K filed on January 30, 1998; (x) Oasis'
Registration Statement on Form 8-A dated April 7, 1995; and (xi) Oasis'
Registration Statement on Form 8-A dated October 12, 1993.
All documents and reports subsequently filed by Camden and Oasis
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the
date of this Joint Proxy Statement/Prospectus and prior to the Special Meetings
shall be deemed to be incorporated by reference herein. Any statement contained
in a document incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Joint Proxy
Statement/Prospectus to the extent that a statement contained herein or in any
subsequently filed document that also is or is deemed to be incorporated by
reference herein 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 Joint Proxy Statement/Prospectus.
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<PAGE> 12
SUMMARY
The following summary is not intended to be a complete description of
all material facts regarding Camden or Oasis and the matters to be considered
at the Special Meetings and is qualified in all respects by the information
appearing elsewhere or incorporated by reference in this Joint Proxy
Statement/Prospectus, the Annexes hereto and the documents referred to herein.
Information contained or incorporated by reference in this Joint Proxy
Statement/Prospectus may include forwardlooking statements within the meaning
of the Private Securities Litigation Reform Act of 1995, which statements can
be identified by the use of forward-looking terminology such as "may," "will,"
"expect," "anticipate," "estimate," "project" or "continue" or the negative
thereof or other comparable terminology. The following matters and certain
other factors noted throughout this Joint Proxy Statement/Prospectus and any
documents incorporated by reference herein or therein and exhibits hereto and
thereto constitute cautionary statements identifying important factors with
respect to any such forwardlooking statements, including certain risks and
uncertainties, that could cause Camden or Oasis' actual results to differ
materially from those predicted in any such forward-looking statements.
THE COMPANIES
Camden. Camden is a Houston-based real estate investment trust
("REIT") engaged in the ownership, development, acquisition, management,
marketing and disposition of multifamily apartment communities in the
Southwest, Southeast and Midwest regions of the United States. As of December
31, 1997, Camden owned interests in and operated 100 multifamily properties
containing 34,669 units located in Texas, Florida, Missouri, North Carolina,
Arizona and Kentucky, including 1,264 units owned through joint ventures. These
properties had a weighted average occupancy rate of 94.0% for the year ended
December 31, 1997. Six of Camden's multifamily properties containing 2,343
apartment units were under development at December 31, 1997. Upon completion of
the development of the six properties, Camden will own interests in 106
properties with 37,012 units. Additionally, Camden managed 4,163 apartment
units in 14 properties for third-parties and non-consolidated affiliates at
December 31, 1997.
Following the Effective Time (as defined below under "THE SPECIAL
MEETINGS--The Merger"), Camden will own interests in 152 multifamily properties
containing 49,786 units (including 1,585 units owned through joint ventures or
6,704 units after the Spin-Off) and will have seven multifamily properties
containing 2,683 units under development. Upon completion of the development of
the seven properties, Camden will own interests in 159 multifamily properties
containing 52,469 units. Camden will also have several additional sites that it
intends to develop into multifamily apartment communities. See "THE SPIN-OFF"
for the properties to be included in an anticipated joint venture.
Camden's principal executive offices are located at 3200 Southwest
Freeway, Suite 1500, Houston, Texas 77027, and its telephone number is (713)
964-3555. For further information concerning Camden, see "BUSINESS OF CAMDEN."
Oasis. Oasis is a fully integrated REIT with in-house acquisition,
development, property management and finance expertise. Oasis is the largest
owner of predominantly upscale apartment communities in the greater Las Vegas
metropolitan area based on the number of apartment units. As of December 31,
1997, Oasis owned interests in and operated 52 apartment communities in Las
Vegas, Reno, Denver and southern California, comprising a total of 15,117
apartment units (the "Oasis Properties") (including 321 units owned through a
joint venture) with an average age of less than eight years, has one apartment
community comprising 340 units under construction and owns a 30,000 square foot
commercial center in Henderson, Nevada in which Oasis' headquarters is located
(the "Commercial Center"). Forty-three of the Oasis Properties are located in
the greater Las Vegas area. The weighted average occupancy rate of the Oasis
Properties was 95% for the year ended December 31, 1997.
The principal executive offices of Oasis are located at 4041 East
Sunset Road, Henderson, Nevada 89014, and its telephone number is (702)
435-9800. For further information concerning Oasis, see "BUSINESS OF OASIS."
Trading Markets. On December 16, 1997, the last trading day prior to
public announcement of the execution of the Merger Agreement, the last reported
sale prices per share of the Camden Common Shares, the Common Stock, par value
$.01 per share, of Oasis (the "Oasis Common Stock"), and the Series A Preferred
Stock, par value $.01 per share, of Oasis (the
2
<PAGE> 13
"Oasis Series A Preferred Stock" and, together with the Oasis Common Stock, the
"Oasis Shares"), were $32.00, $22.1875 and $24.8125, respectively. On February
4, 1998, the last reported sales prices per share of the Camden Common Shares,
the Oasis Common Stock and the Oasis Series A Preferred Stock were $30.125,
$22.0625 and $25.625, respectively. Shares of Camden Common Shares, Oasis
Common Stock and Oasis Series A Preferred Stock are, and shares of Camden
Series A Preferred Shares are expected to be, traded on the NYSE under the
symbols "CPT," "OAS, "OASPrA" and "___," respectively. See "COMPARATIVE MARKET
PRICES."
SPECIAL MEETINGS; VOTES REQUIRED
Camden. The Camden Special Meeting will be held on _________,
________, 1998, at ___, local time, at ____________. At the Camden Special
Meeting, shareholders will consider and vote upon (i) a proposal to approve the
Merger pursuant to the Merger Agreement, (ii) a proposal to elect seven members
to the Board of Trust Managers of Camden (the "Camden Board"), (iii) a proposal
to ratify the appointment of Deloitte & Touche LLP as independent auditors of
Camden for the year ending December 31, 1998 (collectively, the "Camden
Proposals") and (iv) a proposal to approve the postponement or adjournment of
the Camden Special Meeting for the solicitation of additional votes, if
necessary. Only holders of Camden Common Shares of record at the close of
business on _______, 1998 (the "Record Date") will be entitled to vote at the
Camden Special Meeting. Each of the Camden Proposals will be approved if it
receives the affirmative vote of a majority of the votes cast at the Camden
Special Meeting if a quorum is present or represented by proxy. The holders of
a majority of the Camden Common Shares entitled to vote, present in person or
by proxy, will constitute a quorum for purposes of the Camden Special Meeting.
The vote of a majority of the votes cast at the Camden Special Meeting, whether
or not a quorum is present, is necessary to approve the proposal that would
allow Camden to postpone or adjourn the Camden Special Meeting to solicit
additional votes. As of the Record Date, there were ______ Camden Common Shares
outstanding and entitled to vote. As of the Record Date, the members of the
Camden Board, executive officers of Camden and their affiliates beneficially
owned _____ Camden Common Shares (excluding _____ shares issuable as of the
Record Date upon the exercise of vested options), representing approximately
____% of the outstanding shares entitled to vote at the Camden Special Meeting.
See "THE SPECIAL MEETINGS."
Oasis. The Oasis Special Meeting will be held on _______, ________,
1998, at ___, local time, at _________________. At the Oasis Special Meeting,
stockholders will consider and vote upon a proposal to (i) approve the Merger
pursuant to the Merger Agreement and (ii) a proposal to approve the
postponement or adjournment of the Oasis Special Meeting for the solicitation
of additional votes, if necessary. Only holders of Oasis Common Stock of record
at the close of business on the Record Date will be entitled to vote at the
Oasis Special Meeting. The affirmative vote of the holders of a majority of the
outstanding shares of Oasis Common Stock outstanding and entitled to vote is
required to approve the Merger Agreement. The holders of a majority of the
outstanding shares of Oasis Common Stock entitled to vote, present in person or
by proxy, will constitute a quorum for purposes of the Oasis Special Meeting.
The vote of a majority of the votes cast at the Oasis Special Meeting, whether
or not a quorum is present, is necessary to approve the proposal that would
allow Oasis to postpone or adjourn the Oasis Special Meeting to solicit
additional votes. As of the Record Date, there were ______ shares of Oasis
Common Stock outstanding and entitled to vote. As of the Record Date, the
members of the Board of Directors of Oasis (the "Oasis Board"), executive
officers of Oasis and their affiliates beneficially owned ____ shares of Oasis
Common Stock (excluding _____ shares issuable as of the Record Date upon the
exercise of vested stock options), representing approximately ____% of the
outstanding shares entitled to vote at the Oasis Special Meeting. See "THE
SPECIAL MEETINGS."
Voting Agreements. Concurrently with the execution of the Merger
Agreement, Richard J. Campo and D. Keith Oden, each of whom is a member of the
Camden Board and an executive officer of Camden, entered into a voting
agreement with Oasis (the "Camden Voting Agreement") pursuant to which such
persons, representing an aggregate of 512, 881 shares or approximately 1.6% of
the outstanding Camden Common Shares as of February 4, 1998, agreed to vote
their Camden Common Shares then owned or thereafter acquired by them in favor
of the Merger. Also concurrently with the execution of the Merger Agreement,
Robert V. Jones, the Chairman of the Oasis Board, and the Scotsman Trust, the
trustee of which is Mr. Jones, entered into a voting agreement with Camden (the
"Oasis Voting Agreement" and, together with the Camden Voting Agreement, the
"Voting Agreements") pursuant to which such persons, representing an aggregate
of 992,642 shares or approximately 6.1% of the outstanding shares of Oasis
Common Stock as of February 4, 1998, agreed to vote their shares of Oasis
Common Stock then owned or thereafter acquired by them in favor of the Merger.
See "VOTING AGREEMENTS."
3
<PAGE> 14
RISK FACTORS
Shareholders of Camden and stockholders of Oasis should carefully
evaluate the matters set forth under "RISK FACTORS" beginning on page 7 of this
Joint Proxy Statement/Prospectus.
THE MERGER
As described under "THE MERGER AGREEMENT--The Merger," pursuant to the
Merger Agreement, Oasis will be merged with and into Merger Sub, each share of
Oasis Common Stock outstanding immediately prior to the Effective Time (other
than shares held by Oasis as treasury stock or owned by any subsidiary of
Oasis, which shares will be canceled) will be converted into 0.759 of a Camden
Common Share (the "Common Share Exchange Ratio") and each share of Oasis Series
A Preferred Stock outstanding immediately prior to the Effective Time (other
than shares held by Oasis as treasury stock or owned by any subsidiary of
Oasis, which shares will be canceled) will be converted into one Camden Series
A Preferred Share (the "Preferred Share Exchange Ratio" and, together with the
Common Share Exchange Ratio, the "Exchange Ratios"). See "THE MERGER
AGREEMENT--The Merger."
BACKGROUND OF THE MERGER
The terms of the Merger (including the Exchange Ratios) were
determined through negotiation between Camden and Oasis. For a description of
these negotiations, see "THE MERGER--Background of the Merger."
REASONS FOR THE MERGER; RECOMMENDATIONS OF THE BOARDS
Camden. The Camden Board has unanimously approved the Merger and
believes that the Merger is in the best interests of Camden and its
shareholders. The Camden Board recommends that shareholders vote FOR the Merger
and FOR each of the other Camden Proposals. The decision of the Camden Board to
approve the Merger was based on a number of factors. See "THE MERGER--Reasons
for the Merger; Recommendations of the Boards--Camden's Reasons for the Merger;
Recommendation of the Camden Board."
Oasis. The Oasis Board has unanimously approved the Merger and
believes that the Merger is in the best interests of Oasis and its
stockholders. The Oasis Board recommends that stockholders vote FOR the Merger.
The decision of the Oasis Board to approve the Merger was based on a number of
factors. See "THE MERGER--Reasons for the Merger; Recommendations of the
Boards--Oasis' Reasons for the Merger; Recommendation of the Oasis Board."
OPINIONS OF FINANCIAL ADVISORS
Camden. Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"),
an independent investment banking firm, has rendered its opinion to the Camden
Board to the effect that, as of the date of such opinion, based upon and
subject to the assumptions, limitations and qualifications set forth therein,
the Exchange Ratios were fair, from a financial point of view, to Camden and
the holders of Camden Common Shares. A copy of the DLJ opinion, dated as of the
date of this Joint Proxy Statement/Prospectus, which sets forth the assumptions
made, procedures followed, other matters considered and limits of reviews by
DLJ, is attached to this Joint Proxy Statement/Prospectus as Annex III. See
"THE MERGER--Opinions of Financial Advisors--Camden."
Oasis. Merrill Lynch & Company ("Merrill Lynch"), an internationally
recognized investment banking firm with substantial experience in transactions
similar to the Merger and familiar with Oasis and its business, has delivered a
written opinion on the Oasis Board (the "Merrill Lynch Opinion") stating that,
as of the date of such opinion, and based upon the assumptions made, matters
considered and limits of review set forth in such opinion, the consideration to
be received by the Oasis stockholders in the Merger is fair to such
stockholders from a financial point of view. A copy of the Merrill Lynch
Opinion, dated December 16, 1997, which sets forth the assumption made,
procedures followed, other matters considered and limits of reviews by Merrill
Lynch is attached to this Joint Proxy Statement/Prospectus as Annex IV. See
"THE MERGER--Opinions of Financial Advisors--Oasis."
4
<PAGE> 15
REGULATORY MATTERS
Camden and Oasis believe that the Merger may be consummated without
notification being given or certain information being furnished to the Federal
Trade Commission (the "FTC") or the Antitrust Division of the Department of
Justice (the "Antitrust Division") pursuant to the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), and that no waiting
period requirements under the HSR Act are applicable to the Merger. See "THE
MERGER--Regulatory Matters."
CONDITIONS TO CONSUMMATION OF THE MERGER; EFFECTIVE TIME OF THE MERGER;
TERMINATION FEES
The respective obligations of Camden and Oasis are subject to the
satisfaction of certain conditions, including obtaining the requisite
shareholder approvals. It is anticipated that the Merger will become effective
as promptly as practicable after the requisite shareholder approvals have been
obtained and all other conditions to the Merger have been satisfied or waived.
See "THE MERGER AGREEMENT--Conditions to Consummation of the Merger." The
Merger Agreement is subject to termination at the option of Camden or Oasis if
the Merger has not occurred on or before June 30, 1998 and, prior to such time,
upon the occurrence of certain events. Under certain circumstances, Camden or
Oasis may be required to pay to the other a fee in an amount up to $20 million
upon the termination of the Merger Agreement. See "RISK FACTORS--Termination
Payments if the Merger Fails to Occur" and "THE MERGER AGREEMENT--Termination."
THE SPIN-OFF
Following the Effective Time, Camden intends to form a joint venture
partnership to be comprised of 18 multifamily properties located in Las Vegas
and one multi-family property located in Laughlin, Nevada containing an
aggregate of 5,119 apartment units (the "Spin-Off"). Camden expects to retain a
minority equity position in such partnership of approximately 20% and to
continue to provide property management services for these properties. See
"CAMDEN PROPERTY TRUST UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS"
and "CAMDEN PROPERTY TRUST UNAUDITED PRO FORMA COMBINED BALANCE SHEET." For
information regarding the properties to be included in the joint venture, see
"BUSINESS OF OASIS--Oasis Portfolio Summary." No assurance can be given that
the Spin-Off will be consummated on terms favorable to Camden or otherwise. If
the Spin-Off is not consummated, after the Effective Time Camden will retain a
larger interest in Las Vegas assets and thus will be subject to a greater risk
that a decline in the economy in the greater Las Vegas metropolitan area may
adversely affect its earnings. See "RISK FACTORS--Loss of Benefits if the
Spin-Off Fails to Occur; Dependence on the Las Vegas Market" and "THE
SPIN-OFF."
MANAGEMENT, OPERATIONS AND HEADQUARTERS AFTER THE MERGER
Following the Merger, the Camden Board will appoint Scott S. Ingraham
to serve as a trust manager, increasing the size of the Camden Board from seven
to eight trust managers. Mr. Ingraham is currently the President and Chief
Executive Officer and a director of Oasis. The executive officers of Camden
will continue to consist of the current Camden executive officers. See
"MANAGEMENT OF CAMDEN." Following the Merger, the headquarters of Camden will
continue to be located in Houston, Texas at the current headquarters of Camden.
DIVIDENDS
Camden and Oasis have agreed in the Merger Agreement to certain
limitations on the payment of dividends and distributions. Among other things,
these limitations have the effect of restricting Camden and Oasis from
declaring and paying dividends other than on their regularly scheduled dates.
If, as anticipated, the Effective Time occurs after the regularly scheduled
record date for the first quarter dividend on the Camden Common Shares (the
last day of a quarter) but prior to the regularly scheduled record date for the
first quarter dividend on the Oasis Common Stock (early in the second month
following the end of a quarter), holders of Oasis Common Stock will not receive
a dividend for the first quarter unless required for tax purposes as described
under "THE MERGER AGREEMENT--The Merger."
5
<PAGE> 16
ANTICIPATED ACCOUNTING TREATMENT
The Merger will be accounted for using the purchase method in
accordance with Accounting Principles Board Opinion No. 16. See "THE
MERGER--Anticipated Accounting Treatment."
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain members of Oasis' management, as well as certain members of
the Oasis Board, have interests in the Merger in addition to their interests as
stockholders of Oasis. These include, among other things, provisions in the
Merger Agreement relating to consulting arrangements with Camden following the
Merger, indemnification and entitlements under current Oasis employment
agreements and employee benefit plans that are triggered by the Merger. See
"THE MERGER--Interests of Certain Persons in the Merger."
FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
The Merger is intended to qualify as a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the
"Code"). The obligation of each of Camden and Oasis to consummate the Merger is
subject to the condition that it shall have received an opinion of its counsel,
dated the closing date of the Merger, to the effect that the Merger will be
treated for federal income tax purposes as a reorganization within the meaning
of Section 368(a) of the Code. Assuming the Merger is so treated, for federal
income tax purposes, the Merger will not result in the recognition of gain or
loss by Camden, Merger Sub, Oasis or the holders of Oasis Shares, except (i)
with respect to cash received by such holders in lieu of fractional shares and
(ii) with respect to the receipt by such holders of any Pre-Merger Dividend (as
defined below). See "FEDERAL INCOME TAX CONSIDERATIONS--Pre-Merger Dividend."
In addition, counsel to Camden will provide to Camden and Oasis an opinion
regarding the continued qualification of Camden as a REIT after giving effect
to the Merger. See "THE MERGER AGREEMENT--Conditions to Consummation of the
Merger" and "FEDERAL INCOME TAX CONSIDERATIONS."
DISSENTERS' RIGHTS
Neither holders of Camden Common Shares nor holders of Oasis Common
Stock will have statutory dissenters' rights in connection with the Merger. See
"THE MERGER--Dissenters' Rights."
6
<PAGE> 17
RISK FACTORS
In considering whether to approve the Merger Agreement, Camden
shareholders and Oasis stockholders should carefully consider, in addition to
the other information in this Joint Proxy Statement/Prospectus, the matters set
forth below.
SHARE PRICE FLUCTUATIONS
The relative share prices of the Camden Shares and the Oasis Shares at
the Effective Time may vary significantly from the prices as of the date of
execution of the Merger Agreement, the date hereof or the date of the Special
Meetings due to changes in the business, operations and prospects of Camden or
Oasis, market assessments of the likelihood that the Merger will be consummated
and the timing thereof, general market and economic conditions and other
factors. There can be no assurance as to the trading volume or price of the
Camden Shares after the Merger. Events outside the control of Camden that
adversely affect the market value of Camden's assets, as well as the market
value of the Camden Shares, may occur during the period from the date of this
Joint Proxy Statement/Prospectus to the Effective Time or thereafter. All of
the Camden Shares to be issued to Oasis stockholders other than affiliates of
Oasis in connection with the Merger will be freely tradeable. Sales of a
substantial number of Camden Shares by current Oasis stockholders following the
consummation of the Merger, or the perception that such sales could occur,
could adversely affect the market price for Camden Shares after the Merger.
EFFECT OF MARKET INTEREST RATES ON PRICE OF CAMDEN COMMON SHARES
An increase in market interest rates may lead prospective purchasers
of Camden Shares to demand a higher anticipated annual yield from future
dividends. Such an increase in the required anticipated dividend yield may
adversely affect the market price of the Camden Shares.
BENEFITS TO CERTAIN DIRECTORS AND OFFICERS OF OASIS; POSSIBLE CONFLICTS OF
INTEREST
In considering the recommendation of the Oasis Board with respect to
the Merger Agreement and the transactions contemplated thereby, Oasis
stockholders should be aware that certain members of the Oasis Board and
management of Oasis have certain interests in the Merger that are in addition
to the interests of stockholders of Oasis generally. See "THE MERGER--Interests
of Certain Persons in the Merger." No special procedures were put in place to
resolve any conflicts resulting from these interests. However, the Oasis Board
was aware of these interests and was aware of their potential and considered
them, among other matters, in unanimously approving the Merger Agreement and
the transactions contemplated thereby.
LOSS OF RIGHTS BY OASIS STOCKHOLDERS
The rights of the holders of Oasis Shares are presently governed by
Nevada law, the Third Amended and Restated Articles of Incorporation of Oasis
(the "Oasis Articles") and the Fourth Amended and Restated Bylaws of Oasis (the
"Oasis Bylaws"). After consummation of the Merger, the rights of the holders of
Oasis Shares that are converted into Camden Shares will be governed by Texas
law, the Amended and Restated Declaration of Trust of Camden (the "Camden
Declaration of Trust") and the Second Amended and Restated Bylaws of Camden
(the "Camden Bylaws"). Certain differences may alter certain existing rights of
Oasis stockholders. See "COMPARATIVE RIGHTS OF SHAREHOLDERS."
LOSS OF BENEFITS IF THE SPIN-OFF FAILS TO OCCUR; DEPENDENCE ON THE LAS VEGAS
MARKET
As a result of a majority of Oasis' properties being located in the
greater Las Vegas metropolitan area, Oasis has been subject to various risks
associated with a lack of geographic diversification and dependence on such
market, including the adverse effect of economic conditions in this region and
the market for apartment units therein. To reduce Camden's exposure to the Las
Vegas market and the risks associated therewith, after the Effective Time,
Camden expects to form a joint venture partnership to be comprised of 5,119
apartment units. No assurance can be given that the Spin-Off will be
consummated on terms favorable to Camden or otherwise. If the Spin-Off is not
consummated, after the Effective Time Camden will retain a larger interest in
Las Vegas and thus will be subject to a greater risk that a decline in the
economy in the greater Las Vegas metropolitan area may adversely affect its
earnings. See "THE SPIN-OFF."
7
<PAGE> 18
TERMINATION PAYMENTS IF THE MERGER FAILS TO OCCUR
No assurance can be given that the Merger will be consummated. The
Merger Agreement provides for the payment by Camden or Oasis of a termination
fee of up to $20 million if the Merger is terminated under certain
circumstances, or reimbursement of expenses if the Merger is terminated under
certain other circumstances. The obligation to make such payments may adversely
affect the ability of Oasis or Camden to engage in another transaction in the
event the Merger is not consummated and may have an adverse impact on the
financial condition of the company incurring such obligation. See "THE MERGER
AGREEMENT-- Termination."
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 Camden's properties do not generate
income sufficient to meet operating expenses, debt service and capital
expenditures, Camden's ability to make distributions to its shareholders will
be adversely affected. Income from apartment 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). Camden'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 Camden 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.
Camden, 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 Camden will have the opportunity to continue to make suitable
property acquisitions on terms favorable to Camden.
Illiquidity of Real Estate. Real estate investments are relatively
illiquid and, therefore, will tend to limit the ability of Camden to vary its
portfolio promptly in response to changes in economic or other conditions. In
addition, the Code places limits on a REIT's ability to sell properties held
for fewer than four years, which may affect Camden's ability to sell properties
and may adversely affect returns to Camden shareholders.
Acquisition Risks. Assuming consummation of the Merger, Camden will
have increased its interests in apartment communities from 100 communities at
December 31, 1997 to 152 communities at the Effective Time, an increase of 52%.
The properties acquired by Camden from Oasis are in markets where Camden has
not historically managed properties. Due primarily to the number and relative
geographic diversity of its properties after the Merger, Camden 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
being available for distributions to shareholders. Additionally, one of the
anticipated benefits of the Merger is the elimination of redundant activities
in the combined 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 Camden after the Merger.
Development Risks. As a result of the Merger, Camden will obtain
ownership of Oasis' development properties. Camden 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. Camden will be subject to similar risks in connection with any future
development of other properties.
8
<PAGE> 19
NO LIMITATION ON AMOUNT OF DEBT THAT MAY BE INCURRED AND POSSIBLE INABILITY TO
REPAY DEBT
No Limitation on Debt and Increased Indebtedness. Camden intends to
adhere to a policy of maintaining a debt-tototal-market-capitalization ratio of
less than 50%. However, the organizational documents of Camden do not limit the
amount or percentage of indebtedness that it may incur. Therefore, the Camden
Board may change this policy without shareholder approval. Accordingly, Camden
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 Camden.
Camden 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 Camden's total debt to total market capitalization as a result of
Camden's assumption of Oasis' debt pursuant to the Merger may have an adverse
affect on the ability of Camden to meet its current obligations. Additionally,
an increase in Camden's total debt to total market capitalization may adversely
affect Camden'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. Camden is subject to the
risks normally associated with debt financing, including the risk that Camden's
funds from operations ("FFO") might be insufficient to meet required payments
of principal and interest, the risk that existing indebtedness (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 two Oasis properties, Oasis has invested through a
joint venture or limited liability company in which Oasis owns less than a 100%
interest and is subject to certain consent rights of the partners or members
with respect to certain major decisions affecting such properties. Although
Oasis typically has control of the day-to-day management decisions relating to
these partially-owned properties, it has certain fiduciary responsibilities to
the other partners or members in those entities that it will need to consider
when making decisions that affect those properties. Further, Camden will
acquire interests in some properties that Camden may be contractually
restricted from selling without the consent of certain unrelated parties.
After completion of the Merger, the foregoing may result in decisions
with respect to such properties that do not fully reflect the interest of
Camden and its shareholders at such time, and may include decisions relating to
the standards that Camden is required to satisfy in order to maintain its
status as a REIT for tax purposes.
UNINSURED AND UNDERINSURED LOSSES COULD RESULT IN LOSS OF VALUE OF PROPERTY
Camden 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 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 Camden'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
Camden's lost investment. Inflation, 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 Camden and Oasis have been subjected to Phase I or similar environmental
audits (which involve inspection without soil sampling
9
<PAGE> 20
or ground water analysis) by independent environmental consultants. Neither
party's environmental audit reports have revealed any significant environmental
liability, nor is Camden or Oasis aware of any environmental liability with
respect to its properties that Camden or Oasis management believes would have a
material adverse effect on Camden's business, assets or results of operations
following the Merger. 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 Camden or Oasis.
COSTS OF COMPLIANCE WITH FAIR HOUSING AMENDMENTS ACT AND SIMILAR LAWS
A number of federal, state and local laws exist that may require
modifications to the properties owned by Camden or Oasis 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 31, 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.
Oasis has been contacted by certain regulatory agencies with regard to
alleged failures to comply with the FHA as it pertains to properties
constructed for first occupancy after March 31, 1991. Currently, Oasis is
inspecting these properties to determine the extent of the alleged
noncompliance and the changes that may be necessitated. At this time, Oasis is
unable to provide an estimate of costs and expenses associated with this matter
as the scope and extent of required work, if any, has yet to be determined.
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 Camden or
Oasis 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. Final regulations under the ADA have not yet
been promulgated. 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 Camden currently anticipates, or if the
changes must be made on a more accelerated basis than it anticipates, Camden's
ability to make expected distributions could be adversely affected. Camden
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 Camden, such costs could be substantial. Limitations or
restrictions on the completion of certain renovations may limit application of
Camden's investment strategy in certain instances or reduce overall returns on
Camden's investments.
ADVERSE CONSEQUENCES OF FAILURE TO QUALIFY AS A REIT
Camden believes that it has operated so as to qualify as a REIT under
the Code since its formation. Although management of Camden believes that
Camden is organized and is operating in such a manner, no assurance can be
given that Camden 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 Camden's
control. For example, in order to qualify as a REIT, at least 95% of Camden's
gross income in any year must be derived from qualifying sources and Camden
must make distributions to shareholders aggregating annually at least 95% of
its REIT taxable income (excluding net capital gains). In addition, no
assurance can 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. Camden, 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 Camden fails to qualify as a REIT, Camden
would be subject to federal income tax (including any applicable alternative
minimum tax) on its taxable income at corporate rates. In addition, unless
entitled to
10
<PAGE> 21
relief under certain statutory provisions, Camden would 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 Camden
available for investment or distribution to shareholders because of the
additional tax liability to Camden for the year or years involved. In addition,
distributions would no longer qualify for the dividends paid deduction nor be
required to be made. To the extent that distributions to shareholders would
have been made in anticipation of Camden's qualifying as a REIT, Camden might
be required to borrow funds or to liquidate certain of its investments to pay
the applicable tax.
Oasis believes that, since its taxable year ended December 31, 1993,
it has operated so as to qualify as a REIT under the Code. The failure of Oasis
to qualify as a REIT could have consequences generally similar to the
consequences of the failure by Camden to qualify as a REIT, as described above.
Under certain circumstances, Camden's qualification as a REIT following the
Merger could depend on Oasis' qualification as a REIT for periods prior to the
Merger, and in any event, the liabilities that Camden will assume in the Merger
would include Oasis' liability for any unpaid taxes, including taxes resulting
if Oasis failed to qualify as a REIT for any period prior to the Merger. See
"FEDERAL INCOME TAX CONSIDERATIONS--Requirements for Qualification."
OWNERSHIP LIMITS
In order to maintain Camden'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 Camden will fail to qualify as a REIT under
this test, the Camden Declaration of Trust authorizes the Camden Board to take
such action as may be required to preserve its qualification as a REIT.
Moreover, the Camden 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 capital shares of Camden. The Oasis Articles contain a
similar limitation on the ownership of Oasis capital stock. See "COMPARATIVE
RIGHTS OF SHAREHOLDERS--REIT Qualification Provisions."
These ownership limits, as well as the ability of Camden to issue
other classes of equity securities, may delay, defer or prevent a change in
control of Camden and may also deter tender offers for the Camden Shares, which
offers may be attractive to the shareholders, or limit the opportunity of
shareholders to receive a premium for their Camden Shares that might otherwise
exist if an investor were attempting to effect a change in control of Camden.
See "COMPARATIVE RIGHTS OF SHAREHOLDERS."
COMPETITION
All of the properties of Camden and Oasis are located in developed
areas. There are numerous other multifamily properties and real estate
companies within the market area of each such property that compete with Camden
and Oasis and will continue to compete with Camden after the Merger for
residents and development and acquisition opportunities, some of whom may have
greater resources than Camden. The number of competitive multifamily properties
and real estate companies in such areas could have a material effect on
Camden'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 Camden, 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 Camden. Accordingly, shareholders will have no control over
changes in these and similar policies of Camden, and changes in Camden's
policies may not fully serve the interest of all shareholders.
11
<PAGE> 22
EQUIVALENT PER SHARE DATA
The following summary presents selected comparative unaudited per
share information for Camden and Oasis on a historical basis and Camden and
Oasis on a pro forma combined basis assuming the combination had been effective
throughout the periods presented. Oasis pro forma equivalent per share amounts
are presented with respect to pro forma information. Such per share amounts
allow comparison of historical information with respect to the value of one
common and common equivalent share (diluted) of Oasis to the corresponding
information with respect to the projected value of one share of common and
common equivalent share (diluted) of Oasis as a result of the Merger and are
computed by multiplying the pro forma amounts by the Exchange Ratios.
For each of Camden and Oasis, income statement information for the
year ended December 31, 1997 and balance sheet information as of December 31,
1997 are based on, and should be read in conjunction with, the consolidated
audited financial statements of Camden and Oasis incorporated herein by
reference. See "INCORPORATION OF CERTAIN INFORMATION BY REFERENCE." The
remaining financial information is based on the respective historical and
unaudited pro forma combined financial statements of Camden and Oasis and
the notes thereto.
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1997
-----------------
<S> <C>
DILUTED EARNINGS PER SHARE:
Camden.............................................. $ 1.41
Oasis............................................... 1.51
Camden and Oasis pro forma combined (A)............. 1.49
Oasis pro forma equivalent (B)...................... 1.13
CASH DISTRIBUTIONS DECLARED PER COMMON SHARE:
Camden.............................................. $ 1.96
Oasis............................................... 1.81
Camden and Oasis pro forma combined (A)............. 1.96
Oasis pro forma equivalent (B)...................... 1.49
SHAREHOLDERS' EQUITY (BOOK VALUE) PER COMMON
SHARE OUTSTANDING:
Camden.............................................. $22.42
Oasis............................................... 22.62
Camden and Oasis pro forma combined (A)............. 27.45
Oasis pro forma equivalent (B)...................... 20.83
</TABLE>
- --------------
(A) Assumes that in the Merger each Oasis Share is converted into
0.759 of a Camden Share, resulting in total weighted average
outstanding Camden Shares of 40,747 for the year ended
December 31, 1997.
(B) Determined by multiplying the Common Share Exchange Ratio
(0.759) by the Camden and Oasis pro forma combined per share
amounts so that the per share amounts are equated to the
comparative values for each share of Oasis Common Stock.
12
<PAGE> 23
COMPARATIVE MARKET PRICES
CAMDEN
The Camden Common Shares have been traded on the NYSE under the symbol
"CPT" since July 29, 1993. As of February 4, 1998, there were approximately 700
holders of record and approximately _________ beneficial holders of the Camden
Common Shares. Set forth below are the high and low sales prices per Camden
Common Shares as reported on the NYSE for the periods indicated, as well as the
distributions declared by Camden per Camden Common Share for each period.
<TABLE>
<CAPTION>
High Low Distributions
---- --- -------------
<S> <C> <C> <C>
1996
First Quarter $24 3/4 $22 3/4 $ 0.475
Second Quarter 25 21 3/4 0.475
Third Quarter 26 1/2 22 3/4 0.475
Fourth Quarter 29 1/4 25 5/8 0.475
1997
First Quarter $28 3/4 $26 3/4 $ 0.490
Second Quarter 31 5/8 26 1/2 0.490
Third Quarter 31 5/8 28 5/8 0.490
Fourth Quarter 33 3/16 29 1/4 0.490
1998
First Quarter (through February 4, 1998) $30 5/8 $29 1/2 --
</TABLE>
On December 16, 1997, the last trading day prior to the public
announcement of the Merger, the last reported sales price of a Camden Common
Share on the NYSE was $32.00. On February 4, 1998, the last reported sales
price of a Camden Common Share on the NYSE was $30.125.
OASIS
The Oasis Common Stock has been traded on the NYSE under the symbol "OAS"
since October 22, 1993. As of February 4 , 1998, there were approximately 358
holders of record and approximately 5,938 beneficial holders of the Oasis
Common Stock. Set forth below are the high and low sales prices per share of
the Oasis Common Stock as reported on the NYSE for the periods indicated, as
well as the distributions declared by Oasis per share of Oasis Common Stock for
each period.
<TABLE>
<CAPTION>
High Low Distributions
---- --- -------------
<S> <C> <C> <C>
1996
First Quarter $24 1/2 $22 $ 0.435
Second Quarter 23 1/2 21 0.435
Third Quarter 22 21 1/8 0.435
Fourth Quarter 23 1/2 20 1/2 0.435
1997
First Quarter $24 3/8 $22 3/8 $ 0.4525
Second Quarter 23 3/4 22 0.4525
Third Quarter 24 15/16 23 1/16 0.4525
Fourth Quarter 25 21 11/16 0.4525
1998
First Quarter (through February 4, 1998) $22 3/4 $21 7/8 ---
</TABLE>
On December 16, 1997, the last trading day prior to the public
announcement of the Merger, the last reported sales prices of a share of Oasis
Common Stock and Oasis Series A Preferred Stock on the NYSE were $22.1875 and
$24.8125, respectively. On February 4, 1998, the last reported sales prices of
a share of Oasis Common Stock and Oasis Series A Preferred Stock on the NYSE
were $22.0625 and $25.625, respectively.
13
<PAGE> 24
SELECTED HISTORICAL AND UNAUDITED PRO FORMA
COMBINED FINANCIAL AND PROPERTY DATA
The following tables set forth the selected historical financial and
property data for Camden and the unaudited pro forma combined financial and
property data for Camden and Oasis as a combined entity, giving effect to the
Merger as if it had occurred on the dates indicated herein, after giving effect
to the spin-off adjustments described in the notes to the unaudited pro forma
combined financial statements appearing elsewhere in the Joint Proxy
Statement/Prospectus. The selected historical operating, balance sheet and cash
flow data for each of the five years ended December 31, 1997 are derived from
the audited financial statements of Camden as reported in their Annual Reports
on Form 10-K. In the opinion of management, all adjustments necessary to
reflect the effects of these transactions have been made. The Merger has been
accounted for under the purchase method of accounting in accordance with the
Accounting Principles Board Opinion No. 16.
The pro forma financial information should be read in conjunction
with, and are qualified in their entirety by, the respective historical audited
financial statements and notes thereto of Camden and Oasis incorporated by
reference into this Joint Proxy Statement/Prospectus and the unaudited pro
forma financial statements and notes thereto appearing elsewhere in the Joint
Proxy Statement/Prospectus.
The unaudited pro forma operating data and other data are presented
for comparative purposes only and are not necessarily indicative of what the
actual combined results of operations of Camden and Oasis would have been for
the periods presented, nor does such data purport to represent the results of
future periods.
14
<PAGE> 25
CAMDEN PROPERTY TRUST
SELECTED HISTORICAL AND
UNAUDITED PRO FORMA COMBINED FINANCIAL AND PROPERTY DATA
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Camden Property Trust
---------------------------------------------------------------------
Years Ended December 31,
---------------------------------------------------------------------
Pro forma
1997 1997(1) 1996 1995 1994
----------- ----------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
OPERATING DATA
Revenues:
Rental income ...................................... $ 267,774 $ 187,928 $ 105,785 $ 92,275 $ 71,468
Other property income .............................. 10,280 9,510 4,453 3,617 2,811
----------- ----------- --------- --------- ---------
Total property income .......................... 278,054 197,438 110,238 95,892 74,279
Equity in income of joint ventures ................. 1,044 1,141 -- -- --
Fee and asset management ........................... 2,132 743 949 1,029 721
Other income ....................................... 1,044 467 419 353 456
----------- ----------- --------- --------- ---------
Total revenues ................................. 282,274 199,789 111,606 97,274 75,456
----------- ----------- --------- --------- ---------
Expenses:
Property operating and maintenance ................. 91,838 70,595 40,604 37,093 29,352
Real estate taxes .................................. 25,366 21,028 13,192 11,481 8,962
General and administrative ......................... 8,165 4,473 2,631 2,263 2,574
Interest ........................................... 38,989 28,537 17,336 13,843 8,807
Depreciation and amortization ...................... 64,301 44,836 23,894 20,264 16,239
Minority interest in consolidated partnership ...... -- -- -- --
----------- ----------- --------- --------- ---------
Total expenses ................................. 228,838 169,469 97,657 84,944 65,934
----------- ----------- --------- --------- ---------
Income before gain on sales of properties, losses
related to early retirement of debt and minority
interest in Operating Partnership .............. 53,436 30,320 13,949 12,330 9,522
Gain on sales of properties ........................ 17,169 10,170 115 -- --
Losses related to early retirement of debt ......... (397) (397) (5,351) -- --
----------- ----------- --------- --------- ---------
Income before minority interest in Operating
Partnership ...................................... 70,208 40,093 8,713 12,330 9,522
Minority interest in Operating Partnership ......... (1,655) (1,655) -- -- --
----------- ----------- --------- --------- ---------
Net income ......................................... 68,553 38,438 8,713 12,330 9,522
Preferred share dividends .......................... (9,372) -- (4) (39) (20)
----------- ----------- --------- --------- ---------
Net income to common shareholders .................. $ 59,181 $ 38,438 $ 8,709 $ 12,291 $ 9,502
=========== =========== ========= ========= =========
Basic earnings per share ........................... $ 1.53 $ 1.46 $ 0.59 $ 0.86 $ 0.78
Diluted earnings per share ......................... $ 1.49 $ 1.41 $ 0.58 $ 0.86 $ 0.77
Distributions per common share ..................... $ 1.96 $ 1.96 $ 1.90 $ 1.84 $ 1.76
Weighted average number of common shares
outstanding .................................... 38,648 26,257 14,849 14,325 12,188
Weighted average number of common shares
outstanding plus dilutive potential common
shares ......................................... 40,747 28,356 14,979 14,414 12,310
BALANCE SHEET DATA (AT END OF PERIOD)
Real estate assets ................................. $ 2,131,430 $ 1,397,138 $ 646,545 $ 607,598 $ 510,324
Accumulated depreciation ........................... (94,665) (94,665) (56,369) (36, 800) (17,731)
Total assets ....................................... 2,077,424 1,323,620 603,510 582,352 504,284
Notes payable ...................................... 706,079 480,754 244,182 235,459 149,547
Minority interest in Operating Partnership ......... 63,325 63,325 -- -- --
Convertible subordinated debentures ................ 6,025 6,025 27,702 44,050 47,800
Series A preferred shares .......................... 42 -- -- 1,950 1,950
Shareholders'/partners' equity ..................... 1,210,115 710,564 295,428 267,829 277,604
Common shares outstanding .......................... 44,085 31,694 16,521 14,514 14,273
<CAPTION> Camden
Property Camden
Trust Predecessors
----------- ------------
July 29 to January 1
December to July
31, 1993 28, 1993
---------- ---------
<S> <C> <C>
OPERATING DATA
Revenues:
Rental income ...................................... $ 16,785 $ 16,721
Other property income .............................. 539 590
--------- --------
Total property income .......................... 17,324 17,311
Equity in income of joint ventures ................. -- --
Fee and asset management ........................... -- --
Other income ....................................... 243 310
--------- --------
Total revenues ................................. 17,567 17,621
--------- --------
Expenses:
Property operating and maintenance ................. 6,907 7,380
Real estate taxes .................................. 1,910 1,989
General and administrative ......................... 291 343
Interest ........................................... 1,340 4,364
Depreciation and amortization ...................... 3,572 3,045
Minority interest in consolidated partnership ...... -- --
--------- --------
Total expenses ................................. 14,020 17,121
--------- --------
Income before gain on sales of properties, losses
related to early retirement of debt and minority
interest in Operating Partnership .............. 3,547 500
Gain on sales of properties ........................ -- --
Losses related to early retirement of debt ......... -- --
--------- --------
Income before interest in Operating Partnership .... 3,547 500
Minority interest in Operating Partnership ......... -- --
--------- --------
Net income ......................................... 3,547 $ 500
========
Preferred share dividends .......................... --
---------
Net income to common shareholders .................. $ 3,547
=========
Basic earnings per share ........................... $ 0.39
Diluted earnings per share ......................... $ 0.39
Distributions per common share ..................... $ 0.68
Weighted average number of common shares
outstanding .................................... 9,069
Weighted average number of common shares
outstanding plus dilutive potential common
shares ......................................... 9,114
BALANCE SHEET DATA (AT END OF PERIOD)
Real estate assets ................................. $ 296,545
Accumulated depreciation ........................... (3,388)
Total assets ....................................... 304,345
Notes payable ...................................... 111,513
Minority interest in Operating Partnership ......... --
Convertible subordinated debentures ................ --
Series A preferred shares .......................... 1,950
Shareholders'/partners' equity ..................... 175,984
Common shares outstanding .......................... 9,162
</TABLE>
15
<PAGE> 26
CAMDEN PROPERTY TRUST
SELECTED HISTORICAL AND
UNAUDITED PRO FORMA COMBINED FINANCIAL AND PROPERTY DATA
(CONTINUED)
(in thousands, except property data amounts)
<TABLE>
<CAPTION>
Camden Property Trust
----------------------------------------------------------------------------------------
Years ended December 31,
---------------------------------------------------------------------- July 29 to
Pro forma December
1997 1997(1) 1996 1995 1994 31, 1993
--------- -------- -------- -------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
OTHER DATA
Cash flows provided by (used in):
Operating activities ............... $ 65,974 $ 41,267 $ 37,594 $ 33,560 $ 16,554
Investing activities ............... (73,709) (41,697) (97,003) (198,087) (237,346)
Financing activities ............... 11,837 2,560 59,404 159,388 226,171
Funds from operations ("FFO") (2) ..... 75,753 39,999 35,260 28,604 7,119
PROPERTY DATA
Number of operating properties
(at end of period) ................. 152 100 48 50 48 32
Number of operating units
(at end of period) ................. 49,786 34,669 17,611 16,742 15,783 11,064
Number of operating units
(weighted average)(3) .............. 38,439 29,280 17,362 16,412 13,694 7,935
Weighted average monthly total property
income per unit(3) ................. 601 $ 562 $ 529 $ 487 $ 452 $ 420
Properties under development
(at end of period) ................. 7 6 6 9 8 3
<CAPTION>
Camden
Predecessors
------------
January 1
to July 28,
1993
------------
<S> <C>
OTHER DATA
Cash flows provided by (used in):
Operating activities ............... $ 1,942
Investing activities ............... (4,297)
Financing activities ............... 1,073
Funds from operations ("FFO") (2) ..... 3,545
PROPERTY DATA
Number of operating properties
(at end of period) ................. 17
Number of operating units
(at end of period) ................. 6,040
Number of operating units
(weighted average)(3) .............. 5,996
Weighted average monthly total property
income per unit(3) ................. $ 414
Properties under development
(at end of period) .................
</TABLE>
(1) Effective April 1, 1997, Camden acquired Paragon Group, Inc.
(2) Management considers FFO to be an appropriate measure of the
performance of an equity REIT. The National Association of Real
Estate Investment Trusts ("NAREIT") currently defines FFO as net
income (computed in accordance with generally accepted accounting
principles), excluding gains (or losses) from debt restructuring and
sales of property, plus real estate depreciation and amortization,
and after adjustments for unconsolidated partnerships and joint
ventures. In addition, extraordinary or unusual items, along with
significant non-recurring events that materially distort the
comparative measure of FFO are typically disregarded in its
calculation. Prior to March 1995, the NAREIT definition of FFO
required the add back of non-real estate depreciation and
amortization, such as loan cost amortization. Camden adopted the new
FFO definition prescribed by NAREIT during 1995. Camden's definition
of FFO also assumes conversion at the beginning of the period of all
convertible securities, including minority interests that are
convertible into common equity. Camden believes that in order to
facilitate a clear understanding of its consolidated historical
operating results, FFO should be examined in conjunction with net
income as presented in the consolidated financial statements and data
incorporated by reference in this Joint Proxy Statement/Prospectus.
FFO is not defined by generally accepted accounting principles. FFO
should not be considered as an alternative to net income as an
indication of Camden's operating performance or to net cash provided
by operating activities as a measure of Camden's liquidity. Further,
FFO as disclosed by other REITs may not be comparable to Camden's
calculation.
(3) Excludes units held in joint ventures and Spin-Off units.
16
<PAGE> 27
OASIS RESIDENTIAL, INC.
SELECTED HISTORICAL FINANCIAL AND PROPERTY DATA
(in thousands, except per share and property data amounts)
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------------------------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
OPERATING DATA
Revenue:
Rental income ................................ $ 111,591 $ 92,843 $ 73,249 $ 49,316 $ 21,737
Other income ................................. 4,188 3,156 3,080 2,581 815
Joint venture investment income .............. 64 -- -- -- --
Interest income (related party) .............. 142 -- -- -- --
--------- --------- --------- ---------
Total revenue .................................. 115,985 95,999 76,329 51,897 22,552
Expenses:
Property operating and maintenance ........... 32,482 27,226 21,485 14,978 6,782
Property management fees (related party) ..... -- -- -- -- 391
General and administrative ................... 3,692 3,230 2,645 2,352 338
Real estate taxes ............................ 6,246 5,230 4,079 2,814 1,372
Interest ..................................... 26,184 15,216 7,310 6,371 7,538
Interest (related party) ..................... -- -- -- -- 1,294
Interest (non-cash) .......................... 1,214 1,118 1,332 673 1,791
Depreciation and amortization ................ 19,113 15,637 12,062 8,689 4,343
--------- --------- --------- --------- ---------
Total expenses ................................. 88,931 67,657 48,913 35,877 23,849
--------- --------- --------- --------- ---------
Income before minority interest, gain on sale of
real estate assets and extraordinary item .... 27,054 28,342 27,416 16,020 (1,297)
Less minority interest ......................... 179 -- -- -- --
--------- --------- --------- --------- ---------
Income before gain on sale of real estate assets
and extraordinary item ...................... 26,875 28,342 27,416 16,020 (1,297)
Gain on sale of real estate assets ............. 6,999 2,444 -- -- --
Extraordinary item ............................. -- (1,403) (1,952) -- --
--------- --------- --------- --------- ---------
Net income ..................................... 33,874 29,383 25,464 16,020 (1,297)
Less preferred dividend requirement ............ 9,372 9,372 6,534 -- --
--------- --------- --------- --------- ---------
Earnings available for common stockholders ..... $ 24,502 $ 20,011 $ 18,930 $ 16,020 $ (1,297)
========= ========= ========= ========= =========
Net income per common share .................... $ 1.51 $ 1.23 $ 1.17 $ 1.24
Common dividends paid per share ................ $ 1.81 $ 1.74 $ 1.64 $ 1.43
Weighted average common shares outstanding ..... 16,250 16,238 16,230 12,957
BALANCE SHEET DATA
Real estate assets ............................. $ 875,577 $ 798,467 $ 661,922 $ 506,899 $ 208,157
Total assets ................................... 846,528 774,773 641,936 502,432 208,789
Debt ........................................... 448,774 394,274 250,825 212,093 49,426
Total liabilities .............................. 456,652 402,561 261,482 215,834 50,870
Minority Interest .............................. 20,600 -- -- -- --
Stockholders' equity ........................... 369,276 372,212 380,454 286,598 157,919
Common shares outstanding ...................... 16,326 16,238 16,238 16,218 10,468
Series A preferred shares outstanding .......... 4,165 4,165 4,165 -- --
OTHER DATA
Cash flows provided by (used in):
Operating activities ........................ $ 45,881 $ 39,256 $ 41,392 $ 22,286 $ 842
Investing activities ........................ (12,274) (147,169) (155,023) (219,448) (87,551)
Financing activities ........................ (34,474) 105,340 112,544 188,719 101,661
Funds from operations - fully diluted (1) ...... 45,867 43,766 39,329 24,350
PROPERTY DATA (2)
Total properties, end of year .................. 51 49 43 38 24
Total apartment units, end of year ............. 14,796 13,428 11,643 9,819 5,317
Total apartment units, weighted average ........ 14,278 12,671 10,610 7,416 3,501
Weighted average monthly rental income per
apartment unit (3) .......................... $ 647 $ 606 $ 570 $ 549 $ 507
Communities under development, end of year ..... 1 5 13(4) 9(5) 7
</TABLE>
- --------------
(1) Oasis considers FFO to be an appropriate measure of performance of an
equity REIT. FFO, as defined by NAREIT, is defined as income before
gains (losses) on investments and extraordinary items (computed in
accordance with generally accepted accounting principles) plus real
estate depreciation and after adjustments for significant
non-recurring items, if any.
(2) Excludes communities under development and a joint venture property.
(3) Excludes rental income from commercial properties.
(4) Includes the 20-unit expansion at Oasis Cove.
(5) Includes the 156-unit phase II at Oasis Summit.
17
<PAGE> 28
THE SPECIAL MEETINGS
THE MERGER
Pursuant to the Merger Agreement, Oasis will be merged with and into
Merger Sub. The time and date of filing the certificate of merger or other
appropriate documents in accordance with the Delaware General Corporation Law
(the "DGCL") and the articles of merger or other appropriate documents in
accordance with the Nevada General Corporation Law (the "NGCL") is referred to
herein as the "Effective Time." In the Merger, each share of Oasis Common Stock
outstanding immediately prior to the Effective Time (other than shares held by
Oasis as treasury stock or owned by any subsidiary of Oasis, which shares will
be canceled) will be converted into 0.759 of a Camden Common Share and each
share of Oasis Series A Preferred Stock outstanding immediately prior to the
Effective Time (other than shares held by Oasis as treasury stock or owned by
any subsidiary of Oasis, which shares will be canceled) will be converted into
one Camden Series A Preferred Share. See "THE MERGER AGREEMENT--The Merger."
No fractional Camden Shares will be issued in connection with the
Merger. Oasis stockholders otherwise entitled to a fractional share will be
paid the value of such fraction in cash, determined as described under "THE
MERGER AGREEMENT--The Merger."
In addition, at the Effective Time, (i) Camden will assume all options
to acquire shares of Oasis Common Stock and will substitute such options with
options to acquire Camden Common Shares (see "THE MERGER AGREEMENT--The Merger
- -Options"), (ii) Scott S. Ingraham, currently the President and Chief Executive
Officer of Oasis, will be appointed to the Camden Board, increasing the number
of active trust managers from seven to eight (see "MANAGEMENT OF CAMDEN --
Board of Trust Managers of Camden"); and (iii) certain other transactions
contemplated by the Merger Agreement will be effected, as more fully described
in this Joint Proxy Statement/Prospectus.
CAMDEN SPECIAL MEETING
General. This Joint Proxy Statement/Prospectus is being mailed to
holders of Camden Common Shares as of the Record Date and is accompanied by a
form of proxy, which is being solicited by the Camden Board for use at the
Camden Special Meeting to be held on ______, ______, 1998, at ___, local time,
at _____________ and any adjournment thereof. Only holders of record of Camden
Common Shares on the Record Date are entitled to receive notice of and to vote
at the Camden Special Meeting. At the Camden Special Meeting, shareholders will
consider and vote upon (i) a proposal to approve the Merger pursuant to the
Merger Agreement, as described below under "THE MERGER AGREEMENT"; (ii) a
proposal to elect seven members to the Camden Board, as described below under
"MANAGEMENT OF CAMDEN--Board of Trust Managers of Camden"; (iii) a proposal to
ratify the appointment of Deloitte & Touche LLP as independent auditors of
Camden for the year ending December 31, 1998, as described below under
"RATIFICATION OF INDEPENDENT AUDITORS"; and (iv) a proposal to approve
postponement or adjournment of the Camden Special Meeting for the solicitation
of additional votes, if necessary.
Voting and Revocation of Proxies. Any holder of Camden Common Shares
who has executed and delivered a proxy may revoke it at any time before it is
voted by attending and voting in person at the Camden Special Meeting or by
giving written notice of revocation or submitting a signed proxy bearing a
later date to Camden, Attention: Secretary, provided such notice or proxy is
actually received by Camden prior to the vote of shareholders. Shareholders may
vote via facsimile by sending the executed proxy to (713) 234-2287. A proxy
will not be revoked by the death or incapacity of the shareholder executing it
unless, before the shares are voted, notice of such death or supervening
incapacity is filed with the Secretary or other person authorized to tabulate
the votes on behalf of Camden. The Camden Common Shares represented by properly
executed proxies received at or before the Camden Special Meeting and not
subsequently revoked will be voted as directed by the shareholders submitting
such proxies. IF INSTRUCTIONS ARE NOT GIVEN, PROXIES WILL BE VOTED FOR APPROVAL
OF THE MERGER AGREEMENT, FOR ELECTION OF EACH OF THE NOMINEES AS A MEMBER OF
THE CAMDEN BOARD, FOR RATIFICATION OF DELOITTE & TOUCHE LLP AS CAMDEN'S
INDEPENDENT AUDITORS AND IN THE DISCRETION OF THE PROXY HOLDERS ON ANY OTHER
MATTERS PROPERLY PRESENTED FOR CONSIDERATION AT THE CAMDEN SPECIAL MEETING OR
ANY ADJOURNMENT THEREOF. The Camden Bylaws permit the holders of a majority of
the shares represented at the Camden Special Meeting, whether or not
constituting a quorum, to adjourn the Camden Special Meeting or any adjournment
thereof. If necessary, unless authority to do so is withheld, the proxy holders
also may vote in favor of a proposal to adjourn the Camden Special Meeting to
permit further solicitation of proxies in order to obtain sufficient votes to
approve any of the matters being considered at the Camden Special Meeting.
Camden shareholders who wish to withhold from the persons named as proxies in
the enclosed Camden proxy authority to vote such shareholders' shares to
adjourn the Camden Special Meeting should so indicate by appropriately marking
Item 4 on the proxy.
18
<PAGE> 29
Solicitation of Proxies. Camden will bear the costs of soliciting
proxies from the Camden shareholders. In addition to use of the mails, proxies
may be solicited personally or by telephone or facsimile by trust managers,
officers and other employees of Camden, who will not be specially compensated
for such solicitation activities. Arrangements also will be made with brokerage
firms and other custodians, nominees and fiduciaries for the forwarding of
solicitation materials to the beneficial owners of shares held of record by
such persons, and such persons will be reimbursed for their reasonable expenses
incurred in that effort by Camden.
Vote Required. Each Camden Proposal will be approved if it receives
the affirmative vote of a majority of the votes cast at the Camden Special
Meeting if a quorum is present or represented by proxy. The holders of a
majority of the Camden Common Shares entitled to vote, present in person or by
proxy, constitute a quorum for purposes of the Camden Special Meeting. A holder
of a Camden Common Share will be treated as being present at the Camden Special
Meeting if the holder of such share is (i) present in person at the meeting, or
(ii) represented at the meeting by a valid proxy, whether the instrument
granting such proxy is marked as casting a vote or abstaining, is left blank or
does not empower such proxy to vote with respect to some or all matters to be
voted upon at the Camden Special Meeting. The proposal allowing Camden to
postpone or adjourn the Camden Special Meeting to solicit additional votes will
be approved if it receives the affirmative vote of a majority of the votes cast
at the Camden Special Meeting, whether or not a quorum is present. Abstentions
and "broker non-votes" will not be treated as entitled to vote for purposes of
determining whether the proposals have received sufficient votes for approval.
As of February 4, 1998, there were 31,714,881 Camden Common Shares
outstanding and entitled to vote at the Camden Special Meeting, with each share
being entitled to one vote. As of the Record Date, the members of the Camden
Board and the executive officers of Camden and their affiliates were deemed to
beneficially own a total of ______ Camden Common Shares, (excluding ____ Camden
Common Shares issuable as of the Record Date upon the exercise of vested
options), representing approximately __% of the outstanding Camden Common
Shares, all of which are expected to be voted in favor of the Camden Proposals.
Concurrently with the execution of the Merger Agreement, Richard J. Campo and
D. Keith Oden, each of whom is a member of the Camden Board and an executive
officer of Camden, entered into the Camden Voting Agreement pursuant to which
such persons, representing an aggregate of 512,881 Camden Common Shares or
approximately 1.6% of the outstanding Camden Common Shares as of February 4,
1998, agreed to vote their Camden Common Shares then owned or thereafter
acquired in favor of the Merger.
Recommendation. THE CAMDEN BOARD UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS OF CAMDEN VOTE FOR APPROVAL OF THE MERGER AGREEMENT, FOR ELECTION
OF EACH OF THE NOMINEES AS A MEMBER OF THE CAMDEN BOARD AND FOR RATIFICATION OF
DELOITTE & TOUCHE LLP AS CAMDEN'S INDEPENDENT AUDITORS.
Other Matters. Camden is unaware of any matter to be presented at the
Camden Special Meeting other than the matters described in this Joint Proxy
Statement/Prospectus.
OASIS SPECIAL MEETING
General. This Joint Proxy Statement/Prospectus is being furnished to
the holders of Oasis Common Stock as of the Record Date and is accompanied by a
form of proxy, which is being solicited by the Oasis Board for use at the Oasis
Special Meeting to be held on _________, __1998, at ___, local time, at
____________________, and any adjournment thereof. Only holders of shares of
Oasis Common Stock on the Record Date are entitled to receive notice of and to
vote at the Oasis Special Meeting. At the Oasis Special Meeting, stockholders
will consider and vote upon (i) a proposal to approve the Merger Agreement, as
described below under "THE MERGER AGREEMENT"; and (ii) a proposal to approve
the postponement or adjournment of the Oasis Special Meeting for the
solicitation of additional votes, if necessary.
Voting and Revocation of Proxies. Any holder of Oasis Common Stock who
has executed and delivered a proxy may revoke it at any time before it is voted
by attending and voting in person at the Oasis Special Meeting or by giving
written notice of revocation or submitting a signed proxy bearing a later date
to Oasis, Attention: Secretary, provided such notice or proxy is actually
received by Oasis prior to the vote of stockholders. Stockholders may vote via
facsimile by sending the executed proxy to (702) 435-9665. A proxy will not be
revoked by the death or incapacity of the stockholder executing it unless,
before the shares are voted, notice of such death or supervening incapacity is
filed with the Secretary or other person authorized to tabulate the votes on
behalf of Oasis. The shares of Oasis Common Stock represented by properly
executed proxies received at or before the Oasis Special Meeting and not
subsequently revoked will be voted as directed by the stockholders submitting
such proxies. IF INSTRUCTIONS ARE NOT GIVEN, PROXIES WILL BE VOTED FOR APPROVAL
OF THE MERGER AGREEMENT AND WILL BE VOTED IN THE DISCRETION OF THE PROXY
HOLDERS ON ANY OTHER MATTERS PROPERLY PRESENTED FOR CONSIDERATION AT THE OASIS
SPECIAL MEETING OR ANY ADJOURNMENT THEREOF. The Oasis Bylaws permit the holders
of a majority of the shares represented at the Oasis Special Meeting,
19
<PAGE> 30
whether or not constituting a quorum, to adjourn the Oasis Special Meeting or
any adjournment thereof. If necessary, unless authority to do so is withheld,
the proxy holders also may vote in favor of a proposal to adjourn the Oasis
Special Meeting to permit further solicitation of proxies in order to obtain
sufficient votes to approve any of the matters being considered at the Oasis
Special Meeting. Oasis stockholders who wish to withhold from the persons named
as proxies in the enclosed Oasis proxy authority to vote such stockholders'
shares to adjourn the Oasis Special Meeting should so indicate by appropriately
marking Item 2 on the proxy.
Solicitation of Proxies. Oasis will bear the costs of soliciting
proxies from the Oasis stockholders. In addition to use of the mails, proxies
may be solicited personally or by telephone or facsimile by directors, officers
and other employees of Oasis. Arrangements also will be made with brokerage
firms and other custodians, nominees and fiduciaries for the forwarding of
solicitation materials to the beneficial owners of shares held of record by
such persons, and such persons will be reimbursed for their reasonable expenses
incurred in that effort by Oasis.
Vote Required. The affirmative vote of the holders of a majority of
the outstanding shares of Oasis Common Stock entitled to vote at the Oasis
Special Meeting is required in order to approve the Merger Agreement. The
holders of a majority of the Oasis Common Stock entitled to vote, present in
person or by proxy, constitute a quorum for purposes of the Oasis Special
Meeting. The proposal allowing Oasis to postpone or adjourn the Oasis Special
Meeting to solicit additional votes will be approved if it receives the
affirmative vote of a majority of the votes cast at the Oasis Special Meeting,
whether or not a quorum is present. Abstentions and "broker non-votes" will
have the same effect as negative votes for purposes of determining whether the
proposals have received sufficient votes for approval.
As of February 4, 1998 there were 16,326,477 shares of Oasis Common
Stock outstanding and entitled to vote at the Oasis Special Meeting, with each
share being entitled to one vote. As of the Record Date, the members of the
Oasis Board and the executive officers of Oasis and their affiliates
beneficially owned a total of _____ shares of Oasis Common Stock (excluding
______shares issuable as of the Record Date upon the exercise of vested
options), representing approximately _____% of the outstanding shares of Oasis
Common Stock, all of which are expected to be voted in favor of the Merger.
Concurrently with the execution of the Merger Agreement, Robert V. Jones, the
Chairman of the Oasis Board, and the Scotsman Trust, the trustee of which is
Mr. Jones, entered into the Oasis Voting Agreement pursuant to which such
persons, representing an aggregate of 992,642 shares or approximately 6.1% of
the outstanding shares of Oasis Common Stock as of the Record Date, agreed to
vote their shares of Oasis Common Stock then owned or thereafter acquired in
favor of the Merger.
Recommendation. THE OASIS BOARD UNANIMOUSLY RECOMMENDS THAT THE OASIS
STOCKHOLDERS VOTE FOR APPROVAL OF THE MERGER AGREEMENT.
Other Matters. Oasis is unaware of any matter to be presented at the
Oasis Special Meeting other than the matters described in this Joint Proxy
Statement/Prospectus.
THE MERGER
BACKGROUND OF THE MERGER
Since Camden's inception, the Camden Board and its management have
been actively studying the multifamily apartment community environment. This
analysis has consistently indicated to Camden that producing consistent
earnings growth and developing a strategy for selective investment in favorable
markets are crucial factors to Camden's success. In furtherance of this growth
strategy, Camden has actively explored opportunities to acquire or combine with
other owners and developers of multifamily apartment communities. Camden seeks
to diversify its investments through a core market strategy in cities
throughout the southern United States that exhibit good growth patterns for the
future. As a result of these efforts, in April 1997, Camden completed the
acquisition of Paragon Group, Inc. ("Paragon"), which owned 57 multifamily
residential communities in the Southwest, Midwest, North Carolina and Florida
markets.
Richard J. Campo, the Chairman of the Camden Board and Chief Executive
Officer of Camden, D. Keith Oden, the President and Chief Operating Officer of
Camden, Scott S. Ingraham, the current President and Chief Executive Officer,
and a director of Oasis, and Allan O. Hunter, Jr., the current Executive Vice
President and Chief Operating Officer and a director of Oasis, have been
acquainted with each other since 1991. From time to time, Messrs. Campo, Oden,
Ingraham and Hunter have attended the same industry-related functions at which
they discussed developments in the REIT industry, mergers and other business
combinations in general.
20
<PAGE> 31
In July of 1996, representatives of a company ("Company A") contacted
Mr. Robert V. Jones, the Chairman of the Oasis Board and then Chief Executive
Officer of Oasis, regarding a possible business combination of Oasis and
Company A. Mr. Jones and Mr. Ingraham responded with a verbal preliminary
indication of interest in a business combination that would create a more
diversified company. Similarly, Mr. Ingraham was contacted by another company
("Company B") regarding a second possible business combination. Mr. Ingraham
also informed representatives of Company B that Oasis may be interested in
discussing the terms of a potential business combination. Mr. Ingraham reported
these discussions to the Oasis Board which, while determining not to put Oasis
up for sale, authorized Mr. Jones and Mr. Ingraham to continue preliminary
discussions.
Also in July of 1996, Mr. Campo contacted Mr. Ingraham following the
publication of an article in the financial press regarding Oasis. Mr. Campo
inquired as to whether Oasis was willing to consider a business combination.
Mr. Ingraham indicated that Oasis management and the Oasis Board were
open-minded about evaluating strategic alternatives, including a possible
merger. Preliminary discussions between Mr. Ingraham and Mr. Campo followed.
However, because Oasis was engaged in discussions with Company A and Company B,
these initial discussions did not advance to any significant stage and were
abandoned shortly after they commenced. Nonetheless, there continued to be
periodic contacts between the parties regarding the possibility of a
transaction and the efficiencies that could be gained.
During the period between July 1996 and September 1996, Oasis
management continued to meet and discuss various alternatives with
representatives of Company A and Company B. In August 1996 Oasis entered into
confidentiality agreements with both Company A and Company B pursuant to which
each agreed to maintain the confidentiality of materials provided by, as well
as their discussions with Oasis.
On September 11, 1996, Mr. Ingraham advised the Oasis Board of the
desirability of obtaining an investment banker for the purpose of exploring
possible business combinations. Shortly thereafter, Oasis contacted Merrill
Lynch to begin discussions with regard to engaging Merrill Lynch as its
financial advisor in connection with a possible business combinations. After
discussions with investment banking firms that were familiar with Oasis, on
September 17, 1996, Oasis engaged Merrill Lynch as its exclusive financial
advisor. At that time, Merrill Lynch agreed to assist Oasis in identifying
third parties and analyzing, structuring, negotiating and effecting proposed
business combinations. In particular, Oasis requested the assistance of Merrill
Lynch in conducting discussions of a possible combination of Oasis with Company
A or Company B.
In October 1996, Oasis management decided to cease discussions with
Company A and Company B because they were not progressing satisfactorily, and
it did not appear that either company would be able to agree on the terms of a
merger with Oasis that would present an acceptable business combination.
Furthermore, Oasis had received an investment grade credit rating in July 1996
and determined that it would be in the best interest of Oasis and its
stockholders to take advantage of its investment grade stature to retire
certain of its outstanding short term floating rate debt and replace it with
new debt. Consequently, Oasis completed a $150 million debt offering in
November 1996.
During early February 1997, Oasis was contacted by Company A and
agreed to reopen discussions. In March 1997, these discussions terminated after
Oasis and representatives of Company A were again unable to agree upon the
terms of an acceptable business combination.
In late January 1997, discussions were commenced regarding a possible
business combination between Camden and Oasis. On February 4, 1997, Messrs.
Campo, Oden and Ingraham met in Camden's offices in Houston to continue general
discussions of a possible business combination. Mr. Ingraham informed Messrs.
Oden and Campo that Oasis was interested in possible combinations with another
successful apartment REIT to accelerate the diversification of Oasis'
portfolio, however, both parties agreed that discussions of a combination
between Camden and Oasis were premature since Oasis was actively considering a
possible combination with Company A and Camden was in the process of completing
its merger with Paragon. As a result, these discussions ended without agreement
on an exchange ratio or a structure of a transaction.
In March 1997, Oasis was contacted separately by two companies
regarding the possibility of Oasis receiving a strategic investment. Prior to
initiating discussions, however, Oasis resolved with these companies that
further discussions would not take place until late June or early July of 1997.
The proposals discussed by Oasis with these companies, although separate and
distinct, both contemplated a strategic investment of capital in exchange for
the issuance of Oasis Shares, and control of the Oasis Board.
Members of Oasis management continued to negotiate with these companies
through July 1997, but the terms of such an investment were not able to be
agreed upon and these discussions subsequently terminated.
On April 4, 1997, the Oasis Board met at the offices of Merrill Lynch
in Los Angeles. During this meeting, representatives of Merrill Lynch conducted
a presentation of the long-term strategic alternatives available to Oasis after
which
21
<PAGE> 32
the Oasis Board discussed each. In connection with these discussions, on April
11, 1997, the Oasis Board expanded Merrill Lynch's representation to include,
in addition to proposed business combinations involving Oasis and a third
party, the exploration of any restructuring transaction, any public offering or
private placement of debt or equity securities of Oasis, a strategic equity
investment, the issuance of additional securities and other transactions
involving Oasis with the aim of increasing shareholder value. In connection
with the exploration of these options, Merrill Lynch agreed to perform a
financial analysis of Oasis and various strategic alternatives.
Representatives of Merrill Lynch met again with the Oasis Board on May
12, 1997 and made a presentation regarding strategic alternatives available to
the Company. Merrill Lynch reviewed for the Oasis Board its stock price trading
history and performance relative to comparable multifamily residential property
REITs. Merrill Lynch indicated that it had undertaken an initial review of
strategic alternatives that could be available to Oasis to enhance long-term
stock value.
During the period between May 12, 1997 and October 1997, members of
Oasis management continued to evaluate business combinations and strategic
investments involving various candidates, including public companies, private
companies and the purchase of private portfolios. Preliminary discussions were
held with a number of candidates although with the exception of discussions
with one large private company with large institutional partners ("Company C"),
none advanced to a formal stage of negotiation.
In August 1997, representatives of Company C met with Messrs. Jones
and Mr. Ingraham in Las Vegas. At this meeting, Messrs. Jones and Ingraham
began discussions of a preliminary nature with the advice and assistance of
Merrill Lynch. Oasis and Company C entered into a confidentiality agreement and
began to discuss the terms of a merger of the two companies. In September 1997,
representatives of Company C again met with Oasis management including Messrs.
Ingraham and Hunter and with representatives of Merrill Lynch in Las Vegas. At
that meeting, Company C delivered a preliminary written proposal with regard to
a business combination between Company C and Oasis, involving the creation of
an operating partnership by Oasis into which Company C would contribute all of
its assets and operations in return for cash and units of the newly formed
partnership. In October 1997, Mr. Ingraham again met with representatives of
Company C to further discuss their proposal.
In October 1997, Merrill Lynch advised Oasis on the formation and
implementation of a diversification strategy to reduce the exposure of Oasis'
portfolio to the Las Vegas, Nevada real estate market. On October 24, 1997,
Oasis announced publicly the retention of Merrill Lynch.
Merrill Lynch, on behalf of Oasis, contacted a number of real estate
investment trusts which Merrill Lynch believed would most likely be interested
in a combination with Oasis. Merrill Lynch and the Oasis management also began
preparing public and non-public information for distribution to certain
interested parties after they entered into a confidentiality agreement with
Oasis pursuant to which each candidate agreed to maintain the confidentiality
of materials provided by, as well as their discussions with, Oasis. As a result
of the public announcement that Oasis had retained Merrill Lynch,
representatives of DLJ, on behalf of Camden, contacted Mr. Ingraham to
re-initiate discussions regarding a possible business combination of Oasis and
Camden. Mr. Ingraham called Mr. Campo in early November to indicate that Oasis
would be interested in entering into preliminary discussions with Camden.
On November 11, 1997, Mr. Campo met in Las Vegas with Messrs. Jones,
Ingraham and Hunter, with representatives from Merrill Lynch and DLJ present.
At this meeting Mr. Campo suggested that Oasis consider a combination of the
two companies on a stock-for-stock basis and the proposed terms of such a
business combination, including the exchange ratio. After this meeting, Mr.
Campo toured Oasis' Las Vegas properties.
On November 13, 1997, Messrs. Campo and Ingraham again met to discuss
various unresolved issues and arranged a meeting and property tour to be held
on November 25 in Denver.
On November 24, 1997, the Camden Board held a special meeting, at
which the trust managers were informed of the discussions with Oasis regarding
a possible combination.
At a November 25 meeting in Denver, Messrs. Campo and Ingraham
continued their discussions with respect to the previously unresolved elements
of a transaction, including the exchange ratio. After the meeting, Mr. Campo
toured the Oasis Denver properties. On November 26, 1997, Mr. Campo sent a
written proposal to Messrs. Jones and Ingraham containing the basic elements of
the proposed transaction.
22
<PAGE> 33
Oasis was subsequently contacted by another company ("Company D")
which expressed interest in a business combination with Oasis.
During the period beginning October 1997 through December 1997, Oasis
management engaged in discussions with several possible merger candidates,
including Camden, Company C and Company D.
On November 28, 1997, Messrs. Campo and Jones agreed to recommend to
their respective boards a proposal, subject to the completion of due diligence
and documentation reflecting the proposal and to further refinement by and
approval of the two companies' boards. Such proposal was similar in all
material respects to that described in this Joint Proxy Statement/Prospectus.
Shortly thereafter, Camden and Oasis executed a confidentiality agreement and
commenced due diligence relating to Oasis properties and financial and legal
matters.
During the period from December 8 to December 14, 1997,
representatives of Camden and Oasis, together with their respective legal and
financial advisors, frequently held discussions to identify and resolve open
issues and to negotiate the final terms of the proposed transaction.
On December 9, 1997, Mr. Jones advised the Oasis Board that he, Mr.
Ingraham and representatives of Merrill Lynch had been engaged in discussions
with Camden regarding a possible combination of the two companies. Mr. Ingraham
made a presentation to the Oasis Board regarding the terms of the proposed
combination, including the status of price discussions, possible pricing
"collars," a "breakup" fee, a "lockup" option and other possible terms. The
Oasis Board conducted extensive discussions with respect to these terms and
were advised by counsel to Oasis and Merrill Lynch during the meeting.
During the Oasis Board meeting on December 9, 1997, Mr. Ingraham also
reported on the status of continuing discussions with Company C and the initial
terms of a proposed transaction with that company. Mr. Ingraham also noted at
this meeting that he had received an indication of interest in a possible
combination from Company D and that Oasis had entered into a confidentiality
agreement with Company D. Following these discussions, the Oasis Board
discussed the preliminary indications of interest, Oasis operations, business
and short-term and long-term prospects and plans, and directed Oasis management
to continue discussions with possible merger candidates, in particular with
Camden.
Shortly after the December 9, 1997 Oasis Board meeting, Oasis received
a proposal for a business combination between Company D and Oasis. This
proposal was highly contingent, however, and proposed a lower value to Oasis
stockholders than Camden's proposal. About the same time, Oasis management also
received a proposal from Company C, which was similarly unacceptable.
On December 15, 1997, a special meeting of the Camden Board was held
to consider the proposal as negotiated and documented and as thereafter
refined. At such meeting, senior management and the financial and legal
advisors of Camden made detailed presentations concerning all material aspects
of the proposed transaction. The Camden Board unanimously, with one member not
present, determined that the Merger was in the best interests of Camden and its
shareholders and approved the Merger. Following such approval, the Camden
Board, by unanimous written consent, determined that the Merger was in the best
interests of Camden and its shareholders and approved the Merger.
On December 16, 1997, a special meeting of the Oasis Board was held to
consider the proposal as negotiated and documented and as thereafter refined.
At such meeting, senior management and the financial and legal advisors of
Oasis made detailed presentations concerning all material aspects of the
proposed transaction including the due diligence examination of Camden and the
history of the negotiation of the terms of the combination. Also at the
meeting, Messrs. Campo and Oden reviewed the potential benefits of the Merger
with the Oasis Board. The Oasis Board unanimously determined that the Merger
was in the best interest of Oasis and its stockholders and approved the Merger.
Following the approval of the Camden Board and the Oasis Board, on
December 16, 1997, (i) Camden, Merger Sub and Oasis executed the Merger
Agreement, (ii) Camden, Mr. Jones and the Scotsman Trust, the trustee of which
is Mr. Jones, executed the Oasis Voting Agreement pursuant to which, among
other things, Mr. Jones and the Scotsman Trust agreed to vote all shares of
Oasis Common Stock beneficially owned by them in favor of the Merger and (iii)
Oasis and Messrs. Campo and Oden executed the Camden Voting Agreement pursuant
to which, among other things, Messrs. Campo and Oden agreed to vote all Camden
Common Shares beneficially owned by them in favor of the Merger. A joint press
release was issued on December 16, 1997 by Camden and Oasis announcing the
Merger.
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On February 4, 1998, Camden, Merger Sub and Oasis executed Amendment
No. 1 to the Merger Agreement. A copy of the Merger Agreement, which has been
restated to include Amendment No. 1 thereto, is attached to this Joint Proxy
Statement/Prospectus as Annex I.
REASONS FOR THE MERGER; RECOMMENDATIONS OF THE BOARDS
Camden's Reasons for the Merger; Recommendation of the Camden Board
The Camden Board has unanimously approved the Merger and believes that
the Merger is in the best interests of Camden and its shareholders. The Camden
Board recommends that shareholders vote FOR the Merger.
The decision of the Camden Board to approve the Merger and to
recommend approval thereof by Camden shareholders was based on the following
factors:
(1) Analyses prepared by DLJ and reviewed by management show that
the Merger should be accretive to Camden's FFO per share in
1998. FFO is a widely accepted measure of an equity REIT's
operating performance. Higher FFO per share will likely result
in higher distributions to shareholders.
(2) Camden, currently the sixth largest multifamily REIT in the
U.S. as measured by apartment units, will become the nation's
third largest multifamily REIT with interests in 52,469
apartment units (including 2,683 apartment units currently
under development) after the Merger and the Spin-Off.
(3) Camden's total capitalization will increase from approximately
$1.6 billion to approximately $2.6 billion and its market
equity will increase from approximately $1.1 billion to
approximately $1.8 billion (based on $31.00 per share, the
closing price of a Camden Common Share on December 31, 1997).
This increased size affords several benefits. First, the
increased number of shares in the market should result in
greater liquidity for holders of Camden Common Shares. The
Camden Board believes that institutional investors prefer
larger capitalization companies when making investment
decisions due to greater liquidity, which allows the purchase
and sale of larger volumes of shares without disrupting the
market for such shares. The Camden Board further believes that
the increased market capitalization and liquidity should result
in a higher earnings multiple and share price. Finally, the
Camden Board believes that the credit rating agencies generally
favor larger capitalization companies and view them as being
more stable for unsecured debt investors. Each of these factors
increase the attractiveness of Camden to potential investors,
and ultimately should result in an improved ability to access
favorably priced equity and debt capital.
(4) The combined organization should allow the elimination of
several redundant positions and activities, including the
elimination of duplicate management and public company
expenses. The Camden Board believes that the Merger will allow
Camden to realize economies of scale by spreading costs over a
larger number of units, thereby improving Camden's profit
margin. In addition, by taking advantage of the "best
practices" of each company, management believes there will be
significant savings in operating costs and general and
administrative expenses of approximately $2.5 million on an
annualized basis.
(5) Camden's strategic objective has been to focus on specific core
markets located in high growth areas of the Southwest. Camden
currently has 12 core markets, including Houston, Dallas,
Austin, Corpus Christi, Phoenix, Tucson, St. Louis, Louisville,
Charlotte, Greensboro, Orlando and Tampa/St. Petersburg, and
has one property in each of El Paso and Kansas City. The Oasis
Properties are located in high-growth Southwest and West Coast
markets, with properties in Las Vegas, Denver and Orange
County, California, and one property in Reno. Following the
Merger and the Spin-Off, Camden's investment will be spread
among 15 core markets. The Merger is also expected to provide
Camden with a $111.4 million development pipeline in Reno,
Denver and southern California, establishing a strong platform
for growth in the Western and Mountain regions. The Camden
Board believes that this geographic diversification is
preferred by the credit rating agencies and fixed income
investors and will be viewed positively when rating Camden's
fixed income securities, thereby improving Camden's access to
attractively priced alternative sources of capital.
Additionally, these markets create a broader platform for
future development and acquisitions that should be attractive
to equity investors.
(6) Geographic diversification also reduces the vulnerability to
recessions in any particular region. The last recession was a
"rolling recession," because it affected the economies of
different regions at different times. The
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Southwestern United States went into and emerged from the
recession earlier than the Southeast. This expansion into the
Western and Mountain regions should reduce the risk that a
regional economic downturn affects all of the apartment
communities simultaneously. Thus, the geographic
diversification as a result of the Merger may smooth Camden's
performance through the economic cycles.
(7) The Spin-Off is expected to reduce Camden's exposure to risks
relating to the Las Vegas market while leveraging equity
returns, retaining an upside residual interest and promoting
Oasis' market dominance in Las Vegas. The Spin-Off is also
expected to allow Camden to paydown the outstanding balance on
Camden and Oasis' credit facilities and reinvest the remaining
proceeds in real estate assets in other geographic markets
without the need to sell additional Camden Common Shares.
(8) The Camden Board believes that since 1989, Camden (or its
predecessor) has been successful at acquiring, renovating,
repositioning and managing multifamily assets. By expanding
its geographic boundaries beyond its current markets, Camden
will have more opportunities to acquire apartment portfolios
having properties spread over a wider geographical area. The
Merger opens a wider geographical area for future investment
opportunities. These properties and opportunities could result
in higher returns on investment.
(9) The Merger will be tax-free to Camden and its shareholders.
(10) The financial presentation of DLJ and the December 16, 1997
oral opinion of DLJ, which was confirmed in writing on
December 16, 1997, and further confirmed in writing on the
date of this Joint Proxy Statement/Prospectus, that the
Exchange Ratios are fair to Camden and the holders of Camden
Common Shares from a financial point of view as of the date of
such opinion and based upon and subject to certain matters
stated therein.
(11) Presentations from, and discussions with, certain executive
officers of Camden and outside legal counsel regarding the
business, real estate assets, financial, accounting and legal
due diligence with respect to Oasis and the terms and
conditions of the Merger Agreement.
The Camden Board and management also discussed certain potential
negative factors and risks that could arise or do arise from the Merger. These
included, among others, the expansion into new regions and new markets with
which Camden has little prior experience, potential current imbalance between
supply of, and demand for, apartments in certain of these new markets, the
potential difficulties of integrating Oasis' property management employees into
Camden, the higher risk associated with increased development activities,
increased debt to market capitalization and encumbrances of assets, the
significant costs involved in connection with consummating the Merger, the
substantial time and effort of Camden management required to effectuate the
Merger, integrate the business of Oasis into Camden, and manage the increased
and more diverse property portfolio and the risk that the expected benefits of
the Merger might not be fully realized. The Camden Board believed that the
benefits and advantages of the Merger far outweighed the negative factors and
risks.
All of the material factors considered by the Camden Board are
described above. In view of the wide variety of factors, both positive and
negative, considered by the Camden Board, the Camden Board did not find it
practicable to quantity or otherwise assign relative weights to the specific
factors considered.
In the event the Merger is not consummated for any reason, Camden will
return to executing its strategic objective of being a major or even dominant
apartment owner in the larger markets in its core markets. To the extent such
opportunities are available, it would likely consider other potential
combinations with public or private apartment owners that the Camden Board and
management believe add value and enhance the future earnings of Camden and
otherwise are in the best interests of its shareholders.
Oasis' Reasons for the Merger; Recommendation of the Oasis Board
The Oasis Board has unanimously approved the Merger and believes that
the terms of the Merger Agreement and the other transactions contemplated
thereby are fair to, and are in the best interests of, Oasis and the Oasis
stockholders. Accordingly, the Oasis Board recommends that stockholders vote
FOR the Merger.
In reaching its decisions, the Oasis Board considered several factors,
consulted with Oasis management and legal counsel and was advised by Merrill
Lynch, its financial advisor in the transaction. The principal reasons, to
which relative weights were
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not assigned, for the Oasis Board's approval of the Merger, the Merger
Agreement and the other transactions contemplated thereby and its
recommendation to the Oasis stockholders are as follows:
(1) Based on the Common Share Exchange Ratio, the closing price of
Camden Common Shares on December 16, 1997 of $32.00 (the last
trading day prior to the public announcement of the Merger),
and the closing price of Oasis Common Stock on December 16,
1997, holders of Oasis Common Stock would receive 0.759 Camden
Common Shares per share of Oasis Common Stock, a total premium
in value of approximately 9.5%.
(2) Analyses prepared by Merrill Lynch and reviewed by Oasis
management indicate that the Merger should be accretive to
Oasis' FFO per Oasis equivalent common share in 1998, likely
resulting over time in higher distributions relative to
Camden's historical distributions.
(3) The Merger enables Oasis to accomplish management's goal of
accelerating diversification of the Oasis portfolio. The
Merger would result, prior to the Spin-Off, in Las Vegas
exposure being reduced from approximately 80% of total
investment to approximately 23% of total investment, based on
apartment units. Furthermore, the Merger provides the
stockholders of Oasis access to a quality portfolio and
operation in key Sunbelt markets such as Texas, Florida, North
Carolina, Missouri, Arizona and Kentucky.
(4) Camden's overall strategy of creating a large, diversified
premier apartment REIT focused on the sunbelt region of the
United States and the Merger will permit Oasis stockholders to
participate in a company with a geographically diverse
portfolio of properties. Following the Merger and the Spin-Off,
the combined company would own interests in 52,469 apartment
units, as compared to Oasis' existing portfolio of 15,117
apartment units, located in nine states and fifteen core
markets, as compared to Oasis' existing properties which are
located in three states and three core markets. Camden has
informed Oasis that following the Merger it intends to continue
to focus on completing opportunistic acquisitions and
developing upscale apartment communities in high-growth markets
to diversify its portfolio in Sunbelt markets and to continue
to focus on customer satisfaction and resident retention.
Geographic diversification will reduce the vulnerability of the
combined company's results of operations and cash flow to
regional economic cycles.
(5) By virtue of its larger size, a lower leveraged balance sheet
and lower dividend pay-out ratio, the Oasis Board believes
that the combined company should have improved access to
capital markets, which should make additional debt or other
financing more readily available upon more attractive terms,
resulting in an enhanced opportunity for better shareholder
returns.
(6) The combined company would have a total market capitalization
of approximately $2.6 billion and a market equity of
approximately $1.8 billion (based on $31 per share, the closing
price of a Camden Common Share on December 31, 1997). The
larger total market capitalization will likely provide Oasis
stockholders with the opportunity to participate in a company
with higher trading volumes and enhanced liquidity. The Oasis
Board believes that institutional investors prefer larger
capitalization companies when making investment decisions due
to greater liquidity, which allows the purchase and sale of
larger volumes of shares without disrupting the market for the
shares. The Oasis Board also believes that the credit rating
agencies generally favor larger capitalization companies as
being more stable for unsecured debt investors. Each of these
factors should increase the attractiveness of Camden to
potential investors, and ultimately should result in an
improved ability to access favorably priced equity and debt
capital for its stockholders.
(7) The Oasis Board believes that the opportunities for economies
of scale and operating efficiencies from the Merger will
result in cost savings to the surviving company, particularly
as a result of reductions in overhead expenses, including
duplicate management and public company expenses. The Oasis
Board was provided with estimates that the Merger will result
in approximately $2.5 million in operating and general and
administrative cost savings on an annualized basis. See
"SELECTED HISTORICAL AND UNAUDITED PRO FORMA COMBINED
FINANCIAL AND PROPERTY DATA."
(8) The Merger is a "stock-for-stock" rather than a
"cash-for-stock" transaction, thus providing Oasis
stockholders with an opportunity to share in any future
appreciation of the surviving company. Assuming, as intended,
that the Merger qualifies as a reorganization within the
meaning of Section 368(a) of the Code, the Merger will also
allow the Oasis stockholders to convert their Oasis Common
Stock into Camden Common Shares on a tax-freebasis.
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(9) The financial presentation of Merrill Lynch and the Merrill
Lynch Opinion, which was confirmed in writing on December 16,
1997, to the effect that the Exchange Ratios are fair to Oasis
and the holders of Oasis Common Stock from a financial point
of view as of the date of the opinion, based upon the subject
to certain matters stated in the opinion.
(10) Presentations from, and discussions with, certain executive
officers of Oasis and outside legal counsel regarding the
business, real estate assets, financial, accounting and legal
due diligence with respect to Camden and the terms and
conditions of the Merger Agreement.
The Oasis Board also considered the following potentially negative
factors in its deliberations concerning the Merger:
(1) The Oasis stockholders will receive a quarterly distribution
after the Merger of $0.3719 per Camden equivalent common share
(based on Camden's current quarterly distributions), as
compared to Oasis' current quarterly distribution of $0.4525
per share of Oasis Common Stock.
(2) The Exchange Ratios are fixed and not subject to adjustment
and thus a decrease in the trading price of Camden Common
Shares prior to the Effective Time will reduce the market
value of the consideration paid to Oasis' stockholders in the
Merger. A significant decrease in the consideration to be paid
could occur prior to the Oasis Special Meeting. Based on the
closing price of Camden Common Shares on December 31, 1997,
Oasis stockholders would receive for each share of Oasis
Common Stock a fraction of a Camden Common Share with a value
of $23.529.
(3) The Oasis Board considered the risk that the anticipated
benefits of the Merger to Oasis' stockholders may not be
realized as a result of possible changes in the real estate
market in general, the inability to achieve the anticipated
reductions in expenses or other potential difficulties in
integrating the two companies and their respective operations.
(4) The Oasis Board considered the significant costs involved in
connection with consummating the Merger, the substantial
management time and effort required to effectuate the Merger
and integrate the businesses of Oasis and Camden and the
related disruption to Oasis' operations. The Oasis Board also
considered the potential benefits to certain directors and
officers discussed in "RISK FACTORS-- Interests of Certain
Persons in the Merger," including the provisions of the
employment agreements with each of Robert V. Jones, Scott S.
Ingraham, Allan O. Hunter, Walter B. Eeds, John M. Clayton,
Gina Anastasi, Paul M. Buss, Marianne Aguiar, Gary Miller and
Jeff Rosen, which provide for certain payments to be made to
each of these individuals in connection with certain
transactions, such as the Merger, acceleration of the vesting
of certain options to acquire Oasis Common Stock and certain
agreements restricting the sale or refinancing of certain Oasis
Properties.
In the opinion of the Oasis Board, the above factors represent the
material potential adverse consequences that could occur as a result of the
Merger. In considering the Merger, the Oasis Board considered the impact of
these factors on existing Oasis stockholders.
In view of the wide variety of factors considered by the Oasis Board,
the Oasis Board did not quantify or otherwise attempt to assign relative
weights to the specific factors that it considered in making its determination.
However, in the view of the Oasis Board, the potentially negative factors
considered by it were not sufficient, either individually or collectively, to
outweigh the positive factors considered by the Oasis Board in its
deliberations relating to the Merger.
In the event the Merger is not consummated for any reason, Oasis will
continue to pursue its business objectives of (i) maximizing funds from
operations and cash available for distribution to holders of Oasis Common
Stock, (ii) diversifying the geographic concentration of its portfolio of
properties and (iii) increasing distributions per share of Oasis Common Stock.
In addition, Oasis may seek other business combination opportunities and
additional debt or equity financing. The Oasis Board believes that there are no
feasible alternatives to the Merger available to Oasis at the present time that
are likely to result in greater stockholder value.
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OPINIONS OF FINANCIAL ADVISORS
Camden
Camden retained DLJ to render financial advisory services in
connection with a possible business combination with Oasis. In connection with
the engagement, Camden asked DLJ to render an opinion as to whether the
Exchange Ratios were fair, from a financial point of view, to Camden and the
holders of Camden Common Shares. DLJ was not requested to, and did not make,
any recommendation to the Camden Board as to the Exchange Ratios to be provided
for in the Merger, which Exchange Ratios were determined through arms-length
negotiations between Camden and Oasis.
The Camden Board retained DLJ to act as its advisor based upon DLJ's
prominence as an investment banking and financial advisory firm, with
experience in the valuation of businesses and their securities in connection
with mergers and acquisitions, negotiated underwritings, secondary
distributions of securities, private placements and valuations for corporate
purposes especially with respect to REITs and other real estate companies and
because of DLJ's familiarity with Camden and its operations.
On December 15, 1997, DLJ delivered its written opinion to the Camden
Board (the "DLJ Opinion"), to the effect that, as of the date of such opinion,
based upon and subject to the assumptions, limitations and qualifications set
forth in such opinion, the Exchange Ratios were fair, from a financial point of
view, to Camden and the holders of Camden Common Shares.
A COPY OF THE DLJ OPINION IS ATTACHED HERETO AS ANNEX III CAMDEN'S SHAREHOLDERS
ARE URGED TO READ THE DLJ OPINION IN ITS ENTIRETY FOR ASSUMPTIONS MADE,
PROCEDURES FOLLOWED, OTHER MATTERS CONSIDERED AND LIMITS OF THE REVIEW BY DLJ.
The DLJ Opinion is directed to the Camden Board and addresses only the
fairness from a financial point of view to Camden and holders of Camden Common
Shares, of the Exchange Ratios. The DLJ Opinion was rendered to the Camden
Board for its consideration in determining whether to approve the Merger. The
DLJ Opinion does not address the relative merits of the Merger and the other
business strategies considered by the Camden Board nor does it address the
Camden Board's decision to proceed with the Merger. The DLJ Opinion does not
constitute a recommendation to any shareholder of Camden as to how any such
shareholder should vote on the Merger.
In arriving at the DLJ Opinion, DLJ, among other things, reviewed the
Agreement and Plan of Merger, the Oasis Voting Agreement and the Camden Voting
Agreement. DLJ also reviewed financial and other information that was publicly
available or furnished to DLJ by Camden and Oasis, including information
provided during discussions with their respective managements. Included in the
information provided during discussions with the respective managements were
certain financial projections of Oasis prepared by the management of Oasis and
adjusted by the management of Camden and certain financial projections of
Camden prepared by the management of Camden. In addition, DLJ compared certain
financial and securities data of Camden and Oasis with various other companies
whose securities are traded in public markets, reviewed the historical stock
prices and trading volumes of Camden Common Shares and the Oasis Common Stock,
reviewed prices and premiums paid in certain other business combinations and
conducted such other financial studies, analyses and investigations as it
deemed appropriate for purposes of the DLJ Opinion. No restrictions or
limitations were imposed by Camden upon DLJ with respect to the investigation
made or procedures followed by DLJ in rendering the DLJ Opinion.
In rendering the DLJ Opinion, DLJ relied upon and assumed the accuracy
and completeness of all of the financial and other information that was
available to it from public sources, that was provided to it by Camden and
Oasis or their respective representatives, or that was otherwise reviewed by
it. In particular, DLJ relied upon the estimates of the management of Camden of
the operating synergies achievable as a result of the Merger and upon DLJ's
discussions of such synergies with the management of Oasis. With respect to the
financial projections supplied to it, DLJ assumed that they were reasonably
prepared on the basis reflecting the best currently available estimates and
judgments of the managements of Camden and Oasis as to the future operating and
financial performance of Camden and Oasis; and DLJ assumed that the
modifications made by Camden to Oasis' financial projections were reasonably
made on bases reflecting the best currently available estimates and judgements
of Camden's management as to the future operating and financial performance of
Oasis. DLJ has not assumed any responsibility for making any independent
evaluation of any assets or liabilities or for making any independent
verification of any of the information reviewed by it. DLJ has relied on advice
of counsel to Camden as to certain legal matters.
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The DLJ Opinion is necessarily based on economic, market, financial
and other conditions as they exist on, and on the information made available to
DLJ as of, the date of the opinion. It should be understood that, although
subsequent developments may affect the DLJ Opinion, DLJ does not have any
obligation to update, revise or reaffirm the opinion. DLJ does not express any
opinion in the DLJ Opinion as to the price at which the Camden Common Shares or
the Camden Series A Preferred Shares will actually trade at any time.
The following is a summary of the presentation made by DLJ to the
Camden Board at its December 15, 1997 board meeting in connection with the
preparation of the DLJ Opinion.
Current Capitalization. DLJ reviewed certain trading information for
each of Oasis and Camden and, on the basis thereof, calculated their respective
market capitalizations, dividend yields, debt to total market capitalization
ratios and trading multiples based on closing stock prices as of December 11,
1997 of $22.00 for Oasis and $32.19 for Camden. For this purpose, DLJ defined
"total market capitalization" as market value of the company's common equity on
a fully diluted basis (including operating partnership units and convertible
securities), plus total debt less cash. DLJ based its financial analysis of
Oasis on financial projections provided by Oasis' management and adjusted by
Camden which projected Oasis 1997 FFO of $2.19 per share and 1998 FFO of $2.29
per share. DLJ based its financial analysis of Camden on estimates of 1997 and
1998 FFO per share of $2.60 and $2.84, respectively, provided by Camden's
management. For Oasis, DLJ calculated a total market capitalization of $921
million, an annual dividend yield of 8.2%, a debt to total market
capitalization ratio of 49.0% and FFO multiples for 1997 and 1998 of 10.0x and
9.6x, respectively. For Camden, DLJ calculated a total market capitalization of
$1,619 million, an annual dividend yield of 6.1%, a debt to total market
capitalization ratio of 31.3% and FFO multiples for 1997 and 1998 of 12.4x and
11.3x, respectively.
Stock Trading History. DLJ reviewed the history of trading prices for
Camden Common Shares and Oasis Common Stock separately and reviewed the
historical total returns (comprised of cumulative dividends and changes in
stock price) of Oasis Common Stock (since December 11, 1997) in relation to the
Standard & Poor's 500 Index and an index of the Comparable Companies (as
defined below). The comparisons to the index of Comparable Companies was
utilized to compare the total returns of Oasis Common Stock to the total
returns of similar multifamily public REITs, while the Standard & Poor's 500
Index was used to compare the total returns of Oasis Common Stock to the total
returns of the overall stock market. DLJ noted that Oasis underperformed both
indices since December 11, 1997. DLJ also analyzed the historical distribution
of trading prices of Oasis stock for the period from December 11, 1996 to
December 11, 1997. DLJ noted that the shares traded at prices ranging from
$21.00 per share to $25.50 per share over such period. DLJ found that
approximately 4% of Oasis' shares traded at prices greater than the implied bid
value to Oasis stockholders of $24.43 per share (based on the Exchange Ratios
and Camden's closing share price of $32.19 on December 11, 1997) over the
period analyzed and that approximately 25% of Oasis' shares traded at prices
greater than $23.70 per share.
Selected Comparative Public Companies Analysis. Using publicly
available information and estimates of future financial results published by
First Call, a data service that monitors and publishes a compilation of
earnings estimates produced by selected research analysts regarding companies
of interest to institutional investors, DLJ compared selected historical and
projected financial, operating and stock market performance data of Oasis to
the corresponding data of certain publicly traded companies that DLJ deemed to
be reasonably comparable (the "Comparative Companies"). The Comparative
Companies represented large public REITs focused primarily on multifamily
properties. These companies consisted of Avalon Properties Inc., Camden, Equity
Residential Properties Trust, Evans Withycombe Residential, Merry Land
Apartment & Investment Co. Inc., Post Properties Inc., Security Capital Pacific
Trust and United Dominion Realty Trust Inc. The Comparative Companies were
selected principally based on the consistency of property types owned with
those owned by Oasis. DLJ derived a range of per share values for Oasis by
applying Oasis' FFO per share for two selected time periods to the
corresponding median estimated FFO multiple for the Comparative Companies for
those same periods. The two periods selected were the years ended December 31,
1997 and 1998. In calculating the FFO multiples of the Comparable Companies,
DLJ used median First Call FFO estimates or DLJ Research FFO estimates and
closing stock prices as of December 11, 1997. DLJ observed that (i) the FFO
multiples for the Comparative Companies for the year ended December 31, 1997
ranged from 10.4x to 15.3x, with a median of 13.1x, and (ii) the FFO multiples
for the Comparative Companies for the year ended December 31, 1998 ranged from
9.6x to 13.7x, with a median of 11.9x. Per share values for Oasis were computed
by multiplying Oasis' projected FFO per share by the median FFO multiple for
the Comparative Companies for the years ended December 31, 1997 and 1998. The
values produced by this method were $28.69 and $27.25 per share for the years
ended December 31, 1997 and 1998, respectively. DLJ observed that the implied
bid value to Oasis stockholders of $24.43 (based on the Exchange Ratios and
Camden's closing share price of $32.19 on December 11, 1997) was in the range
produced by the Selected Comparative Public Companies Analysis and less than
the per share values calculated by multiplying Oasis' FFO per share by the
median FFO multiple for the Comparative Companies. None of the companies
utilized in the above analysis for comparative purposes is, of course,
identical to Oasis. Accordingly, a complete
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analysis of the results of the foregoing calculations cannot be limited to a
quantitative review of such results and involves complex considerations and
judgments concerning differences in the financial and operating characteristics
of the Comparative Companies and other factors that could affect the public
trading value of the Comparative Companies as well as that of Oasis and Camden.
In addition, the multiples of common stock price to projected 1997 FFO per
share and projected 1998 FFO per share for the Comparative Companies are based
on projections prepared by research analysts using only publicly available
information.
Accordingly, such estimates may or may not prove to be accurate.
Selected Transactions Analysis. DLJ reviewed the financial terms, to
the extent publicly available, of six then pending or completed mergers between
publicly traded multi-family REITs (the "Selected Transactions"). DLJ
calculated various financial multiples and the premium over market price based
on certain publicly available information for each of the Selected Transactions
and compared them to corresponding multiples and premiums for the Merger and
the consideration to be paid to Oasis' stockholders in the Merger. The Selected
Transactions included the following transactions: (i) Real Estate Investment
Trust of California's acquisition by BRE Properties, Inc., (ii) South West
Property Trust Inc.'s acquisition by United Dominion Realty Trust, Inc., (iii)
Paragon Group Inc.'s acquisition by Camden Property Trust, (iv) Wellsford
Residential's acquisition by Equity Residential Properties Trust, (v) Columbus
Realty Trust's acquisition by Post Properties Inc. and (vi) the proposed
acquisition of Evans Withycombe Residential Inc. by Equity Residential
Properties Trust. For purposes of comparison, DLJ utilized estimated FFO per
share for the next full calendar year based on First Call at the date the
transaction was announced. DLJ noted the multiple of equity purchase price to
estimated twelve months' forward FFO ranged from 8.7x to 11.4x (with a mean of
10.2x) for the Selected Transactions, versus a multiple of 10.7x for the
Merger. DLJ further noted that the Selected Transactions were effected or were
proposed to be effected at premiums ranging from 1.5% to 20.3% (with a mean at
10.9%) over market price seven trading days prior to the public announcement of
such transactions, versus a premium of 12.0% for the Merger. DLJ calculated the
premium for the Merger based on the market price of Oasis Common Stock seven
trading days prior to December 11, 1997. DLJ observed that the multiples and
premiums for the Merger were within the ranges established by the Selected
Transactions. DLJ then applied the median multiples for the Selected
Transactions to Oasis' projected 1998 FFO per share to arrive at a theoretical
range of per share values for Oasis. The range of values produced by this
method was $19.92 to $26.11 per share. DLJ observed that the implied bid value
to Oasis stockholders of $24.43 per share was within the range produced by the
Selected Transactions Analysis.
Discounted Cash Flow Valuation. The discounted cash flow valuation
assumes, as a basic premise, that the value of a real estate business can be
determined with reference to the current value of the future cash flow that the
real estate assets will generate for their owners. DLJ used projections and
other information supplied by the managements of Camden and Oasis to estimate
the free cash flow of Oasis' real estate portfolio (defined as revenues less
property operating expenses, real estate taxes, capital expenditures and
estimated incremental general and administrative costs). The present value of
free cash flow for the six-year period beginning January 1, 1998 through
December 31, 2003, inclusive, was calculated using discount rates ranging from
10.5% to 12.5% based on published real estate market surveys for multi-family
properties and considering the location, quality, occupancy and income
characteristics of Oasis' properties.
DLJ estimated the terminal equity value of Oasis' real estate
portfolio by applying FFO multiples of 11.0x to 13.0x to estimated 2003 FFO,
and adding the projected debt balance as of December 31, 2003. DLJ discounted
the range of terminal values back to January 1, 1998 at discount rates ranging
from 10.5% to 12.5%, the same discount rates used in calculating the present
value of the free cash flow. DLJ then added together the range of present
values of the free cash flow and the range of present values of terminal value
and subtracted Oasis' projected debt as of December 31, 1997, to arrive at a
discounted cash flow valuation for Oasis' equity. The discounted cash flow
valuation produced ranges of values for Oasis' equity of $21.94 to $28.89 per
share. DLJ observed that the implied bid value of $24.43 per share was within
the range produced by the Discounted Cash Flow Valuation.
Premiums Paid Analysis. DLJ compared the premium of the implied bid
value to Oasis stockholders of $24.43 per share over the unaffected price of
Oasis Common Stock with the percentage premium of the offer price over the
trading prices one day and seven days prior to the announcement date of
approximately 40 recent merger and acquisition transactions involving public
company targets in the $750 million to $1,250 million range based on total
market capitalization. The transactions analyzed consisted of stock-for-stock
and cash-for-stock merger or acquisition transactions completed between January
1, 1993 and April 8, 1997 in which the target company was a domestic
non-financial, publicly traded company and in which more than 50% of the target
company's stock was acquired. The transactions involve companies not
necessarily directly comparable to Oasis. The median premiums for the
stock-for-stock transactions over the trading prices, one day and seven days to
the announcement dates were 30% and 31%, respectively, and the median premiums
for the cash-for-stock transactions over the trading prices, one day and seven
days prior to the announcement dates were 29% and 32%, respectively. Overall,
the median premiums for all deals over the one day and seven day trading prices
were 24% and 28%, respectively. DLJ applied premiums ranging from 24% to 30%
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to the unaffected price of Oasis Common Stock on December 10, 1997 of $21.94
and premiums ranging from 28% to 32% to the unaffected price of Oasis Common
Stock on December 2, 1997 of $21.81 to derive stand-alone prices of Oasis
Common Stock ranging from $27.27 to $28.70 per share. Based on this analysis,
the 11.4% premium of the implied bid value to Oasis stockholders of $24.43 over
the unaffected price of Oasis Common Stock one day and the 12.0% premium of the
implied bid value to Oasis stockholders of $24.43 over the unaffected stock
price seven days prior are below the range of median merger premiums for merger
transactions analyzed. DLJ noted that the lower premium paid may be a result of
the stable net asset value of the underlying real estate properties and the
lack of significant control premiums paid in typical REIT merger and
acquisition transactions. In addition, DLJ noted that Oasis Common Stock has
lower price volatility than the overall market.
Historical Exchange Ratio Analysis. DLJ reviewed the historical
implied exchange ratio between Oasis Common Stock and Camden Common Shares for
the 12-month period ending December 11, 1997, and compared this to the Common
Exchange Ratio of 0.759x. DLJ noted that while the historical exchange ratio
ranged from 0.66x to 0.89x (with a mean of 0.79x), the historical exchange
ratio was generally greater than the Common Exchange Ratio over this 12-month
period.
Net Asset Valuation Analysis. DLJ performed a net asset valuation
analysis of Oasis' operating multifamily and commercial properties by
subtracting outstanding debt from the gross estimated value of the properties.
The gross estimated value for the Oasis operating assets was estimated by
capitalizing 1998 net operating income as projected by Oasis and adjusted by
Camden, including adjustments for market rate management fees and reserves for
recurring capital expenditures. The capitalization rates were based on industry
surveys published by certain independent research firms and recent sales of
comparable multifamily properties in Oasis' primary markets. In applying
capitalization rates (which ranged from 7.5% to 8.8%), DLJ took into
consideration current market conditions, property characteristics and the
benefit of favorable tax exempt debt in place at certain properties. The net
asset valuation was further adjusted for land held for development and
multi-family assets under development. The net asset valuation analysis
produced an estimated value range of Oasis' equity of approximately $503
million to $559 million, or $23.54 to $26.20 per fully diluted share. DLJ
observed that the implied bid value to Oasis stockholders of $24.43 was within
the range of value estimates produced by the Net Asset Valuation Analysis.
Contribution Analysis. DLJ reviewed Camden's and Oasis' financial
contribution to the combined company on a projected pro forma basis. Based on
the Exchange Ratios, DLJ noted that on a pro forma basis, Oasis stockholders
will receive an approximate 32.0% equity interest in the combined company on a
fully diluted basis. Assuming that Camden completes an equity offering to
reduce its ratio of debt to total market capitalization to its pre-merger level
of 31.3%, Oasis stockholders will receive an approximate 38.0% equity interest
in the combined company (counting the additional shares offered as Oasis').
Using projected FFO results for the years ended December 31, 1998 and 1999, and
assuming certain operating synergies available as a result of the Merger as
estimated by Camden, DLJ calculated that Oasis would contribute approximately
34.4% of the FFO of the combined company in 1998 and approximately 31.3% of the
FFO of the combined company in 1999. Including the potential synergistic
savings from the Merger and assuming an equity offering to reduce Camden's
ratio of debt to total market capitalization to the pre-merger level of
approximately 31.3%, DLJ calculated that Oasis would contribute approximately
38.8% of the FFO of the combined company in 1998 and approximately 35.5% of the
combined company FFO in 1999. Including these synergies projected by Camden,
Oasis stockholders will receive a lower percentage of the combined company
equity than their relative contribution of 1998 FFO would imply in both the
pre-equity offering and post-equity offering analysis. DLJ noted that while the
contribution analysis indicated that Oasis stockholders will receive a greater
percentage of the combined company equity than their relative contribution of
1999 FFO would imply, the 1999 FFO estimates for Oasis used in the analysis (as
adjusted by Camden) are more conservative than the First Call 1999 FFO
estimates.
Pro Forma Merger Analysis. DLJ performed an analysis of the effect of
the Merger on Camden's FFO per share for 1998 and 1999, based on projections
and other information supplied by the managements of Camden and Oasis. The
projections prepared by Oasis were adjusted by Camden for property operations
and synergies, acquisitions and dispositions of certain properties, projected
interest expenses and changes in dividend policies. The pro forma merger
analysis assumed a closing of the Merger on January 1st of each year presented.
DLJ combined the projected results of Camden with the projected results of
Oasis to arrive at projected FFO for the combined company. DLJ used the
Exchange Ratios to estimate the number of shares issued in the Merger. DLJ then
compared the resulting pro forma FFO per share in each year to Camden's
projected stand-alone FFO per share. This analysis indicated that the pro forma
impact of the Merger was accretive to Camden's FFO per share in 1998 and 1999.
While DLJ noted that the Merger was accretive on a pro forma basis, DLJ also
noted that the Merger would increase Camden's ratio of debt to total market
capitalization. Specifically, DLJ noted that this ratio would increase from
approximately 31.3% to approximately 37.2% on a pro forma basis. DLJ conducted
an additional analysis assuming an equity offering at Camden's December 11,
1997 closing stock price of $32.19 to reduce Camden's ratio of debt to total
market capitalization to its pre-merger level of 31.3%. This analysis indicated
that the pro forma impact of the Merger following the assumed equity offering
was still accretive to Camden's FFO per share in 1998 and 1999.
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The summary set forth above does not purport to be a complete
description of the analyses performed by DLJ, but describes, in summary form,
the material elements of the presentation by DLJ to the Camden Board on
December 15, 1997 in connection with its preparation of the DLJ Opinion. The
preparation of a fairness opinion involves various determinations as to the
most appropriate and relevant methods of financial analysis and the application
of these methods to the particular circumstances and, therefore, such an
opinion is not readily susceptible to summary description. Each of the analyses
conducted by DLJ was carried out in order to provide a different perspective on
the Merger and add to the total mix of information available. DLJ did not form
a conclusion as to whether any individual analysis, considered in isolation,
supported or failed to support an opinion as to fairness from a financial point
of view. Rather, in reaching its conclusion, DLJ considered the results of the
analyses in light of each other and ultimately reached its opinion based on the
results of all analyses taken as a whole. DLJ did not place particular reliance
or weight on any individual analysis, but instead concluded that its analyses,
taken as a whole, supported its determination. Accordingly, notwithstanding the
separate factors summarized above, DLJ believes that its analyses must be
considered as a whole and that selecting portions of its analysis and the
factors considered by it, without considering all analyses and factors, could
create an incomplete or misleading view of the evaluation process underlying
its opinion. In performing its analyses, DLJ made numerous assumptions with
respect to industry performance, business, economic, market and financial
conditions and other matters, including the absence of any material changes in
the real estate markets in which Camden and Oasis conduct business, U.S.
economic conditions generally and the financial markets and mergers and
acquisitions markets in particular. The analyses performed by DLJ are not
necessarily indicative of actual values or future results, which may be
significantly more or less favorable than suggested by such analyses.
Pursuant to an engagement letter dated December 15, 1997, DLJ will
receive a fee of $500,000 for delivery of its opinion. In addition, DLJ will
receive (i) an additional fee of $50,000 for each update of the DLJ Opinion
delivered by DLJ at the request of the Camden Board to be paid by Camden upon
delivery of such update and (ii) an additional $2,500,000 fee to be paid by
Camden upon completion of the Merger for financial advisory services provided
to Camden. DLJ will not be paid any additional fees or additional consideration
for the proposed Merger, other than the fees and consideration discussed in
this Proxy Statement. Camden has also agreed to indemnify DLJ, its affiliates
and their respective directors, officers, employees, agents and controlling
persons against certain liabilities, including liabilities under federal
securities laws.
DLJ may actively trade the securities of Camden and Oasis for its own
account and for the accounts of its customers and, accordingly, DLJ may at any
time hold long or short positions in such securities. DLJ has provided advisory
services to, and acted as an underwriter for, Camden over the past two years.
Specifically, DLJ acted as lead underwriter for Camden's 4.2 million common
share offering in July 1997, for which DLJ received usual and customary fees.
DLJ has also acted as an underwriter for Oasis over the past two years.
Specifically, DLJ acted as a co-underwriter for Oasis' 4.0 million share
offering of Series A Cumulative Convertible Preferred Stock in April 1995, for
which DLJ received usual and customary fees.
Oasis
Merrill Lynch was retained by Oasis on September 17, 1996 to assist
Oasis in the evaluation and implementation of strategic alternatives intended
by Oasis to maximize shareholder value. At the meeting of the Oasis Board held
on December 16, 1997, Merrill Lynch delivered the Merrill Lynch Opinion to the
Oasis Board stating that, as of such date, and based upon the assumptions made,
matters considered and limits of review set forth in the Merrill Lynch Opinion,
the consideration to be received by the Oasis stockholders in the Merger was
fair to such stockholders from a financial point of view.
THE FULL TEXT OF THE MERRILL LYNCH OPINION, WHICH SETS FORTH THE
ASSUMPTIONS MADE, MATTERS CONSIDERED AND CERTAIN LIMITATIONS ON THE SCOPE OF
REVIEW UNDERTAKEN BY MERRILL LYNCH, IS ATTACHED AS APPENDIX IV TO THIS JOINT
PROXY STATEMENT/PROSPECTUS. EACH HOLDER OF OASIS COMMON STOCK IS URGED TO READ
SUCH OPINION IN ITS ENTIRETY. THE MERRILL LYNCH OPINION WAS INTENDED FOR THE
USE AND BENEFIT OF THE OASIS BOARD, WAS DIRECTED ONLY TO THE FAIRNESS OF THE
MERGER CONSIDERATION TO THE OASIS STOCKHOLDERS FROM A FINANCIAL POINT OF VIEW,
AND DOES NOT CONSTITUTE A RECOMMENDATION TO ANY STOCKHOLDER AS TO HOW SUCH
STOCKHOLDER SHOULD VOTE WITH RESPECT TO THE MERGER PROPOSAL OR ANY TRANSACTION
RELATED THERETO. THE MERGER CONSIDERATION WAS DETERMINED ON THE BASIS OF
NEGOTIATIONS BETWEEN OASIS AND CAMDEN AND WAS APPROVED BY THE OASIS BOARD.
THE SUMMARY OF THE MERRILL LYNCH OPINION SET FORTH IN THIS JOINT PROXY
STATEMENT/PROSPECTUS IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT
OF SUCH OPINION.
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In arriving at the Merrill Lynch Opinion, Merrill Lynch among other
things: (i) reviewed certain publicly available business and financial
information relating to Camden and Oasis which Merrill Lynch deemed to be
relevant; (ii) reviewed certain information, including financial forecasts,
relating to the business, earnings, funds from operations, adjusted funds from
operations, cash flow, assets, liabilities and prospects of Camden and Oasis
furnished to Merrill Lynch by Oasis and Camden, as well as the amount and
timing of the cost savings and related expenses and synergies expected to
result from the Merger (the "Expected Synergies") furnished to Merrill Lynch by
Oasis and Camden; (iii) conducted discussions with members of senior management
of Camden and Oasis concerning the matters described in clauses (i) and (ii)
above, as well as their respective businesses and prospects before and after
giving effect to the Merger and the Expected Synergies; (iv) reviewed the
market prices and valuation multiples for the Camden Common Shares and the
Oasis Common Stock and compared them with those of certain publicly traded
companies that Merrill Lynch deemed relevant; (v) reviewed the results of
operations of Camden and Oasis and compared them with those of certain publicly
traded companies that Merrill Lynch deemed relevant; (vi) compared the proposed
financial terms of the Merger with the financial terms of certain other
transactions which Merrill Lynch deemed relevant; (vii) participated in certain
discussions and negotiations among representatives of Camden and Oasis and
their financial and legal advisors; (viii) reviewed the potential pro forma
impact of the Merger; (ix) reviewed a draft, dated December 14, 1997, of the
Merger Agreement; and (x) reviewed such other financial studies and analyses
and took into account such other matters as Merrill Lynch deemed necessary,
including Merrill Lynch's assessment of general economic, market and monetary
conditions.
In preparing the Merrill Lynch Opinion, Merrill Lynch assumed and
relied on the accuracy and completeness of all information supplied or
otherwise made available to Merrill Lynch, discussed with or reviewed by or for
Merrill Lynch, or publicly available. Merrill Lynch also did not assume any
responsibility for independently verifying such information or for undertaking
an independent evaluation or appraisal of any of the assets or liabilities of
Camden or Oasis, and Merrill Lynch has not been furnished with any such
evaluation or appraisal. In addition, Merrill Lynch did not assume any
obligation to conduct any physical inspection of the properties or facilities
of Camden or Oasis. With respect to the financial forecast information and the
Expected Synergies furnished to or discussed with Merrill Lynch by Camden and
Oasis, Merrill Lynch assumed that they have been reasonably prepared and
reflect the best currently available estimates and judgment of Camden's or
Oasis' management as to the expected future financial performance of Camden or
Oasis, as the case may be, and the Expected Synergies. Merrill Lynch further
assumed that the Merger will qualify as a tax-free reorganization for United
States federal income tax purposes. Merrill Lynch has also assumed that the
final form of the Merger Agreement will be substantially similar to the draft
referred to above dated December 14, 1997.
Merrill Lynch's opinion is necessarily based upon market, economic and
other conditions as they exist and can be evaluated on, and on the information
made available to Merrill Lynch as of, the date of the Merrill Lynch Opinion.
Merrill Lynch assumed that in the course of obtaining the necessary regulatory
or other consents or approvals (contractual or otherwise) for the Merger, no
restrictions, including any divestiture requirements or amendments or
modifications, will be imposed that would have a material adverse effect on the
contemplated benefits of the Merger. Merrill Lynch also assumed that the
combined entity will continue to qualify after the Merger as a REIT for federal
income tax purposes.
At the meeting of the Oasis Board held on December 16, 1997, Merrill
Lynch presented certain financial analyses in connection with the delivery of
the Merrill Lynch Opinion. The following is a summary of the material financial
and comparative analyses performed by Merrill Lynch in arriving at the Merrill
Lynch Opinion.
Valuation of Oasis
Historical Trading Performance and Current Capitalization. Merrill
Lynch reviewed certain trading information for Oasis and, on the basis thereof,
calculated its market value, market capitalization and trading multiples based
on its stock price as of December 12, 1997, of $21.69. For this purpose,
Merrill Lynch defined "total market capitalization" as the market value of
Oasis' common equity, plus total debt. Merrill Lynch then calculated the market
value of Oasis as a multiple of projected FFO (based on mean estimates of FFO
provided by First Call, an industry service provider of earnings estimates
based on an average of earnings estimates published by various investment
banking firms ("First Call")), and FFO less recurring capital expenditures
("AFFO"). Oasis' FFO multiples for 1998 and 1999 were 9.4x and 9.3x
respectively, and AFFO multiples for 1997 and 1998 were 10.3x and 10.2x,
respectively.
Merrill Lynch also reviewed Camden's offer for Oasis and, on the basis
thereof, calculated an aggregate net offer value for the Oasis Common Stock
(the "Net Offer Value") of $520.1 million. Using an estimation of Oasis' debt
balances as of December 31, 1997 provided by Oasis' management, Merrill Lynch
also calculated an aggregate transaction value (the "Transaction Value") of
$967.2 million which consisted of the Net Offer Value plus debt of $452.4
million, less an estimation of Oasis' cash balance at December 31, 1997 of $5.2
million. With respect to the Net Offer Value, Merrill Lynch calculated FFO
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multiples for 1998 and 1999 of 10.5x and 10.4x, respectively, and the AFFO
multiples for 1998 and 1999 of 11.6x and 11.5x, respectively.
Analysis of Selected Comparable Publicly Traded Companies. Using
publicly available information and estimates of future financial results
published by First Call, and taken from Merrill Lynch Equity Research, Merrill
Lynch compared certain financial and operating information and ratios for Oasis
with the corresponding financial and operating information for a group of
publicly traded companies engaged primarily in the ownership, management,
operation and acquisition of multifamily properties. For the purpose of its
analysis, the following companies were used as comparable companies to Oasis:
Ambassador Apartments, Inc., Associated Estates Realty Corporation, Mid-America
Apartment Communities, Inc. and Walden Residential Properties (collectively,
the "Oasis Comparable Companies").
Merrill Lynch's calculations resulted in the following relevant ranges
for the Oasis Comparable Companies and for Oasis as of December 12, 1997: a
range of debt to total market capitalization of 33.2% to 60.5%, with a mean of
42.6% (as compared to Oasis at 48.7%); a range of market value as a multiple of
projected 1997 FFO of 10.3x to 11.5x, with a mean of 10.8x (as compared to
Oasis at 9.8x); a range of market value as a multiple of projected 1998 FFO of
9.2x to 10.4x, with a mean of 9.8x (as compared to Oasis at 9.4x); a range of
market value as a multiple of projected 1997 AFFO of 10.9x to 14.1x, with a
mean of 12.6x (as compared with Oasis at 10.8x); and a range of market value as
a multiple of projected 1998 AFFO of 9.9x to 12.1x, with a mean of 11.1x (as
compared to Oasis at 10.3x). Based upon projected 1998 FFO multiples, the
implied per share valuation of the Oasis Common Stock is between $21.28 and
$23.94.
None of the Oasis Comparable Companies is, of course, identical to
Oasis. Accordingly, a complete analysis of the results of the foregoing
calculations cannot be limited to a quantitative review of such results and
involves complex considerations and judgments concerning differences in
financial and operating characteristics of the Oasis Comparable Companies and
other factors that could affect the public trading volume of the Oasis
Comparable Companies, as well as that of Oasis. In addition, the multiples of
market value to estimated 1997 and projected 1998 FFO and AFFO for the Oasis
Comparable Companies are based on projections prepared by research analysts
using only publicly available information. Accordingly, such estimates may or
may not prove to be accurate.
Comparable Transaction Analysis. Merrill Lynch also compared certain
financial ratios of the Merger with those of selected other mergers and
strategic transactions involving REITS. These transactions were Equity
Residential Properties Trust's merger with Evans Withycombe Residential, Inc.,
Post Properties, Inc.'s merger with Columbus Realty Trust, Equity Residential
Properties Trust's merger with Wellsford Residential Property Trust, Camden
Property Trust's merger with Paragon Group, Inc., United Dominion Realty Trust,
Inc.'s merger with South West Property Trust, Mid-America Apartment
Communities, Inc.'s merger with America First REIT and Wellsford Residential
Property Trust's merger with Holly Residential Properties, Inc. (collectively,
the "Transaction Comparables").
Using publicly available information and estimates of financial
results as published by First Call, Merrill Lynch calculated the premium of the
implied offer prices relative to the acquired company's stock price on the day
before the announcement of the respective transaction and the implied offer
value per share for the acquired company, as of the day before the announcement
of the respective transaction, as a multiple of the projected FFO per share for
such company. This analysis yielded a range of premiums of 4.9% to 38.0% with a
mean of 15.1% and a range of transaction FFO multiples of 9.2x to 12.3x with a
mean of 11.2x. This results in an implied per share valuation of between $21.25
and $28.41 for the Oasis Common Stock.
Discounted Cash Flow Analyses. Merrill Lynch performed discounted cash
flow analyses (i.e., an analysis of the present value of the projected levered
cash flows for the periods using the discount rates indicated) of Oasis based
upon projections provided by Oasis' management for the years 1998 through 2002,
inclusive, using discount rates reflecting an equity cost of capital ranging
from 16.5% to 18.5% and terminal value multiples of calendar year 2002 FFO
ranging from 9.5x to 10.5x. The range of implied present values per share of
Oasis Common Stock was approximately $19.57 to $22.58 using the discounted
dividend method and approximately $21.69 to $24.82 based upon the discounted
FFO method.
Net Asset Valuation Analysis. Merrill Lynch performed a net asset
valuation for Oasis based on an asset-by-asset real estate valuation of Oasis'
properties, an estimation of the current value for Oasis' other assets and
liabilities, and an estimation of Oasis' debt balances as of December 31, 1997.
The real estate valuation utilized property specific projections prepared by
Oasis' management for the calendar year 1998. For the operating portfolio of
Oasis, the valuation utilized the direct capitalization method on 1998 property
net operating income and weighted-average capitalization rates of 8.73% to
9.23%. These calculations indicated a per share net asset valuation range for
Oasis Common Stock of approximately $21.79 to $24.09.
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Valuation of Camden
Historical Trading Performance and Current Capitalization. Merrill
Lynch reviewed certain trading information for Camden and, on the basis
thereof, calculated its market value, market capitalization and trading
multiples based on its stock price as of December 12, 1997 of $32.00. For this
purpose, Merrill Lynch defined "total market capitalization" as the market
value of Camden's common equity (including the assumed conversion of all
outstanding operating partnership units into Camden Common Shares) plus
preferred stock at liquidation value plus total debt. Merrill Lynch then
calculated the market value of Camden as a multiple of projected FFO (based on
mean estimates of FFO provided by First Call) and AFFO. Camden's FFO multiples
for 1998 and 1999 were 11.2x and 10.2x, respectively, and the AFFO multiples
for 1998 and 1999 were 11.9x and 10.7x, respectively.
Analysis of Selected Comparable Publicly Traded Companies. Using
publicly available information and estimates of future financial results
published by First Call and taken from Merrill Lynch Equity Research, Merrill
Lynch compared certain financial and operating information and ratios for
Camden with the corresponding financial and operating information for a group
of publicly traded companies engaged primarily in the ownership, management,
operation and acquisition of multifamily properties. For the purpose of its
analysis, the following companies were used as comparable companies to Camden:
Merry Land & Investment Co., Inc., Post Properties, Inc. and Summit Properties,
Inc, (collectively, the "Camden Comparable Companies").
Merrill Lynch's calculations resulted in the following relevant ranges
for the Camden Comparable Companies and for Camden as of December 12,: a range
of debt to total market capitalization of 31.3% to 42.8%, with a mean of 35.3%
(as compared to Camden at 28.8%); a range of market value as a multiple of
projected 1997 FFO of 11.1x to 12.7x, with a mean of 11.8x (as compared to
Camden at 12.3x); a range of market value as a multiple of projected 1998 FFO
of 10.6x to 11.4x, with a mean of 10.9x (as compared to Camden at 11.2x); a
range of market value as a multiple of projected 1997 AFFO of 12.6x to 113.5x,
with a mean of 12.9x (as compared with Camden at 13.0x); and a range of market
value as a multiple of projected 1998 AFFO of 11.6x to 12.2x, with a mean of
12.0x (as compared to Camden at 11.9x). Based upon projected 1998 FFO
multiples, the implied per share valuation of the Camden Common Shares is
between $30.25 and $32.44.
None of the Camden Comparable Companies is, of course, identical to
Camden. Accordingly, a complete analysis of the results of the foregoing
calculations cannot be limited to a quantitative review of such results and
involves complex considerations and judgments concerning differences in
financial and operating characteristics of the Camden Comparable Companies and
other factors that could affect the public trading volume of the Camden
Comparable Companies, as well as that of Camden. In addition, the multiples of
market value to estimated 1997 and projected 1998 FFO and AFFO for the Camden
Comparable Companies are based on projections prepared by research analysts
using only publicly available information.
Accordingly, such estimates may or may not prove to be accurate.
Comparable Transaction Analysis. Merrill Lynch also compared certain
financial ratios of the Merger with those of the Transaction Comparables. Using
publicly available information and estimates of financial results as published
by First Call, Merrill Lynch calculated with respect to the Transaction
Comparables the premiums of the implied offer prices relative to the acquired
company's stock price on the day before the announcement of the respective
transaction and the implied offer value per share for the acquired company, as
of the day before the announcement of the respective transaction, as a multiple
of the projected FFO per share for such company. This analysis yielded a range
of premiums of 4.9% to 38.0% with a mean of 15.1% and a range of transaction
FFO multiples of 9.2x to 12.3x with a mean of 11.2x. This results in an implied
per share valuation of Camden Common Shares of between $26.22 and $35.05.
Discounted Cash Flow Analyses. Merrill Lynch performed discounted cash
flow analyses (i.e., an analysis of the present value of the projected levered
cash flows for the periods using the discount rates indicated) of Camden based
upon projections provided by Camden's management for the years 1998 through
2002, inclusive, using discount rates reflecting an equity cost of capital
ranging from 14.7% to 16.7% and terminal value multiples of calendar year 2002
FFO ranging from 9.5x to 10.5x. The range of implied present values per share
of Oasis Common Stock was approximately $28.27 to $32.60 using the discounted
dividend method and approximately $31.45 to $35.93 based upon the discounted
FFO method.
Net Asset Valuation Analysis. Merrill Lynch performed a net asset
valuation for Camden based on an aggregate real estate valuation of Camden's
properties, an estimation of the current value for Camden's other assets and
liabilities, and an estimation of Camden's debt balances as of December 31,
1997. The real estate valuation utilized projections prepared by Camden's
management for the calendar year 1998. For the operating portfolio of Camden,
the valuation utilized the direct capitalization method on 1998 property net
operating income and a range of capitalization rates of 8.00% to 9.75%. These
calculations indicated a per share net asset valuation range for Oasis Common
Stock of approximately $28.54 to $31.06.
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<PAGE> 46
Pro Forma Merger Consequences. Merrill Lynch analyzed the pro forma
effects resulting from the Merger, including the potential impact on Camden's
projected standalone FFO per share and the anticipated accretion (i.e., the
incremental increase) to Camden's per share FFO resulting from the Merger.
Merrill Lynch observed that, after giving effect to the Expected Synergies, the
Merger would be accretive to Camden's projected FFO per share in each of the
years 1998 through 2002, inclusive, and that the year-over-year annual growth
rates for FFO per share in each of the years 1999 through 2002, inclusive,
exceeded such comparable results for Camden on a standalone basis.
The summary set forth above does not purport to be a complete
description of the analysis performed by Merrill Lynch in arriving at the
Merrill Lynch Opinion. The preparation of a fairness opinion is a complex
process and not necessarily susceptible to partial or summary description.
Merrill Lynch believes that its analyses must be considered as a whole and that
selecting portions of its analyses and of the factors considered by it, without
considering all factors and analyses, could create a misleading view of the
process underlying the Merrill Lynch Opinion. In its analyses, Merrill Lynch
made numerous assumptions with respect to industry performance, general
business and economic conditions and other matters, many of which are beyond
Oasis', Camden's and Merrill Lynch's control. Any estimates contained in
Merrill Lynch's analyses are not necessarily indicative of actual values, which
may be significantly more or less favorable than as set forth therein.
Estimated values do not purport to be appraisals and do not necessarily reflect
the prices at which businesses or companies may be sold in the future, and such
estimates are inherently subject to uncertainty.
The Oasis Board selected Merrill Lynch to render a fairness opinion
because Merrill Lynch is an internationally recognized investment banking firm
with substantial experience in transactions similar to the Merger and because
it is familiar with Oasis and its business. Merrill Lynch is continually
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions, leveraged buyouts, negotiated underwritings,
secondary distributions of listed and unlisted securities and private
placements.
Pursuant to a letter agreement dated September 17, 1996, Oasis has
agreed to pay Merrill Lynch a fee equal to $4,836,000 upon consummation of the
Merger. In addition, Oasis has agreed to reimburse Merrill Lynch for its
reasonable out-of-pocket expenses, subject to certain limitations, and to
indemnify Merrill Lynch and certain related persons against certain
liabilities, including certain liabilities under the federal Securities Laws,
arising out of its engagement.
Merrill Lynch has, in the past, provided financial advisory services
to Oasis and Camden and may continue to do so and has received, and may
receive, fees for the rendering of such services. In addition, in the ordinary
course of its business, Merrill Lynch may actively trade in the securities of
Oasis or Camden, for its own account and for the accounts of customers and,
accordingly, may at any time hold a long or short position in such securities.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the recommendation of the Oasis Board with respect to
the Merger, stockholders should be aware that certain members of management of
Oasis and the Oasis Board may have interests in the Merger in addition to their
interests as stockholders of Oasis generally. The Oasis Board either was aware
of these interests or, with respect to interests that arose subsequent to the
execution of the Merger Agreement, was aware of their potential and considered
them, among other matters, in approving the Merger Agreement and the
transactions contemplated thereby.
Contract-Based Payments. Pursuant to the Merger Agreement, and under
existing agreements with Oasis, Robert V. Jones, Scott S. Ingraham, Allan O.
Hunter, Walter B. Eeds, John M. Clayton, Gina Anastasi, Paul M. Buss, Marianne
Aguiar, Gary Miller and Jeff Rosen will, at the Effective Time, be entitled to
receive payments in the aggregate amounts of $1,350,000, $1,140,000, $840,000,
$825,000, $150,000, $110,000, $95,000, $88,000, $48,750 and $30,000,
respectively, if their employment with Oasis is terminated under certain
circumstances following the Effective Time and, in certain instances, as
compensation for non-competition agreements. In addition, in the case of each
of Messrs. Jones, Ingraham, Hunter and Eeds, in the event that such payments
are subject to the excise tax under Section 4999 of the Code, Camden will pay
such person an additional amount to offset the effects of such excise tax. Mr.
Jones is the current Chairman of the Oasis Board, each of Messrs. Ingraham,
Hunter and Eeds is a director and executive officer of Oasis and each of
Messrs. Clayton, Buss, Miller and Rosen, Ms. Anastasi and Ms. Aguiar is an
officer of Oasis.
Appointment to Camden Board. Pursuant to the Merger Agreement, Camden
agreed to increase the number of active trust managers from seven to eight as
of the Effective Time with the appointment of Scott S. Ingraham to the Camden
Board. See "MANAGEMENT OF CAMDEN."
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<PAGE> 47
Indemnification. From and after the Effective Time of the Merger,
Camden will indemnify the directors or officers of Oasis and its subsidiaries
against all claims, damages and expenses (including attorneys' fees and
expenses) based on or arising out of the fact that such person is or was a
director or officer of Oasis or any of its subsidiaries at or prior to the
Effective Time (including matters based on or arising out of or pertaining to
the Merger Agreement or the Merger), in each case to the full extent Oasis
would have been permitted under applicable law and its charter documents to
indemnify such persons. Camden will also, for a period of six years from the
Effective Date, use its best efforts to provide that portion of Oasis'
directors' and officers' liability insurance that serves to reimburse the
persons currently covered by Oasis' directors' and officers' liability
insurance policy with respect to claims against such officers and directors
arising from facts or events that occurred before the Effective Time, which
will contain at least the same coverage and terms and conditions that in all
material respects are no less advantageous as that currently provided by Oasis.
Such coverage will, however, have a single aggregate liability for such
six-year period in an amount not less than the annual aggregate limit of
liability of such coverage currently provided by Oasis.
Stock Incentive Plans. Pursuant to the employment agreements between
Oasis and each of Robert V. Jones, Scott S. Ingraham, Allan O. Hunter and
Walter B. Eeds, all stock options held by such person and not otherwise
exercisable at the Effective Time will become exercisable in full at the
Effective Time and such person will have the right to exercise such stock
options, as well as all other stock options held by such person at the
Effective Time, at any time during the period ending on the tenth anniversary
of the respective date of grant of the option. In addition, all unvested
options held by members of the Oasis Board, Messrs. Clayton and Buss, Ms.
Anastasi and Ms. Aguiar will automatically vest at the Effective Time.
Consulting Agreements. In connection with the execution of the Merger
Agreement, Camden entered into a letter agreement with each of Scott S.
Ingraham and Allan O. Hunter Jr. in which Camden agreed to use its best efforts
to enter into a consulting agreement with each of Messrs. Ingraham and Hunter
concurrently with the Effective Time pursuant to which Camden will agree (i) to
pay Messrs. Ingraham and Hunter a fee in the amount of $260,000 and $220,000,
respectively, (ii) to reimburse Messrs. Ingraham and Hunter for reasonable
overhead and other expenses reasonably incurred by such person in providing
services under the consulting agreement and (iii) to pay Messrs. Ingraham and
Hunter such additional compensation as may be set forth in the consulting
agreement. Also in connection with the execution of the Merger Agreement,
Camden entered into a letter agreement with Walter B. Eeds pursuant to which
Camden agreed to use its bests efforts to enter into a consulting agreement
with Mr. Eeds concurrently with the Effective Time, which consulting agreement
will contain mutually agreeable terms and conditions to be negotiated in good
faith.
HEADQUARTERS
After the Merger, the headquarters of Camden will continue to be
located at 3200 Southwest Freeway, Suite 1500, Houston, Texas 77027, the
current headquarters of Camden.
DIVIDENDS
Camden and Oasis have agreed in the Merger Agreement to certain
limitations on the payment of dividends and distributions. Among other things,
these limitations have the effect of restricting Camden and Oasis from
declaring and paying dividends other than on their regularly scheduled dates.
If, as anticipated, the Effective Time occurs after the record date for the
regularly scheduled first quarter dividend on the Camden Common Shares (the
last day of a quarter) but prior to the regularly scheduled record date for the
first quarter dividend on the Oasis Common Stock (early in the second month
following the end of a quarter), holders of Oasis Common Stock will not receive
a dividend for the first quarter unless required for tax purposes as described
under "THE MERGER AGREEMENT--The Merger."
ANTICIPATED ACCOUNTING TREATMENT
The Merger will be accounted for using the purchase method in
accordance with Accounting Principles Board Opinion No. 16. The fair market
value of the consideration given by Camden in the Merger and the market value
of liabilities assumed will be used as the basis of the purchase price. The
assets and liabilities of Oasis will be revalued to their respective fair
market values. The financial statements of Camden will reflect the combined
operations of Camden and Oasis from the Effective Time of the Merger.
RESALES OF CAMDEN SHARES
The Camden Shares issuable to holders of Oasis Shares upon
consummation of the Merger have been registered under the Securities Act, and
will be freely transferable without restriction by those holders of Oasis
Shares who receive such shares
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<PAGE> 48
following consummation of the Merger and who are not deemed to be "affiliates"
(as defined under the Securities Act, and generally including trust managers,
directors, certain executive officers and 10% or more stockholders) of Oasis or
Camden. It is a condition to Camden's obligation to consummate the Merger
Agreement that each person whom Oasis has identified as an "affiliate" of Oasis
for purposes of the Securities Act deliver to Camden an agreement providing
that such person will not transfer any Camden Shares received by such person in
connection with the Merger except in compliance with the Securities Act. This
Joint Proxy Statement/Prospectus does not cover any resales of Camden Shares
received by affiliates of Oasis.
DISSENTERS' RIGHTS
Section 92A.390 of the NGCL provides that holders of any class or
series of capital stock will have no right to dissent from a merger or exchange
if either (i) at the record date fixed to determine the stockholders entitled
to receive notice of and to vote on such action, shares of such stock were
either listed on a national securities exchange, included in the national
market system by the National Association of Securities Dealers, Inc. or held
by at least 2,000 stockholders of record unless otherwise provided in the
articles of incorporation of the corporation issuing the shares, or (ii) the
holders of the class or series are required under the plan of merger or
exchange to accept for such shares anything other than cash, shares of the
surviving corporation or shares of any other corporation meeting certain
criteria. Oasis Common Stock is listed on the NYSE and the Oasis Articles do
not extend dissenters' rights to holders of Oasis Common Stock. Therefore, the
holders of Oasis Common Stock will not have dissenters' rights in connection
with the Merger.
REGULATORY MATTERS
Camden and Oasis believe that the Merger may be consummated without
notification being given or certain information being furnished to the FTC or
the Antitrust Division pursuant to the HSR Act, and that no waiting period
requirements under the HSR Act are applicable to the Merger. However, at any
time before or after the Effective Time, either the Antitrust Division or the
FTC could take such action under the antitrust laws as it deems necessary or
desirable in the public interest, or certain other persons could take action
under the antitrust laws, including seeking to enjoin the Merger. Camden and
Oasis believe that consummation of the Merger would not violate any antitrust
laws. However, there can be no assurance that a challenge to the Merger on
antitrust grounds will not be made or, if a challenge is made, what the result
will be.
NYSE LISTING
The Camden Common Shares are, and the Camden Series A Preferred Shares
will be, listed on the NYSE and traded under the symbols "CPT" and "___,"
respectively.
EFFECT OF THE MERGER ON OASIS DEBT SECURITIES
Oasis currently has outstanding $50,000,000 aggregate principal amount
of its 6 3/4% Notes due 2001, $50,000,000 aggregate principal amount of its 7%
Notes due 2003 and $50,000,000 aggregate principal amount of its 7 1/4% Notes
due 2006, each of which was issued under an Indenture, dated as of November 25,
1996 (the "Indenture"). Upon consummation of the Merger, Camden and the trustee
under the Indenture will enter into a supplemental indenture pursuant to which
Camden will become an obligor under the Indenture.
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<PAGE> 49
MANAGEMENT OF CAMDEN
BOARD OF TRUST MANAGERS OF CAMDEN
The Camden Board currently consists of seven members (the "Current
Members") and, at the Effective Time, will be expanded to consist of eight
members upon the appointment of Scott S. Ingraham, currently the President and
Chief Executive Officer and a director of Oasis (or such other person
designated by Oasis in the event Mr. Ingraham is unable or unwilling to serve),
as a member of the Camden Board. At the Camden Special Meeting, holders of
Camden Common Shares will consider and vote upon the election of the Current
Members. Each of Messrs. Campo, Hrdlicka, Oden, Parker and Webster must be
reelected by the affirmative vote of the holders of a majority of the Camden
Common Shares present in person or represented by proxy at the Camden Special
Meeting. Each of Messrs. Cooper and Levey must be elected by the affirmative
vote of the holders of two-thirds of the outstanding Camden Common Shares
present in person or represented by proxy at the Camden Special Meeting.
If for any reason any nominee for trust manager should become
unavailable for election, the proxies may be voted for the election of a
substitute designated by the Camden Board unless a contrary instruction is
given on the proxy. The Camden Board has no reason to believe that any of the
Current Members will be unable or unwilling to serve if elected, and all
Current Members have expressed an intention to serve the entire term for which
election is sought.
The following table contains certain information concerning the Current
Members and Mr. Ingraham:
<TABLE>
<CAPTION>
Name Age Trust Manager Since
- ------------------------- --- -------------------
<S> <C> <C>
Richard J. Campo (1) 43 May 1993
William R. Cooper (1) 61 April 1997
George A. Hrdlicka (2)(3) 66 October 1993
Lewis A. Levey (3) 56 April 1997
D. Keith Oden 41 May 1993
F. Gardner Parker (1)(2) 56 July 1993
Steven A. Webster (1) 46 July 1993
Scott S. Ingraham 43 --
</TABLE>
- --------------
(1) Member of the Executive Committee.
(2) Member of the Compensation Committee.
(3) Member of the Audit Committee.
Richard J. Campo has been the Chairman of the Camden Board and Chief
Executive Officer of Camden since May 1993. From June 1993 through December
1993, Mr. Campo also was the President of Camden. Mr. Campo co-founded Centeq
Realty, Inc. ("Centeq") and its predecessor entities in 1982 and has been
continuously involved as a principal executive officer and director of Centeq
and its predecessors since 1982. Mr. Campo is a member of the Board of
Directors of First Sierra Financial, a publicly-held financial services
company, and the Houston Sports Authority, a Harris County authority created to
build a baseball stadium in downtown Houston.
William R. Cooper is currently a private investor who prior to April
1997 served for 30 years in a variety of capacities with Paragon or its
predecessor. Most recently Mr. Cooper served as Chairman of the Board of
Directors and Chief Executive Officer of Paragon. Mr. Cooper is a member of the
Board of Directors for the Advisory Board of the Society of Industrial and
Office Realtors, the Presbyterian Healthcare System and the National Realty
Committee.
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<PAGE> 50
George A. Hrdlicka is a founding partner of the law firm of
Chamberlain Hrdlicka White Williams & Martin and has been primarily involved in
the practice of tax law since 1965. He is a regular lecturer on tax subjects at
institutes and seminars around the country and is Board Certified as a tax
lawyer by the Texas Board of Legal Specialization. He currently serves as a
member of the Texas Board of Legal Specialization staff.
Lewis A. Levey is currently a private investor who prior to April 1997
served for 26 years in a variety of capacities with Paragon or its predecessor.
Most recently Mr. Levey served as Vice Chairman of the Board of Directors and
as a director of Paragon. Mr. Levey is currently a member of the Board of
Directors of the National Multi-Housing Council, and a Council member of the
Urban Land Institute.
D. Keith Oden has been the President and Chief Operating Officer of
Camden since December 1993. From July 1993 through December 1993, Mr. Oden was
a consultant to Camden. Mr. Oden co-founded Centeq and its predecessor entities
in 1982 and has been continuously involved as a principal executive officer and
director of Centeq and its predecessors since 1982.
F. Gardner Parker is currently a private investor and has been
involved in structuring private and venture capital investments for the past
twelve years. Mr. Parker was with Ernst & Young from 1970 to 1984 and was a
partner with the firm from 1977 to 1984. Mr. Parker is Chairman of the Board of
three privately held companies and is a director of three additional privately
held companies.
Steven A. Webster currently serves as President and Chief Executive
Officer of R & B Falcon Drilling Company, Inc., a publicly-held offshore
drilling contractor, of which he is also a director. Mr. Webster serves as a
director of the following publicly-held companies: Crown Resources Corporation,
a precious metals mining concern; Greywolf, Inc., a land drilling contractor;
Geokinetics, Inc., a seismic acquisition company; and Ponder Industries, Inc.,
an oil field service company.
Scott S. Ingraham is the President, Chief Executive Officer and a
director of Oasis. He became President of Oasis effective June 1, 1994, and
Chief Executive Officer effective December 31, 1997, and served as Chief
Financial Officer of Oasis from March 1993 to March 1996. He also served as
Executive Vice President and Secretary of Oasis from March 1993 to June 1994
and August 1994, respectively. Mr. Ingraham was employed by Robert V. Jones
Corp., a real estate development company. Prior to his employment with Robert
V. Jones Corp., he was a Managing Director and partner at Post Oak Partners, a
real estate finance/consulting firm founded by Mr. Ingraham and others in 1982.
The Camden Declaration of Trust and the Camden Bylaws expressly permit
the trust managers and officers to engage in other activities including those
relating to the ownership and operation of multifamily properties. No policy of
Camden restricts trust managers from conducting, for their own accounts or on
behalf of others, other business activities including those relating to the
ownership and operation of multifamily properties. For a description of certain
restrictions on the ability of Messrs. Campo and Oden to compete with Camden in
the multifamily property business, see "--Executive Compensation--Employment
Agreements."
COMMITTEES OF THE CAMDEN BOARD
The Camden Board has three standing committees: an Audit Committee, an
Executive Committee and a Compensation Committee. The Audit Committee makes
recommendations concerning the engagement of independent auditors, reviews with
the independent auditors the plans and results of the audit engagement,
approves professional services provided by the independent auditors, reviews
the independence of the independent auditors, considers the range of audit and
non-audit fees and reviews the adequacy of Camden's internal accounting
controls. The Executive Committee has the authority to acquire, dispose of and
finance investments for Camden and execute contracts and agreements, including
those related to the borrowing of money by Camden, and generally exercises all
other powers of the trust managers except for those which require action by all
trust managers or the independent trust managers under the Camden Declaration
of Trust or the Camden Bylaws or under applicable law. The Compensation
Committee has the authority to determine compensation for Camden's executive
officers and to administer the Camden's 1993 Share Incentive Plan (the "Plan").
Camden does not have a nominating committee.
COMPENSATION OF TRUST MANAGERS
Camden pays to its trust managers who are not employees or consultants
of Camden an annual fee of $12,000, a fee of $1,000 for attending each meeting
plus a fee of $250 for each telephone conference. In addition, trust managers
receive a fee of $500 for attending each committee meeting unless such meeting
is on the same day as another meeting. Trust managers who are employees of
Camden are not paid any trust managers' fees. In addition, Camden may reimburse
the trust managers for travel
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<PAGE> 51
expenses incurred in connection with their activities on behalf of Camden.
Prior to May 1995, trust managers who were not employees of Camden received
options to purchase 4,000 Camden Common Shares under the Plan. Total options
granted to the trust managers were 12,000, all of which had vested at December
31, 1997. Such options have a three-year vesting period and expire ten years
from the grant date. In May 1995, the shareholders of Camden approved an
amendment to the Plan allowing trust managers who are not employees of Camden
to each receive 2,000 restricted Camden Common Shares under the Plan effective
upon their election as a trust manager and on each anniversary of the date such
trust manager joined the Camden Board. Total restricted Camden Common Shares
granted to the trust managers were 22,000, of which 3,600 had vested at
December 31, 1997. Following the merger of Paragon into a wholly owned
subsidiary of Camden, which occurred on April 15, 1997, Messrs. Cooper and
Levey became members of the Camden Board and each received 2,000 restricted
Camden Common Shares under the Plan. Restricted Camden Common Shares vest over
five years from date of grant.
MEETINGS OF THE CAMDEN BOARD AND COMMITTEES
During the year ended December 31, 1997, there were twelve meetings of
the Camden Board, one meeting of the Audit Committee and four meetings of the
Compensation Committee. Each trust manager attended at least 75% of the
meetings of the Camden Board and the committees on which such trust manager
served during such period. In addition, the Camden Board and such Committees
took action on numerous occasions by unanimous written consent.
EXECUTIVE OFFICERS OF CAMDEN
The executive officers of Camden and their ages are as follows:
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Richard J. Campo 43 Chairman of the Board of Trust Managers and Chief Executive Officer
D. Keith Oden 41 President, Chief Operating Officer and Trust Manager
Michael W. Biggs 47 Senior Vice President-Asset Management
G. Steven Dawson 40 Senior Vice President-Finance, Chief Financial Officer, Treasurer and
Assistant Secretary
Alison L. Dimick 35 Senior Vice President-Acquisitions and Dispositions
James M. Hinton 41 Senior Vice President-Development
Elizabeth Pringle Johnson 39 Senior Vice President-General Counsel, Secretary and Assistant Treasurer
H. Malcolm Stewart 46 Senior Vice President-Construction
</TABLE>
Information concerning the business experience of Messrs. Campo and
Oden is provided above under "--Board of Trust Mangers of Camden."
Michael W. Biggs has been the Senior Vice President--Asset Management
of Camden since May 1993. Prior to the formation of Camden, from 1992 to 1993,
Mr. Biggs was President of Centeq's property management division and
responsible for managing properties owned by Centeq.
G. Steven Dawson has been the Senior Vice President--Finance, Chief
Financial Officer and Treasurer of Camden since May 1993 and Assistant
Secretary of Camden since December 1993. Prior to the formation of Camden, from
1990 to 1993, Mr. Dawson was Senior Vice President--Finance and Chief Financial
Officer of Centeq.
Alison L. Dimick joined Camden in April 1997 as Senior Vice
President-Acquisitions & Dispositions. Prior to joining Camden, Ms. Dimick was
Vice President of Acquisitions for MIG Realty Advisors from 1991 through 1997,
a pension fund advisor specializing in multifamily properties.
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<PAGE> 52
James M. Hinton has been the Senior Vice President--Development of
Camden since June 1996. Mr. Hinton was Vice President of Development for Camden
Development, Inc. from December 1993 to May 1996. Prior thereto, Mr. Hinton was
the National Multifamily Asset Manager for J. E. Robert Company from February
1991 to November 1993.
Elizabeth Pringle Johnson has been the Senior Vice President--General
Counsel and Secretary of Camden since May 1993 and Assistant Treasurer since
December 1993. Prior to the formation of Camden, Ms. Johnson was General
Counsel to Centeq from 1992 to 1993.
H. Malcolm Stewart has been the Senior Vice President--Construction
since December 1993. Mr. Stewart was the President of Centeq's construction
division from 1989 to December 1993.
No family relationship exists among any of the trust managers or
executive officers of Camden. Except in connection with the transactions
contemplated by the Merger Agreement, no arrangement or understanding exists
between any trust manager or executive officer or any other person pursuant to
which any trust manager or executive officer was selected as a trust manager or
executive officer of Camden. All executive officers are elected annually by,
and serve at the discretion of, the Camden Board.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE OFFICER COMPENSATION
[to come]
EXECUTIVE COMPENSATION
[to come]
PERFORMANCE GRAPH
The following graph shows a comparison of cumulative total returns for
Camden, the Standard & Poor's 500 Composite Stock Index and the National
Association of Real Estate Investment Trusts All Equity Index (excluding health
care real estate investment trusts). The graph assumes the investment of $100
on July 31, 1993 (the month in which the IPO was consummated and the Camden
Common Shares were registered under Section 12 of the Exchange Act) in the
Camden Common Shares and in each index and that all dividends were reinvested.
42
<PAGE> 53
[GRAPHIC]
CAMDEN PROPERTY TRUST
<TABLE>
<CAPTION>
PERIOD ENDING
---------------------------------------------------------------------------
INDEX 7/21/93 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Camden Property Trust 100.00 118.02 124.78 129.31 167.96 194.26
S&P 500 100.00 105.65 107.04 147.26 180.93 241.31
NAREIT Equity w/o Health Care 100.00 100.05 103.33 117.78 160.98 194.18
</TABLE>
43
<PAGE> 54
CERTAIN RELATIONSHIPS AND TRANSACTIONS
Camden Connection, Inc. ("CCI") (formerly Apartment Connection, Inc.)
is a nonqualified-REIT subsidiary. CCI was established to act as a leasing
agent providing tenants for apartment owners in Houston, including properties
owned by Camden. Locator fees paid by Camden to CCI were $79,000, $136,000 and
$195,000 for the years ended December 31, 1997, 1996 and 1995, respectively.
Camden made an unsecured working capital revolving line of credit available to
CCI, which was renewable annually. The loan had a maximum commitment of $1.2
million and earned interest at a fixed rate of 7.5% per annum. During 1997, the
operations of CCI were sold and the loan was paid off. The loan's outstanding
balance was $1.2 million at December 31, 1996.
Two of the executive officers ("Executives") have loans totaling $1.8
million with one of Camden's nonqualified-REIT subsidiaries. The Executives
utilized amounts received from these loans to purchase Camden Common Shares.
The loans mature in 1999 and bear interest at the fixed rate of 7.0%. These
loans are non-recourse, but are secured by a pledge of such Camden Common
Shares, and do not require any prepayments of principal until maturity.
During 1995, Camden formed TeleServe, Inc. (formerly Camden
Communications One, Inc.) doing business as CamTel ("CamTel"). CamTel is a
nonqualified-REIT subsidiary that was established to provide fiber optic,
central office switched telecommunications service to residents in Camden's
properties and third parties. CamTel entered into operating agreements with
third parties during the fourth quarter of 1997 to provide continuing services
to CamTel's customers. Camden had made a 7.0% unsecured revolving line of
credit available to CamTel, which had an outstanding balance of $0 and $585,000
at December 31, 1997 and 1996, respectively.
In connection with the April 15, 1997 merger with Paragon, Camden
through one of its affiliates, Camden Residential Services, Inc., began
performing residential services for owners of 15 affiliated properties.
Management fees earned on the properties amounted to $279,000 for the year
ended December 31, 1997. Although the management agreements were not the result
of arm's length negotiations, Camden believes that they were no more favorable
to the owners than the fees that would have been paid to unaffiliated third
parties under similar circumstances.
THE SPIN-OFF
As part of the Merger, Camden expects to form a joint venture
partnership (the "Partnership") to be comprised of 18 multifamily properties
located in Las Vegas and one multifamily property located in Laughlin, Nevada
containing an aggregate of 5,119 apartment units (the "Spin-Off Properties").
Camden intends to retain a minority equity position in the Partnership of
approximately 20% and to continue to provide property management services for
the Spin-Off Properties. See "CAMDEN PROPERTY TRUST UNAUDITED PRO FORMA
COMBINED STATEMENT OF OPERATIONS" and "CAMDEN PROPERTY TRUST UNAUDITED PRO
FORMA COMBINED BALANCE SHEET." For information regarding the Spin-Off
Properties, see "BUSINESS OF OASIS--Oasis Portfolio Summary." Following the
Spin-Off, it is anticipated that Camden will own interests in 152 multifamily
properties containing 49,786 units (including 6,704 units owned through joint
ventures) and will have seven multifamily properties containing 2,683 units
under development. Upon completion of the development of the seven properties,
Camden will own interests in 159 multifamily properties containing 52,469
units. Camden will also have several additional sites that it intends to
develop into multifamily apartment communities. Camden is seeking an equity
capital commitment from a third party investor to own a majority equity
position in the Partnership of approximately 80%.
Camden expects that the Partnership will assume existing first
mortgage debt on two of the Spin-Off Properties and finance the other 17
Spin-Off Properties with fully amortizing fixed-rate mortgage debt with a loan
to value ratio of approximately 80%.
Camden expects that the Spin-Off should allow Camden to lower its
post-Merger leverage ratio to pre-Merger levels and maintain a geographically
diversified overall portfolio by reducing its direct ownership position in Las
Vegas to 6,724 units while capitalizing on Oasis' dominant market presence in
Las Vegas.
No assurance can be given that the Spin-Off will be consummated on
terms favorable to Camden or otherwise. If the Spin-Off is not consummated,
after the Effective Time Camden will retain a larger interest in Las Vegas
assets and thus will be subject to a greater risk that a decline in the economy
in the greater Las Vegas metropolitan area may adversely affect its earnings.
See "RISK FACTORS--Loss of Benefits if the Spin-Off Fails to Occur; Dependence
on the Las Vegas Market."
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THE MERGER AGREEMENT
The following is a summary of certain provisions of the Merger
Agreement, a copy of which is attached as Annex I hereto and incorporated
herein by reference. Such summary is qualified in its entirety by the full text
of the Merger Agreement.
THE MERGER
The Merger. Pursuant to the Merger Agreement, at the Effective Time,
each outstanding share of Oasis Common Stock (other than shares of Oasis Common
Stock that are held by Oasis as treasury stock or owned by any subsidiary of
Oasis, which shares will be canceled without any conversion thereof or payment
therefor) will automatically be converted into 0.759 of a Camden Common Share,
and each outstanding share of Oasis Series A Preferred Stock (other than shares
held by Oasis as treasury stock or owned by any subsidiary of Oasis, which
shares will be canceled without any conversion thereof or payment therefor)
will automatically be converted into one Camden Series A Preferred Share.
Notwithstanding the foregoing if, prior to the Effective Time, the outstanding
Camden Common Shares have been increased, decreased or changed into or
exchanged for a different number of kind of shares or securities, then an
appropriate and proportionate adjustment will be made to the Exchange Ratios.
At the Effective Time, Oasis will be merged with and into Merger Sub, Merger
Sub will be the surviving corporation of the Merger, the separate corporate
existence of Oasis will cease and Merger Sub will succeed to and assume all of
the rights and obligations of Oasis. After the Effective Time there will be no
further registration of transfers on the stock transfer books of Oasis or its
transfer agent of the Oasis Shares that were outstanding immediately prior to
the Effective Time.
Options. The Merger Agreement provides that, at the Effective Time, to
the extent not prohibited by the terms of the relevant governing instrument and
subject to the terms of the 1993 Stock Option Plan of Oasis Residential, Inc.,
the 1995 Equity Participation Plan of Oasis Residential, Inc. and the Oasis
Residential, Inc. Stock Option Plan for Outside Directors, each option to
purchase Oasis Common Stock that is outstanding and unexercised immediately
prior thereto will cease to represent a right to acquire shares of Oasis Common
Stock and be automatically converted into an option to purchase 0.759 of a
Camden Common Share (rounded down to the nearest whole share) at a price per
share equal to the exercise price of the Oasis Common Stock under the original
option divided by 0.759 (rounded up to the nearest whole cent), provided that
in the case of incentive stock options the adjustment will be consistent with
Section 424(a) of the Code. The duration and terms of the new options will be
the same as the original options. Oasis will not, except as required by the
applicable governing instrument, accelerate the excersisability of an
outstanding option to purchase shares of Oasis Common Stock.
Oasis Martinique LLC Units. The Merger Agreement also provides that,
at the Effective Time, each outstanding unit of limited liability company
interest in Oasis Martinique, LLC, a Delaware limited liability company ("Oasis
Martinique LLC"), will automatically be exchangeable, subject to the provisions
of the Amended and Restated Limited Liability Company Agreement, dated as of
October 23, 1997, by and among Oasis, IFT Properties, Ltd. and ISCO (the "Oasis
Martinique LLC Agreement"), and the Exchange Rights Agreement, dated as of
October 23, 1997, by and among Oasis, Oasis Martinique LLC and each unitholder
listed on the signature page thereto (the "Oasis Martinique Exchange Rights
Agreement"), for 0.759 of a Camden Common Share.
The Effective Time. As soon as practicable following the satisfaction
or waiver of the conditions set forth in the Merger Agreement, the certificate
of merger and the articles of merger pertaining to the Merger, or other
appropriate documents, will be executed and filed in accordance with the DGCL
and the NGCL and the Merger will become effective.
Fractional Shares. No fractional Camden Shares will be issued in the
Merger. In lieu of any fraction of a Camden Share that any person would
otherwise be entitled to receive, Camden will pay an amount equal to such
fraction multiplied by the average closing price per Camden Common Share on the
NYSE during the five trading days immediately following the Effective Time. Any
fractional interest will not entitle the holder to vote or to any other rights
as a shareholder.
Dividends. As discussed below under "--Certain Covenants," Camden and
Oasis have agreed in the Merger Agreement to certain limitations on the payment
of dividends and distributions. Among other things, these limitations have the
effect of restricting Camden and Oasis from declaring and paying dividends
other than on their regularly scheduled dates. If, as anticipated, the
Effective Time occurs after the record date for the regularly scheduled first
quarter dividend on the Camden Common Shares (the last day of a quarter) but
prior to the regularly scheduled record date for the first quarter dividend on
the Oasis Common Stock (early in the second month following the end of a
quarter), holders of the Oasis Common Stock will not receive a dividend for the
first quarter except as provided below.
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Pursuant to the Merger Agreement, to the extent necessary to satisfy
the requirements of Section 857(a)(1) of the Code for the taxable year of Oasis
ending at the Effective Time, Oasis will declare a dividend (the "Pre-Merger
Dividend") to holders of Oasis Shares, the record date for which will be the
close of business on the last business day prior to the Effective Time, in an
amount equal to the minimum dividend sufficient to permit Oasis to satisfy such
requirements. If Oasis determines that it is necessary to declare the
Pre-Merger Dividend, Camden will declare a dividend per Camden Common Share,
the record date for which will be close of business on the last business day
prior to the Effective Time, in an amount per share equal to the quotient
obtained by dividing (a) the Pre-Merger Dividend per Oasis Share paid by Oasis
by (b) 0.759. The Pre-Merger Dividend will be paid to holders of Oasis Shares
upon presentation of certificates representing such shares as described below.
Exchange of Certificates. As soon as reasonably practicable after the
Effective Time and in no event later than ten business days thereafter,
American Stock Transfer and Trust Company (the "Exchange Agent") will mail to
each person who was a holder of record of Oasis Shares whose shares were
converted into Camden Shares pursuant to the Merger Agreement, a letter of
transmittal to be used to effect the surrender of certificates representing
Oasis Shares in exchange for certificates representing Camden Shares. After
receipt of such letter of transmittal, each holder of certificates representing
Oasis Shares should surrender such certificates to the Exchange Agent, and each
such holder will receive in exchange therefor certificates representing the
whole number of Camden Shares to which such holder is entitled, any cash that
may be payable in lieu of a fractional Camden Share and any Pre-Merger Dividend
to which such holder is entitled. Such letter of transmittal will be
accompanied by instructions specifying other details of the exchange.
STOCKHOLDERS OF OASIS SHOULD NOT SEND IN THEIR
CERTIFICATES UNTIL THEY RECEIVE A LETTER OF TRANSMITTAL.
From and after the Effective Time, Camden will treat each certificate
formerly representing Oasis Shares that has not yet been surrendered for
exchange as evidencing the ownership of the number of full Camden Shares into
which such Oasis Shares will be been converted pursuant to the Merger
Agreement, notwithstanding the failure to surrender such certificates. However,
the holder of such unexchanged certificates will not be entitled to receive any
dividend or distribution payable by Camden until such certificates are
surrendered, at which time such dividends and distributions, together with any
cash payment in lieu of a fractional Camden Share and any Pre-Merger Dividend,
will be paid without interest. Oasis will transfer to the Exchange Agent cash
sufficient to pay dividends or make distributions on Oasis Shares with a record
date prior to the Effective Time and that remain unpaid at the Effective Time.
Such dividends and distributions will be paid without interest upon surrender
of the certificates formerly representing Oasis Shares. All certificates
representing Camden Shares and funds held by the Exchange Agent for payment to
the holders of certificates representing unsurrendered Oasis Shares that remain
unclaimed for six months after the Effective Time will be delivered by the
Exchange Agent to Camden and any holders of certificates representing
unsurrendered Oasis Shares may thereafter, subject to applicable escheat and
other similar laws, look only to Camden for delivery of any shares or funds
upon surrender of certificates representing Oasis Shares.
CAMDEN BOARD OF TRUST MANAGERS
The Merger Agreement sets forth matters related to the Camden Board.
For a description of the Camden Board after the Effective Time, see "MANAGEMENT
OF CAMDEN--Board of Trust Managers of Camden."
REPRESENTATIONS AND WARRANTIES
The Merger Agreement contains various customary representations of
Camden and Oasis (as to such party) relating to, among other things, (i) each
party's and their respective subsidiaries' organization, qualification and
similar corporate matters, and the ownership of each party's subsidiaries, (ii)
each party's capital structure, (iii) the authority of each of Camden and Oasis
relative to the execution and delivery of, and the performance of their
respective obligations under, the Merger Agreement and the enforceability of
the Merger Agreement against each of them, (iv) certain consents and approvals,
(v) the Merger Agreement's noncontravention of (a) their charters, declaration
of trust, or bylaws, as applicable; (b) any loan or credit agreement, note,
bond, mortgage, indenture, reciprocal easement agreement, lease or other
agreement, instrument, permit, concession, franchise or license applicable to
Oasis, Camden or any of their respective subsidiaries; or (c) any judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to Oasis,
Camden or any of their respective subsidiaries of their respective properties
or assets, (vi) the absence of the need for governmental or other filings or
actions with respect to the Merger Agreement and the transactions contemplated
thereby, (vii) documents filed by each of Camden and Oasis with the Commission
and the accuracy of the information contained therein, (viii) the absence of
certain changes or events, (ix) the absence of litigation involving either Oasis
or Camden or their respective subsidiaries that would have a material adverse
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effect on the business of either party, (x) each party's ownership of real
properties and the absence of certain encumbrances, (xi) certain environmental
matters, (xii) transactions with related parties, (xiii) matters relating to
employee benefit plans and the Employee Retirement Income Security Act of 1974,
as amended, (xiv) the timely filing and the accuracy of information of all
material tax returns and certain other matters relating to taxes and each
party's status as a REIT within the meaning of the Code, (xv) payments to be
made as a result of the Merger to any employee, officer or director of a party
or its subsidiaries, (xvi) the absence of brokers or other persons entitled to a
fee as a result of the Merger, other than the financial advisors of each of
Camden and Oasis, (xvii) compliance with laws, (xviii) compliance with material
agreements, (xix) the receipt of opinions of financial advisors, (xx) any
necessary action to exempt the Merger from state takeover statutes, (xxi) the
accuracy and completeness of information supplied by each party for inclusion
in the Registration Statement or this Joint Proxy Statement/Prospectus and
(xxii) the vote required by holders of capital stock of each party to approve
the Merger Agreement and the transactions contemplated thereby.
CERTAIN COVENANTS
Conduct of the Business of Camden and Oasis. Pursuant to the Merger
Agreement, each of Camden and Oasis has made various customary covenants,
including that, during the period from December 16, 1997 to the Effective Time,
it and each of its subsidiaries will carry on its business in the usual,
regular and ordinary course in substantially the same manner as conducted in
the past and, to the extent consistent therewith, use commercially reasonable
efforts to preserve intact its current business organization, goodwill and
ongoing businesses.
Without limiting the generality of the foregoing, each of Camden and
Oasis also agreed in the Merger Agreement that, except as disclosed to the
other party prior to the execution of the Merger Agreement or in certain
limited circumstances specified therein and except that the parties agreed that
nothing contained in the Merger Agreement will restrict or prohibit the
performance by Oasis Martinique LLC or Oasis of their respective obligations
under or the exercise of their respective rights under the Oasis Martinique LLC
Agreement, the Oasis Martinique Exchange Rights Agreement or the Loan and
Security Agreement, dated as of October 23, 1997, by and among Oasis, IFT
Properties, Ltd, ISCO, Edward M. Israel and Robert Cohen, that during the
period from December 16, 1997 to the Effective Time, neither such party nor its
subsidiaries will: (i) (a) declare, set aside or pay any dividends on, or make
any other distributions in respect of any of their capital stock other than the
Pre-Merger Dividend, (b) split, combine or reclassify any capital stock or
partnership interests or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for shares of such
capital stock or partnership interests or (c) purchase, redeem or otherwise
acquire any shares of their capital stock or any options, warrants or rights to
acquire, or security convertible into, shares of such capital stock or
partnership interests; (ii) except in connection with the exercise of stock
options or the issuance of shares pursuant to stock rights or warrants
outstanding on the date of the Merger Agreement, issue, deliver or sell, or
grant any option or other right in respect of, any shares of capital stock, any
other voting securities (including partnership interests) or any securities
convertible into, or any rights, warrants or options to acquire, any such
shares, voting securities or convertible securities; (iii) amend the
declaration of trust, articles or certificate of incorporation, bylaws,
partnership agreement or other comparable charter or organizational documents
of the parties or any of their respective subsidiaries; (iv) merge or
consolidate with any person; (v) in any transaction or series of related
transactions involving capital, securities or other assets or indebtedness in
excess of $100,000, without obtaining the prior written consent of the other
party, which consent shall not unreasonably be withheld or delayed, (a) acquire
or agree to acquire by merging or consolidating with, or by purchasing all or a
substantial portion of the equity securities or all or substantially all of the
assets of, or by any other manner, any business or any corporation,
partnership, limited liability company, joint venture, association, business
trust or other business organization or division thereof or interest therein,
(b) subject to certain encumbrances or liens or sell, lease or otherwise
dispose of any of their properties or any material assets or assign or encumber
the right to receive income, dividends, distributions and the like, (c) make or
agree to make any new capital expenditures, except in accordance with budgets
relating to such party that have been previously delivered to the other party
or (d) incur any indebtedness for borrowed money or guarantee any such
indebtedness of another person or entity (except, in the case of Oasis, in
connection with the refinancing, refunding or amendment of the "Bonds," as that
term is defined in the Oasis Martinique LLC Agreement), issue or sell any debt
securities or warrants or other rights to acquire any debt securities,
guarantee any debt securities of another person (except, in the case of Oasis,
in connection with the refinancing, refunding or amendment of the "Bonds," as
that term is defined in the Oasis Martinique LLC Agreement), enter into any
"keep well" or other agreement to maintain any financial statement condition of
another person or enter into any arrangement having the economic effect of any
of the foregoing, prepay or refinance any indebtedness or make any loans,
advances or capital contributions to, or investments in, any other person
(except, in the case of Oasis, in connection with the refinancing, refunding or
amendment of the "Bonds," as that term is defined in the Oasis Martinique LLC
Agreement); (vi) engage in any transactions of the types described in clauses
(a), (b), (c) and (d) of clause (v) above, whether or not related, involving,
in the aggregate, capital, securities or other assets or indebtedness in excess
of $500,000, without obtaining prior written consent
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of the other party; (vii) make any tax election (unless required by law or
necessary to preserve the party's status as a REIT or the status of any party's
subsidiary as a partnership for federal income tax purposes included in such
party's filings with the Commission); (viii) (a) change in any material manner
any of its methods, principles or practices of accounting in effect, or (b)
make or rescind any express or deemed election relating to taxes, settle or
compromise any claim, action, suit, litigation, proceeding, arbitration,
investigation, audit or controversy relating to taxes, except in the case of
settlements or compromises relating to taxes on real property in an amount not
to exceed, individually or in the aggregate, $100,000, or change any of its
methods of reporting income or deductions for federal income tax purposes from
those employed in the preparation of its federal income tax return for the most
recently completed taxable year; (ix) except as provided in the Merger
Agreement, adopt any new employee benefit plan, incentive plan, severance plan,
stock option or similar plan, grant new stock appreciation rights or amend any
existing plan or rights, except such changes as are required by law or which
are not more favorable to participants than provisions presently in effect; (x)
pay, discharge, settle or satisfy any claims, liabilities or objections
(absolute, accrued, asserted or unasserted, contingent or otherwise), other
than the payment, discharge or satisfaction in the ordinary course of business
consistent with past practice or in accordance with their terms, of liabilities
reflected or reserved against in, or contemplated by, the most recent
consolidated financial statements (or the notes thereto) of the party included
in such party's filings with the Commission or incurred in the ordinary course
of business consistent with past practice; (xi) settle any shareholder
derivative or class action claims arising out of or in connection with the
Merger or related transactions; and (xii) enter into or amend or otherwise
modify any agreement or arrangement with persons that are affiliates or, as of
the date hereof, are executive officers, trust managers or directors without
the consent of the other party.
Other Actions. Each party to the Merger Agreement also agreed therein
to not take any action that would result in any of the representations and
warranties of such party becoming untrue or, except as contemplated by the
Merger Agreement, any of the conditions to the Merger not being satisfied.
Access to Information and Confidentiality. The Merger Agreement
provides that, subject to the requirements of confidentiality agreements with
third parties, each of Camden and Oasis will afford to the other party and to
the officers, employees and representatives of such other party, reasonable
access during normal business hours during the period prior to the Effective
Time to all of their respective properties, books, contracts, commitments,
personnel and records and will promptly furnish to the other party (a) a copy
of each document filed by it during such period pursuant to the requirements of
federal or state securities laws and (b) all other information concerning its
business, properties and personnel as such other party may reasonably request.
The Merger Agreement further provides that each of Camden and Oasis will hold
any nonpublic information in confidence to the extent required by, and in
accordance with, and will comply with the provisions of an existing
confidentiality agreement between Camden and Oasis (the "Confidentiality
Agreement"). Camden, Merger Sub and Oasis have agreed to consult with each
other before issuing, and provide each other the opportunity to review and
comment upon, any press release or other public statement with respect to the
Merger and related transactions, except as may be required by applicable law,
court process or by obligations pursuant to any listing agreement with a
national securities exchange.
No Solicitation. Pursuant to the Merger Agreement, Oasis has agreed
not to, directly or indirectly, initiate, solicit or encourage, any inquiry or
proposal that constitutes, or may reasonably be expected to lead to, any
proposal or offer for a merger, consolidation, business combination, sale of
substantial assets, sale of shares of capital stock (including without
limitation by way of a tender offer) or similar transaction involving Oasis or
any of its subsidiaries, other than the transactions contemplated by the Merger
Agreement (a "Competing Transaction"); engage in negotiations or discussions
concerning, or provide any nonpublic information to any person or entity
relating to, any Competing Transaction; or agree to, approve or recommend any
Competing Transaction. Oasis also agreed that it will immediately terminate any
existing activities, discussions or negotiations with respect thereto; and that
it will notify Camden immediately if any inquiry or proposal is received.
Nothing contained in the Merger Agreement, however, will prevent Oasis or its
directors or any other employee, representative or agent of Oasis from (A)
furnishing nonpublic information to, or entering into discussions or
negotiations with, any person in connection with an unsolicited bona fide
written Competing Transaction submitted to Oasis, the Oasis Board or the Oasis
stockholders if and only to the extent that (1) the Oasis Board believes in
good faith (after consultation with its financial advisor) that such Competing
Transaction would, if consummated, result in a transaction more favorable to
the Oasis stockholders from a financial point of view than the Merger and the
Oasis Board determines in good faith after consultation with outside legal
counsel that such action is necessary for Oasis to comply with its fiduciary
duties to its stockholders under applicable law and (2) prior to furnishing
such nonpublic information to, or entering into discussions or negotiations
with, such person or entity, the Oasis Board receives from such person an
executed confidentiality agreement with terms no less favorable to Oasis than
those contained in the Confidentiality Agreement; or (B) complying with Rule
14e- 2 promulgated under the Exchange Act with regard to a Competing
Transaction. Oasis further agreed in the Merger Agreement to (i) promptly
notify Camden after receipt by it (or its advisors) of any Competing
Transaction or any inquiry
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indicating that any person is considering making or wishes to make a Competing
Transaction, (ii) promptly notify Camden after receipt of any request for
nonpublic information relating to Oasis or any of its subsidiaries or for
access to Oasis' or any of its subsidiaries' properties, books or records by
any person that may be considering making, or has made, a Competing Transaction
and (iii) subject to the fiduciary duties of the Oasis Board under applicable
law as advised by its outside legal counsel, keep Camden advised of the status
and principal financial terms of any such Competing Transaction, indication or
request.
INDEMNIFICATION
Pursuant to the Merger Agreement, Camden agreed to indemnify certain
officers and directors of Oasis and its subsidiaries and to provide certain
directors' and officers' liability insurance coverage. See "THE MERGER --
Interests of Certain Persons in the Merger."
CONDITIONS TO CONSUMMATION OF THE MERGER
The respective obligations of Camden and Oasis to effect the Merger
are subject to the satisfaction of certain conditions, including the following:
(i) the Merger Agreement and the transactions contemplated thereby have been
approved by the necessary majority of the shareholders of the parties (see "THE
SPECIAL MEETINGS"); (ii) the waiting period applicable to the Merger, if any,
under the HSR Act has been terminated or has expired; (iii) the NYSE has
approved for listing the Camden Shares to be issued in the Merger, subject to
official notice of issuance; (iv) the Registration Statement has become
effective and is not the subject of any stop order or proceedings by the
Commission seeking a stop order; (v) no temporary restraining order,
preliminary or permanent injunction or other order or legal or restraint or
prohibition preventing the consummation of the Merger or any other transaction
contemplated by the Merger Agreement is in effect; (vi) Camden has obtained all
necessary state securities law or "Blue Sky" permits and other authorizations
necessary to issue the Camden Shares pursuant to the Merger Agreement; (vii)
the Voting Agreements remain in full force and effect; and (viii) all material
actions by or in respect of or filings with any governmental entity required
for the consummation of the Merger and related transactions have been obtained
or made.
The obligation of Camden and Merger Sub to effect the Merger is
further subject to the following conditions, among others: (a) the
representations and warranties of Oasis set forth in the Merger Agreement are
true and correct in all material respects as of the closing date, except to the
extent a representation or warranty is limited by its terms to another date
(the "Oasis Representation Condition"); (b) Oasis has performed in all material
respects all obligations required to be performed by it under the Merger
Agreement at or prior to the Effective Time (the "Oasis Covenant Condition");
(c) from December 16, 1997, no change has occurred that would have a material
adverse effect on the business, properties, assets, financial condition or
results of operations ("Material Adverse Effect") of Camden and its
subsidiaries, taken as a whole; (d) Camden has received an opinion of counsel
to Oasis that, commencing with its taxable year ended December 31, 1993 through
the closing date, Oasis was organized in conformity with the requirements for
qualification as a REIT under the Code and its method of operation has enabled
it to so qualify (with customary exceptions, assumptions and qualifications and
based upon customary representations) during such period; (e) Camden has
received an opinion dated as of the closing date from legal counsel to Camden
to the effect that the Merger will qualify as a reorganization under the
provisions of Section 368(a) of the Code; (f) all consents and waivers from
third parties necessary in connection with the consummation of the Merger and
related transactions have been obtained, other than such consents and waivers
from third parties, which, if not obtained, would not result, individually or
in the aggregate, in a Material Adverse Effect on Camden or Oasis; and (g)
Camden and Merger Sub have received an opinion from legal counsel to Oasis
regarding the valid existence and good standing of Oasis and its subsidiaries,
the due authorization of the execution and delivery of the Merger Agreement by
Oasis and the absence of any conflict with the Oasis Articles or the Oasis
Bylaws created by the execution and delivery of the Merger Agreement.
The obligation of Oasis to effect the Merger is further subject to the
following conditions, among others: (a) the representations and warranties of
Camden set forth in the Merger Agreement are true and correct in all material
respects as of the closing date, except to the extent a representation or
warranty is limited by its terms to another date (the "Camden Representation
Condition"); (b) Camden has performed in all material respects all obligations
required to be performed by it under the Merger Agreement at or prior to the
Effective Time (the "Camden Covenant Condition"); (c) from December 16, 1997,
no change has occurred that would have a Material Adverse Effect on Oasis and
its subsidiaries, taken as a whole; (d) Oasis has received an opinion of
counsel to Camden that, commencing with its taxable year ended December 31,
1993 through the closing date, Camden was organized in conformity with the
requirements for qualification as a REIT under the Code and its method of
operation has enabled it to so qualify (with customary exceptions, assumptions
and qualifications and based upon customary representations) during such
period; (e) Oasis has received an opinion from legal counsel to Oasis that
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the Merger will qualify as a reorganization under the provisions of Section
368(a) of the Code; (f) all consents and waivers from third parties necessary
in connection with the consummation of the Merger and related transactions have
been obtained, other than such consents and waivers from third parties, which,
if not obtained, would not result, individually or in the aggregate, in a
Material Adverse Effect on Camden or Oasis; and (g) Oasis has received an
opinion from legal counsel to Camden regarding the valid existence and good
standing of Camden and its subsidiaries, the due authorization of the execution
and delivery of the Merger Agreement by Camden and Merger Sub, the
enforceability of the Merger Agreement against Camden and Merger Sub, the
absence of any conflict with the Camden Declaration of Trust and the Camden
Bylaws resulting from the execution and delivery of the Merger Agreement, and
the valid issuance, full payment and nonassessibility of the Camden Shares
issued in connection with the Merger.
TERMINATION
The Merger Agreement may be terminated at any time prior to the
Effective Time, whether before or after approval by the Camden shareholders and
the Oasis stockholders: (a) by mutual written consent duly authorized by the
respective Boards of Camden and Oasis; (b) by Camden, upon a breach of any
covenant or agreement on the part of Oasis set forth in the Merger Agreement
such the Oasis Covenant Condition would be incapable of being satisfied by June
30, 1998 (or as otherwise extended); (c) by Oasis, upon a breach of any
covenant or agreement on the part of Camden set forth in the Merger Agreement
such that the Camden Covenant Condition would be incapable of being satisfied
by June 30, 1998 (or as otherwise extended); (d) by Camden, if any
representation or warranty of Oasis set forth in the Merger Agreement has
become untrue such that the Oasis Representation Condition would be incapable
of being satisfied by June 30, 1998 (or as otherwise extended); (e) by Oasis,
if any representation or warranty of Camden set forth in the Merger Agreement
has become untrue such that the Camden Representation Condition would be
incapable of being satisfied by June 30, 1998 (or as otherwise extended); (f)
by either Camden or Oasis, if any judgment, injunction, order, decree or action
by any governmental entity of competent authority preventing the consummation
of the Merger has become final and nonappealable; (g) by either Camden or
Oasis, if the Merger has not been consummated by June 30, 1998, provided that a
party that has willfully and materially breached a representation, warranty or
covenant of such party set forth in the Merger Agreement will not be entitled
to exercise its right to terminate the Merger Agreement under this clause; (h)
by either Camden or Oasis (unless Oasis is in breach of certain obligations
under the Merger Agreement) if, upon a vote at a duly held Oasis Special
Meeting or any adjournment thereof, the approval of the Oasis stockholders
shall not have been obtained; (i) by either Camden or Oasis (unless Camden is
in breach of certain obligations under the Merger Agreement) if, upon a vote at
a duly held Camden Special Meeting or any adjournment thereof, the approval of
the Camden shareholders shall not have been obtained; (j) by Oasis, if, prior
to the Oasis Special Meeting, the Oasis Board has withdrawn or modified in any
manner adverse to Camden its approval or recommendation of the Merger or the
Merger Agreement because the Oasis Board, after having consulted with and
considered the advice of outside legal counsel, has reasonably determined in
good faith that the making of the recommendation, or the failure to withdraw
the recommendation, would constitute a breach of fiduciary duties of the
members of the Oasis Board under applicable law (provided that such right to
terminate the Merger Agreement will not be available to Oasis if it, at such
time, is in material breach of its covenant to not solicit, or take certain
other actions in connection with, a Competing Transaction); or (k) by Camden,
if (i) prior to the Oasis Special Meeting, the Oasis Board has withdrawn or
modified in any manner adverse to Camden its approval or recommendation of the
Merger or the Merger Agreement because the Oasis Board, after having consulted
with and considered the advice of outside legal counsel, has reasonably
determined in good faith that the making of the recommendation, or the failure
to withdraw the recommendation, would constitute a breach of fiduciary duties
of the members of the Oasis Board under applicable law or (ii) Oasis has
entered into a definitive agreement with respect to any Competing Transaction.
In the event of any termination of the Merger Agreement as provided
above, the Merger Agreement will become void and there will be no liability or
obligation on the part of Camden or Oasis except for the payment of expense and
termination fees as set forth below and the obligation of the parties to use
commercially reasonable efforts to maintain in confidence any non-public
information in accordance with the provisions of the confidentiality agreement
entered into by Camden and Oasis. Notwithstanding the foregoing, no party will
be relieved from liability for any willful, material breach of the Merger
Agreement.
EXPENSES AND TERMINATION FEES
The Merger Agreement provides that, except as set forth below or
agreed in writing by the parties, all out-of-pocket costs and expenses incurred
in connection with the Merger Agreement and the transactions contemplated
thereby will be paid by the party incurring such cost or expense, except that
those expenses incurred in connection with the printing and mailing
50
<PAGE> 61
of this Joint Proxy Statement/Prospectus and the Registration Statement, as
well as the filing fee related thereto, will be shared equally by Camden and
Oasis.
The Merger Agreement also provides that, if the Merger Agreement is
terminated (i) pursuant to clauses (b), (j) or (k) under "Termination"
described above or (ii) pursuant to clause (h) under "Termination" described
above and Oasis has entered into an agreement to consummate a Competing
Transaction on or prior to the date of termination or, within six months from
the date of termination, Oasis consummates a Competing Transaction or enters
into an agreement to consummate a Competing Transaction that is subsequently
consummated and, in any event specified in clauses (i) or (ii) of this
paragraph, if Oasis is not entitled to terminate the Merger Agreement by reason
of clauses (c), (e), (f), (g) or (i) under "Termination" described above, then,
in addition to any other right or remedy that may be available, Oasis will
promptly (and in any event within two days of receipt by Oasis of written
notice from Camden) pay to Camden $20 million or a lesser amount as may be
required to meet the requirements of Sections 856(c)(2) and (3) of the Code
(the "Break-Up Fee").
In addition, the Merger Agreement provides that, if the Merger
Agreement is terminated pursuant to clause (h) under "Termination" described
above and no agreement for a Competing Transaction has been entered into on or
prior to the date of termination and, within six months from the date of such
termination, Oasis does not consummate a Competing Transaction and does not
enter into an agreement to consummate a Competing Transaction that is
subsequently consummated, and if Oasis is not entitled to terminate the Merger
Agreement by reason of clauses (c), (e), (f), (g) or (i) under "Termination"
described above, then, in addition to any other right or remedy that may be
available, Oasis will promptly (and in any event within two days of receipt by
Oasis of written notice from Camden) pay to Camden $3 million or a lesser
amount as may be required to meet the requirements of Sections 856(c)(2) and
(3) of the Code (the "Fee").
The Merger Agreement further provides that, if the Merger Agreement is
terminated pursuant to clause (d) under "Termination" described above, and if
Oasis is not entitled to terminate the Merger Agreement by reason of clauses
(c), (e), (f), (g) or (i) under "Termination" described above, then, in
addition to any other right or remedy that may be available, Oasis will
promptly (and in any event within two days of receipt by Oasis of written
notice from Camden) pay to Camden the payee's out-of-pocket expenses incurred
in connection with the Merger Agreement and the transactions contemplated
thereby, including, without limitation, all attorneys', accountants' and
investment bankers' fees and expenses or a lesser amount as may be required to
meet the requirements of Sections 856(c)(2) and (3) of the Code (the "Break-Up
Expenses").
Furthermore, if the Merger Agreement is terminated pursuant to clause
(c) under "Termination" described above and if Camden is not entitled to
terminate the Merger Agreement by reason of clauses (b), (d), (f), (g), (h),
(i) or (k) under "Termination" described above, then, in addition to any other
right or remedy that may be available, Camden will promptly (and in any event
within two days of receipt by Camden of written notice from Oasis) pay to Oasis
the Break-Up Fee.
The Merger Agreement additionally provides that, if the Merger
Agreement is terminated pursuant to clause (i) under "Termination" described
above and if Camden is not entitled to terminate the Merger Agreement by reason
of clauses (b), (d), (f), (g), (h) or (k) under "Termination" described above,
then, in addition to any other right or remedy that may be available, Camden
will promptly (and in any event within two days of receipt by Camden of written
notice from Oasis) pay to Oasis the Fee.
Lastly, the Merger Agreement provides that, if the Merger Agreement is
terminated pursuant to clause (e) under "Termination" described above, and if
Camden is not entitled to terminate the Merger Agreement by reason of clauses
(b), (d), (f), (g), (h), (i) or (k) under "Termination" described above, then,
in addition to any other right or remedy that may be available, Camden will
promptly (and in any event within two days of receipt by Camden of written
notice from Oasis) pay to Oasis the Break-Up Expenses.
Pursuant to the Merger Agreement, a parties obligation to pay any
portion of any of the Break-Up Fee, the Fee or the Break-Up Expenses that,
because of the effects of Sections 856(c)(2) and (3) of the Code, is unpaid
will terminate on December 16, 2000.
EXTENSION, WAIVER AND AMENDMENT
The Merger Agreement may be amended by the parties in writing by
action of their respective boards at any time, except that, after any
shareholder approval is obtained, no amendment may be made that would alter the
amount or change the form of the consideration to be delivered to the Oasis
stockholders or alter or change any terms or conditions if such alteration or
change would adversely affect Camden's shareholders or the Oasis stockholders,
in either case without further
51
<PAGE> 62
approval of such stockholders and shareholders. At any time prior to the
Effective Time, the parties may (i) extend the time for the performance of any
of the obligations or other acts of the other party, (ii) waive any
inaccuracies in the representations and warranties made to such party contained
in the Merger Agreement or in any document delivered pursuant thereto or (iii)
subject to the proviso set forth in the first sentence of this paragraph, waive
compliance with any of the agreements or conditions for the benefit of such
party contained in the Merger Agreement.
52
<PAGE> 63
VOTING AGREEMENTS
OASIS VOTING AGREEMENT
Camden and each of Robert V. Jones and the Scotsman Trust, of which Mr.
Jones is the trustee, have entered into the Oasis Voting Agreement pursuant to
which each of Mr. Jones and the Scotsman Trust have agreed, among other things,
to cast all votes attributable to shares of Oasis Common Stock beneficially
owned at the date of the Oasis Voting Agreement or thereafter beneficially owned
at any annual or special meeting of stockholders of Oasis in favor of adoption
of the Merger Agreement and the transactions contemplated thereby (including any
amendment or modification of the terms of the Merger Agreement approved by the
Oasis Board) and against approval or adoption of any action or agreement (other
than the Merger Agreement or the transactions contemplated thereby) that would
impede, interfere with, delay, postpone or attempt to discourage the Merger and
the transactions contemplated thereby. Mr. Jones and the Scotsman Trust
beneficially owned 776,499 and 216,143 shares, respectively, of Oasis Common
Stock, constituting in the aggregate approximately 6.1% of the shares of Oasis
Common Stock outstanding on February 4, 1998. Pursuant to the Oasis Voting
Agreement, Mr. Jones and the Scotsman Trust have agreed not to (a) directly or
indirectly sell, transfer, pledge, encumber, assign or otherwise dispose of, or
enter into any contract, option or other agreement or understanding with respect
to the sale, transfer, pledge, encumbrance, assignment or other disposition of,
any shares of Oasis Common Stock owned as of the date of the Oasis Voting
Agreement or thereafter acquired by such person, except for transfers to
independent charitable foundations or institutions and except for transfers
approved in writing by Oasis, (b) grant any proxies, deposit any shares of Oasis
Common Stock into a voting trust or enter into a voting agreement with respect
to any such shares or (c) take any action that would have the effect of
preventing or disabling such person from performing his or its obligations under
the Oasis Voting Agreement.
CAMDEN VOTING AGREEMENT
Oasis and each of Richard J. Campo and D. Keith Oden have entered into
the Camden Voting Agreement pursuant to which each of Messrs. Campo and Oden
have agreed, among other things, to cast all votes attributable to Camden Common
Shares beneficially owned at the date of the Camden Voting Agreement or
thereafter beneficially owned at any annual or special meeting of shareholders
of Camden in favor of adoption of the Merger Agreement and the transactions
contemplated thereby (including any amendment or modification of the terms of
the Merger Agreement approved by the Camden Board) and against approval or
adoption of any action or agreement (other than the Merger Agreement or the
transactions contemplated thereby) that would impede, interfere with, delay,
postpone or attempt to discourage the Merger and the transactions contemplated
thereby. Messrs. Campo and Oden beneficially owned 257,468 and 255,413 Camden
Common Shares, respectively, constituting in the aggregate approximately 1.6% of
the Camden Common Shares outstanding on February 4, 1998. Pursuant to the Camden
Voting Agreement, Messrs. Campo and Oden have agreed not to (a) directly or
indirectly sell, transfer, pledge, encumber, assign or otherwise dispose of, or
enter into any contract, option or other agreement or understanding with respect
to the sale, transfer, pledge, encumbrance, assignment or other disposition of,
any Camden Common Shares owned as of the date of the Camden Voting Agreement or
thereafter acquired by such person, except for transfers to independent
charitable foundations or institutions and except for transfers approved in
writing by Camden, (b) grant any proxies, deposit any Camden Common Shares into
a voting trust or enter into a voting agreement with respect to any such shares
or (c) take any action that would have the effect of preventing or disabling
such person from performing his obligations under the Camden Voting Agreement.
53
<PAGE> 64
CAMDEN PROPERTY TRUST
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
BASIS OF PRESENTATION
The Unaudited Pro Forma Combined Statement of Operations for the year
ended December 31, 1997 is presented as if the Merger had occurred on January 1,
1997. The Unaudited Pro Forma Combined Statement of Operations gives effect to
the Merger under the purchase method of accounting in accordance with Accounting
Standards Board Opinion No. 16, and as if the combined entity qualifying as a
REIT, distributed at least 95% of its taxable income, and therefore, incurred no
federal income tax liability for the period presented. In addition to the
Merger, the Unaudited Pro Forma Combined Statement of Operations gives effect to
the sale of the Spin-Off Properties as if the Spin-Off had occurred on January
1, 1997 (see Note E to the Unaudited Pro Forma Combined Statement of
Operations). The Merger and Spin-Off adjustments are based on certain estimates
and currently available information. Such adjustments could change as additional
information becomes available, as estimates are refined or as additional events
occur, however, management does not expect any changes in the purchase price or
the allocation of such purchase price to be significant.
The Unaudited Pro Forma Combined Statement of Operations is presented
for comparative purposes only and is not necessarily indicative of what the
actual combined results of Camden and Oasis would have been for the year ended
December 31, 1997 if the Merger and the Spin-Off had occurred at the beginning
of the period presented, nor does it purport to be indicative of the results of
operations in future periods. The Unaudited Pro Forma Combined Statement of
Operations should be read in conjunction with, and is qualified in its entirety
by, the respective historical financial statements and notes thereto of Camden
and Oasis incorporated by reference into this Joint Proxy Statement/Prospectus.
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<PAGE> 65
CAMDEN PROPERTY TRUST
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Historical Pro Forma
------------------------ ---------------------------------------------------------------
Merger Camden Spin-Off As Further
Camden Oasis (A) Adjustments Combined Adjustments (E) Adjusted
----------- --------- ----------- -------- --------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Rental income $ 187,928 $ 111,591 -- $ 299,519 $ (31,745) $ 267,774
Other property income 9,510 3,753 -- 13,263 (2,983) 10,280
--------- --------- --------- --------- --------- ---------
Total property income 197,438 115,344 -- 312,782 (34,728) 278,054
Equity in income of joint
ventures 1,141 64 -- 1 205 (161) 1,044
Fee and asset management 743 -- -- 743 1,389 2,132
Other income 467 577 -- 1,044 -- 1,044
--------- --------- --------- --------- --------- ---------
Total revenues 199,789 115,985 -- 315,774 (33,500) 282,274
Expenses: (F)
Property operating and
maintenance 70,595 32,482 -- 103,077 (11,239) 91,838
Real estate taxes 21,028 6,246 -- 27,274 (1,908) 25,366
General and administrative 4,473 3,692 -- 8,165 -- 8,165
Interest 28,537 26,184 1,122(B) 55,843 (16,854) 38,989
Depreciation and
amortization 44,836 20,327 7,082(C) 77,245 (7,944) 64,301
Minority interest in
consolidated partnership -- 179 179 -- 179
--------- --------- --------- --------- --------- ---------
Total expenses 169,469 89,110 8,204 266,783 (37,945) 228,838
--------- --------- --------- --------- --------- ---------
Income before gain on sales
of properties, losses related
to early retirement of
debt and minority interest in
Operating Partnership 30,320 26,875 (8,204) 48,991 4,445 53,436
Gain on sales of properties 10,170 6,999 -- 17,169 -- 17,169
Losses related to early
retirement of debt (397) -- -- (397) -- (397)
--------- --------- --------- --------- --------- ---------
Income before minority interest
in Operating Partnership 40,093 33,874 (8,204) 65,763 4,445 70,208
---------
Minority interest in Operating
Partnership (1,655) -- -- (1,655) -- (1,655)
--------- --------- --------- --------- --------- ---------
Net income 38,438 33,874 (8,204) 64,108 4,445 68,553
Preferred share dividends -- (9,372) -- (9,372) -- (9,372)
--------- --------- --------- --------- --------- ---------
Net income to common
shareholders $ 38,438 $ 24,502 $ (8,204) $ 54,736 $ 4,445 $ 59,181
========= ========= ========= ========= ========= =========
Basic earnings per share $ 1.46 $ 1.51 -- $ 1.42 -- $ 1.53
Diluted earnings per share $ 1.41 $ 1.51 -- $ 1.38 -- $ 1.49
Weighted average number of
common shares outstanding 26,257 16,250 12,391(D) 38,648 -- 38,648
Weighted average number of
common shares outstanding
plus dilutive potential
common shares 28,356 16,250 12,391(D) 40,747 -- 40,747
</TABLE>
55
<PAGE> 66
CAMDEN PROPERTY TRUST
NOTES TO UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(in thousands, except per share amounts)
(A) Certain reclassifications have been made to Oasis' historical statements
of operations to conform to the pro forma combined financial statement
presentation.
(B) Represents the net adjustment to interest expense to reflect the
additional borrowings of $16,600 of available unsecured debt to fund the
Merger and registration costs (See Notes (B) and (G) of the Pro Forma
Combined Balance Sheet) at current market interest rate of 6.67% available
to Camden under its unsecured credit facility.
(C) Represents the net increase in depreciation of real estate owned as a
result of recording Oasis' real estate assets at fair value versus
historical cost. Depreciation is computed on a straight-line basis over
the remaining estimated useful lives of the related assets which have an
estimated weighted average useful life of approximately 29 years.
Buildings have an estimated useful life of 35 years and other assets have
estimated useful lives of 3 to 15 years.
Calculation of the fair value of depreciable real estate assets at
December 31, 1997:
<TABLE>
<S> <C>
Purchase price (See Pro Forma Combined Balance Sheet Note (B)) $993,853
Less:
Purchase price allocated to projects under development, including land 30,034
Purchase price allocated to investment in real estate joint ventures 8,370
Purchase price allocated to cash and other assets 19,512
Purchase price allocated to land 139,718
--------
Pro forma basis of Oasis' depreciable real estate held for investment at fair value $796,219
========
</TABLE>
Calculation of depreciation of real estate owned for the year ended
December 31, 1997 is as follows:
<TABLE>
<S> <C>
Depreciation expense based upon an estimated
weighted average useful life of approximately
29 years. $ 27,409
Less historical Oasis depreciation of real estate
owned and loan cost amortization (See Note (D)
of the Pro Forma Combined Balance Sheet) (20,327)
----------
Pro forma adjustment $ 7,082
==========
</TABLE>
(D) The pro forma weighted average shares outstanding for the year ended
December 31, 1997 are the historical weighted average number of Camden
Common Shares outstanding adjusted for the issuance of 12,391 Camden
Common Shares. The Camden Series A Preferred Shares to be issued in
exchange for shares of Oasis Series A Preferred Stock are anti-dilutive.
(E) Represents adjustments to reflect (i) the Spin-Off, (ii) a 4% property
management fee and 1% asset management fee, (iii) a 20% participation in
the earnings of the Partnership and (iv) a 7% interest savings from the
reduction of unsecured debt by use of the proceeds from the third party
equity investment and the unsecured debt borrowing by the Partnership.
See "THE SPIN-OFF."
(F) Although not presented as pro forma adjustments because they do not meet
the criteria for such presentation, management anticipates that the
Merger will create significant operating and general and administrative
cost savings of approximately $2.5 million in the first full year of
operations.
56
<PAGE> 67
CAMDEN PROPERTY TRUST
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
DECEMBER 31, 1997
BASIS OF PRESENTATION
The Unaudited Pro Forma Combined Balance Sheet gives effect to the
proposed Merger of Camden and Oasis as if the Merger had occurred on December
31, 1997. The Unaudited Pro Forma Combined Balance Sheet gives effect to the
Merger and Spin-Off under the purchase method of accounting in accordance with
Accounting Standards Board Opinion No. 16. In the opinion of management, all
significant adjustments necessary to reflect the effects of the Merger and
Spin-Off have been made. The Merger and Spin-off adjustments are based on
certain estimates and currently available information. Such adjustments could
change as additional information becomes available, as estimates are refined or
as additional events occur, however, management does not expect any changes in
the purchase price or the allocation of such purchase price to be significant.
The Unaudited Pro Forma Combined Balance Sheet is presented for
comparative purposes only and is not necessarily indicative of what the actual
combined financial position of Camden and Oasis would have been at December 31,
1997, nor does it purport to represent the future combined financial position of
Camden and Oasis. This Unaudited Pro Forma Combined Balance Sheet should be read
in conjunction with, and is qualified in its entirety by, the respective
historical financial statements and notes thereto of Camden and Oasis
incorporated by reference into this Joint Proxy Statement/Prospectus.
57
<PAGE> 68
CAMDEN PROPERTY TRUST
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
DECEMBER 31, 1997
(in thousands)
<TABLE>
<CAPTION>
Historical Pro Forma
-------------------------- ---------------------------------------------------------
Merger Spin-Off
Adjustments Camden Adjustments As Further
Camden Oasis(A) (B) Combined (H) Adjusted
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Real estate assets:
Real estate held for investment $ 1,338,244 $ 845,543 $ 90,394 (C) $ 2,274,181 $ (251,607) $ 2,022,574
Less: accumulated depreciation (94,665) (64,899) 64,899 (C) (94,665) -- (94,665)
----------- ----------- ----------- ----------- ----------- -----------
1,243,579 780,644 155,293 2,179,516 (251,607) 1,927,909
Projects under development,
including land 43,805 30,034 -- 73,839 -- 73,839
Investment in real estate
joint ventures 15,089 8,370 -- 23,459 11,558 35,017
----------- ----------- ----------- ----------- ----------- -----------
1,302,473 819,048 155,293 2,276,814 (240,049) 2,036,765
Cash and cash equivalents 6,468 2,530 (73)(D) 8,925 -- 8,925
Other assets 14,679 24,950 (7,895)(D) 31,734 -- 31,734
----------- ----------- ----------- ----------- ----------- -----------
Total assets $ 1,323,620 $ 846,528 $ 147,325 $ 2,317,473 $ (240,049) $ 2,077,424
=========== =========== =========== =========== =========== ===========
LIABILITIES AND
SHAREHOLDERS' EQUITY:
Liabilities:
Notes payable:
Unsecured $ 316,941 $ 235,522 16,600 (E) $ 569,063 $ (230,129) $ 338,934
Secured 163,813 213,252 -- 377,065 (9,920) 367,145
----------- ----------- ----------- ----------- ----------- -----------
480,754 448,774 16,600 946,128 (240,049) 706,079
Distributions payable 16,805 -- -- 16,805 -- 16,805
Accounts payable, accrued
expenses and other liabilities 46,147 28,478 450 (F) 75,075 -- 75,075
----------- ----------- ----------- ----------- ----------- -----------
Total liabilities 543,706 477,252 17,050 1,038,008 (240,049) 797,959
----------- ----------- ----------- ----------- ----------- -----------
Minority interest of unitholders in
Operating Partnership 63,325 -- -- 63,325 -- 63,325
7.33% Convertible Subordinated
Debentures 6,025 -- -- 6,025 -- 6,025
Shareholders' Equity:
Preferred shares of beneficial interest -- 42 -- (G) 42 -- 42
Common shares of beneficial interest 317 163 (39)(G) 441 -- 441
Additional paid-in capital 780,738 388,876 110,509 (G) 1,280,123 -- 1,280,123
Distributions in excess of net income (63,526) (19,805) 19,805 (G) (63,526) -- (63,526)
Unearned restricted share awards (6,965) -- -- (6,965) -- (6,965)
----------- ----------- ----------- ----------- ----------- -----------
Total shareholders' equity 710,564 369,276 130,275 1,210,115 -- 1,210,115
----------- ----------- ----------- ----------- ----------- -----------
Total liabilities and
shareholders' equity $ 1,323,620 $ 846,528 $ 147,325 $ 2,317,473 $ (240,049) $ 2,077,424
=========== =========== =========== =========== =========== ===========
</TABLE>
58
<PAGE> 69
CAMDEN PROPERTY TRUST
NOTES TO UNAUDITED PRO FORMA COMBINED BALANCE SHEET
DECEMBER 31, 1997
(in thousands, except per share amounts)
(A) Certain reclassifications have been made to Oasis' historical balance
sheet to conform to Camden's balance sheet presentation.
(B) Represents adjustments to record the Merger in accordance with the
purchase method of accounting, based upon the assumed purchase price of
$993,853 assuming a market value of $32.00 per Camden Common Share, as
follows:
<TABLE>
<S> <C>
Issuance of 12,391 Camden Common Shares based on a 0.759 exchange
ratio in exchange for 16,326 shares of Oasis Common Stock $396,526
Issuance of 4,165 Camden Series A Preferred Shares having a liquidation value
of $25.00 for 4,165 shares of Oasis Series A Preferred Stock 104,125
Assumption of Oasis liabilities 477,252
Adjustment to record Oasis mortgages, other notes payable and other liabilities
at fair value 450
Merger costs (See calculation below) 15,500
--------
$993,853
========
</TABLE>
The following is a calculation of the estimated fees and other expenses
related to the Merger:
<TABLE>
<S> <C>
Advisory fees $ 8,000
Legal and accounting fees 1,000
Termination, severance and relocations costs 6,000
Due diligence 250
Other 250
--------
$ 15,500
========
</TABLE>
(C) Fair value adjustments of Oasis' real estate assets held for investment
based upon Camden's purchase price and the adjustment to eliminate Oasis'
historical accumulated depreciation of $64,899.
(D) To fair value Oasis' cash and other assets by $1,585 and to reverse
deferred financing costs and similar costs of $6,383, which have a zero
fair value, in connection with the Merger.
(E) Represents additional borrowings of $16,600 of available unsecured debt
by Camden to fund Merger costs of $15,500 (see Note (B) and registration
costs of $1,100 (see Note (G)).
(F) Adjustment to record Oasis' accrued expenses and other liabilities at
fair value.
(G) To adjust Camden's and Oasis' shareholders' equity to reflect the
issuance of 12,391 (at an exchange ratio of 0.759) Camden Common Shares
at an assumed price of $32.00 per share, in exchange for all of the
16,326 outstanding shares of Oasis Common Stock, the issuance of 4,165
Camden Series A Preferred Shares for 4,165 Oasis Series A Preferred
Shares and to record the estimated registration costs in connection with
the Merger of $1,100, as follows:
59
<PAGE> 70
<TABLE>
<CAPTION>
Series A Additional Distributions
Preferred Common Paid-in in Excess of
Shares Shares Capital Net Income
---------- ---------- ------------ -------------
<S> <C> <C> <C> <C>
Issuance of Camden Shares $ 42 $ 124 $ 500,485 $ --
Registration costs incurred in
connection with the Merger -- -- (1,100) --
Oasis' historical shareholders'
equity (42) (163) (388,876) 19,805
--------- --------- --------- ---------
Pro forma adjustments -- $ (39) $ 110,509 $ 19,805
========= ========= ========= =========
</TABLE>
(H) Represents Spin-Off adjustments to reflect the net effect of (i) the
Spin-Off of certain real estate assets and related secured debt to the
Partnership, (ii) proceeds from the sale of an 80% equity interest to a
third party, net of expenses of $910, and (iii) proceeds from secured
debt obtained by the Partnership, net of loan costs of $2,814, as
follows:
<TABLE>
<CAPTION>
Spin-Off
Assets and Third Party Secured Spin-Off
Debt Equity Debt Adjustments
----------- ---------- --------- ------------
<S> <C> <C> <C> <C>
ASSETS
Real estate held for investment $(251,607) $ -- $ -- $(251,607)
Investment in real estate joint ventures 241,687 (45,322) (184,807) 11,558
--------- --------- --------- ---------
Total assets $ (9,920) $ (45,322) $(184,807) $(240,049)
========= ========= ========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Notes payable:
Unsecured $ -- $ (45,322) $(184,807) $(230,129)
Secured (9,920) -- -- (9,920)
--------- --------- --------- ---------
Total liabilities (9,920) (45,322) (184,807) (240,049)
--------- --------- --------- ---------
Total liabilities and shareholders' equity $ (9,920) $ (45,322) $(184,807) $(240,049)
========= ========= ========= =========
</TABLE>
60
<PAGE> 71
BUSINESS OF CAMDEN
GENERAL
Camden engages in the ownership, development, acquisition, management,
marketing and disposition of multifamily apartment communities in the Southwest,
Southeast and Midwest regions of the United States. As of December 31, 1997,
Camden owned interests in and operated 100 multifamily properties (the "Camden
Operating Properties"), containing 34,669 units located in Texas, Florida,
Missouri, North Carolina, Arizona and Kentucky, including 1,264 units owned
through joint ventures. These properties had a weighted average occupancy rate
of 94.0% for the year ended December 31, 1997. Six of Camden's multifamily
properties containing 2,343 apartment units were under development (the "Camden
Development Properties") at December 31, 1997. Upon completion of the
development of the six properties, Camden will own interests in 106 properties
with 37,012 units (collectively with the Camden Operating Properties and the
Camden Development Properties, the "Camden Properties"). Additionally, Camden
managed 4,163 apartment units in 14 properties for third-parties and
non-consolidated affiliates at December 31, 1997.
On April 15, 1997, Camden acquired through a tax-free merger Paragon, a
Dallas-based multifamily REIT. The acquisition increased the size of Camden's
portfolio from 53 to 103 multifamily properties (after combining the operations
of seven of the acquired properties with adjacent properties), and from 19,389
to 35,364 apartment units at the date of acquisition (the "Paragon
Acquisition").
At December 31, 1997, Camden employed 1,180 persons, approximately 105 of
whom were located at Camden's headquarters and 1,075 of whom were "on-site" or
in regional operating offices.
OPERATING STRATEGY
Management believes that producing consistent earnings growth and
developing a strategy for selective investment in favorable markets are crucial
factors to Camden's success. Camden relies heavily on its sophisticated property
management capabilities and innovative operating strategies in its efforts to
produce consistent earnings growth.
Sophisticated Property Management. Management believes the depth of its
organization enables Camden to deliver quality services, thereby promoting
resident satisfaction and improving resident retention, which reduces operating
expenses. Camden manages the Camden Properties utilizing its staff of
professionals and support personnel, including certified property managers,
experienced apartment managers and leasing agents, and trained apartment
maintenance technicians. All on-site personnel are trained to deliver high
quality services to their residents. Camden attempts to motivate on-site
employees through incentive compensation arrangements based upon the net
operating income produced at their property, as well as rental rate increases
and the level of lease renewals achieved.
Innovative Operating Strategies. Management believes an intense focus on
operations is necessary to realize consistent, sustained earnings growth.
Ensuring resident satisfaction, increasing rents as market conditions allow,
maximizing rent collections, maintaining property occupancy at optimal levels
and controlling operating costs comprise Camden's principal strategies to
maximize property net operating income. Lease terms are generally staggered
based on vacancy exposure by apartment type so that lease expirations are better
matched to each property's seasonal rental patterns. Camden offers leases
ranging from six to thirteen months, with individual property marketing plans
structured to respond to local market conditions. In addition, Camden conducts
ongoing customer service surveys to ensure timely responsiveness to changing
resident needs and the highest level of resident satisfaction.
Acquisitions and Dispositions. Camden believes it is well positioned in its
markets with the expertise to take advantage of both acquisition and development
opportunities. This dual capability, combined with what management believes is a
conservative financial structure, affords Camden the ability to concentrate its
growth efforts towards selective acquisition opportunities and development
alternatives.
Several of Camden's core markets are targeted by Camden for continued
acuisitions during 1998. Camden plans to continue diversification of its
investments within its core markets, both geographically and in terms of the
number of units and selection of amenities offered. Camden's portfolio consists
primarily of properties that are 10 to 15 years old. The Camden Operating
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Properties have an average age of ten years (calculated on a basis of investment
dollars). Camden believes its demonstrated ability to make physical improvements
to acquired properties, such as new or enhanced landscaping design, new or
upgraded amenities and redesigned building structures, coupled with a strong
focus on property management and marketing, has resulted in attractive yields on
the acquired Camden Properties.
To generate consistent earnings growth, Camden seeks to selectively dispose
of properties and redeploy capital if management determines a property cannot
meet long-term earnings growth expectations. In December 1997, Camden disposed
of five properties containing 1,592 units. The net proceeds of $36.0 million
from the property dispositions were reinvested in developments and used to
retire debt.
New Development. Selective development of new apartment properties in
Camden's core markets will continue to be important to the growth of Camden's
portfolio for the next several years. Camden uses experienced on-site
construction superintendents, operating under the supervision of project
managers and senior management, to control the construction process. All
development decisions are made from the corporate office. Risks inherent to
developing real estate include zoning changes and environmental matters. There
is also the risk that certain assumptions concerning economic conditions may
change during the development process. Management believes that it understands
and effectively manages the risks associated with development and that the risks
of new development are justified by higher potential yields.
FINANCIAL STRATEGY
Financial Structure. Camden intends to continue maintaining what management
believes to be a conservative capital structure by: (i) targeting a ratio of
total debt to total market capitalization of less than 50%; (ii) extending and
sequencing the maturity dates of its debt where possible; (iii) managing
interest rate exposure using fixed rate debt and hedging, where appropriate;
(iv) borrowing on an unsecured basis; (v) maintaining a substantial number of
unencumbered assets; and (vi) maintaining a conservative debt service coverage
ratio.
On July 21, 1997, Camden completed the public sale and issuance of
4,830,000 Camden Common Shares, including 630,000 shares issued to the
underwriters to satisfy over-allotments (the "July 1997 Equity Offering"), at a
price of $31 per share. Net proceeds from the July 1997 Equity Offering were
used to retire certain secured indebtedness assumed in the Paragon Acquisition
and to reduce amounts outstanding under the $150 million unsecured line of
credit (the "Unsecured Credit Facility"), which had been advanced to fund recent
property developments, acquisitions and other working capital requirements.
Camden has maintained on a quarterly basis a financial structure with no
more than 40% total debt to total market capitalization since its initial public
offering (the "IPO") in July 1993. At December 31, 1997, Camden's ratio of total
debt to total market capitalization was approximately 31.0% (based on the
closing price of $31 per Camden Common Share on the NYSE composite tape on
December 31, 1997). This ratio represents total consolidated debt of Camden as a
percentage of the market value of Camden Common Shares (including Camden Common
Shares issuable upon conversion of convertible securities and limited
partnership units ("OP Units") in Camden Operating, L.P., but excluding shares
issuable upon exercise of outstanding options) plus total consolidated debt
(excluding the convertible securities). The interest coverage ratio was 4.0
times for the fourth quarter of 1997 and 3.6 times and 3.2 times for the twelve
months ended December 31, 1997 and 1996, respectively. At December 31, 1997 and
1996, 78.9% and 84.3%, respectively, of Camden's properties (based on invested
capital) were unencumbered.
Liquidity. Camden intends to meet its short-term liquidity requirements
through cash flows provided by operations, the Unsecured Credit Facility and
other short-term borrowings. Camden uses equity capital and senior unsecured
debt to refinance maturing secured debt and borrowings under the Unsecured
Credit Facility and other short-term borrowings. As of December 31, 1997, Camden
had $107 million available under the Unsecured Credit Facility. Camden filed a
universal shelf registration statement in April 1997 providing for the issuance
of up to $500 million in equity, debt, preferred or convertible securities, of
which over $275 million remains unused. Additionally, in March 1997, Camden
implemented a $196 million medium-term note program used to provide intermediate
and long-term, unsecured publicly-traded debt financing, of which $171 million
remains unused. Finally, Camden has significant unencumbered real estate assets
which could be sold or used as collateral for financing purposes should other
sources of capital not be available. Camden considers its ability to generate
cash to be sufficient, and expects to be able to meet future operating cash
requirements and to pay distributions to shareholders and holders of OP Units.
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On January 16, 1998, Camden paid a distribution of $0.49 per share for the
fourth quarter of 1997 to all holders of record of Camden Common Shares as of
December 24, 1997, and paid an equivalent amount per unit to holders of OP
Units. Total distributions to common shareholders for the year ended December
31, 1997 were $1.96 per share. Total distributions to holders of OP Units from
the date of the Paragon Acquisition through December 31, 1997 were $1.47 per
unit. Camden determines the amount of cash available for distribution from the
Operating Partnership in accordance with the partnership agreement and has
distributed and intends to continue to make distributions to the holders of OP
Units in amounts equivalent to the per share dividends paid to holders of Camden
Common Shares. Camden intends to continue shareholder distributions in
accordance with REIT qualification requirements under the Code while maintaining
what management believes to be a conservative payout ratio, and expects to
continue reducing the payout ratio by raising the dividends at a rate which is
less than the FFO growth rate.
Financial Flexibility. Camden concentrates its growth efforts toward
selective development and acquisition opportunities in its core markets, and
through the acquisition of existing operating portfolios and development
properties in selected new markets. During 1997, Camden incurred $91.2 million
in development costs and $45.8 million in acquisition costs. In addition, Camden
issued 9.5 million Camden Common Shares and assumed $296 million of
indebtedness, at fair value, to purchase Paragon. Camden has announced plans to
develop six additional properties at an aggregate cost of approximately $142
million. Camden funds its developments and acquisitions through a combination of
equity capital, OP Units, debt securities, the Unsecured Credit Facility and
other short-term borrowing arrangements, and previously has used construction
and other mortgage loans. Camden also seeks to selectively dispose of assets
that are not in core markets, have a lower projected net operating income growth
rate than the overall portfolio, or no longer conform to Camden's operating and
investment strategies. The $36.0 million in net proceeds received from these
asset disposals during 1997 were reinvested in developments and used to retire
debt.
On May 9, 1997, Camden issued from its $500 million universal shelf
registration statement an aggregate principal amount of $75 million of its
unsecured reset notes maturing May 2002, the net proceeds of which were used by
Camden to reduce indebtedness incurred under the Unsecured Credit Facility which
had been used to liquidate portions of the debt assumed in the Paragon
Acquisition. On June 20, 1997, Camden issued $25 million aggregate principal
amount of senior unsecured notes from its $196 million medium-term note shelf
registration, the net proceeds of which were used to reduce indebtedness
outstanding under short-term unsecured notes. On July 21, 1997, Camden retired
$66.7 million in mortgage loans using a portion of the proceeds of the July 1997
Equity Offering. Including the debt retirements made in conjunction with the
July 1997 Equity Offering, Camden has retired $160.8 million of the $296 million
of debt assumed in the Paragon Acquisition.
MARKETS AND COMPETITION
Camden's portfolio consists of middle to upper market apartment properties.
Camden has expanded its portfolio since the IPO through targeted acquisitions
and developments in selected high-growth markets. By combining acquisition,
renovation and development capabilities, management believes it is able to
better respond to changing conditions in each market, thereby reducing market
risk and allowing Camden to take advantage of opportunities as they arise.
At December 31, 1997, 51% of Camden's real estate assets were located in
Texas. Since the IPO, Camden has diversified into other markets in the Southwest
region and into the Southeast and Midwest regions of the United States. At the
time of the IPO, approximately 77% of the Camden Properties (based on the number
of units) were located in Houston. At December 31, 1997, after giving effect to
the anticipated completion of the Camden Development Properties, 21% of the
Camden Properties were located in Houston. Camden intends to further diversify
geographically into the Western region of the United States through the Merger.
There are numerous housing alternatives that compete with the Camden
Properties in attracting residents. The Camden Properties compete directly with
other multifamily properties and single family homes that are available for rent
in the markets in which the Camden Properties are located. The Camden Properties
also compete for residents with the new and existing owned-home market. The
demand for rental housing is driven by economic and demographic trends. Recent
trends in the economics of renting versus home ownership indicate an increasing
demand for rental housing in certain markets, despite relatively low residential
mortgage interest rates. Rental demand should be strong in areas anticipated to
experience in-migration, due to the younger ages that characterize movers as
well as the relatively high cost of home ownership in higher growth areas. In
addition, management believes that the accelerating growth in the formation of
non-traditional households, which tend to rent, should increase the demand for
apartments.
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THE CAMDEN PROPERTIES
The Camden Properties typically consist of two- and three-story buildings
in a landscaped setting and provide residents with a variety of amenities. Most
of the Camden Properties have, or are expected to have, one or more swimming
pools and a clubhouse and many have whirlpool spas, tennis courts and
controlled-access gates. Many of the units offer additional features such as
fireplaces, vaulted ceilings, microwave ovens, covered parking, icemakers,
washers and dryers and ceiling fans. The Camden Operating Properties' units
average 798 square feet of living area.
Camden Operating Properties. For the year ended December 31, 1997, no
single Camden Operating Property accounted for greater than 3.1% of Camden's
total revenues. The Camden Operating Properties had an average occupancy rate of
94.0% in both 1997 and 1996. Resident lease terms generally range from six to
thirteen months and usually require security deposits. Eighty-eight of the
Camden Operating Properties have in excess of 200 units, with the largest having
832 units. Twenty of the Camden Operating Properties were constructed by Camden
or its predecessors and placed in service since 1992. Seven were placed in
service between 1988 and 1992, 43 were placed in service between 1983 and 1987,
18 were placed in service between 1978 and 1982, seven were placed in service
between 1973 and 1977 and five were placed in service between 1967 and 1972.
CAMDEN PORTFOLIO SUMMARY
The following table sets forth information with respect to the Camden
Operating Properties, excluding properties currently in lease-up, as of December
31, 1997:
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<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PROPERTY AND LOCATION NUMBER YEAR PLACED IN AVERAGE UNIT 1997 AVERAGE DEC. 1997 AVG. MO.
OF UNITS SERVICE SIZE (SQ. FT.) OCCUPANCY (1) RENTAL RATES
-----------------------
PER UNIT PER SQ FT.
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ARIZONA
PHOENIX/SCOTTSDALE
Arrowhead Springs, The Park at 288 1997 925 93% $740 $ 0.80
Longmore Estates (3) 357 1986 923 92 678 0.73
Scottsdale Legacy 428 1996 1,067 93 876 0.82
TUCSON
Eastridge 456 1984 559 92 428 0.77
Oracle Villa 365 1974 1,026 92 675 0.66
FLORIDA
ORLANDO
Grove 232 1973 677 96 503 0.74
Landtree Crossing 220 1983 748 95 566 0.76
Renaissance Pointe (2) 272 1996 940 97 770 0.82
Reserve 146 1991 893 97 699 0.78
Riverwalk I & II 552 1984/1986 747 91 524 0.70
Vineyard 380 1990 798 98 623 0.78
TAMPA/ST. PETERSBURG
Broadmoor 384 1986 651 93 481 0.74
Chase Crossing (3) 444 1986 1,223 93 760 0.62
Chasewood 247 1985 704 95 521 0.74
Dolphin Pointe 832 1987/1989 748 93 611 0.82
Greenhouse 324 1982 694 94 471 0.68
Heron Pointe 276 1996 942 97 798 0.85
Island Club I & II 484 1983/1985 722 96 496 0.69
Mallard Pointe I & II 688 1982/1983 728 94 558 0.77
Parsons Run 228 1986 728 98 547 0.75
Schooner Bay 278 1986 728 96 611 0.84
Summerset Bend (5) 368 1984/1986 771 96 568 0.74
KENTUCKY
LOUISVILLE
Copper Creek 224 1987 732 94 616 0.84
Deerfield 400 1987/1990 746 91 607 0.81
Glenridge 138 1990 916 94 710 0.78
Post Oak 126 1981 847 90 578 0.68
Sundance 254 1975 682 94 516 0.76
MISSOURI
KANSAS CITY
Camden Passage I & II (2)(6) 596 1989/1997 832 92 667 0.80
ST. LOUIS
Cove at Westgate 276 1990 828 97 826 1.00
Knolls 112 1973 1,493 92 798 0.53
Knollwood I & II 608 1981/1985 722 94 514 0.71
Pear Tree 134 1967 723 95 500 0.69
Spanish Trace (4) 372 1972 1,158 87 691 0.60
Sunswept 334 1971 805 91 525 0.65
Tempo 304 1975 676 95 478 0.71
Westchase Park 160 1986 945 90 841 0.89
Westgate I & II (4) 591 1973/1980 947 84 760 0.80
NORTH CAROLINA
CHARLOTTE
Copper Creek 208 1989 703 94 577 0.82
Eastchase 220 1986 698 93 557 0.80
Falls 352 1984 706 93 592 0.84
Habersham Pointe 240 1986 773 95 612 0.79
Overlook (7) 220 1985 754 93 653 0.87
Park Commons (2) 232 1997 859 94 690 0.80
Pinehurst 407 1967 1,147 93 737 0.64
GREENSBORO
Brassfield Park (2) (7) 336 1997 889 92 668 0.75
Glen 304 1980 662 93 520 0.79
River Oaks 216 1985 795 92 608 0.76
</TABLE>
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<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PROPERTY AND LOCATION NUMBER YEAR PLACED IN AVERAGE UNIT 1997 AVERAGE DEC. 1997 AVG. MO.
OF UNITS SERVICE SIZE (SQ. FT.) OCCUPANCY (1) RENTAL RATES
-----------------------
PER UNIT PER SQ. FT.
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
TEXAS
AUSTIN
Autumn Woods 283 1984 644 94% $ 553 $ 0.86
Calibre Crossing 183 1986 705 95 587 0.83
Huntingdon 398 1995 903 94 760 0.84
Quail Ridge 167 1984 859 93 640 0.74
Ridgecrest 284 1995 851 92 732 0.86
South Oaks 430 1980 705 94 578 0.81
CORPUS CHRISTI
Breakers 288 1996 861 95 754 0.88
Miramar (8) 244 1994/1995 722 89 744 1.03
Potters Mill 344 1986 775 93 588 0.76
Waterford 580 1976/1980 767 91 521 0.68
DALLAS/FORT WORTH
Addison, The Park at 456 1996 942 94 866 0.92
Chesapeake 128 1982 912 95 713 0.78
Cottonwood Ridge 208 1985 829 97 547 0.66
Emerald Valley 516 1986 743 96 636 0.86
Emerald Village 304 1987 713 94 597 0.84
Glen Arbor 320 1980 666 96 481 0.72
Glen Lakes 424 1979 877 92 719 0.82
Highland Trace 160 1985 816 95 634 0.78
Highpoint (7) 708 1985 835 94 610 0.73
Ivory Canyon 602 1986 548 93 523 0.96
Los Rios 286 1992 772 96 760 0.99
Nob Hill 486 1986 642 95 503 0.78
North Dallas Crossing 446 1985 730 93 607 0.83
Oakland Hills 476 1985 853 95 581 0.68
Pineapple Place 256 1983 652 96 571 0.88
Randol Mill Terrace 340 1984 848 95 559 0.66
Shadowlake 264 1984 733 94 558 0.76
Stone Creek 240 1995 831 95 782 0.94
Stone Gate (2) 276 1996 871 94 800 0.92
Towne Centre Village 188 1983 735 97 550 0.75
Towne Crossing, The Place at 442 1984 772 95 550 0.71
Valley Creek Village 380 1984 855 97 612 0.72
Valley Ridge 408 1987 773 95 593 0.77
Westview 335 1983 697 95 579 0.83
EL PASO
La Plaza 129 1969 997 97 572 0.57
HOUSTON
Brighton Place 282 1978 749 94 522 0.70
Cambridge Place 336 1979 771 95 533 0.69
Crossing, The 366 1982 762 95 542 0.71
Driscoll Place 488 1983 708 93 446 0.63
Eagle Creek 456 1984 639 98 532 0.83
Jones Crossing 290 1982 748 97 536 0.72
Roseland Place 671 1982 726 95 518 0.71
Southpoint 244 1981 730 92 557 0.76
Stonebridge 204 1993 845 97 742 0.88
Sugar Grove, The Park at 380 1997 917 96 790 0.86
Vanderbilt I, The Park at 516 1996 963 96 1,020 1.06
Wallingford 462 1980 787 95 549 0.70
Wilshire Place 536 1982 761 95 533 0.70
Woodland Park 288 1995 866 97 766 0.89
Wyndham Park 448 1978/1981 797 96 490 0.61
------ --- -- ----- ----
TOTAL 33,559 798 94% $ 616 0.78
====== === == ===== ====
</TABLE>
(1) Represents average physical occupancy for the year ended.
(2) Development property - average occupancy calculated from date at which
occupancy exceeded 90% through year end.
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(3) Acquisition property - average occupancy calculated from acquisition date
through year end.
(4) These properties were under major renovation during 1997, which affected
occupancy levels during this period.
(5) Phase II of Summerset Bend was acquired in June 1997, increasing the total
number of units at this property from 272 to 368.
(6) Phase II of Camden Passage was completed in 1997 and stabilized during the
third quarter of 1997.
(7) Properties owned through investment in joint venture.
(8) Miramar is a student housing project for Texas A&M at Corpus Christi.
Average occupancy includes summer, which is normally subject to high
vacancies.
Camden Operating Properties Under Lease-Up. The following table sets forth
information regarding the Camden Operating Properties under lease-up at December
31, 1997:
<TABLE>
<CAPTION>
Number of % Leased at Date of Estimated Date
Property and Location Units 1/28/98 Completion of Stabilization
- --------------------- --------- ----------- ---------- ----------------
<S> <C> <C> <C> <C>
The Park at Vanderbilt, Phase II
Houston, TX ..................... 378 89% 3Q97 1Q98
The Park at Centreport
Dallas, TX ...................... 268 65 4Q97 3Q98
The Park at Buckingham
Dallas, TX ...................... 464 57 4Q97 3Q98
-----
Total 1,110
=====
</TABLE>
Camden Development Properties. The total budgeted cost of the Camden
Development Properties is approximately $141.8 million, with a remaining cost to
complete, as of December 31, 1997, of approximately $113.5 million. There can be
no assurance that Camden's budget, leasing or occupancy estimates will be
attained for the Camden Development Properties or that their performance will be
comparable to that of Camden's existing portfolio.
The following table sets forth information regarding the Camden Development
Properties:
<TABLE>
<CAPTION>
Estimated Cost Estimated Date of Estimated Date of
Property and Location Number of Units ($ millions) Completion Stabilization
- --------------------- --------------- -------------- ----------------- -----------------
<S> <C> <C> <C> <C>
The Park at Towne Center
Glendale, AZ .............. 240 $ 13.4 4Q98 2Q99
Renaissance Pointe II
Orlando, FL ............... 306 17.3 4Q98 3Q99
The Park at Goose Creek
Baytown, TX ............... 272 11.8 1Q99 3Q99
The Park at Midtown
Houston, TX ............... 337 21.5 2Q99 4Q99
The Park at Oxmoor
Louisville, KY ............ 432 22.1 2Q99 4Q99
The Park at Greenway
Houston, TX ............... 756 55.7 1Q00 4Q00
----- --------
Total .............. 2,343 $ 141.8
===== ========
</TABLE>
Management believes that Camden possesses the development capabilities and
experience to provide a continuing source of portfolio growth. In making
development decisions, management considers a number of factors, including the
size of the property, the season in which leasing activity will occur and the
extent to which delivery of the completed units will coincide with leasing and
occupancy of such units (which is dependent upon local market conditions). In
order to pursue a development opportunity,
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Camden currently requires a minimum initial stabilized target return of
10%-10.5%. This minimum target return is based on current market rents and
projected stabilized expenses, considering the market and the nature of the
prospective development.
BUSINESS OF OASIS
GENERAL
Oasis is a fully integrated REIT with in-house acquisition,
development, property management and finance expertise. Oasis is the largest
owner of predominantly upscale apartment communities in the greater Las Vegas
metropolitan area based on the number of apartment units. As of December 31,
1997, Oasis owned interests in and operated 52 apartment communities in Las
Vegas, Reno, Denver and southern California, comprising a total of 15,117
apartment units with an average age of less than eight years (including 321
units owned through a joint venture), has one apartment community comprising 340
units under construction, and owns the Commercial Center. Forty-three of the
Oasis Properties are located in the greater Las Vegas area. Oasis' weighted
average occupancy rate was 95%, 94% and 95% for the years ended December 31,
1997, 1996 and 1995, respectively. During these periods, average monthly rental
income per unit was $647, $606 and $570, respectively. As of December 31, 1997,
the weighted average occupancy rate of the Oasis Properties was 95% and the
Commercial Center was 100% occupied.
At December 31, 1997, Oasis employed approximately 542 people.
RECENT DEVELOPMENTS
Acquisitions. On October 23, 1997, Oasis completed the acquisition of a
managing member interest in Oasis Martinique LLC, which owns the 714 unit Villa
Martinique apartment community in Orange County, California (which has been
renamed "Oasis Martinique"). In connection with the acquisition, Oasis
Martinique LLC issued units of limited liability company interest ("Oasis
Martinique LLC Units"), convertible on a one-for-one basis into 886,022 shares
of Oasis Common Stock. Oasis also assumed existing tax exempt bond debt of $51.4
million issued by Orange County, California. The "low floater" bonds mature in
2009 and have an interest rate subject to weekly repricing based upon a spread
of 125 basis points over the seven-day tax exempt bond floating rate index.
Oasis also contributed approximately $1.5 million in cash drawn from its bank
credit facility for the transaction and limited liability company formation
costs associated with the formation of Oasis Martinique LLC. At the time of the
closing of the acquisition, the holders of the Oasis Martinique LLC Units
borrowed $8.2 million from Oasis. The loans must be repaid by the Oasis
Martinique LLC Unit holders on or prior to December 23, 1998, and are secured by
the pledge of the Oasis Martinique LLC Units to Oasis.
On June 5, 1997, Oasis completed the acquisition of an apartment
community in Costa Mesa, California named Sea Palms (138 units). The purchase
price of approximately $10.95 million was funded with proceeds of Oasis' $200
million revolving credit facility. Since the acquisition, Oasis has renamed the
community Oasis Sea Palms and invested approximately $430,000 in a capital
refurbishment program designed to upgrade the community to Oasis brand
standards.
Oasis has also entered into a contract for the purchase of the Parkside
Apartments apartment community in Fullerton, California (421 units) for
approximately $28.9 million and anticipates completing this transaction in March
1998.
Dispositions. On December 8, 1997, Oasis completed the sale of three
Las Vegas apartment properties: Oasis Orchid, containing 280 units; Oasis
Terrace, containing 336 units; and Oasis Trails, containing 360 units. The
combined sales price for the properties was $53.7 million, resulting in a book
gain by Oasis of approximately $7.0 million. Additionally, on August 18, 1997,
Oasis sold the 84 unit Oasis Villas apartment community for $6.3 million, with
no material gain or loss resulting from the transaction. The net proceeds of the
sales were used to reduce debt outstanding under Oasis' $200.0 million revolving
credit facility. Oasis is currently under contract to sell the Oasis Star II
apartment community for approximately $1.3 million with an anticipated closing
date of February 27, 1998 and Oasis Morning for $3.5 million with a projected
closing date in April 1998.
Developments. During 1997, Oasis completed construction on five
apartment communities in the Las Vegas and Reno, Nevada and Denver, Colorado
metropolitan areas comprising an aggregate of 1,897 units with a total
investment of $153.0 million as follows: Oasis Bluffs (450 units in Reno,
Nevada), Oasis Denver West (321 units in Denver, Colorado, which was developed
as part of a joint venture agreement with Stevenson Partnership Ltd., an
unaffiliated entity), Oasis Lakeway (451 units located
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in Denver, Colorado), Oasis Gateway (315 units located in Las Vegas, Nevada) and
Oasis Pines (360 units in Las Vegas, Nevada). Oasis has initiated construction
of a 340 units apartment community called Oasis Interlocken on a recently
purchased 19.5 acre parcel of property in the master planned community of
Interlocken, Colorado in 1998 and plans to complete the project in April of
1999.
BUSINESS STRATEGY
Oasis' primary business strategy has been to increase cash flow and
enhance portfolio value by focusing on the upscale apartment market. Oasis has
implemented this strategy principally by (i) realizing internal growth in income
from its existing portfolio of apartment communities and (ii) pursuing external
growth through the selective development and acquisition of new apartment
communities.
Oasis believes its strong local market presence, brand name identity
and resident-oriented approach reduce turnover and encourage resident referrals,
resulting in higher occupancies, higher effective rents and reduced expenses as
compared to its competitors.
Brand Name Operating Strategy. In order to take advantage of Oasis'
significant presence and market leadership position in Las Vegas, Oasis
implemented a customer focused brand name operating strategy in 1995. The brand
name program is designed to build customer recognition of Oasis and its
apartment communities and to impart an image of distinction, quality and
consistency. All of the Oasis Properties incorporate the Oasis brand name and
all Oasis on-site associates wear uniforms advertising the Oasis brand name and
logo. Oasis believes the Oasis brand name enhances Oasis' ability to attract new
residents, retain existing residents, gain additional resident referrals and
retain more residents transferring from one Oasis community to another.
Internal Growth Strategy. Oasis has been committed to increasing cash
flow and FFO from its existing portfolio by utilizing the experience and quality
of Oasis' senior management. Oasis' operating priorities have been to (i)
provide the residents with the highest quality lifestyle possible in an
apartment community; (ii) emphasize a clean, pleasant living environment by
maintaining all buildings, grounds and landscaping in excellent condition; and
(iii) attract the caliber of residents who desire to live in a high-quality,
clean apartment community with premium service at a reasonable cost.
External Growth Strategy. Oasis has pursued external growth by
selectively developing new apartment communities in areas where it had
first-hand knowledge of growth patterns and local economic conditions and
believed that it had or could create a competitive advantage due to its brand
name identity, extensive experience and reputation as a developer and access to
lower cost of capital than that available to many of its local competitors.
Oasis has pursued a strategy of selectively acquiring apartment
communities to supplement its program of developing new properties.
In evaluating whether to develop a new property, Oasis has analyzed
salient geographic, demographic, economic and financial data, including the
following factors: (i) prevailing rental and occupancy rates in the area: (ii)
prospective resident income levels and the ability of those income levels to
service the property's requisite rents; (iii) the site's location and aesthetic
appeal; and (iv) the size and growth rate of the employment base in the area. In
order to provide its residents with a feeling of quality, community, security
and accessibility, Oasis has been selective in seeking development sites which
are located in quality single-family neighborhoods having convenient access to
employment centers and plentiful amenities.
In certain circumstances, Oasis has also expanded its portfolio of
properties through the selective acquisition of existing apartment properties.
Oasis has sought to acquire properties which are: (i) strategically located in
Oasis' existing or target markets; (ii) capable of increased operating cash flow
after benefiting from Oasis' renovation and management expertise; (iii) priced
below replacement cost, thereby enabling Oasis to operate the properties
profitably at lower rents than those realized from new properties; and (iv) able
to generate returns comfortably in excess of Oasis' weighted average cost of
capital.
Oasis has also, from time to time, disposed of properties in order to
enhance stockholder value.
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<PAGE> 80
It has also been Oasis' strategy to expand through acquisition and
development beyond the greater Las Vegas metropolitan area to certain target
markets located in Nevada, Colorado and California. Pursuant to this strategy,
Oasis has expanded its operations to the greater Denver metropolitan area, Reno
and southern California. Oasis believes these target markets share many of the
favorable investment characteristics found in the Las Vegas area and are in
sufficient proximity to allow Oasis to continue to benefit from its successful
"hands-on" property management philosophy.
Financing Strategy. In conducting its operations and pursuing its
external growth strategy, Oasis has maintained a conservative balance sheet to
provide Oasis with the financial flexibility to choose the optimal source of
capital (whether debt or equity) with which to finance external growth. It has
been Oasis' policy to maintain a debt to total market capitalization ratio
(i.e., total consolidated debt of Oasis as a percentage of market value of its
capital stock plus total consolidated debt) of less than 50%. For purposes of
this calculation, the Oasis Series A Preferred Stock has been valued at the
greater of its liquidation preference or its market value.
Investment Policies. Oasis has developed and acquired apartment
communities for long term investment in a manner consistent with requirements of
the Code for Oasis to qualify as a REIT through the development and ownership of
apartment communities.
CERTAIN PENDING COMPLAINTS
Oasis has been contacted by certain regulatory agencies with regard to
alleged failures to comply with the FHA as it pertains to properties constructed
for first occupancy after March 31, 1991. Currently, Oasis is inspecting these
properties to determine the extent of the alleged noncompliance and the changes
that may be necessitated. At this time, Oasis is unable to provide an estimate
of costs and expenses associated with this matter as the scope and extent of
required work, if any, has yet to be determined.
PROPERTY OPERATIONS
As of December 31, 1997, Oasis owned interests in and operated 52
apartment communities containing 15,117 apartment units (including 321 units
owned through a joint venture), as well as the Commercial Center in which Oasis'
headquarters is located, and had under construction an additional 340 units. The
Oasis Properties typically consist of one- and two-story buildings in a
landscaped setting. Thirty-four of the Oasis Properties (comprising
approximately 61% of the total units) were completed less than 10 years ago. The
Oasis Properties are predominantly upscale garden apartment complexes consisting
of one, two and three bedroom apartments. Forty-seven of the Oasis Properties
have in excess of 100 apartment units, with the largest having 720 apartment
units.
The Oasis Properties generally provide residents with a variety of
attractive amenities, such as in-unit laundry facilities, oversized luxury bath
tubs, monitored security systems, swimming pools, spas and saunas, extensive
landscaping and, in certain cases, tennis courts, racquetball courts, and weight
and exercise facilities. The Oasis Properties generally are located in or
adjacent to attractive and desirable single-family residential neighborhoods and
are easily accessible to significant areas of employment.
The Commercial Center was constructed in 1989. Oasis occupies 15,100
square feet of the building as its headquarters, and the remainder is leased to
third parties, consisting predominantly of banking, professional and service
businesses. As of December 31, 1997, the Commercial Center was 100% leased, with
third party tenants paying an average annualized rent per square foot of $24.58.
Aside from Oasis, one tenant, a bank, occupies more than 10% of the Commercial
Center. The bank's lease expires in May 2008 and has two five-year renewal
options priced at fair market value.
None of Oasis' properties account for 10% or more of the book value of
Oasis' assets.
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<PAGE> 81
OASIS PORTFOLIO SUMMARY
Portfolio information as of December 31, 1997.
Oasis Operating Properties
<TABLE>
<CAPTION>
MONTH ENDED
DECEMBER 31, 1997
AVERAGE MONTHLY
AVERAGE RENTAL RATE(1)
NUMBER YEAR RENTABLE UNIT 1997 --------------------
OF PLACED IN AREA SIZE AVERAGE PER PER
THE COMMUNITIES UNITS SERVICE (SQ. FT.) (SQ. FT.) OCCUPANCY UNIT SQ. FT.
--------------- ----- ------- --------- --------- --------- ---- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Nevada
Oasis Bay(2)......... 128 1993 108,032 844 95.7% $ 706 $ 0.84
Oasis Bel Air I...... 232 1993 202,600 873 93.9% 647 0.74
Oasis Bel Air II..... 296 1995 296,512 1,002 94.3% 755 0.75
Oasis Bluffs ........ 450 1997 501,687 1,115 82.9%(3) 975 0.87
Oasis Breeze......... 320 1993 275,920 862 95.1% 669 0.78
Oasis Canyon......... 200 1995 197,408 987 92.4% 753 0.76
Oasis Cliffs......... 376 1993 351,920 936 96.3% 707 0.75
Oasis Club........... 320 1993 286,560 896 96.1% 704 0.79
Oasis Cove........... 124 1993 111,290 898 94.7% 668 0.74
Oasis Crossings(2)... 72 1995/1996 70,752 983 87.4% 736 0.75
Oasis Del Mar........ 560 1996 552,040 986 93.4% 798 0.81
Oasis Emerald(2)..... 132 1993 115,180 873 96.8% 630 0.72
Oasis Gateway(2)..... 360 1997 418,680 1,163 77.8%(3) 840 0.72
Oasis Glen........... 113 1994 89,488 792 98.1% 692 0.87
Oasis Greens......... 432 1993 385,216 892 96.3% 688 0.77
Oasis Harbor I....... 336 1997 338,696 1,008 95.6%(3) 769 0.76
Oasis Heights........ 240 1994 204,160 851 96.1% 637 0.75
Oasis Heritage(2).... 720 1994 678,760 943 92.9% 594 0.63
Oasis Hills.......... 184 1993 106,472 579 96.5% 500 0.86
Oasis Island(2)...... 118 1993 106,260 901 94.3% 639 0.71
Oasis Landing(2)..... 144 1993 124,752 866 95.8% 674 0.78
Oasis Meadows(2)..... 383 1996 397,276 1,037 93.7% 763 0.74
Oasis Morning........ 106 1993 53,772 507 95.2% 464 0.91
Oasis Palms(2)....... 208 1993 184,272 886 94.3% 647 0.73
Oasis Paradise....... 624 1994 560,896 899 93.4% 722 0.80
Oasis Pearl(2)....... 90 1993 82,332 915 94.9% 666 0.73
Oasis Pines.......... 315 1997 313,950 997 90.2%(3) 818 0.82
Oasis Place(2)....... 240 1994 105,600 440 96.7% 461 1.05
Oasis Plaza(2)....... 300 1993 245,936 820 95.9% 590 0.72
Oasis Pointe......... 252 1996 249,216 989 93.9% 747 0.76
Oasis Ridge(2)....... 477 1993 187,833 394 95.1% 414 1.05
Oasis Rose(2)........ 212 1994 213,888 1,009 92.8% 709 0.70
Oasis Sands.......... 48 1994 54,000 1,125 86.6% 740 0.66
Oasis Springs(2)..... 304 1994 246,912 812 94.1% 619 0.76
Oasis Star .......... 24 1993 21,720 905 96.2% 661 0.73
Oasis Suites(2)...... 409 1994 163,200 399 92.0% 439 1.10
Oasis Summit......... 234 1994/95 277,836 1,187 97.6% 1,040 0.88
Oasis Tiara.......... 400 1996 417,016 1,043 97.0% 817 0.78
Oasis Topaz.......... 270 1993 223,268 827 96.2% 607 0.73
</TABLE>
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<PAGE> 82
<TABLE>
<CAPTION>
MONTH ENDED
DECEMBER 31, 1997
AVERAGE MONTHLY
AVERAGE RENTAL RATE(1)
NUMBER YEAR RENTABLE UNIT 1997 ------------------------
OF PLACED IN AREA SIZE AVERAGE PER PER
THE COMMUNITIES UNITS SERVICE (SQ. FT.) (SQ. FT.) OCCUPANCY UNIT SQ. FT.
--------------- ------- --------- ---------- --------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Oasis View(2) ...... 180 1993 169,200 940 94.5% 642 0.68
Oasis Vinings(2) ... 234 1993/94 269,574 1,152 92.5% 741 0.64
Oasis Vintage ...... 368 1993/94 366,048 995 93.2% 712 0.72
Oasis Vista(2) ..... 408 1994 363,196 890 94.5% 522 0.59
Oasis Winds ........ 350 1993 282,500 807 95.4% 587 0.73
------ ---------- ---------- ------ ---------- -------
Subtotals/
Wtd. Avg(6) .... 12,203 10,971,826 893 94.6% 683 0.77
Colorado
Oasis Centennial ... 276 1995 205,380 744 96.6% 639 0.86
Oasis Deerwood ..... 342 1996 391,590 1,145 90.0% 1,057 0.92
Oasis Lakeway ...... 451 1997 425,770 944 79.6%(3) 930 0.99
Oasis Park(5) ...... 224 1994 167,600 748 97.7% 676 0.90
Oasis Wexford(5) ... 358 1994 289,968 810 97.0% 707 0.87
------ ---------- ---------- ------ ---------- -------
Subtotals/
Wtd. Avg ....... 1,651 1,480,308 897 95.1%(4) 825 0.92
California
Oasis Martinique(5) 714 1997 642,176 899 97.7% 895 1.00
Oasis Sea Palms(7) 138 1997 123,300 893 96.1% 957 1.07
Subtotals/
Wtd. Avg ....... 852 765,476 898 97.5% 905 1.01
------ ---------- ---------- ------ ---------- -------
Grand Totals/
Wtd. Avg(6) .... 14,796 13,217,610 893 94.9% 712 .80
====== ========== ========== ====== ========== -------
</TABLE>
(1) Reflects a weighted average of current contract rents for occupied units
and market rents for unoccupied units for each community.
(2) Expected to be included as a Spin-Off Property. See "THE SPIN-OFF."
(3) In lease-up during period, therefore, occupancy at end of period.
(4) Does not include units in lease-up.
(5) Oasis is required to comply with affordable housing restrictions that
require a certain percentage of the units at these communities to be leased
to persons with incomes below a certain percentage of the local median
income. This obligation may impair Oasis' ability to achieve increased
rental rates on portions of these communities.
(6) Excludes the 321 unit Oasis Denver West community, which is owned by a
joint venture of which Oasis is a 50% joint venture partner.
(7) Due to high density units put in place at the time of construction, Oasis
is required to comply with affordable housing restrictions that require a
certain percentage of the units at these communities to be leased to
persons with incomes below a certain percentage of the local median income.
This obligation may impair Oasis' ability to achieve increased rental rates
on portions of these communities.
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<PAGE> 83
Development Properties
The following table presents certain information concerning Oasis'
development activities:
<TABLE>
<CAPTION>
APPROXIMATE ESTIMATED
NUMBER RENTABLE APPROXIMATE AVERAGE ANTICIPATED TOTAL
OF AREA TOTAL UNIT SIZE CONSTRUCTION CONSTRUCTION INVESTMENT
COMMUNITIES UNITS (SQ. FT.) ACREAGE(1) (SQ. FT.) COMMENCEMENT COMPLETION (2)
- ----------------------- -------- ------------ ------------ ---------- -------------- ------------ ----------
($ in millions)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Under Construction
Denver:
Oasis Interlocken.... 340 336,350 19.5 989 4th Qtr. 1997 2nd Qtr. 1999 $ 32.3
Future Construction
Las Vegas:
Oasis Bluffs II...... 414 461,552 50.6 1,115 (3) (3)
Oasis Harbor II...... 248 250,026 13.6 1,008 (3) (3)
Oasis Miramar........ 352 350,112 19.6 995 (3) (3)
----- --------- ----- -----
Subtotal/weighted
average............ 1,014 1,061,690 83.8 1,047
----- --------- ----- -----
Total/weighted average. 1,354 1,398,040 101.2 [ ]
===== ========= ===== =====
</TABLE>
- ----------
(1) Reflects gross acreage for each community.
(2) Includes cost of land.
(3) In preliminary planning stage; no construction schedule has been
established. Commencement of construction is contingent upon a number of
factors, including suitable financing, and there can be no assurances as to
when or if such financing will be obtained.
The time required to complete the lease-up phase of development varies
from project to project. Oasis typically develops its properties in phases,
opening a portion of the total units to occupancy at one time. Oasis begins
leasing activities approximately 60 days before the first phase is opened for
occupancy, setting up a temporary leasing office at the property.
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<PAGE> 84
SECURITY OWNERSHIP
CAMDEN
The following table sets forth certain information regarding the
beneficial ownership of Camden Common Shares as of ________, 1998 for (i) each
person or entity known by Camden to be the beneficial owner of more than 5% of
Camden's Common Shares, (ii) the Named Executive Officers, (iii) each trust
manager and (iv) all trust managers and executive officers of Camden as a group.
Each person or entity named in the table has sole voting and investment power
with respect to all Camden Common Shares shown as beneficially owned, except as
otherwise set forth in the notes to the table. The number of shares reported as
beneficially owned by a person or entity represents the number of Camden Common
Shares the person or entity holds plus the number of Camden Common Shares into
which vested options held by the person are exercisable within 60 days and the
number of Camden Common Shares into which units held by the person or entity are
redeemable. Camden may elect to issue Camden Common Shares rather than pay cash
upon redemption of such units or convert the units at the rate of one Camden
Common Share for each unit. These units represent the limited partnership
ownership interest in Camden Operating, L.P. The extent to which a person or
entity holds Camden Common Shares, options or units is set forth in the
footnotes.
<TABLE>
<CAPTION>
Camden Common Shares
Camden Common Shares Beneficially Owned at
Name and Address of Beneficial Owners(1) Beneficially Owned the Effective Time
- ------------------------------------- --------------------- ----------------------
Amount Percent Amount Percent
---------------------- ------ -------
<S> <C> <C> <C> <C>
William R. Cooper [to come]
PGI Associates, L.P.
Richard J. Campo
D. Keith Oden
Lewis A. Levey
H. Malcom Stewart
G. Steven Dawson
Steven A. Webster
F. Gardner Parker
George A. Hrdlicka
All Trust Managers and
executive officers as a group (13 persons)
</TABLE>
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<PAGE> 85
OASIS
The following table sets forth certain information available to Oasis
with respect to shares of the Oasis Common Stock (i) held by those persons known
to Oasis to be the beneficial owners (as determined under the rules of the
Commission) of more than 5% of the outstanding shares of Oasis' Common Stock and
(ii) held individually and as a group by the directors, the Chief Executive
Officer and the other four most highly compensated officers of Oasis. Except as
noted, all information is as of February 4, 1998.
<TABLE>
<CAPTION>
Camden Common Stock
Oasis Common Stock Beneficially Owned at
Name and Address of Beneficial Owners Beneficially Owned the Effective Time
- ------------------------------------- -------------------------- ---------------------------
Amount(1) Percent(2) Amount(1) Percent(2)
--------- ---------- --------- ---------
<S> <C> <C> <C> <C>
Directors and Certain Executive Officers:
Robert V. Jones (3) .................... 1,251,767 7.6 950,091 2.1
Scott S. Ingraham (4) .................. 315,619 1.9 163,654 *
Allan O. Hunter, Jr. (5) ............... 236,569 1.4 179,555 *
Walter B. Eeds (6) ..................... 123,139 * 93,462 *
John M. Clayton (7) .................... 3,750 * 2,846 *
John M. Galvin (8) ..................... 15,000 * 11,385 *
Edward R. Muller (9) ................... 3,300 * 2,504 *
Peter L. Rhein (8) ..................... 14,000 * 10,626 *
Robert H. Smith (8) .................... 30,400 * 23,073 *
Executive Officers and
Directors as a Group (13 persons) .... 2,000,044 11.7 1,518,053 3.4
5% Holders:
LaSalle Advisors Limited Partnership and 1,437,067 8.8 1,090,733 2.5
ABKB/LaSalle Securities Limited
Partnership (10).........
J.P. Morgan
Investment Management Inc. (11) ...... 1,373,051 8.4 1,042,145 2.4
</TABLE>
- --------------------
* Less than 1%
(1) Beneficial ownership as of February 4, 1998 includes shares subject to
options that are exercisable within 60 days after February 4, 1998 and
excludes unvested options to purchase shares of Oasis Common Stock that
will automatically become vested at the Effective Time as follows:
Robert V. Jones, 134,375 options; Scott S. Ingraham, 112,500 options;
Allan O. Hunter, Jr., 56,250 options; Walter B. Eeds, 56,250 options;
John M. Clayton, 6,250 options; John M. Galvin, 3,000 options; Edward
R. Mueller, 3,000 options; Peter L. Rhein, 3,000 options; and Robert H.
Smith, 3,000 options.
(2) Percentage of beneficial ownership as of February 4, 1998 for each
person includes shares subject to options held by that person that are
exercisable within 60 days after February 4, 1998, and is computed as
if those shares were outstanding on February 4, 1998.
(3) Includes 776,499 shares held in trust for the benefit of Mr. Jones and
of which he is the trustee and 3,000 shares held by minor children of
Mr. Jones. Also includes 253,125 shares issuable upon the exercise of
currently exercisable options. Business address: 3275 South Jones,
#105, Las Vegas, Nevada 89102.
(4) Includes 750 shares held by minor children of Mr. Ingraham and 237,500
shares issuable upon the exercise of currently exercisable options.
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<PAGE> 86
(5) Includes 550 shares held in trust, of which Mr. Hunter is trustee, for
the benefit of family members of Mr. Hunter and 168,750 shares
issuable upon the exercise of currently exercisable options.
(6) Includes 68,750 shares issuable upon the exercise of currently
exercisable options.
(7) Includes 3,750 shares issuable upon the exercise of currently
exercisable options.
(8) Includes 9,000 shares issuable upon the exercise of currently
exercisable options.
(9) Includes 3,000 shares issuable upon the exercise of currently
exercisable options.
(10) Based upon information set forth in an amended Schedule 13G filed as
of February 12, 1997 by LaSalle Advisors Limited Partnership
("LaSalle"), ABKB/LaSalle Securities Limited Partnership ("ABKB") and
William K. Morrill, Jr. and Keith R. Pauley, as employees of LaSalle.
Address: 11 South LaSalle Street, Chicago, Illinois 60603. Includes
159,926 shares over which LaSalle and Messrs. Morrill and Pauley
exercise shared voting power, 434,626 shares over which LaSalle and
Messrs. Morrill and Pauley exercise shared dispositive power, 373,365
shares over which ABKB and Messrs. Morrill and Pauley exercise shared
voting power and 469,150 shares over which ABKB and Messrs. Morrill
and Pauley exercise shared dispositive power.
(11) Based upon information provided by J.P. Morgan Inc. ("J.P. Morgan"),
as of February 4, 1998. Address: 522 Fifth Avenue, New York, New York
10036. Includes 1,014 shares over which J.P. Morgan exercises shared
voting and dispositive power and 1,372,037 shares over which
J.P. Morgan exercises sole voting and dispositive power.
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<PAGE> 87
DESCRIPTION OF CAMDEN SECURITIES
The following is a summary of certain provisions of Camden's
securities. Such summary is qualified in its entirety by reference to the Camden
Declaration of Trust and the Camden Bylaws and to the Certificate of
Designation, Preferences and Rights of Series A Cumulative Convertible Preferred
Shares of Beneficial Interest of Camden (the "Certificate of Designation"), the
form of which is attached hereto as Annex II and incorporated herein by
reference.
CAMDEN COMMON SHARES
The Camden Declaration of Trust authorizes 100,000,000 Camden Common
Shares. As of February 4, 1998, 31,714,881 Camden Common Shares were
outstanding. Immediately following the Effective Time, 12,391,796 Camden Common
Shares will be issued to former holders of Oasis Common Stock. An additional
______ Camden Common Shares will be reserved for issuance upon exercise of stock
options, conversion of the Camden Series A Preferred Shares or exchange of the
Oasis Martinique LLC Units.
All Camden Common Shares are identical and each entitles the holder
thereof to one vote at all meetings of the shareholders of Camden. Except as
otherwise specifically required by law or the Camden Declaration of Trust or as
specifically provided in any resolution or resolutions of the Camden Board
providing for the issuance of any particular series of Camden Preferred Shares
(as defined below), the exclusive voting power of Camden is vested in the Camden
Common Shares. No holder of Camden Common Shares has any preference, conversion,
exchange or preemptive rights.
CAMDEN PREFERRED SHARES
General
The Camden Declaration of Trust authorizes 10,000,000 preferred shares,
par value $.01 per share (the "Camden Preferred Shares"). The Camden Declaration
of Trust also authorizes Camden to issue one or more series of Preferred Shares,
each such series to consist of such number of shares as is determined by
resolution of the Camden Board creating such series. The Camden Preferred Shares
of each such series will have such designations, preferences, conversion,
exchange or other rights, relations, limitations as to dividends, qualifications
or terms, or conditions of redemption thereof, as shall be stated and expressed
by the Camden Board in the resolution or resolutions providing for the issuance
of such series of Camden Preferred Shares. The issuance in the future of Camden
Preferred Shares or the designation of authorized but unissued Camden Preferred
Shares with voting and other rights that may be established by the Camden Board
in its discretion without shareholder approval may be used by Camden to create
voting impediments or otherwise delay or prevent a change in control of Camden.
By issuance of Camden Preferred Shares, the Camden Board could modify the rights
of holders of Camden Common Shares. Except for the issuance of the Camden Series
A Preferred Shares pursuant to the Merger Agreement, the Camden Board has no
current intention to authorize or issue any Camden Preferred Shares.
Camden Series A Preferred Shares
In connection with the consummation of the Merger, the Camden Board has
authorized the issuance of the Camden Series A Preferred Shares, of which
4,165,000 shares will be issued to former holders of Oasis Series A Preferred
Stock. The Camden Series A Preferred Shares will, when issued, be fully paid and
nonassessable and no holder of Camden Series A Preferred Shares will have any
preemptive right to subscribe to any securities of Camden. The Camden Series A
Preferred Shares will not be subject to any sinking fund or other obligation of
Camden to redeem or retire the Camden Series A Preferred Shares. Unless
converted into Camden Common Shares or redeemed by Camden, the Camden Series A
Preferred Shares will have a perpetual term, with no maturity. The Camden Series
A Preferred Shares have been approved for listing on the NYSE under the symbol
"__," subject to official notice of issuance.
Ranking. The Camden Series A Preferred Shares will rank senior to the
Camden Common Shares with respect to payment of dividends and amounts upon
liquidation, dissolution or winding up of Camden.
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<PAGE> 88
While any Camden Series A Preferred Shares are outstanding, Camden may
not authorize, create or increase the authorized amount of any class or series
of shares that ranks prior to or senior to the Series A Preferred Shares with
respect to the payment of dividends or amounts upon liquidation, dissolution or
winding up without the consent of the holders of two-thirds of the outstanding
Camden Series A Preferred Shares and all other Voting Preferred Shares (as
defined below), voting as a single class. However, Camden may create additional
classes of shares, increase the authorized number of Camden Preferred Shares or
issue series of Camden Preferred Shares that rank on a parity with the Camden
Series A Preferred Shares with respect, in each case, to the payment of
dividends and amounts upon liquidation, dissolution or winding up of Camden
("Parity Shares") without the consent of any holder of Camden Series A Preferred
Shares. See "--Voting Rights."
Dividends. Holders of Camden Series A Preferred Shares will be entitled
to receive, when as and if declared by the Camden Board, out of funds of Camden
legally available for payment therefore, cumulative cash dividends payable in an
amount per share equal to the greater of (i) $0.5625 per quarter (equivalent to
$2.25 per annum) or (ii) the cash dividends paid or payable (determined on each
of the quarterly dividend payment dates referred to below) on a number of Camden
Common Shares equal to the number of Camden Common Shares into which a Camden
Series A Preferred Share is convertible. Dividends on the Camden Series A
Preferred Shares are payable quarterly in arrears on the fifteenth day (or the
next succeeding business day) of February, May, August and November of each
year. Each such dividend will be payable to holders of record as they appear on
the share records of Camden at the close of business on such record dates, not
exceeding 60 days preceding the payment dates thereof, as will be fixed by the
Camden Board. Dividends will accrue from the date of original issuance of the
Camden Series A Preferred Shares. Dividends will be cumulative from such date,
whether or not in any dividend period or periods such dividends are declared or
there will be funds of Camden legally available for the payment of such
dividends. Accumulated dividends on Camden Series A Preferred Shares will not
bear interest. Dividends payable on the Camden Series A Preferred Shares for any
period less than a full dividend period will be computed on the basis of twelve
30-day months and a 360-day year.
Except as provided in the next sentence, no dividend will be declared
or paid or other distribution of cash or other property declared or made
directly by Camden or any affiliate or any person acting on behalf of Camden or
any of its affiliates on any Parity Shares unless full cumulative dividends have
been declared and paid or are contemporaneously declared and funds sufficient
for payment set aside on the Camden Series A Preferred Shares for all prior and
contemporaneous dividend periods. If accumulated and accrued dividends on the
Camden Series A Preferred Shares for all prior and contemporaneous dividend
periods have not been paid in full, then any dividend declared on the Camden
Series A Preferred Shares for any dividend period and on any Parity Shares will
be declared ratably in proportion to accumulated, accrued and unpaid dividends
on the Camden Series A Preferred Shares and the Parity Shares.
Neither Camden nor any affiliate nor any person acting on behalf of
Camden or any of its affiliates will (i) declare, pay or set apart funds for the
payment of any dividend or other distribution of cash or other property declared
or made directly or indirectly by Camden or any such affiliate or person with
respect to any Junior Shares (as defined below) or (ii) redeem, purchase or
otherwise acquire for consideration any Junior Shares through a sinking fund or
otherwise (other than a reduction or purchase or other acquisition of Camden
Common Shares made for purposes of an employee incentive or benefit plan of
Camden or any of its subsidiaries) or (iii) pay or distribute any cash or other
property for the benefit of any holder of Junior Shares in respect thereof,
directly or indirectly, unless (A) all cumulative dividends with respect to the
Camden Series A Preferred Shares and any Parity Shares at the time such
dividends are payable have been paid or such dividends have been declared and
funds have been set apart for payment of such dividends and (B) sufficient funds
have been paid or set apart for the payment of the dividend for the current
dividend period with respect to the Camden Series A Preferred Shares and any
Parity Shares. The foregoing limitations do not restrict Camden's ability to
take the foregoing actions with respect to any Parity Shares.
As used herein, (i) the term "Parity Shares" does not include dividends
payable solely in Junior Shares or in options, warrants or rights to holders of
Junior Shares to subscribe for or purchase any Junior Shares, and (ii) the term
"Junior Shares" means the Camden Common Shares, and any other class of capital
shares of Camden now or hereafter issued and outstanding that ranks junior to
the Camden Series A Preferred Shares as to the payments or amounts upon
liquidation, dissolution or winding up of Camden.
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Redemption. The Camden Series A Preferred Shares are not redeemable by
Camden prior to April 1, 2001. On and after April 1, 2001, the Camden Series A
Preferred Shares are redeemable at the option of Camden, in whole or in part,
either for (i) such number of authorized but previously unissued Camden Common
Shares as equals the per share liquidation preference of the Camden Series A
Preferred Shares to be redeemed (without regard to accumulated, accrued and
unpaid dividends, if any, to the date set for redemption, that are to be paid in
cash, whether or not earned or declared) divided by the Conversion Price (as
defined below) as of the opening of business on the date set for such
redemption, subject to adjustment, in certain circumstances, or (ii) for cash at
a redemption price of $25.00, plus any accumulated, accrued and unpaid
dividends, whether or not earned or declared. Camden may exercise this option to
deliver Camden Common Shares upon redemption only if for 20 trading days, within
any period of 30 consecutive trading days, including the last trading day of
such period, the closing price of the Camden Common Shares on the NYSE (or such
other exchange or quotation system as the Camden Common Shares are listed or
quoted on) equals or exceeds the Conversion Price per share in effect on such
trading days, subject to adjustments in certain circumstances. In order to
exercise this redemption option, Camden must issue a press release announcing
the redemption prior to the opening of business on the second trading day after
the conditions in the preceding sentences have, from time to time, been met.
Notice of redemption will be given by mail or by publication (with
subsequent prompt notice by mail) to the holders of record of the Camden Series
A Preferred Shares not more than four business days after Camden issues the
press release, in the case of a redemption for Common Shares, or not less than
30 nor more than 60 days prior to the date of redemption, in the case of a
redemption for cash. The redemption date will be a date selected by Camden not
less than 30 nor more than 60 days after the date on which Camden gives the
notice of redemption or issues the press release announcing its intention to
redeem the Camden Series A Preferred Shares, as the case may be. If fewer than
all of the Camden Series A Preferred Shares are to be redeemed, the shares to be
redeemed will be selected by lot or pro rata or in some other equitable manner
determined by Camden.
Notwithstanding the foregoing, unless full cumulative dividends on all
Camden Series A Preferred Shares have been or contemporaneously are declared and
paid or declared and a sum sufficient for the payment thereof set apart for
payment for all past dividend periods and the then current dividend period, no
Camden Series A Preferred Shares will be redeemed unless all outstanding Camden
Series A Preferred Shares are simultaneously redeemed. The foregoing will not,
however, prevent the purchase or acquisition of Camden Series A Preferred Shares
to preserve the REIT status of Camden or pursuant to a purchase of exchange
offer made on the same terms to holders of all outstanding Camden Series A
Preferred Shares. In addition, unless full cumulative dividends on all
outstanding Camden Series A Preferred Shares have been or contemporaneously are
declared and paid or declared and a sum sufficient for the payment thereof set
apart for payment for all past dividend periods and the then current dividend
period, Camden will not purchase or otherwise acquire directly or indirectly any
Camden Series A Preferred Shares (except by conversion into or exchange for
capital shares of Camden ranking junior to the Camden Series A Preferred Shares
as to dividends and liquidation). The foregoing will not, however, prevent the
purchase or acquisition of Camden Series A Preferred Shares to preserve the REIT
status of Camden or pursuant to a purchase or exchange offer made on the same
terms to holders of all outstanding Camden Series A Preferred Shares.
On the redemption date, Camden must pay in cash on each Camden Series A
Preferred Share to be redeemed any accumulated, accrued and unpaid dividends, if
any, on the redemption date, whether or not earned or declared. In the case of a
redemption date falling after a dividend record date and prior to the related
dividend payment date, the holders of the Camden Series A Preferred Shares at
the close of business on such record date will be entitled to receive the
dividend payable on such shares on the corresponding dividend payment date,
notwithstanding the redemption of such shares following such dividend record
date. Except as provided for in the preceding sentences, no payment or allowance
will be made for accumulated or accrued dividends on any Camden Series A
Preferred Shares called for redemption or on the Camden Common Shares issuable
upon such redemption.
In the event that full cumulative dividends on the Camden Series A
Preferred Shares and any Parity Shares have not been paid or declared and set
apart for payment, the Camden Series A Preferred Shares may not be redeemed in
part and Camden may not purchase or acquire Camden Series A Preferred Shares
other than pursuant to a purchase or exchange offer made on the same terms to
all holders of Camden Series A Preferred Shares.
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On and after the date fixed for redemption, provided that Camden has
made available at the office of the registrar and transfer agent for the Camden
Series A Preferred Shares a sufficient number of Camden Common Shares and/or an
amount or cash to effect the redemption, dividends will cease to accumulate or
accrue on the Camden Series A Preferred Shares called for redemption (except
that, in the case of a redemption date after a dividend record date and prior to
the related dividend payment date, holders of Camden Series A Preferred Shares
on the dividend record date will be entitled on such dividend payment date to
receive the dividend payable on such shares), such shares will no longer be
deemed to be outstanding and all rights of the holders of such Camden Series A
Preferred Shares will cease except the right to receive the Camden Common Shares
upon such redemption. At the close of business on the redemption date, each
holder of Camden Series A Preferred Shares to be redeemed (unless Camden
defaults in the delivery of the Camden Common Shares or cash) will be, without
further action, deemed a holder of the Camden Common Shares and/or amount of
cash for which such Camden Series A Preferred Shares are redeemable.
Fractional Camden Common Shares will not be issued upon redemption of
the Camden Series A Preferred Shares, but, in lieu thereof, Camden will pay an
amount in cash based on the current market price of the Camden Common Shares on
the day prior to the redemption date.
Liquidation Preference. The holders of the Camden Series A Preferred
Shares will be entitled to receive in the event of any liquidation, dissolution
or winding up of Camden, whether voluntary or involuntary, $25.00 per Camden
Series A Preferred Share plus an amount per share equal to all dividends
(whether or not earned or declared) accumulated, accrued and unpaid thereon to
the date of final distribution to such holders (the "Liquidation Preference"),
and no more.
Until the holders of the Camden Series A Preferred Shares have been
paid the Liquidation Preference in full, no payment will be made to any holder
of Junior Stock upon the liquidation, dissolution or winding up of Camden. If,
upon any liquidation, dissolution or winding up of Camden, the assets of Camden,
or proceeds thereof, distributable among the holders of the Camden Series A
Preferred Shares are insufficient to pay in full the Liquidation Preference and
the liquidation preference with respect to any other Parity Shares, then such
assets, or the proceeds thereof, will be distributed among the holders of the
Camden Series A Preferred Shares and such Parity Shares ratably in accordance
with the respective amounts that would be available on such Camden Series A
Preferred Shares and such Parity Shares if all amounts payable thereon were paid
in full. Neither a consolidation or merger of Camden with another corporation, a
statutory share exchange by Camden nor a sale or transfer of all or
substantially all of Camden's assets will be considered a liquidation,
dissolution or winding up, voluntary or involuntary, of Camden.
Voting Rights. Except as indicated below, or except as otherwise from
time to time required by applicable law, the holders of the Camden Series A
Preferred Shares will have no voting rights.
If six quarterly dividends payable on the Camden Series A Preferred
Shares or any other Parity Shares are in arrears, whether or not earned or
declared, the number of trust managers then constituting the Camden Board will
be increased by two and the holders of the Camden Series A Preferred Shares
voting together as a class with the holders of any other series of Parity Shares
(any other such series, the "Voting Preferred Shares"), will have the right to
elect the two additional trust managers to serve on the Camden Board at any
annual meeting of shareholders or special meeting held in place thereof, or at a
properly called special meeting of the holders of the Camden Series A Preferred
Shares and such Voting Preferred Shares and at each subsequent annual meeting of
shareholders or special meeting held in place thereof, until all such dividends
in arrears and dividends for the current quarterly period on the Camden Series A
Preferred Shares and such Voting Preferred Shares have been paid or declared and
set aside for payment.
The approval of two-thirds of the outstanding Camden Series A Preferred
Shares and all other series of Voting Preferred Shares similarly affected,
voting as a single class, is required to amend the Camden Declaration of Trust
to affect materially and adversely the rights, preference or voting power of the
holders of the Camden Series A Preferred Shares or the Voting Preferred Shares
or to authorize, create or increase the authorized amount of, any class of
shares having rights prior to or senior to the Camden Series A Preferred Shares
with respect to the payment of dividends or amounts upon liquidation,
dissolution or winding up. However, Camden may create additional classes of
Parity Shares or Junior Shares, increase the authorized number of Parity Shares
or Junior Shares and issue additional series of Parity Shares or Junior Shares
without the consent of any holder of the Camden Series A Preferred Shares.
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Except as required by law, the holders of the Camden Series A Preferred
Shares will not be entitled to vote on any merger or consolidation involving
Camden or a sale of all or substantially all of the assets of Camden. See
"--Conversion Price Adjustments."
Conversion Rights. Camden Series A Preferred Shares will be
convertible, in whole or in party, at any time, at the option of the holder
thereof, into authorized but previously unissued Camden Common Shares at a
conversion price of $32.4638 per Camden Common Share (equivalent to a conversion
rate of .7701 Camden Common Share for each share of Camden Series A Preferred
Shares), subject to adjustment as described below (the "Conversion Price"). The
right to convert Camden Series A Preferred Shares called for redemption will
terminate at the close of business on the redemption date for such shares. For
information as to notices of redemption, see "--Redemption."
Conversion of Camden Series A Preferred Shares, or a specified portion
thereof, may be effected by delivering certificates evidencing such shares,
together with written notice of conversion and a proper assignment of such
certificates to Camden or in blank, to the office or agency to be maintained by
Camden for that purpose. Initially such office will be at the principal
corporate trust office of American Stock Transfer and Trust Company, New York,
New York.
Each conversion will be deemed to have been effected immediately prior
to the close of business on the date on which the certificates for Camden Series
A Preferred Shares have been surrendered and notice shall have been received by
Camden as aforesaid (and, if applicable, payment of an amount equal to the
dividend payable on such shares shall have been received by Camden as described
below) and the conversion shall be at the Conversion Price in effect at such
time and on such date.
Holders of Camden Series A Preferred Shares at the close of business on
a dividend record date will be entitled to receive the dividend payable on such
shares on the corresponding dividend payment date notwithstanding the conversion
of such shares following such dividend record date and prior to such dividend
payment date. However, Camden Series A Preferred Shares surrendered for
conversion during the period between the close of business on any dividend
record date and the opening of business on any corresponding dividend payment
date (except shares converted after the issuance of a notice of redemption with
respect to a redemption date during such period) must be accompanied by payment
of an amount equal to the dividend payable on such shares on such dividend
payment date. A holder of Camden Series A Preferred Shares on a dividend record
date who (or whose transferee) tenders any such shares for conversion into
Camden Common Shares on such dividend payment date will receive the dividend
payable by Camden on such Camden Series A Preferred Shares on such date, and the
converting holder need not include payment of the amount of such dividend upon
surrender of Camden Series A Preferred Shares for conversion. Except as provided
above, Camden will make no payment or allowance for unpaid dividends, whether or
not in arrears, on converted shares or for dividends on the Camden Common Shares
issued upon such conversion.
Fractional Camden Common Shares will not be issued upon conversion but,
in lieu thereof, Camden will pay an amount in cash based on the closing market
price of the Camden Common Shares on the day prior to the conversion date.
Conversion Price Adjustments. The Conversion Price is subject to
adjustment upon certain events, including (i) dividends (and other
distributions) payable in Camden Common Shares or any class of capital shares of
Camden, (ii) the issuance to all holders of Camden Common Shares of certain
rights or warrants entitling them to subscribe for or purchase Camden Common
Shares at a price per share less than the fair market value per Camden Common
Share, (iii) subdivisions, combinations and reclassifications of Camden Common
Shares, and (iv) distributions to all holders of Camden Common Shares of
evidences of indebtedness of Camden or of assets (including securities and cash,
but excluding those dividends, rights, warrants and distributions referred to in
clause (i), (ii) or (iii) above and excluding cash dividends and cash
distributions on Camden Common Shares to the extent the same either constitute
Permitted Common Share Cash Distributions (as herein defined) or result in a
payment of an equal cash dividend to the holders of Camden Series A Preferred
Shares (see "--Dividends")). In addition to the foregoing adjustments, Camden
will be permitted to make such reductions in the Conversion Price as it
considers to be advisable in order that any event treated for federal income tax
purposes as a dividend of share or share rights will not be taxable to the
holders of the Camden Common Shares or, if that is not possible, to diminish any
income taxes that are otherwise payable because of such event.
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"Permitted Common Share Cash Distributions" means cash dividends and
cash distributions paid on the Camden Common Shares after December 31, 1997 not
in excess of the sum of Camden's cumulative undistributed net earnings at
December 31, 1997, plus the cumulative amount of Funds Available for
Distribution, as determined by the Camden Board on a basis consistent with the
financial reporting practices of Camden, after December 31, 1997, minus the
cumulative amount of dividends accumulated, accrued or paid on the Camden Series
A Preferred Shares and all other classes of Camden Preferred Shares after
January 1, 1998.
If Camden is a party to any transaction (including without limitation a
merger, consolidation, statutory share exchange, tender offer for all or
substantially all of the Camden Common Shares or sale of all or substantially
all of Camden's assets), in each case as a result of which Camden Common Shares
will be converted into the right to receive shares, securities or other property
(including cash or any combination thereof), each Camden Series A Preferred
Share, if convertible after the consummation of the transaction, will thereafter
be convertible into the kind and amount of shares, securities and other property
receivable (including cash or any combination thereof) upon the consummation of
such transaction by a holder of that number of shares or fraction thereof of
Camden Common Shares into which one Camden Series A Preferred Share was
convertible immediately prior to such transaction (assuming such holder of
Camden Common Shares failed to exercise any rights of election and received per
share the kind and amount of shares, securities and other property (including
cash or any combination thereof) received per share by a plurality of
non-electing shares). Camden may not become a party to any such transaction
unless the terms thereof are consistent with the foregoing.
Transfer Agent, Registrar, Dividend Disbursing Agent and Redemption
Agent. The transfer agent, registrar, dividend agent and redemption agent for
the Camden Series A Preferred Shares will be the American Stock Transfer and
Trust Company, New York, New York.
RESTRICTIONS ON TRANSFER
With certain exceptions, no person may own, or be deemed to own by
virtue of the attribution provisions of the Code, more than 9.8% of Camden's
total outstanding capital shares. See "COMPARATIVE RIGHTS OF SHAREHOLDERS--REIT
Qualification Provisions."
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS TO HOLDERS OF CAMDEN SERIES A
PREFERRED SHARES
The following is a summary of certain United States federal income tax
consequences of the ownership and disposition of Camden Series A Preferred
Shares. Camden does not intend to seek a ruling from the Internal Revenue
Service (the "Service" or "IRS") with respect to any of these tax consequences.
This summary is for general information only and deals only with holders who are
initial holders of Camden Series A Preferred Shares and who holds Camden Series
A Preferred Shares as capital assets within the meaning of Section 1221 of the
Code. The tax treatment of a holder of Camden Series A Preferred Shares will
vary depending upon his or her particular situation, and this summary does not
purport to deal with all aspects of taxation that may be relevant to holders of
Camden Series A Preferred Shares in light of such holder's particular investment
or tax circumstances, or to certain types of holders subject to special
treatment under the federal income tax laws, including, without limitation, life
insurance companies, certain financial institutions, broker-dealers,
shareholders holding Camden Series A Preferred Shares as part of a conversion
transaction, as part of a hedge or hedging transaction, or as a position in a
straddle for tax purposes, tax-exempt organizations (except to the extent
discussed under the heading "--Taxation of Tax-Exempt Shareholders"), or foreign
corporations, foreign partnerships and persons who are not citizens or residents
of the United States (except to the extent discussed under the heading
"--Taxation of Non-U.S. Shareholders"). There can be no assurance that future
changes in applicable law or administration and judicial interpretations
thereof, any of which could have a retroactive effect, will not adversely affect
the tax consequences discussed herein or that there will not be differences of
opinion as to the interpretation of applicable law. In addition, the summary
below does not consider the effect of any foreign state, local or other tax laws
that may be applicable to holders of Camden Series A Preferred Shares.
This discussion does not address any aspects of federal income taxation
to Camden relating to its election to be taxed as a REIT. For a summary of
certain federal income tax considerations to Camden, see "FEDERAL INCOME TAX
CONSIDERATIONS--Taxation of Camden" below. The discussion set forth below
assumes Camden qualifies as a REIT
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under the Code. If in any taxable year Camden were to fail to qualify as a REIT,
Camden would not be allowed a deduction for dividends paid to shareholders in
computing taxable income and would be subject to federal income tax on its
taxable income at regular corporate rates. As a result, the funds available for
distribution to Camden's shareholders (including holders of Camden Series A
Preferred Shares) would be materially reduced.
PROSPECTIVE HOLDERS OF CAMDEN SERIES A PREFERRED SHARES ARE URGED TO CONSULT
THEIR OWN TAX ADVISORS REGARDING THE SPECIFIC TAX CONSEQUENCES TO THEM OF THE
ACQUISITION, OWNERSHIP AND SALE OF CAMDEN SERIES A PREFERRED SHARES, INCLUDING
THE FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX CONSEQUENCES OF SUCH
ACQUISITION, OWNERSHIP AND SALE AND OF POTENTIAL CHANGES IN APPLICABLE TAX LAWS.
Dividends, Other Distributions, and Adjustments in Conversion Price. As
used herein, the term "U.S. Shareholder" means a holder of Camden Series A
Preferred Shares who (for United States federal income tax purposes) (i) is a
citizen or resident of the United States, (ii) is a corporation, partnership, or
other entity created or organized in or under the laws of the United States or
of any political subdivision thereof, (iii) is an estate the income of which is
subject to United States federal income taxation regardless of its source or
(iv) is a trust whose administration is subject to the primary supervision of a
United States court and which has one or more United States persons who have the
authority to control all substantial decisions of the trust. Notwithstanding the
preceding sentence, to the extent provided in regulations, certain trusts in
existence on August 20, 1996, and treated as United States persons prior to such
date that elect to continue to be treated as United States persons, shall also
be considered U.S. Shareholders.
As long as Camden qualifies as a REIT, distributions made by Camden out
of its current or accumulated earnings and profits (and not designated as
capital gain dividends) will constitute dividends taxable to its taxable U.S.
Shareholders as ordinary income. Such distributions will not be eligible for the
dividends received deduction in the case of U.S. Shareholders that are
corporations. For purposes of determining whether distributions are out of
current or accumulated earnings and profits, the earnings and profits of Camden
will be allocated first to Camden Series A Preferred Shares and then to Camden
Common Shares.
Distributions made by Camden that are properly designated by Camden as
capital gain dividends will be taxable to U.S. Shareholders as gains (to the
extent that they do not exceed Camden's actual net capital gain for the taxable
year) from the sale or disposition of a capital asset. Depending on the period
of time that Camden held the assets which produced such gains, and on certain
designations, if any, which may be made by Camden, such gains may be taxable to
non-corporate U.S. Shareholders at a 20%, 25%, or 28% rate. U.S. Shareholders
that are corporations, may, however, be required to treat up to 20% of certain
capital gains dividends as ordinary income. To the extent that Camden makes
distributions (not designated as capital gain dividends) in excess of its
current and accumulated earnings and profits, such distributions will be treated
first as a tax-free return of capital to each U.S. Shareholder, reducing the
adjusted basis which such U.S. Shareholder has in his Camden Series A Preferred
Shares for tax purposes by the amount of such distribution (but not below zero),
with distributions in excess of a U.S. Shareholder's adjusted basis in his
shares taxable as capital gains (and as long-term capital gain if the shares
have been held by the U.S. Shareholder for more than one year (long-term capital
gain recognized by certain non-corporate shareholders is subject to federal
income tax at preferential capital gains rates, and such gain recognized with
respect to an asset with a holding period of more than 18 months is subject to
federal income tax at further reduced capital gains rates)), provided that the
shares have been held as a capital asset. Camden will notify shareholders at the
end of each year as to the portions of the distributions which constitute
ordinary income, net capital gain or return of capital. Dividends declared by
Camden in October, November, or December of any year and payable to a
shareholder of record on a specified date in any such month shall be treated as
both paid by Camden and received by the shareholder on December 31 of such year,
provided that the dividend is actually paid by Camden on or before January 31 of
the following calendar year. Shareholders may not include in their own income
tax return any net operating losses or capital losses of Camden.
Camden may elect to retain, rather than distribute as a capital gain
dividend, its net long-term capital gains. In such event, Camden would pay tax
on such retained net long-term capital gains. In addition, for tax years of
Camden beginning on or after January 1, 1998, to the extent designated by
Camden, a U.S. Shareholder generally would (i) include its proportionate share
of such undistributed long-term capital gains in computing its long-term capital
gains in its return for
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its taxable year in which the last day of Camden's taxable year falls (subject
to certain limitations as to the amount so includable), (ii) be deemed to have
paid the capital gains tax imposed on Camden on the designated amounts included
in such U.S. Shareholder's long-term capital gains, (iii) receive a credit or
refund for such amount of tax deemed paid by it, (iv) increase the adjusted
basis of its Camden Series A Preferred Shares by the difference between the
amount of such includable gains and the tax deemed to have been paid by it, and
(v) in the case of a U.S. Shareholder that is a corporation, appropriately
adjust its earnings and profits for the retained capital gains in accordance
with Treasury Regulations to be prescribed by the IRS.
Distributions made by Camden and gain arising from the sale or exchange
by a U.S. Shareholder of Camden Series A Preferred Shares will not be treated as
passive activity income, and, as a result, U.S. Shareholders generally will not
be able to apply any "passive losses" against such income or gain. Distributions
made by Camden (to the extent they do not constitute a return of capital)
generally will be treated as investment income for purposes of computing the
investment interest limitation. Gain arising from the sale or other disposition
of Camden Series A Preferred Shares, however, will not be treated as investment
income under certain circumstances.
In addition, holders of Camden Series A Preferred Shares may be deemed,
in certain circumstances, to have received a dividend (without a corresponding
cash distribution) upon an adjustment in the Conversion Price that is
attributable to distributions on Camden Common Shares. See "DESCRIPTION OF
CAMDEN SECURITIES--Camden Preferred Shares--Conversion Price Adjustments."
Sale or Exchange of Camden Series A Preferred Shares. Upon any sale,
exchange or other disposition of Camden Series A Preferred Shares to or with a
person other than Camden, a U.S. Shareholder will generally recognize gain or
loss for federal income tax purposes in an amount equal to the difference
between (i) the amount of cash and the fair market value of any other property
received on such sale or other disposition (less any portion thereof
attributable to accumulated and declared but unpaid distributions that the
selling shareholder is entitled to receive, which would have been characterized
as a dividend to the extent of Camden's current and accumulated earnings and
profits) and (ii) the holder's adjusted tax basis in such Camden Series A
Preferred Shares for tax purposes. Such gain or loss will be capital gain or
loss if the shares have been held by the U.S. Shareholder as a capital asset and
will constitute long-term capital gain or loss if the shares have been held by
the U.S. Shareholder for more than one year. Long-term capital gain recognized
by certain non-corporate U.S. Shareholders is subject to federal income tax at
preferential capital gains rates, and such gain recognized with respect to an
asset with a holding period of more than 18 months is subject to federal income
tax at further reduced capital gains rates. In general, any loss recognized by a
U.S. Shareholder upon the sale or other disposition of Camden Series A Preferred
Shares that have been held for six months or less (after applying certain
holding period rules) will be treated as long-term capital loss, to the extent
of distributions received by such U.S. Shareholder from Camden with were
required to be treated as long-term capital gains.
Redemption of Camden Series A Preferred Shares. A redemption of Camden
Series A Preferred Shares will be treated under Section 302 of the Code as a
distribution taxable as a dividend (to the extent of Camden's current and
accumulated earnings and profits) at ordinary income rates unless the redemption
satisfies one of the tests set forth in Section 302(b) of the Code and is
therefore treated as a sale or exchange of the redeemed shares. The redemption
will be treated as a sale or exchange if it (i) is "substantially
disproportionate" with respect to the holder, (ii) results in a "complete
termination" of the holder's stock interest in Camden, or (iii) is "not
essentially equivalent to a dividend" with respect to the holder, all within the
meaning of Section 302(b) of the Code. In determining whether any of these tests
have been met, shares of capital stock (including Camden Common Shares and other
equity interests in Camden) considered to be owned by the holder by reason of
certain constructive ownership rules set forth in the Code, as well as shares of
capital stock actually owned by the holder, must generally be taken into
account. Because the determination as to whether any of the alternative tests of
Section 302(b) of the Code will be satisfied with respect to any particular
holder of Camden Series A Preferred Shares depends upon the facts and
circumstances at the time that the determination must be made, prospective
holders of Camden Series A Preferred Shares are advised to consult their own tax
advisors to determine such tax treatment.
If a redemption of Camden Series A Preferred Shares is not treated as a
distribution taxable as a dividend to a particular holder, it will be treated,
as to the holder, as a taxable sale or exchange. As a result, such holder will
recognize gain or loss for federal income tax purposes in an amount equal to the
difference between (i) the amount of cash and the fair
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market value of any property received (less any portion thereof attributable to
accumulated and declared but unpaid dividends, which will be taxable as a
dividend to the extent of Camden's current and accumulated earnings and
profits), and (ii) the holder's adjusted basis in the Camden Series A Preferred
Shares for tax purposes. Such gain or loss will be capital gain or loss if the
shares have been held as a capital asset and will constitute long-term capital
gain or loss if the shares have been held by the holder for more than one year.
Long-term capital gain recognized by certain non-corporate shareholders is
subject to federal income tax at preferential capital gains rates, and such gain
recognized with respect to an asset with a holding period of more than 18 months
is subject to federal income tax at further reduced capital gains rates. In
general, any loss recognized by a U.S. Shareholder upon the sale or other
disposition of Camden Series A Preferred Shares that have been held for six
months or less (after applying certain holding period rules) will be treated as
long-term capital loss, to the extent of distributions received by such U.S.
Shareholder from Camden which were required to be treated as long-term capital
gains.
If a redemption of Camden Series A Preferred Shares is treated as a
distribution taxable as a dividend, the amount of the distribution will be
measured by the amount of cash and the fair market value of any property
received by the holder. The holder's adjusted basis in the redeemed Camden
Series A Preferred Shares for tax purposes will be transferred to the holder's
remaining shares of capital stock in Camden, if any. If the holder owns no other
shares of capital stock in Camden, such basis may, under certain circumstances,
be transferred to a related person or it may be lost entirely.
Conversion of Camden Series A Preferred Shares. Generally, no gain or
loss will be recognized by a U.S. Shareholder that converts Camden Series A
Preferred Shares into Camden Common Shares. Such U.S. Shareholder's tax basis in
the Camden Common Shares received upon the conversion will be the same as the
holder's tax basis in the converted Camden Series A Preferred Shares, reduced by
any cash received in lieu of fractional Camden Common Shares. Such U.S.
Shareholder's holding period for such Camden Common Shares will include the
holder's holding period for the converted Camden Series A Preferred Shares. A
U.S. Shareholder receiving cash in lieu of a fractional Camden Common Share will
generally recognize gain or loss equal to the difference between the amount of
cash so received and the holder's tax basis in the converted Camden Series A
Preferred Shares allocable to such fractional Camden Common Share.
Withholding. Camden will report to its U.S. Shareholders and the
Service the amount of dividends paid during each calendar year, and the amount
of tax withheld, if any. Under the backup withholding rules, a shareholder may
be subject to backup withholding at the rate of 31% with respect to dividends
paid and redemptions unless such holder (a) is a corporation or comes within
certain other exempt categories and, when required, demonstrates this fact, or
(b) provides a taxpayer identification number, certifies as to no loss of
exemption from backup withholding, and otherwise complies with the applicable
requirements of the backup withholding rules. A U.S. Shareholder that does not
provide Camden with his correct taxpayer identification number may also be
subject to penalties imposed by the Service. Any amount paid as backup
withholding will be creditable against the shareholder's income tax liability.
In addition, Camden may be required to withhold a portion of capital gain
distributions to any shareholders who fail to certify their non-foreign status
to Camden.
Taxation Of Tax-Exempt Shareholders. Generally, a tax-exempt investor
that is exempt from tax on its investment income, such as an individual
retirement account(IRA) or a 401(k) plan, that holds Camden Series A Preferred
Shares as an investment will not be subject to tax on dividends paid by Camden.
However, if such tax-exempt investor is treated as having purchased its Camden
Series A Preferred Shares with borrowed funds, some or all of its dividends from
Camden Series A Preferred Shares will be subject to tax. In addition, under some
circumstances certain pension plans (including 401(k) plans but not including
IRAs and government pension plans) that own more than 10% (by value) of Camden's
outstanding stock, including Camden Series A Preferred Shares and Camden Common
Shares, could be subject to tax on a portion of their dividends even if their
Camden Series A Preferred Shares are held for investment and are not acquired
with borrowed funds.
Taxation Of Non-U.S. Shareholders. The preceding discussion does not
address the rules governing United States federal income taxation of the
ownership and disposition of Camden Series A Preferred Shares by persons that
are not U.S. Shareholders ("Non-U.S. Shareholders"). In general, Non-U.S.
Shareholders may be subject to special tax withholding requirements on
distributions from Camden and with respect to their sale or other disposition of
Camden Series A Preferred Shares, except to the extent reduced or eliminated by
an income tax treaty between the United States and the Non-U.S. Shareholder's
country. A Non-U.S. Shareholder who is a shareholder of record and is eligible
for reduction or elimination
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of withholding must file an appropriate form with Camden in order to claim such
treatment. Non-U.S. Shareholders should consult their own tax advisors
concerning the federal income tax consequences to them of a purchase of Camden
Series A Preferred Shares, including the federal income tax treatment of
dispositions of interests in, and the receipt of distributions from, Camden.
COMPARATIVE RIGHTS OF SHAREHOLDERS
At the Effective Time, Oasis stockholders will become shareholders of
Camden whose rights will (i) cease to be defined and governed by the NGCL and
will be defined and governed by the Texas Real Estate Investment Trust Act, as
amended (the "Texas REIT Act"), and (ii) cease to be defined by the Oasis
Articles and the Oasis Bylaws and will be defined and governed by the Camden
Declaration of Trust and the Camden Bylaws. Certain provisions of the Camden
Declaration of Trust and the Camden Bylaws alter the rights of shareholders from
those that Oasis stockholders presently have and also alter certain powers of
management. These provisions are summarized below. This summary is qualified in
its entirety by reference to the Camden Declaration of Trust, the Camden Bylaws,
the Oasis Articles and the Oasis Bylaws and applicable law. In addition, Camden
could implement certain other changes by amending the Camden Declaration of
Trust or the Camden Bylaws.
CAPITALIZATION
Camden. Camden is authorized to issue 100,000,000 Camden Common Shares
and 10,000,000 Camden Preferred Shares of which, at the Effective Time,
4,165,000 Camden Preferred Shares will be designated as the Camden Series A
Preferred Shares. The Camden Declaration of Trust also provides for the
reclassification of outstanding capital shares as "Excess Securities" in
connection with transfers resulting in ownership of shares in violation of the
ownership limits set forth in the Camden Declaration of Trust in order to
protect Camden's status as a REIT for federal income tax purposes ("Camden
Excess Securities"). See "--REIT Qualification Provisions."
The Camden Declaration of Trust also authorizes Camden to issue one or
more series of Preferred Shares, each such series to consist of such number of
shares as is determined by resolution of the Camden Board creating such series.
The Camden Preferred Shares of each such series will have such designations,
preferences, conversion, exchange or other rights, relations, limitations as to
dividends, qualifications or terms, or conditions of redemption thereof, as
shall be stated and expressed by the Camden Board in the resolution or
resolutions providing for the issuance of such series of Camden Preferred
Shares. The issuance in the future of Camden Preferred Shares or the designation
of authorized but unissued Camden Preferred Shares with voting and other rights
that may be established by the Camden Board in its discretion without
shareholder approval may be used by Camden to create voting impediments or
otherwise delay or prevent a change in control of Camden. By issuance of Camden
Preferred Shares, the Camden Board could modify the rights of holders of Camden
Common Shares. Except for the issuance of the Camden Series A Preferred Shares
pursuant to the Merger Agreement, the Camden Board has no current intention to
authorize or issue any Camden Preferred Shares. See "DESCRIPTION OF CAMDEN
SECURITIES."
Oasis. Oasis is authorized to issue 160,000,000 shares, of which
100,000,000 are Oasis Common Stock, 45,000,000 are shares of Excess Stock, par
value $.01 per share, and 15,000,000 are shares of Preferred Stock, par value
$.01 per share ("Oasis Preferred Stock"), of which 4,165,000 shares have been
designated as the Oasis Series A Preferred Stock. The Oasis Articles also
provide for the reclassification of outstanding capital stock as "Excess Stock"
in connection with transfers resulting in ownership of shares in violation of
the ownerships limits set forth in the Oasis Articles in order to protect Oasis'
status as a REIT for federal income tax purposes (the "Oasis Excess Stock").
VOTING RIGHTS
Camden. Each holder of Camden Common Shares is entitled to one vote per
share and to the same and identical voting rights as other holders of Camden
Common Shares. Holders of Camden Common Shares do not have cumulative voting
rights. Except as may otherwise be provided in a designation of a series of
Camden Preferred Shares or as otherwise expressly required by law, holders of
Camden Preferred Shares do not have any voting rights. The holders of Camden
Excess Securities have no voting rights on any matters except as otherwise
expressly required by law.
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The holders of Camden Series A Preferred Shares will be afforded the
same voting rights as those currently afforded to holders of Oasis Series A
Preferred Stock. Such rights are described above under "DESCRIPTION OF CAMDEN
SECURITIES--Camden Preferred Shares."
Oasis. Each holder of Oasis Common Stock is entitled to one vote per
share and to the same and identical voting rights as other holders of Oasis
Common Stock. Holders of Oasis Common Stock do not have cumulative voting
rights. Holders of Oasis Preferred Stock have such voting rights, if any, as
established by the Oasis Board in the designation of a series of Oasis Preferred
Stock or as otherwise expressly required by law. The holders of Oasis Excess
Stock have no voting rights on any matters except as otherwise expressly
required by law.
The holders of the Oasis Series A Preferred Stock are afforded the same
voting rights as those that will be afforded to the holders of Camden Series A
Preferred Shares. Such rights are described above under "DESCRIPTION OF CAMDEN
SECURITIES--Camden Preferred Shares."
VOTING POWER
Upon consummation of the Merger, based on the capitalization of Camden
and Oasis on February 4, 1998, Camden shareholders and Oasis stockholders will
hold approximately 31,714,881 and 12,391,795 Camden Common Shares, respectively,
constituting approximately 72% and 28%, respectively, of Camden's voting power.
Following the Merger, neither Camden shareholders nor Oasis stockholders will
possess the same relative voting power in matters put to a vote of shareholders
of Camden as they possessed prior to the Merger. See "SECURITY OWNERSHIP."
TRUST MANAGERS AND DIRECTORS
Camden. The Camden Bylaws provide for a Board of Trust Managers having
two to ten members. The number of trust managers may be fixed from time to time
by resolution adopted by a majority of the Camden Board. Vacancies may be filled
by the majority of the trust managers or elected by the vote of the holders of
at least two-thirds of the outstanding Camden Common Shares at an annual or
special meeting of shareholders. Trust manager nominees who have not been
previously elected as trust managers by Camden shareholders will be elected at
the annual meeting of shareholders (except as provided in the preceding
sentence) by the affirmative vote of the holders of two-thirds of the
outstanding Camden Common Shares. Trust managers who have been previously
elected as trust managers by the shareholders of Camden will be reelected as the
annual meeting of the shareholders by the affirmative vote of the holders of a
majority of the Camden Common Shares present in person or by proxy at such
meeting. Any trust manager that has been previously elected as a trust manager
by shareholders who is not reelected by such majority vote at a subsequent
annual meeting will nevertheless remain in office until his or her successor is
elected and qualified.
A member of the Camden Board may be removed with or without cause by
the affirmative vote of shareholders holding at least two-thirds of all Camden
Common Shares authorized to be cast and entitled to vote on the election of
trust managers.
Oasis. The Oasis Bylaws provide that the Oasis Board will consist of
not less than four or more than nine persons. The number of persons constituting
the Oasis Board is seven. The directors of Oasis are divided into three classes
as nearly equal in number as possible, with terms of three years each. The
division of a board into staggered classes makes changes in the composition of
such board more difficult, and thus a potential change in control of a
corporation a lengthier and more difficult process. The Oasis Bylaws provide
that any vacancy on the Oasis Board will be filled by a successor elected by the
affirmative vote of a majority of the remaining directors.
Under the Oasis Articles, Oasis directors may be removed for cause or
without cause and by the affirmative vote of two-thirds of all the votes
entitled to be cast for the election of directors. A special meeting of
stockholders may be called, in accordance with the Oasis Bylaws, for the purpose
of removing a director.
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POWER TO CALL SPECIAL MEETINGS; ACTION BY WRITTEN CONSENT
Camden. The Texas REIT Act provides that special meetings of
shareholders may be called by the trust managers, any officer of the trust or
such other persons as may be provided in the declaration of trust or the bylaws.
The Camden Bylaws provide that special meetings of shareholders for any purpose
may be called by the Camden Board, any officer of Camden or the holders of at
least 10% of the shares entitled to vote at the meetings.
The Texas REIT Act and the Camden Bylaws provide that any action
required or permitted to be taken at a meeting of shareholders may be taken
without a meeting if a consent in writing, setting forth the action so taken, is
signed by all of the shareholders entitled to vote with respect to the subject
matter thereof, and such consent will have the same force and effect as a
unanimous vote of the shareholders.
Oasis. The NGCL provides that meetings of stockholders may be held in
the manner provided by the bylaws and requires that notice of the meeting be
signed by the president or a vice president, or the secretary, or an assistant
secretary, or by such other natural person as the bylaws may prescribe or the
directors may designate. The Oasis Bylaws provide that special meetings may be
held whenever called by the President or by the Oasis Board or by a vote of at
least a majority of the issued and outstanding capital stock of Oasis. It will
therefore be easier for former Oasis stockholders, upon becoming Camden
shareholders, to call a special meeting of shareholders to vote on a matter that
is opposed by the Camden Board, as calling such a meeting will require 10% of
the shares entitled to vote at such meeting to request such meeting.
The NGCL provides that, unless the articles of incorporation or the
bylaws of a company provide for different proportions, any action required or
permitted to be taken at a meeting of the stockholders may be taken without a
meeting if a written consent thereto is signed by stockholders holding at least
a majority of the voting power, except that if a different proportion of voting
power is required for such an action at a meeting, then that proportion of
written consent is required. Neither the Oasis Articles nor the Oasis Bylaws
require a different proportion for action to be taken by stockholders without a
meeting.
AMENDMENT OF CHARTER DOCUMENTS
Camden. The Camden Declaration of Trust may be amended by the
affirmative vote of at least two-thirds of the outstanding Camden Common Shares,
except that articles relating to the prohibition against engaging in non-REIT
businesses, approval of certain business combination, share ownership
requirements and amendment of the Camden Declaration of Trust require the
affirmative vote of at least 80% of the outstanding Camden Common Shares. The
Camden Bylaws may be amended by the affirmative vote of a majority of the
members of the Camden Board. In addition, to the extent not inconsistent with
the Texas REIT Act and the Camden Declaration of Trust and as specified in the
notice of the meeting, the Camden Bylaws (i) with respect to bylaws relating to
business at annual shareholder meetings, election and term of office of trust
managers, nomination of trust managers, removal of trust managers, vacancies of
trust managers and amendment of bylaws, may be amended by the affirmative vote
of two-thirds of the outstanding Camden Common Shares or (ii) with respect to
all other bylaws, may be amended by the affirmative vote of the holders of a
majority of the outstanding Camden Common Shares.
Oasis. The Oasis Articles may be amended by the affirmative vote of a
majority of all of the votes of stockholders entitled to be cast on the matter.
The Oasis Bylaws may be amended by the Oasis Board by a vote of not less than a
majority of such Board.
MERGERS
Camden. Pursuant to the Texas REIT Act, shareholder approval of a plan
of merger is not required if, among other things, the REIT is the surviving
entity in the merger, the declaration of trust will not differ from its
declaration of trust before the merger, each shareholder whose shares were
outstanding immediately before the effective date of the merger will hold the
same number of shares, with identical rights immediately after the effective
date of the merger and the voting power and number of participating shares
outstanding immediately after the merger, plus those shares issuable in the
merger, will not exceed more than 20% of the shares outstanding immediately
before the merger. In all other instances, unless the trust managers require a
greater vote or a vote by class or series, the affirmative vote of at least
two-thirds of the outstanding shares
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entitled to vote thereon is required for approval of a plan of merger or
exchange, unless any class or series of shares is entitled to vote as a class on
the plan of merger or exchange, in which event the affirmative vote of at least
two-thirds of the outstanding shares otherwise entitled to vote thereon is
required for approval.
Oasis. The NGCL contains similar provisions to those of the Texas REIT
Act with respect to approval of a plan of merger, except that a plan of merger
or exchange requires the approval of a majority of the voting power of a
corporation.
CERTAIN BUSINESS COMBINATIONS
Camden. The Camden Declaration of Trust provides that, under certain
circumstances, the affirmative vote of the holders of not less than 80% of the
outstanding shares of the Camden Common Shares and Camden Preferred Shares is
required for the approval or authorization of certain business combinations.
Generally, the type of combinations affected by this voting threshold are
substantial transactions between Camden and "related persons," defined to be
persons that beneficially own in the aggregate more than 50% of the capital
stock of Camden. Further, holders of not less than 50% of the outstanding shares
of capital stock not owned, directly or indirectly, by such "related person" is
required for approval of such combinations, unless the affirmative vote of not
less than 90% of the outstanding shares of capital stock of Camden is obtained.
Camden believes that these provisions will encourage any potential acquiror to
negotiate with the Camden Board, and may have the effect of limiting the ability
of potential acquirors to make a two-tiered bid for Camden in which all
shareholders would not be treated equally. These provisions may also discourage
certain potential acquirors unwilling to comply therewith.
Oasis. Under Section 78.438 of the NGCL, certain "Combinations" between
a resident domestic corporation (i.e., a domestic corporation that has 200 or
more stockholders) and any person that is an Interested Stockholder of that
resident domestic corporation are prohibited for three years from the date such
person first becomes an Interested Stockholder unless the Combination or
purchase of shares which first caused such person to become an Interested
Stockholder is approved by the board of directors of the resident domestic
corporation prior to the date of such Combination or purchase of shares.
As defined under the NCGL, the "Interested Stockholders" of a resident
domestic corporation include (i) the beneficial owners of 10% or more of the
voting power of the outstanding voting shares of the resident domestic
corporation and (ii) any affiliates or associates of the resident domestic
corporation who, at any time within the three years immediately before the date
in question, beneficially owned 10% or more of the voting power of the then
outstanding shares of the resident domestic corporation.
"Combinations" are broadly defined in the NGCL to include, among other
things, (i) mergers or consolidations with, (ii) sales, leases, mortgages,
pledges or other dispositions of assets having a market value of 5% or more of
the market value of the corporation's assets or outstanding shares, or
representing 10% or more of the corporation's earning power or net income, to,
(iii) certain transactions resulting in the issuance or transfer of any shares
having a market value equal to 5% or more of the market value of all outstanding
shares of the corporation to, (iv) the adoption of a plan or proposal of the
liquidation or dissolution of such corporation proposed by, (v) certain
transactions which would result in increasing the proportionate share of shares
of the corporation owned by, or (vi) the receipt of the benefits, except
proportionately as a stockholder, of any loans, advances or other financial
benefits by, an Interested Stockholder. Following the expiration of the
three-year period, a Combination with an Interested Stockholder is permitted if
the Combination meets all the requirements specified in the articles of
incorporation of such corporation and either (i) (a) the board of directors of
the corporation approves, prior to such person becoming an Interested
Stockholder, the Combination or the purchase of shares by the Interested
Stockholder resulting in such 10% ownership and (b) the Combination is approved
by the affirmative vote of holders of a majority of the outstanding voting power
not beneficially owned by the Interested Stockholder proposing the Combination
(or any affiliate or associate of such Interested Stockholder) at a meeting
called for that purpose no earlier than three years after the date the
Interested Stockholder became such or (ii) (x) the aggregate amount of cash and
the market value of consideration other than cash to be received by holders of
common shares and holders of any other class or series of shares meets the
minimum requirements set forth in Sections 78.441 through 78.443, inclusive, of
the NGCL and (y) prior to the consummation of the Combination, except in limited
circumstances, the Interested Stockholder will not have become the beneficial
owner of additional voting shares of the corporation.
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CONTROL SHARE ACQUISITIONS
Under Sections 78.378 to 78.3793 of the NCGL (the "Control Share Act"),
an "acquiring person" who acquires a "controlling interest" in an "issuing
corporation" may not exercise voting rights on any "Control Shares" unless such
voting rights are conferred by a majority vote of the disinterested stockholders
of the issuing corporation at an annual meeting or at a special meeting of such
stockholders held upon the request and at the expense of the acquiring person.
If the Control Shares are accorded full voting rights and the acquiring person
acquires Control Shares with a majority or more of all the voting power, any
stockholder, other than the acquiring person, who does not vote for authorizing
voting rights for the Control Shares, is entitled to demand payment for the fair
value of their shares, and the corporation must comply with the demand. For the
above provisions, "acquiring person" means (subject to certain exceptions) any
person who, individually or in association with others, acquires or offers to
acquire, directly or indirectly, a controlling interest in an issuing
corporation. "Controlling interest" means the ownership of outstanding voting
shares of an issuing corporation sufficient to enable the acquiring person,
individually or in association with others, directly or indirectly, to exercise
(i) one-fifth or more but less than one-third, (ii) one-third or more but less
than a majority, and/or (iii) a majority or more of the voting power of the
issuing corporation in the election of directors. Voting rights must be
conferred by a majority of the disinterested stockholders as each threshold is
reached and/or exceeded. "Control Shares" means those outstanding voting shares
of an issuing corporation which an acquiring person (1) acquires or offers to
acquire in an acquisition or (2) acquires within 90 days immediately preceding
the date when the acquiring person became an acquiring person. "Issuing
corporation" means a corporation that is organized in Nevada, has 200 or more
stockholders (at least 100 of whom are stockholders of record and residents of
Nevada) and does business in Nevada directly or through an affiliated
corporation. The above does not apply if the articles of incorporation or bylaws
of the corporation in effect on the tenth day following the acquisition of a
controlling interest by an acquiring person provide that said provisions do not
apply. Neither the Oasis Articles nor the Oasis Bylaws exclude Oasis from the
restrictions imposed by such provisions.
REIT QUALIFICATION PROVISIONS
Camden. The Camden 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 capital stock ("Camden Capital Stock"). The Camden Board
is not permitted to waive the Ownership Limit. Further, any transfer of Camden
Capital Stock that would: (i) result in the Camden Capital Stock being owned by
fewer than 100 persons; (ii) result in Camden being "closely held" within the
meaning of Section 856(h) of the Code; or (iii) result in the disqualification
of Camden as a REIT, is considered to be null and void, and the intended
transferee will acquire no rights in the shares, except as provided in the
Camden Declaration of Trust regarding Camden Excess Securities.
The Camden Declaration of Trust provides that Camden Capital Stock
owned, or deemed to be owned, or transferred to a shareholder in excess of the
Ownership Limit will automatically be deemed to be Camden Excess Securities and
as such will be deemed to have been transferred to Camden as trustee of a trust
for the exclusive benefit of the transferees to whom such Camden Capital Stock
may ultimately be transferred without violating the Ownership Limit.
While the Camden Excess Securities are held in trust, they will not be entitled
to vote, and they will not be entitled to participate in dividends or other
distributions. Any dividend or distribution paid to a proposed transferee of
Camden Excess Securities prior to the discovery by Camden that Camden Capital
Stock has been transferred in violation of the provisions of the Camden
Declaration of Trust shall be repaid to Camden upon demand. The original
transferee- shareholder may, at any time Camden Excess Securities are held by
Camden in trust, transfer the interest in the trust representing the Camden
Excess Securities to any individual whose ownership of the Camden Capital Stock
that have been deemed to be Camden 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 Camden Capital Stock that were exchanged into
Camden Excess Securities. Immediately upon the transfer to the permitted
transferee, the Camden Excess Securities will automatically be deemed to be
Camden Capital Stock 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 Camden Excess Securities may be deemed, at the
option of Camden, to have acted as an agent on behalf of Camden in acquiring the
Camden Excess Securities and to hold the Camden Excess Securities on behalf of
Camden.
In addition to the foregoing transfer restrictions, Camden will have
the right, for a period of 90 days during the time any Camden Excess Securities
are held by Camden in trust, to purchase all or any portion of the Camden Excess
Securities
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from the original transferee-shareholder at the lesser of the price paid for the
Camden Capital Stock by the original transferee-shareholder and the market price
(as determined in the manner set forth in the Camden Declaration of Trust) of
the Camden Capital Stock on the date Camden 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.
Each shareholder shall upon demand be required to disclose to Camden 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 Camden unless the Camden Board and the shareholders determine that
maintenance of REIT status is no longer in the best interests of Camden.
Oasis. For Oasis to qualify as a REIT under the Code, not more than 50%
in value of its outstanding capital stock 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, the shares of capital stock
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 and certain percentages of Oasis' gross income must be from particular
activities. To ensure that Oasis remains qualified as a REIT, certain provisions
of the Oasis Articles restrict the acquisition of shares of capital stock.
Subject to certain exceptions specified in the Oasis Articles, no holder may
own, or be deemed to own by virtue of the attribution provisions of the Code,
more than 8% by value (the "Oasis Ownership Limit") of Oasis' capital stock. If
shares of capital stock in excess of the Oasis Ownership Limit, or shares of
capital stock that would cause the REIT to be beneficially owned by less than
100 persons, are issued or transferred to any person, such issuance or transfer
will be null and void as to the intended transferee, and the intended transferee
would acquire no rights to the stock. Shares of capital stock transferred in
excess of the Oasis Ownership Limit will automatically be exchanged for Oasis
Excess Stock, which will be transferred by operation of law to Oasis as trustee
for the exclusive benefit of the person or persons to whom the shares are
ultimately transferred, until such time as the intended transferee retransfers
the shares. While these shares are held in trust, they would not be entitled to
vote or to share in any dividends or other distributions. The shares may be
retransferred by the intended transferee to a person who may hold such shares at
a price not to exceed the price paid by the intended transferee, at which point
the shares will automatically be exchanged for ordinary shares of capital stock.
In addition, such shares of Oasis Excess Stock held in trust are purchasable by
Oasis for a 90-day period at a price equal to the lesser of the price paid for
the stock by the intended transferee and the market price for the stock on the
date Oasis determines to purchase the stock. This ownership limitation may have
the effect of precluding acquisition of control of Oasis by a third party unless
the Oasis Board determines that maintenance of REIT status is no longer in the
best interests of Oasis.
INDEMNIFICATION
Camden. Trust managers and officers of Camden will be indemnified
against judgments, fines, penalties, amounts paid in settlement and claims
imposed upon or asserted against them as provided in the Texas REIT Act, the
Camden Declaration of Trust and the Camden Bylaws. Such indemnification covers
all costs and expenses reasonably incurred by such officer or trust manager. The
Camden Board, by a majority vote of a quorum (or, if unavailable, a committee)
of disinterested trust managers or, under certain circumstances, independent
counsel appointed by the Camden Board, must determine that the trust manager or
officer seeking indemnification acted in good faith while reasonably believing,
in the case of conduct in an official capacity, that such conduct was in
Camden's best interests or, in all other cases, that such conduct was at least
not opposed to Camden's best interests and, in the case of any criminal
proceeding, that such person had no reasonable belief that such conduct was
unlawful.
If the person involved is not a trust manager or officer of Camden, the
Camden Board may cause Camden to indemnify to the same extent allowed for trust
managers and officers of Camden such person who was or is a party to a
proceeding, by reason of the fact that such person is or was an employee or
agent of Camden, or is or was serving at the request of Camden as a trust
manager, officer, employee or agent of another corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise.
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Oasis. Pursuant to the Oasis Articles and the Oasis Bylaws, every
person who was or is a party to, or threatened to be made a party to, or is
involved in any action, suit or proceeding, by reason of the fact that he or
she, or a person to whom he or she is the legal representative, is or was a
director or officer of Oasis, or is or was serving at the request of Oasis as a
director or officer of another corporation, or as its representative in a
partnership, joint venture, trust or other enterprise, will be indemnified to
the fullest extent permissible under the NGCL, and Oasis will make advances for
expenses incurred in defending such actions.
TRUST MANAGER AND DIRECTOR LIABILITY
As permitted by the Texas REIT Act and the NGCL, respectively, the
Camden Declaration of Trust and the Oasis Articles eliminate the liability of
trust managers, directors and officers of Camden and Oasis, respectively, for
monetary damages in a shareholder or derivative proceeding.
FEDERAL INCOME TAX CONSIDERATIONS
The following discussion is a general summary of the material United
States federal income tax consequences of the Merger. This discussion is based
upon the Code, regulations, proposed or promulgated thereunder, judicial
precedent relating thereto, and current rulings and administrative practice of
the Service, in each case as in effect as of the date hereof and all of which
are subject to change at any time, possibly with retroactive effect. It is
assumed that shares of Oasis Common Stock and shares of Oasis Series A Preferred
Stock are held as "capital assets" within the meaning of Section 1221 of the
Code (i.e., property held for investment). This discussion does not address all
aspects of federal income taxation that might be relevant to particular holders
of Oasis Common Stock and Oasis Series A Preferred Stock in light of their
status or personal investment circumstances; nor does it discuss the
consequences to such holders who are subject to special treatment under the
federal income tax laws, such as foreign persons, dealers in securities,
regulated investment companies, life insurance companies, other financial
institutions, tax-exempt organizations, pass-through entities, taxpayers who
hold Oasis Common Stock and Oasis Series A Preferred Stock as part of a
"straddle," "hedge" or "conversion transaction" or who have a "functional
currency" other than the United States dollar. In addition, this discussion does
not address the tax consequences to holders of options under the Oasis stock
option plans or other persons who have received their Oasis Common Stock as
compensation. Neither Camden nor Oasis has requested or will receive a ruling
from the Service as to the tax consequences of the Merger.
EACH OASIS STOCKHOLDER IS URGED TO CONSULT HIS OR HER OWN TAX ADVISOR
REGARDING THE SPECIFIC TAX CONSEQUENCES TO HIM OR HER OF THE MERGER, THE
ACQUISITION, OWNERSHIP AND SALE OF THE CAMDEN SHARES AND OF CAMDEN'S ELECTION TO
BE TAXED AS A REIT, INCLUDING THE FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX
CONSEQUENCES OF THE MERGER, SUCH ACQUISITION, OWNERSHIP, SALE AND ELECTION, AND
OF POTENTIAL CHANGES IN APPLICABLE TAX LAWS.
TAX CONSIDERATIONS RELATING TO THE MERGER
The Merger is intended to qualify as a reorganization under Section
368(a) of the Code, and the federal income tax consequences summarized below are
based on the assumption that the Merger will qualify as a reorganization. It is
a condition to the obligation of Camden to consummate the Merger that Camden
shall have received an opinion from Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P.
("Liddell Sapp") to the effect that the Merger will be treated as a
reorganization within the meaning of Section 368(a) of the Code. It is a
condition to the obligation of Oasis to consummate the Merger that Oasis shall
have received an opinion from Latham & Watkins to the effect that the Merger
will be treated as a reorganization within the meaning of Section 368(a) of the
Code. In rendering such opinions, counsel to each of Camden and Oasis will rely
upon certain representations made by Camden, Oasis, and certain stockholders of
Oasis.
If the Merger qualifies as a reorganization under Section 368(a) of the
Code, no gain or loss will be recognized by Camden, Merger Sub or Oasis as a
result of the Merger. Except as described below with respect to cash received in
lieu of fractional shares, a holder of Oasis Common Stock or Oasis Series A
Preferred Stock will not recognize gain or loss on the exchange of shares of
Oasis Common Stock or Oasis Series A Preferred Stock for Camden Common Shares or
Camden Series A Preferred Shares, respectively, pursuant to the Merger (but all
Camden shareholders and Oasis stockholders will recognize
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income in the amount of any Pre-Merger Dividend made to them. See "--Pre-Merger
Dividend" below.) Of particular importance to the opinions of Liddell Sapp and
Latham & Watkins regarding the treatment of the Merger for federal income tax
purposes are certain assumptions and representations relating to the "continuity
of interest" requirement discussed below.
CONTINUITY OF INTEREST ASSUMPTION
To qualify as a reorganization, among other requirements, the Merger
must satisfy a "continuity of interest" test, under which the historic Oasis
stockholders must continue to retain a meaningful ownership interest in Camden
after the Merger. Generally, this test will be considered satisfied if, pursuant
to the Merger, historical Oasis stockholders exchange shares of Oasis Common
Stock and Oasis Series A Preferred Stock having an aggregate value at the
Effective Time of the Merger equal to at least 50% of the aggregate value of the
Oasis Common Stock and Oasis Series A Preferred Stock outstanding for Camden
Common Shares and Camden Series A Preferred Shares, respectively, and the Oasis
stockholders do not at the time of the Merger plan to dispose of those Camden
Common Shares and/or Camden Series A Preferred Shares. Management of Camden and
Oasis have represented that they are not aware of any plan on the part of the
Oasis stockholders that would cause this test not to be satisfied. Based upon
these representations, each of Latham & Watkins and Liddell Sapp have assumed,
for purposes of their opinions, that the continuity of interest requirement will
be satisfied.
CASH IN LIEU OF FRACTIONAL SHARES
A holder of Oasis Common Stock or Oasis Series A Preferred Stock who
receives cash in lieu of fractional Camden Common Shares or Camden Series A
Preferred Shares, respectively, will be treated as having received such
fractional shares pursuant to the Merger and then as having exchanged such
fractional shares for cash in a redemption by Camden. Any gain or loss
attributable to such fractional shares generally will be capital gain or loss.
The amount of such gain or loss will be equal to the difference between the
portion of the holder's adjusted tax basis in the Oasis Common Stock or Oasis
Series A Preferred Stock surrendered in the Merger that is allocated to its
fractional share and the cash received in lieu thereof. Any such capital gain or
loss will constitute long-term capital gain or loss if the Oasis Common Stock or
Oasis Series A Preferred Stock has been held by the holder for more than one
year at the Effective Time. Long-term capital gain recognized by certain
non-corporate stockholders is subject to federal income tax at preferential
capital gains rates, and such gain recognized with respect to an asset with a
holding period of more than 18 months is subject to federal income tax at
further reduced capital gains rates.
PRE-MERGER DIVIDEND
The Merger Agreement provides that Oasis shall distribute to its
stockholders immediately prior to the Merger the Pre-Merger Dividend in the
minimum amount necessary for Oasis to satisfy the REIT distribution requirements
under Section 857(a) of the Code for Oasis' short taxable year ending with the
date of the Effective Time of the Merger. The Merger Agreement also provides
that, should such distribution by Oasis occur, Camden shall distribute to its
shareholders an amount per share equal to (i) the amount per share of any such
Pre-Merger Dividend paid by Oasis divided by (ii) 0.759. Except as provided
below with respect to the Pre-Merger Dividend (if any) designated as capital
gain dividends, (i) any Pre-Merger Dividend made to Oasis' taxable U.S.
shareholders out of Oasis' current or accumulated earnings and profits would be
taken into account by such U.S. shareholders as ordinary income and would not be
eligible for the dividends received deduction generally available for
corporations and (ii) any Pre-Merger Dividend made to Camden's taxable U.S.
shareholders out of Camden's current or accumulated earnings and profits would
be taken into account by such U.S. shareholders as ordinary income and would not
be eligible for the dividends received deduction generally available for
corporations. Any Pre-Merger Dividend in excess of current and accumulated
earnings and profits of Oasis (in the case of any Oasis Pre-Merger Dividend) or
Camden (in the case of any Camden Pre-Merger Dividend) would not be taxable to
the shareholder to the extent that such distribution does not exceed the
adjusted basis of the shareholder's shares with respect to which the
distribution is made, but rather would reduce the adjusted basis of such shares.
To the extent that any such Pre-Merger Dividend in excess of earnings and
profits exceeds the adjusted basis of the shareholder's shares, such
distribution would be included in the shareholder's income as long-term capital
gain (or short-term capital gain if the shares have been held for one year or
less) assuming the shareholder holds the shares as a capital asset at the time
of the Merger. Long-term capital gain recognized by certain non-corporate
shareholders is subject to federal income tax at preferential capital gains
rates, and such gain recognized with respect to an asset with a holding period
of more than 18 months is subject to federal income tax at further reduced
capital gains rates. Any Pre-Merger Dividend designated as capital gain
dividends will be taxed as long-term capital gains (to the
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extent they do not exceed the payor's actual net capital gain for the taxable
year), provided that corporate shareholders may be required to treat up to 20%
of certain capital gain dividends as ordinary income.
TAXATION OF CAMDEN
Each of Camden and Oasis currently has in effect an election to be
taxed as a REIT under Sections 856 through 859 of the Code. Each of Camden and
Oasis believes that it has, since its taxable year ending December 31, 1993,
been organized and operated in such a manner so as to qualify for taxation as a
REIT under the Code. Camden's continued qualification as a REIT after the Merger
will depend in part upon Oasis' qualification as a REIT immediately prior to the
Merger. In this regard, Camden's obligation to consummate the Merger is subject
to the condition that it has received an opinion from counsel to Oasis, dated as
of the closing of the Merger, that Oasis, commencing with its taxable year ended
December 31, 1993 through its short taxable year ending on the date of the
Effective Time of the Merger, was organized in conformity with the requirements
for qualification as a REIT under the Code and its method of operations has
enabled it to so qualify. This opinion will be based on various assumptions and
will be conditioned upon certain representations made by Oasis as to factual
matters. Furthermore, each of Camden and Oasis' obligations to consummate the
Merger is subject to the condition that it has received an opinion from counsel
to Camden that commencing with Camden's taxable year ended December 31, 1993,
Camden was organized in conformity with the requirements for qualification as a
REIT under the Code and Camden's method of operation has enabled Camden to so
qualify during such period. This opinion will be based on various assumptions
and will be conditioned upon certain representations made by Camden as to
factual matters. Camden intends to continue to operate in a manner so as to
qualify as a REIT following the Effective Time of the Merger, but no assurance
can be given that Camden will qualify or remain qualified as a REIT. As a result
of the Merger, Oasis' separate existence will cease as of the Effective Time of
the Merger. Accordingly, the following discussion summarizes only the taxation
of Camden. Prior to the Effective Time of the Merger, the taxation of Oasis as a
REIT is similar to that described herein with respect to Camden.
The sections of the Code relating to qualification and operation as a
REIT are highly technical and complex. The following discussion sets forth
certain material aspects of the Code sections that govern the federal income tax
treatment of a REIT and its shareholders. The discussion is qualified in its
entirety by the applicable Code provisions, Treasury Regulations promulgated
thereunder and administrative and judicial interpretations thereof, all of which
are subject to change prospectively or retroactively.
So long as Camden continues to qualify for taxation as a REIT, it
generally will not be subject to federal corporate income tax on its net income
that is distributed currently to its shareholders. That treatment substantially
eliminates the "double taxation" (i.e., taxation at both the corporate and
shareholder levels) that generally results from investment in a corporation.
However, Camden will be subject to federal income tax in the following
circumstances. First, Camden will be taxed at regular corporate rates on any
undistributed "REIT taxable income," including undistributed net capital gains
(subject to Camden's election to retain, rather than distribute as a capital
gain dividend, its net long-term capital gains; see "--Taxation of Taxable U.S.
Shareholders" below). Second, under certain circumstances, Camden may be subject
to the "alternative minimum tax" on items of tax preference, if any. Third, if
Camden has (i) 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 (ii) other nonqualifying income from foreclosure property, it will
be subject to tax at the highest corporate rate on such income. Fourth, if
Camden has net income from prohibited transactions (which are, in general,
certain sales or other dispositions of property (other than foreclosure
property) held primarily for sale to customers in the ordinary course of
business), such income will be subject to a 100% tax. Fifth, if Camden should
fail to satisfy the 75% gross income test or the 95% gross income test (as
discussed below), and nonetheless has maintained its qualification as a REIT
because certain other requirements have been met, it will be subject to a 100%
tax on the net income attributable to the greater of the amount by which it
fails the 75% or 95% gross income test. Sixth, if Camden should fail to
distribute during each calendar 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, it
would be subject to a 4% excise tax on the excess of such required distribution
over the amounts actually distributed. Seventh, if Camden acquires any asset
from a C corporation (i.e., a corporation generally subject to full
corporate-level tax) in a transaction in which the basis of the asset in the
acquiror's hands is determined by reference to the basis of the asset (or any
other asset) in the hands of the C corporation and the acquiror recognizes gain
on the disposition of such asset during the 10-year period beginning on the date
on which such asset was acquired by it, then to the extent of such asset's
"built-in-gain" (i.e., the excess of the fair market value of such asset at
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the time of acquisition by Camden or Oasis over the adjusted basis in such asset
at such time), such gain will be subject to tax at the highest regular corporate
rate applicable. The results described above with respect to the recognition of
"built-in- gain" assume that Camden will make an election pursuant to IRS Notice
88-19 if it were to make any such acquisition.
REQUIREMENTS FOR QUALIFICATION
The Code defines a REIT as a corporation, trust or association (i) that
is managed by one or more trustees or directors; (ii) the beneficial ownership
of which is evidenced by transferable shares, or by transferable certificates of
beneficial interest; (iii) that would be taxable as a domestic corporation, but
for Sections 856 through 859 of the Code; (iv) that is neither a financial
institution nor an insurance company subject to certain provisions of the Code;
(v) the beneficial ownership of which is held by 100 or more persons; (vi) not
more than 50% in value of the outstanding shares of which is owned, directly or
indirectly, by five or fewer individuals (as defined in the Code to include
certain entities) during the last half of each taxable year (the "5/50 Rule");
(vii) that makes an election to be a REIT (or has made such election for a
previous taxable year which has not been revoked or terminated) and satisfies
all relevant filing and other administrative requirements established by the
Service that must be met in order to elect and maintain REIT status; (viii) that
uses a calendar year for federal income tax purposes and complies with the
recordkeeping requirements of the Code and Treasury Regulations promulgated
thereunder (pursuant to the Taxpayer Relief Act of 1997, for taxable years
beginning after August 5, 1997, failure to comply with the record keeping
requirements of the Code and Treasury Regulations results in the imposition of a
$25,000 penalty ($50,000 if the failure is due to intentional disregard) rather
than loss of REIT status); and (ix) that meets certain other tests, described
below, regarding the nature of its income and assets. The Code provides that
conditions (i) to (iv), inclusive, must be met during the entire taxable year
and that condition (v) must be met during at least 335 days of a taxable year of
12 months, or during a proportionate part of a taxable year of less than 12
months. For purposes of determining stock ownership under the 5/50 Rule, a
supplemental unemployment compensation benefits plan, a private foundation or a
portion of a trust permanently set aside or used exclusively for charitable
purposes generally is considered an individual. A trust that is a qualified
trust under Code Section 401(a), however, generally is not considered an
individual and beneficiaries of such trust are treated as holding shares of a
REIT in proportion to their actuarial interests in such trust for purposes of
the 5/50 Rule.
The Camden Declaration of Trust and the Oasis Articles contain
restrictions regarding the transfer of Camden Shares and Oasis Shares that are
intended to assist Camden and Oasis in continuing to satisfy the share ownership
requirements described in clauses (v) and (vi) above. Such transfer restrictions
are described in "COMPARATIVE RIGHTS OF SHAREHOLDERS--REIT Qualification
Provisions." Those restrictions may not ensure that Camden in all cases will be
able to satisfy the share ownership requirements described above. If Camden
fails to satisfy those share ownership requirements, Camden's status as a REIT
will terminate. See "--Failure to Qualify." Pursuant to the Taxpayer Relief Act
of 1997, enacted August 5, 1997, starting with a REIT's first taxable year that
begins after August 5, 1997, a REIT that complies with Treasury Regulations for
ascertaining the ownership of its shares and that does not know or, exercising
reasonable diligence would not have known, whether it failed condition (vi) will
be treated as meeting condition (vi).
Both Camden and Oasis currently have wholly-owned corporate
subsidiaries (the "Corporate Subsidiaries"). Upon consummation of the Merger,
Oasis will be merged into a direct corporate subsidiary of Camden and the Oasis
Corporate Subsidiaries in existence at the Effective Date of the Merger will
become indirect Corporate Subsidiaries of Camden. Camden may form or acquire
additional Corporate Subsidiaries in the future. Code Section 856(i) provides
that a corporation that is a "qualified REIT subsidiary" shall not be treated as
a separate corporation, and all assets, liabilities and items of income,
deduction and credit of a "qualified REIT subsidiary" shall be treated as
assets, liabilities and items of income, deduction and credit of the REIT. For
taxable years of a REIT beginning on or before August 5, 1997, a "qualified REIT
subsidiary" is a corporation, all of the capital stock of which has been held by
the REIT at all times during the period such corporation was in existence. The
IRS has ruled in a number of private letter rulings that subsidiaries acquired
by a REIT as a result of a merger will be treated as "qualified REIT
subsidiaries" even though the REIT has not held all of the capital stock of such
subsidiary at all times during the period such corporation was in existence.
Furthermore, pursuant to the Taxpayer Relief Act of 1997, starting with a REIT's
first taxable year that begins after August 5, 1997, a corporation may qualify
as a qualified REIT subsidiary as long as the REIT owns 100% of its stock even
though such corporation was not wholly-owned by the REIT during its entire
period of existence. Under such provisions, where a REIT acquires an existing
corporation, such corporation is treated as being liquidated at the time of
acquisition by the REIT and then reincorporated.
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Accordingly, the Corporate Subsidiaries of Oasis should constitute "qualified
REIT subsidiaries" of Camden following the Merger so long as Camden continues to
hold 100% of the stock of such Corporate Subsidiaries, either directly or
through Merger Sub. Furthermore, the Service has ruled privately that if a
corporation merges into a "qualified REIT subsidiary," such merger will not
affect the status of the "qualified REIT subsidiary." Accordingly, Merger Sub
should continue to constitute a "qualified REIT subsidiary" following the
Merger. In applying the income and asset tests described below, any Corporate
Subsidiaries of Camden that are "qualified REIT subsidiaries" will be ignored,
and all assets, liabilities and items of income, deduction and credit of such
Corporate Subsidiaries will be treated as assets, liabilities and items of
income, deduction and credit of Camden. Because each of the current Corporate
Subsidiaries will continue to be a "qualified REIT subsidiary" of Camden after
the Merger, no such Corporate Subsidiary will be subject to federal corporate
income taxation, although it may be subject to state and local taxation.
In the case of a REIT that is a partner in a partnership or a member of
a limited liability company that is treated as a partnership for federal income
tax purposes, Treasury Regulations provide that the REIT will be deemed to own
its proportionate share of the assets of the partnership or limited liability
company, as the case may be (based on the REIT's capital interest in the
partnership or limited liability company, as the case may be), and will be
deemed to be entitled to the gross income of the partnership or the limited
liability company, as the case may be, attributable to such share. In addition,
the assets and gross income of the partnership, or limited liability company, as
the case may be will retain the same character in the hands of the REIT for
purposes of Section 856 of the Code, including satisfying the gross income and
asset tests described below. Thus, Oasis' (and, following the consummation of
the Merger, Camden's) proportionate share of the assets and items of income of
Oasis Martinique LLC will be treated as assets and items of income of Oasis
(and, following the consummation of the Merger, Camden) for purposes of applying
the requirements described herein.
Income Tests. In order for Camden to qualify and to maintain its
qualification as a REIT, three requirements relating to gross income must be
satisfied annually. First, at least 75% of its gross income (excluding gross
income from prohibited transactions) for each taxable year must consist of
defined types of income derived directly or indirectly from investments relating
to real property or mortgages on real property (including "rents from real
property" and, in certain circumstances, interest) or temporary investment
income. Second, at least 95% of its gross income (excluding gross income from
prohibited transactions) for each taxable year must be derived from such real
property or temporary investments, and from dividends, other types of interest
and gain from the sale or disposition of stock or securities, or from any
combination of the foregoing. Third, not more than 30% of its gross income
(including gross income from prohibited transactions) for each taxable year may
be gain from the sale or other disposition of (i) stock or securities held for
less than one year, (ii) dealer property that is not foreclosure property and
(iii) certain real property held for less than four years (apart from
involuntary conversions and sales of foreclosure property). Pursuant to the
Taxpayer Relief Act of 1997, the 30% gross income test is eliminated, starting
with a REIT's first taxable year that begins after August 5, 1997.
The rent received by Camden from its tenants ("Rent") will qualify as
"rents from real property" in satisfying the gross income requirements for a
REIT described above only if several conditions are met. First, the amount of
Rent must not be based, in whole or in part, on the income or profits of any
person. However, an amount received or accrued generally will not be excluded
from the term "rents from real property" solely by reason of being based on a
fixed percentage or percentages of receipts or sales. Second, the Code provides
that rents received from a tenant of Camden will not qualify as "rents from real
property" in satisfying the gross income tests if Camden, or a direct or
indirect owner of 10% or more of Camden, directly or constructively owns 10% or
more of such tenant (a "Related Party Tenant"). Third, if rent attributable to
personal property, leased in connection with a lease of real property, is
greater than 15% of the total rent received under the lease, then the portion of
rent attributable to such personal property will not qualify as "rents from real
property." For the Rent to qualify as "rents from real property," Camden
generally must not operate or manage its properties or furnish or render
services to the tenants of such properties, other than through an "independent
contractor" who is adequately compensated and from whom Camden derives no
revenue. The "independent contractor" requirement, however, does not apply to
the extent the services provided by Camden are "usually or customarily rendered"
in connection with the rental of space for occupancy only and are not otherwise
considered "rendered to the occupant." Moreover, pursuant to the Taxpayer Relief
Act of 1997, starting with a REIT's first taxable year that begins after August
5, 1997, income derived by a REIT from non-qualifying services provided to
tenants or from managing or operating a property that it owns will not be
treated as rent from real property unless such income does not exceed 1% of the
REIT's gross income from the property (determined by
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treating the amount of income received for any such non-qualifying service as
not less than 150% of the REIT's direct cost in furnishing or rendering such
service.)
Camden does not charge, and Camden will not charge after the Merger,
Rent for any portion of any property that is based, in whole or in part, on the
gross income or profits of any person. In addition, Camden has not received and
Camden does not anticipate receiving after the Merger any Rent from a Related
Party Tenant. Also, the Rent attributable to personal property leased in
connection with any lease (a "Lease") of real property by Camden does not
exceed, and such Rent charged by Camden after the Merger will not exceed, 15% of
the total Rent received under the Lease. Finally, Camden does not operate or
manage its properties or furnish or render services (other than services that
are "usually or customarily rendered" in connection with the rental of space for
occupancy only and are not otherwise considered "rendered to the occupant") to
the tenants of its properties other than through an "independent contractor" who
is adequately compensated and from whom Camden derives no revenue.
If any portion of the Rent does not qualify as "rents from real
property" because the Rent attributable to personal property leased in
connection with any Lease of real property exceeds 15% of the total Rent
received under the Lease for a taxable year, the portion of the Rent that is
attributable to personal property will not be qualifying income for purposes of
either the 75% or 95% gross income test. Thus, if the Rent attributable to
personal property, plus any other income received by Camden during a taxable
year that is not qualifying income for purposes of the 95% gross income test,
exceeds 5% of its gross income during such year, Camden would lose its REIT
status. If, however, any portion of the Rent received under a Lease does not
qualify as "rents from real property" because either (i) the Rent is considered
based on the income or profits of any person or (ii) the tenant is a Related
Party Tenant, none of the Rent received by Camden under such Lease would qualify
as "rents from real property." In that case, if the Rent received by Camden
under such Lease, plus any other income received by it during the taxable year
that is not qualifying income for purposes of the 95% gross income test, exceeds
5% of its gross income for such year, Camden would lose its REIT status.
Finally, if any portion of the Rent does not qualify as "rents from real
property" because Camden furnishes noncustomary services with respect to a
property other than through a qualifying independent contractor (and in excess
of the 1% de minimis exception referred to above), none of the Rent received by
it with respect to the such property would qualify as "rents from real
property." In that case, if the Rent received by Camden with respect to such
property, plus any other income received by it during the taxable year that is
not qualifying income for purposes of the 95% gross income test, exceeds 5% of
its gross income for such year, Camden would lose its REIT status.
From time to time, Camden has entered into hedging transactions with
respect to one or more of its assets or liabilities, and Camden may continue to
enter into such hedging transactions following consummation of the Merger. Such
transactions include or may include interest rate swap contracts, interest rate
cap or floor contracts, futures or forward contracts and options. To the extent
that Camden has entered or enters into an interest rate swap or cap contract to
hedge any variable rate indebtedness incurred to acquire or carry real estate
assets, any periodic income or gain from the disposition of such contract should
be qualifying income for purposes of the 95% gross income test, but not the 75%
gross income test. To the extent that Camden hedges with other types of
financial instruments or in other situations, it may not be entirely clear how
the income from those transactions will be treated for purposes of the various
income tests that apply to REITs under the Code. Camden has structured, and
Camden intends to structure in the future, any hedging transactions in a manner
that will not jeopardize its status as a REIT.
If Camden fails to satisfy one or both of the 75% or 95% gross income
tests for any taxable year, it nevertheless may qualify as a REIT for such year
if it is entitled to relief under certain provisions of the Code. Those relief
provisions generally will be available if the failure to meet such tests is due
to reasonable cause and not due to willful neglect, Camden attaches a schedule
of the sources of its income to its return, and any incorrect information on the
schedule was not due to fraud with intent to evade tax. It is not possible,
however, to state whether in all circumstances Camden would be entitled to the
benefit of those relief provisions. As discussed above in "--Taxation of
Camden," even if those relief provisions apply, a 100% tax would be imposed on
the net income attributable to the greater of the amount by which Camden fails
the 75% and 95% gross income tests.
Asset Tests. Camden, at the close of each quarter of each taxable year,
also must satisfy two tests relating to the nature of its assets. First, at
least 75% of the value of its total assets must be represented by cash or cash
items (including
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certain receivables), government securities, "real estate assets" or, in cases
where it raises new capital through stock or long-term (at least five-year) debt
offerings, temporary investments in stock or debt instruments during the
one-year period following its receipt of such capital. The term "real estate
assets" includes interests in real property, interests in mortgages on real
property to the extent the principal balance of a mortgage does not exceed the
value of the associated real property and shares of other REITs. For purposes of
the 75% asset test, the term "interest in real property" includes an interest in
land and improvements thereon, such as buildings or other inherently permanent
structures (including items that are structural components of such buildings or
structures), a leasehold of real property and an option to acquire real property
(or a leasehold of real property). Second, of the investments not included in
the 75% asset class, the value of any one issuer's securities owned by Camden
may not exceed 5% of the value of its total assets and Camden may not own more
than 10% of any one issuer's outstanding voting securities (except for the
interest of Camden in any qualified REIT subsidiary).
If Camden should fail to satisfy the asset tests at the end of a
calendar quarter, such a failure would not cause it to lose its REIT status if
(i) it satisfied the asset tests at the close of the preceding calendar quarter
and (ii) the discrepancy between the value of its assets and the asset tests
either did not exist immediately after the acquisition of any particular asset
or was not wholly or partly caused by such an acquisition (i.e., the discrepancy
arose from changes in the market values of its assets). If the condition
described in clause (ii) of the preceding sentence were not satisfied, Camden
still could avoid disqualification by eliminating any discrepancy within 30 days
after the close of the calendar quarter in which it arose.
Distribution Requirements. Camden, in order to qualify as a REIT, is
required to distribute with respect to each taxable year dividends (other than
capital gain dividends) to its shareholders in an aggregate amount at least
equal to (i) the sum of (A) 95% of its "REIT taxable income" (computed without
regard to the dividends paid deduction and its net capital gain) and (B) 95% of
the net income (after tax), if any, from foreclosure property, minus (ii) the
sum of certain items of non-cash income. Such distributions must be paid in the
taxable year to which they relate, or in the following taxable year if declared
before Camden timely files its federal income tax return for such year and if
paid on or before the first regular dividend payment date after such
declaration. To the extent that Camden does not distribute all of its net
capital gain or distributes at least 95%, but less than 100%, of its "REIT
taxable income," as adjusted, it will be subject to tax thereon at regular
ordinary and capital gains corporate tax rates. Furthermore, if Camden should
fail to distribute during each calendar year at least the sum of (i) 85% of its
REIT ordinary income for such year, (ii) 95% of its REIT capital gain income for
such year and (iii) any undistributed taxable income from prior periods, it
would be subject to a 4% nondeductible excise tax on the excess of such required
distribution over the amounts actually distributed.
Under certain circumstances, Camden may be able to rectify a failure to
meet the distribution requirements for a year by paying "deficiency dividends"
to its shareholders in a later year, which may be included in its deduction for
dividends paid for the earlier year. Although Camden may be able to avoid being
taxed on amounts distributed as deficiency dividends, it will be required to pay
to the Service interest based upon the amount of any deduction taken for
deficiency dividends.
Recordkeeping Requirements. Pursuant to applicable Treasury
Regulations, in order to be able to elect to be taxed as a REIT, Camden must
maintain certain records and request on an annual basis certain information from
its shareholders designed to disclose the actual ownership of its outstanding
shares. Pursuant to the Taxpayer Relief Act of 1997, for taxable years beginning
after August 5, 1997, failure to comply with the record keeping requirements of
the Code and Treasury Regulations results in the imposition of a $25,000 penalty
($50,000 if the failure is due to intentional disregard) rather than loss of
REIT status.
FAILURE TO QUALIFY
If Camden fails to qualify for taxation as a REIT in any taxable year,
and the relief provisions do not apply, it 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 Camden fails to
qualify will not be deductible 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 taxable as ordinary income and, subject to
certain limitations of the Code, corporate distributees may be eligible for the
dividends received deduction. Unless entitled to relief under specific statutory
provisions, Camden also will be disqualified from taxation as a REIT for the
four taxable years following the year during which it ceased to qualify as a
REIT. It is not possible to predict whether in all circumstances Camden would be
entitled to such statutory relief.
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TAXATION OF TAXABLE U.S. SHAREHOLDERS
As long as Camden qualifies as a REIT, distributions made to taxable
U.S. Shareholders out of current or accumulated earnings and profits (and not
designated as capital gain dividends) will be taken into account by such U.S.
Shareholders as ordinary income and will not be eligible for the dividends
received deduction generally available to corporations. For a discussion of
certain United States federal income tax considerations to holders of Camden
Preferred Shares, see "DESCRIPTION OF CAMDEN SECURITIES --Camden Preferred
Shares --Certain Federal Income Tax Considerations to Holders of Camden Series A
Preferred Shares" above. Distributions that are designated as capital gain
dividends will be taxed as long-term capital gains (to the extent they do not
exceed the payor's actual net capital gain for the taxable year). However,
corporate U.S. Shareholders may be required to treat up to 20% of certain
capital gain dividends as ordinary income. Pursuant to the Taxpayer Relief Act
of 1997, starting with a REIT's first taxable year that begins after August 5,
1997, a REIT may elect to retain and pay income tax on net long-term capital
gains that it receives during a taxable year. If a REIT makes this election, its
shareholders are required to include in their income as long-term capital gain
their proportionate share of the undistributed long-term capital gains so
designated by the REIT. A shareholder will be treated as having paid his or her
share of the tax paid by the REIT in respect of long-term capital gains so
designated by the REIT, for which the shareholder will be entitled to a credit
or refund. In addition, the shareholder's basis in his or her REIT shares will
be increased by the amount of the REIT's designated undistributed long-term
capital gains that are included in the shareholder's long-term capital gains,
reduced by the shareholder's proportionate share of tax paid by the REIT on
those gains that the shareholder is treated as having paid. The earnings and
profits of the REIT will be reduced, and the earnings and profits of any
corporate shareholder of the REIT will be increased, to take into account
amounts designated by the REIT pursuant to this rule. A REIT must pay its tax on
its designated long-term capital gains within 30 days of the close of any
taxable year in which it designates long-term capital gains pursuant to this
rule, and it must mail a written notice of its designation to its shareholders
within 60 days of the close of the taxable year. Distributions in excess of
current and accumulated earnings and profits will not be taxable to a U.S.
Shareholder to the extent that they do not exceed the adjusted basis of the U.S.
Shareholder's shares, but rather will reduce the adjusted basis of such shares.
To the extent that such distributions in excess of current and accumulated
earnings and profits exceed the adjusted basis of a U.S. Shareholder's shares,
such distributions will be included in income as long-term capital gain (or
short-term capital gain if such shares have been held for one year or less),
assuming that such shares are capital assets in the hands of the U.S.
Shareholder. In addition, any distribution declared by Camden in October,
November or December of any year and payable to a U.S. Shareholder of record on
a specified date in any such month shall be treated as both paid by the payor
and received by the U.S. Shareholder on December 31 of such year, provided that
the distribution is actually paid by the payor during January of the following
calendar year.
U.S. Shareholders may not include in their individual income tax
returns any net operating losses or capital losses of Camden. Instead, such
losses would be carried over by Camden for potential offset against its future
income (subject to certain limitations). Taxable distributions from Camden and
gain from the disposition of Camden Common Shares will not be treated as passive
activity income and, therefore, U.S. Shareholders generally will not be able to
apply any "passive activity losses" (such as losses from certain types of
limited partnerships in which a shareholder is a limited partner) against such
income. In addition, taxable distributions from Camden generally will be treated
as investment income for purposes of the investment interest limitations.
Capital gains from the disposition of Camden Common Shares (and distributions
treated as such), however, will be treated as investment income only if the U.S.
Shareholder so elects, in which case such capital gains will be taxed at
ordinary income rates. Camden will notify shareholders after the close of
Camden's taxable year as to the portions of the distributions attributable to
that year that constitute ordinary income, return of capital and capital gain.
As used herein, the term "U.S. Shareholder" means a holder of Camden
Common Shares or Camden Series A Preferred Shares who (for United States federal
income tax purposes) (i) is a citizen or resident of the United States, (ii) is
a corporation, partnership, or other entity created or organized in or under the
laws of the United States or of any political subdivision thereof, (iii) is an
estate the income of which is subject to United States federal income taxation
regardless of is source or (iv) is a trust whose administration is subject to
the primary supervision of a United States court and which has one or more
United States persons who have the authority to control all substantial
decisions of the trust. Notwithstanding the preceding sentence, to the extent
provided in regulations, certain trusts in existence on August 20, 1996, and
treated as United States persons prior to such date that elect to continue to be
treated as United States persons, shall also be considered U.S. Shareholders.
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TAXATION OF U.S. SHAREHOLDERS ON THE DISPOSITION OF COMMON SHAREs
In general, any gain or loss realized upon a taxable disposition of
Camden Common Shares by a U.S. Shareholder who is not a dealer in securities
will be treated as long-term capital gain or loss if the shares have been held
for more than one year and otherwise as short-term capital gain or loss.
However, any loss upon a sale or exchange by a U.S. Shareholder who has held
such shares for six months or less (after applying certain holding period
rules), will be treated as a long-term capital loss to the extent of
distributions from Camden required to be treated by such U.S. Shareholder as
long-term capital gain. All or a portion of any loss realized upon a taxable
disposition of Camden Common Shares may be disallowed if other shares of the
same common shares are purchased within 30 days before or after the disposition.
CAPITAL GAINS AND LOSSES
A capital asset generally must be held for more than one year in order
for gain or loss derived from its sale or exchange to be treated as long-term
capital gain or loss. The highest marginal individual income tax rate is 39.6%,
and the tax rate on net capital gains applicable to individuals is 28%. Thus,
the tax rate differential between capital gain and ordinary income for
individuals may be significant. The Taxpayer Relief Act of 1997 has changed the
tax rates and holding periods applicable to long-term capital gains of
individuals. In general, under applicable provisions of the Taxpayer Relief Act
of 1997, which are generally effective for taxable years ending after May 6,
1997, the maximum tax rate applicable to net capital gains of individuals
realized upon the sale of property held for 18 months or more is 20%, and the
maximum tax rate on net capital gains of individuals realized upon the sale of
property for more than one year and for not more than 18 months is 28%. The
Taxpayer Relief Act of 1997 does not affect the taxation of a corporation's
capital gains. Because the tax rates and applicable holding periods will vary
depending upon a U.S. Shareholder's individual circumstances, investors should
consult their own tax advisors concerning the effect of these Taxpayer Relief
Act of 1997 changes. In addition, the characterization of income as capital or
ordinary may affect the deductibility of capital losses. Capital losses not
offset by capital gains may be deducted against an individual's ordinary income
only up to a maximum annual amount of $3,000. Unused capital losses may be
carried forward. All net capital gain of a corporate taxpayer is subject to tax
at ordinary corporate rates. A corporate taxpayer can deduct capital losses only
to the extent of capital gains, with unused losses being carried back three
years and forward five years.
Backup Withholding Tax and Information Reporting. Backup withholding
tax (which generally is a withholding tax imposed at the rate of 31% on certain
payments to persons that fail to furnish certain information under the United
States information reporting requirements) and information reporting will
generally not apply to distributions paid to Non U.S. Shareholders outside the
United States that are treated as (i) dividends subject to the 30% (or lower
treaty rate) withholding tax discussed below, (ii) capital gains dividends or
(iii) distributions attributable to gain from the sale or exchange by Camden of
United States real property interests. As a general matter, backup withholding
and information reporting will not apply to a payment of the proceeds of a sale
of Camden Common Shares by or through a foreign office of a foreign broker.
Information reporting (but not backup withholding) will apply, however, to a
payment of the proceeds of a sale of Camden Common Shares by a foreign office of
a broker that (a) is a United States person, (b) is a controlled foreign
corporation for United States tax purposes, or (c) derives 50% or more of its
gross income for certain periods from the conduct of a trade or business in the
United States shareholders) for United States tax purposes, unless the broker
has documentary evidence in its records that the holder is a Non-U.S.
Shareholder and certain other conditions are met, or the shareholder otherwise
establishes an exemption. Payment to or through a United States office of a
broker of the proceeds of a sale of Camden Common Shares is subject to both
backup withholding and information reporting unless the shareholder certifies
under penalty of perjury that the shareholder is a Non-U.S. Shareholder, or
otherwise establishes an exemption. Backup withholding is not an additional tax.
A Non-U.S. Shareholder may obtain a refund of any amounts withheld under the
backup withholding rules by filing the appropriate claim for refund with the
IRS.
New Withholding Regulations. Final regulations dealing with withholding
tax on income paid to foreign persons and related matters (the "New Withholding
Regulations") were issued by the Treasury Department in October 1997. In
general, the New Withholding Regulations do not significantly alter the
substantive withholding and information reporting requirements, but unify
current certification procedures and forms and clarify reliance standards. In
addition, the New Withholding Regulations require a corporation that is a REIT
to treat as a dividend the portion of a distribution that is not designated as a
capital gain dividend or return of basis and apply the 30% withholding tax
(subject to any applicable
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deduction or exemption) to such portion, and to apply the withholding rules of
the Foreign Investments in Real Property Tax Act of 1980 ("FIRPTA") discussed
below under "--Taxation of Non-U.S. Shareholders." The New Withholding
Regulations will generally be effective for payments made after December 31,
1998, subject to certain transition rules. THE DISCUSSION SET FORTH BELOW IN
"TAXATION OF NON-U.S. SHAREHOLDERS" DOES NOT TAKE THE NEW WITHHOLDING
REGULATIONS INTO ACCOUNT. PROSPECTIVE NON-U.S. SHAREHOLDERS ARE STRONGLY URGED
TO CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE NEW WITHHOLDING
REGULATIONS.
TAXATION OF TAX-EXEMPT SHAREHOLDERS
Tax-exempt entities, including qualified employee pension and profit
sharing trusts and individual retirement accounts ("Exempt Organizations"),
generally are exempt from federal income taxation. However, they are subject to
taxation on their unrelated business taxable income ("UBTI"). While many
investments in real estate generate UBTI, the Service has issued a published
ruling that dividend distributions from a REIT to an exempt employee pension
trust do not constitute UBTI, provided that the shares of the REIT are not
otherwise used in an unrelated trade or business of the exempt employee pension
trust. Based on that ruling, amounts distributed by Camden to Exempt
Organizations generally should not constitute UBTI. However, if an Exempt
Organization finances its acquisition of Camden Shares or Oasis Shares with
debt, a portion of its income from distributions on such shares will constitute
UBTI pursuant to the "debt-financed property" rules. Furthermore, social clubs,
voluntary employee benefit associations, supplemental unemployment benefit
trusts and qualified group legal services plans that are exempt from taxation
under paragraphs (7), (9), (17) and (20), respectively, of Code Section 501(c)
are subject to different UBTI rules, which generally will require them to
characterize distributions from Camden as UBTI. In addition, in certain
circumstances, a pension trust that owns more than 10% of the Camden Common
Shares is required to treat a percentage of the dividends on its Camden Common
Shares as UBTI (the "UBTI Percentage"). The UBTI Percentage is the gross income
derived by Camden from an unrelated trade or business (determined as if Camden
were a pension trust) divided by the gross income of Camden for the year in
which the dividends are paid. The UBTI rule applies to a pension trust holding
more than 10% of the Camden Common Shares only if (i) the UBTI Percentage is at
least 5%; (ii) Camden or Oasis, as the case may be, qualifies as a REIT by
reason of the modification of the 5/50 Rule that allows the beneficiaries of the
pension trust to be treated as holding shares of Camden or Oasis, as the case
may be, in proportion to their actuarial interests in the pension trust; and
(iii) either (A) one pension trust owns more than 25% of the value of Camden's
Common Shares or (B) a group of pension trusts individually holding more than
10% of the value of Camden's shares collectively owns more than 50% of the value
of Camden's shares.
TAXATION OF NON-U.S. SHAREHOLDERS
The rules governing United States federal income taxation of
nonresident alien individuals, foreign corporations, foreign partnerships and
other foreign holders of Camden Common Shares are complex and no attempt will be
made herein to provide more than a summary of such rules. SUCH SHAREHOLDERS
SHOULD CONSULT WITH THEIR OWN TAX ADVISORS TO DETERMINE THE IMPACT OF FEDERAL,
STATE, LOCAL AND ANY FOREIGN INCOME TAX LAWS WITH REGARD TO AN INVESTMENT IN
CAMDEN SHARES, INCLUDING ANY REPORTING REQUIREMENTS.
Distributions to Non-U.S. Shareholders that are not attributable to
gain from sales or exchanges of United States real property interests and are
not designated by the payor as capital gains dividends will be treated as
dividends of ordinary income to the extent that they are made out of the payor's
current or accumulated earnings and profits. Such distributions ordinarily will
be subject to a withholding tax equal to 30% of the gross amount of the
distribution unless an applicable tax treaty reduces or eliminates that tax.
However, if income from the investment in Camden Common Shares is treated as
effectively connected with the Non-U.S. Shareholder's conduct of a United States
trade or business, the Non-U.S. Shareholder generally will be subject to federal
income tax at graduated rates, in the same manner as U.S. Shareholders are taxed
with respect to such distributions (and also may be subject to the 30% branch
profits tax in the case of a Non-U.S. Shareholder that is a corporate Non-U.S.
Shareholder). Camden expects to withhold United States income tax at the rate of
30% on the gross amount of any such distributions made to a Non-U.S. Shareholder
unless (i) a lower treaty rate applies and any required form evidencing
eligibility for that reduced rate is filed with Camden or (ii) the Non-U.S.
Shareholder files an IRS Form 4224 with Camden claiming that the distribution is
effectively connected income.
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Distributions in excess of current and accumulated earnings and profits
of Camden will not be taxable to a Non-U.S. Shareholder to the extent that such
distributions do not exceed the adjusted basis of the Non-U.S. Shareholder's
Camden Common Shares but rather will reduce the adjusted basis of such shares.
To the extent that distributions in excess of current and accumulated earnings
and profits exceed the adjusted basis of a Non-U.S. Shareholder's Camden Common
Shares, such distributions will give rise to tax liability if the Non-U.S.
Shareholder would otherwise be subject to tax on any gain from the sale or
disposition of his Camden Common Shares as described below. Because it generally
cannot be determined at the time a distribution is made whether or not such
distribution will be in excess of current and accumulated earnings and profits,
the entire amount of any distribution normally will be subject to withholding at
the same rate as a dividend. However, amounts so withheld are refundable to the
extent it is determined subsequently that such distribution was, in fact, in
excess of the payor's current and accumulated earnings and profits.
For any year in which Camden qualifies as a REIT, distributions that
are attributable to gain from sales or exchanges of U.S. real property interests
will be taxed to a Non-U.S. Shareholder under the provisions of FIRPTA. Under
FIRPTA, distributions attributable to gain from sales of United States real
property interests are taxed to a Non-U.S. Shareholder as if such gain were
effectively connected with a United States business. Non-U.S. Shareholders thus
would be taxed at the normal capital gain rates applicable to U.S. Shareholders
(subject to applicable alternative minimum tax and a special alternative minimum
tax in the case of nonresident alien individuals). Distributions subject to
FIRPTA also may be subject to the 30% branch profits tax in the hands of a
corporate Non-U.S. Shareholder not entitled to treaty relief or exemption. The
payor is required to withhold 35% of any distribution that is designated by it
as a capital gains dividend. The amount withheld is creditable against the
Non-U.S. Shareholder's FIRPTA tax liability.
Gain recognized by a Non-U.S. Shareholder upon a sale of his Camden
Common Shares generally will not be taxed under FIRPTA if Camden is a
"domestically controlled REIT," defined generally as a REIT in which at all
times during a specified testing period less than 50% in value of the shares was
held directly or indirectly by foreign persons. Camden is currently a
"domestically-controlled REIT" and, therefore, the sale of Camden Common Shares
will not be subject to taxation under FIRPTA. However, no assurance can be given
that Camden will continue to be a "domestically-controlled REIT." Furthermore,
gain not subject to FIRPTA will be taxable to a Non-U.S. Shareholder if (i)
investment in Camden Common Shares or Oasis Common Stock is effectively
connected with the Non-U.S. Shareholder's United States trade or business, in
which case the Non-U.S. Shareholder will be subject to the same treatment as
U.S. Shareholders with respect to such gain, or (ii) the Non-U.S. Shareholder is
a nonresident alien individual who was present in the United States for 183 days
or more during the taxable year and certain other conditions apply, in which
case the nonresident alien individual will be subject to a 30% tax on the
individual's capital gains. If the gain on the sale of Camden Common Shares or
Oasis Common Stock were to be subject to taxation under FIRPTA, the Non-U.S.
Shareholder would be subject to the same treatment as U.S. Shareholders with
respect to such gain (subject to applicable alternative minimum tax, a special
alternative minimum tax in the case of nonresident alien individuals, and the
possible application of the 30% branch profits tax in the case of corporate
Non-U.S. Shareholders).
OTHER TAX CONSEQUENCES
Camden, the Camden Corporate Subsidiaries and/or Camden shareholders
may be subject to state or local taxation in various state or local
jurisdictions, including those in which it or they own property, transact
business or reside. The state and local tax treatment of Camden and its
shareholders may not conform to the federal income tax consequences discussed
above. CONSEQUENTLY, OASIS STOCKHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS
REGARDING THE EFFECT OF STATE AND LOCAL TAX LAWS ON AN INVESTMENT IN CAMDEN.
RATIFICATION OF INDEPENDENT AUDITORS
Upon the recommendation of the Audit Committee, the Camden Board has
appointed the firm of Deloitte & Touche LLP as Camden's independent auditors for
the year ending December 31, 1998. The affirmative vote of a majority of the
Camden Common Shares present, or represented, and entitled to vote at the
meeting, is required to ratify the appointment of Deloitte & Touche LLP.
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If the resolution ratifying the appointment of Deloitte & Touche LLP as
independent auditors is approved by the shareholders, the Camden Board
nevertheless retains the discretion to select different auditors in the future,
should the Camden Board then deem it in Camden's best interest. Any such
selection need not be submitted to a vote of shareholders.
EXPERTS
The consolidated financial statements and the related financial
statement schedule incorporated in this prospectus by reference from Camden's
annual report on Form 10-K for the year ended December 31, 1997 have been
audited by Deloitte & Touche LLP, independent auditors, as stated in their
report which is incorporated herein by reference, and have been so incorporated
in reliance upon the report of such firm given upon their authority as experts
in accounting and auditing.
The consolidated financial statements and related financial statement
schedule of Oasis included in (i) its Annual Report on Form 10-K for the year
ended December 31, 1996, (ii) its Current Report on Form 8-K filed with the
Commission on November 6, 1997 and (iii) its Current Report on Form 8-K filed
with the Commission on January 30, 1998 have been audited by Coopers & Lybrand
L.L.P., independent auditors, as set forth in their report thereon included
therein and incorporated herein by reference. Such consolidated financial
statements and schedule are incorporated herein by reference in reliance upon
such report given upon the authority of such firm as experts in accounting and
auditing.
It is expected that representatives of Deloitte & Touche LLP will be
present at the Camden Special Meeting to respond to appropriate questions of
shareholders and to make a statement if they desire. It is expected that
representatives of Coopers & Lybrand L.L.P. will be present at the Oasis Special
Meeting to respond to appropriate questions of stockholders and to make a
statement if they desire.
LEGAL OPINIONS
The legality of the Camden Shares to be issued in the Merger will be
passed on for Camden by Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P., Dallas,
Texas.
Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P., Dallas, Texas, counsel to
Camden, and Latham & Watkins, Costa Mesa, California, counsel to Oasis, will
deliver opinions to Camden and Oasis, respectively, concerning federal income
tax consequences of the Merger. See "THE MERGER--Material Federal Income Tax
Consequences." Also, Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P. will deliver
an opinion to each of Camden and Oasis that, commencing with its taxable year
ended December 31, 1993, Camden was organized and has operated in conformity
with the requirements for qualification and taxation as a REIT, and Latham &
Watkins will deliver an opinion to Camden that, commencing with its taxable year
ended December 31, 1993, Oasis was organized and has operated in conformity with
the requirements for qualification and taxation as a REIT.
SHAREHOLDER PROPOSALS
Any proposals by Camden shareholders to be presented at Camden's Annual
Meeting of Shareholders to be held in 1999 must have been received by Camden no
later than November 29, 1998 in order to be included in Camden's proxy materials
relating to the meeting. Any proposals by Oasis stockholders to be presented at
Oasis' Annual Meeting of Stockholders to be held in 1999, assuming that the
Merger is not consummated by June 30, 1998, must have been received by Oasis no
later than December 11, 1998.
OTHER MATTERS
The Camden Board does not intend to bring any matter before the Camden
Special Meeting other than as specifically set forth in the Notice of Special
Meeting of Shareholders, nor does it know of any matter to be brought before the
Camden Special Meeting by others. If, however, any other matters properly come
before the Special Meeting, it is the intention of the proxyholders to vote such
proxy in accordance with the decision of a majority of the Camden Board.
The Oasis Board does not intend to bring any matter before the Oasis
Special Meeting other than as specifically set forth in the Notice of Special
Meeting of Stockholders, nor does it know of any matter to be brought before the
Oasis Special
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Meeting by others. If, however, any other matters properly come before the Oasis
Special Meeting, it is the intention of the proxyholders to vote such proxy in
accordance with the decision of a majority of the Oasis Board.
BY ORDER OF THE BOARD OF TRUST BY ORDER OF THE BOARD OF DIRECTORS OF
MANAGERS OF CAMDEN PROPERTY TRUST OASIS RESIDENTIAL, INC.
Richard J. Campo Scott S. Ingraham
Chairman of the Board and President and Chief Executive Officer
Chief Executive Officer
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ANNEX I
AGREEMENT AND PLAN OF MERGER
(Restated to include Amendment No. 1 thereto)
dated December 16, 1997
by and among
CAMDEN PROPERTY TRUST
CAMDEN SUBSIDIARY II, INC.
and
OASIS RESIDENTIAL, INC.
<PAGE> 116
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I
THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1
SECTION 1.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1
SECTION 1.2 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-2
SECTION 1.3 Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-2
SECTION 1.4 Effects of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-2
SECTION 1.5 Certificate of Incorporation and Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . . I-2
SECTION 1.6 Trust Managers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-2
SECTION 1.7 Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-2
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-2
SECTION 2.1 Effect on Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-2
SECTION 2.2 Conversion of Camden Sub Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . I-2
SECTION 2.3 Cancellation of Certain Shares of Company Capital Stock . . . . . . . . . . . . . . . . . . I-3
SECTION 2.4 Oasis Martinique LLC Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-4
SECTION 2.5 Exchange of Certificates; Final Company Dividend . . . . . . . . . . . . . . . . . . . . . I-4
ARTICLE III
REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-5
SECTION 3.1 Representations and Warranties of the Company . . . . . . . . . . . . . . . . . . . . . . . I-5
SECTION 3.2 Representations and Warranties of Camden . . . . . . . . . . . . . . . . . . . . . . . . I-12
ARTICLE IV
COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-19
SECTION 4.1 Conduct of Business by the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . I-19
SECTION 4.2 Conduct of Business by Camden . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-20
SECTION 4.3 Other Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-22
ARTICLE V
ADDITIONAL COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-22
SECTION 5.1 Preparation of the Registration Statement and the Proxy Statement; Company
Stockholder Meeting and Camden Shareholder Meeting . . . . . . . . . . . . . . . . . . I-22
SECTION 5.2 Access to Information; Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . I-23
SECTION 5.3 Commercially Reasonable Efforts; Notification . . . . . . . . . . . . . . . . . . . . . . I-23
SECTION 5.4 Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-24
SECTION 5.5 Tax Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-24
SECTION 5.6 Camden Board of Trust Managers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-24
SECTION 5.7 No Solicitation of Transactions by the Company . . . . . . . . . . . . . . . . . . . . . I-24
SECTION 5.8 Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-25
SECTION 5.9 Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-25
SECTION 5.10 Letters of Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-25
SECTION 5.11 Transfer and Gains Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-25
SECTION 5.12 Benefit Plans and Other Employee Arrangements . . . . . . . . . . . . . . . . . . . . . . I-25
SECTION 5.13 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-26
</TABLE>
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<TABLE>
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ARTICLE VI
CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-27
SECTION 6.1 Conditions to Each Party's Obligation To Effect the Merger . . . . . . . . . . . . . . . I-27
SECTION 6.2 Conditions to Obligations of Camden and Camden Sub . . . . . . . . . . . . . . . . . . . I-28
SECTION 6.3 Conditions to Obligations of the Company . . . . . . . . . . . . . . . . . . . . . . . . I-29
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-30
SECTION 7.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-30
SECTION 7.2 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-31
SECTION 7.3 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-33
SECTION 7.4 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-33
SECTION 7.5 Extension; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-33
ARTICLE VIII
GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-33
SECTION 8.1 Nonsurvival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . I-33
SECTION 8.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-33
SECTION 8.3 Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-34
SECTION 8.4 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-35
SECTION 8.5 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-35
SECTION 8.6 Entire Agreement; No Third-Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . I-35
SECTION 8.7 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-35
SECTION 8.8 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-35
SECTION 8.9 Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-35
SECTION 8.10 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-35
</TABLE>
<PAGE> 118
EXHIBITS:
A Form of Affiliate Letter
B Form of Company Legal Opinion
C Form of Camden Legal Opinion
Annex A - Parties to Company Voting Agreement
Annex B - Parties to Camden Voting Agreement
<TABLE>
<CAPTION>
SCHEDULES:
<S> <C>
Schedule 1.6 Trust Managers of Camden
Schedule 1.7 Officers of Surviving Corporation
Schedule 3.1(b) Company Subsidiaries
Schedule 3.1(c) Capital Structure
Schedule 3.1(d) Authority; Noncontravention; Consents
Schedule 3.1(e) SEC Documents; Financial Statements; Undisclosed Liabilities
Schedule 3.1(f) Certain Changes or Events
Schedule 3.1(g) Litigation
Schedule 3.1(h) Company Properties
Schedule 3.1(j) Company Related Party Transactions
Schedule 3.1(k)(i) Changes in Benefit Plans
Schedule 3.1(k)(ii) ERISA Compliance
Schedule 3.1(l) Taxes
Schedule 3.1(m) Payments to Employees, Officers and Directors
Schedule 3.1(o) Compliance with Laws (Exceptions)
Schedule 3.1(p)(i) Contracts
Schedule 3.1(p)(ii) Debt Instruments
Schedule 3.2(b) Camden Subsidiaries
Schedule 3.2(c) Camden Capital Structure
Schedule 3.2(d) Authority; Noncontravention; Consents
Schedule 3.2(e) Camden Liabilities
Schedule 3.2(f) Certain Changes or Events
Schedule 3.2(g) Litigation
Schedule 3.2(h) Camden Properties
Schedule 3.2(j) Camden Related Party Transactions
Schedule 3.2(k)(i) Changes in Benefit Plans
Schedule 3.2(k)(ii) ERISA Compliance
Schedule 3.2(l)(i) Taxes
Schedule 3.2(l)(ii) Tax Exceptions
Schedule 3.2(m) Payments to Employees, Officers or Directors
Schedule 3.2(p)(i) Contracts
Schedule 3.2(p)(ii) Debt Instruments
Schedule 4.1 Conduct of Business by the Company (Exceptions to Covenants)
Schedule 4.2 Conduct of Business by Camden (Exceptions to Covenants)
Schedule 5.12 Employee Benefits
Schedule 8.3 Persons with "Knowledge" of the Company or Camden
</TABLE>
<PAGE> 119
INDEX OF DEFINED TERMS
<TABLE>
<S> <C>
Term Section
- ---- -------
Affiliate 8.3
Agreement Introduction
Articles of Merger 1.3
Base Amount 7.2(h)
Break-Up Expenses 7.2(h)
Break-Up Expense Base Amount 7.2(h)
Break-Up Fee 7.2(h)
Break-Up Fee Tax Opinion 7.2(h)
Camden Introduction
Camden Benefit Plans 3.2(k)(i)
Camden Common Stock Recital (e)
Camden Disclosure Letter 8.3
Camden Employee Stock Plans 3.2(c)
Camden Financial Statement Date 3.2(f)
Camden Material Adverse Change 3.2(f)
Camden Material Adverse Effect 3.2(a)
Camden Options 3.2(c)
Camden Preferred Shares 3.2(c)
Camden Preferred Stock 2.1(d)
Camden Properties 3.2(h)
Camden SEC Documents 3.2(e)
Camden Shareholder Approval 3.2(d)
Camden Shareholder Meeting 5.1(c)
Camden Shares 2.1(d)
Camden Sub Introduction
Camden Subsidiaries 3.2(b)
Camden Voting Agreement Recital (e)
Certificate of Merger 1.3
Certificates 2.2(b)
Closing Date 1.2
Code Recital (c)
Common Stock Recital (d)
Common Stock Exchange Ratio 2.1(c)
Company Introduction
Company Benefit Plans 3.1(k)(i)
Company Disclosure Letter 8.3
Company Employee Stock Plans 2.1(e)
Company Option 2.1(e)
Company Properties 3.1(h)
Company SEC Documents 3.1(e)
Company Shares 2.1(b)
Company Stockholder Approval 3.1(d)
Company Stockholder Meting 5.1(b)
Company Subsidiaries 3.1(b)
Company Voting Agreement Recital (d)
Competing Transaction 5.7(a)
Confidentiality Agreement 5.2
DGCL 1.1
DLJ 3.2(n)
Encumbrances 3.1(h)
ERISA 3.1(k)(ii)
</TABLE>
<PAGE> 120
<TABLE>
<S> <C>
Excess Shares 3.1(c)
Exchange Act 3.1(d)
Exchange Agent 2.2(a)
Exchange Ratio 2.1(d)
Fee 7.2(h)
Fee Base Amount 7.2(h)
Financial Statement Date 3.1(f)
Final Company Dividend 2.2(d)(i)
GAAP 3.1(e)
Governmental Entity 3.1(d)
Hazardous Materials 3.1(i)
HSR Act 3.1(d)
Indebtedness 3.1(p)(ii)
Indemnified Parties 5.13(a)
Knowledge 8.3
Laws 3.1(d)
Liens 3.1(b)
Material Adverse Change 3.1(f)
Material Adverse Effect 3.1(a)
Material Contract 3.1(p)(i)
Merger Recital (9)
Merrill Lynch 3.1(n)
NGCL 1.1
NYSE 2.2(g)
Oasis Martinique Exchange Rights Agreement 8.3
Oasis Martinique LLC 8.3
Oasis Martinique LLC Agreement 8.3
Oasis Martinique LLC Units 8.3
Oasis Martinique Loan and Security Agreement 8.3
Person 8.3
Preferred Stock 3.1(c)
Preferred Stock Exchange Ratio 2.1(d)
Property Restrictions 3.1(h)
Proxy Statement 3.1(d)
Qualifying Income 7.2(h)
Registration Statement 3.2(d)
REIT 3.1(l)(ii)
REIT Requirements 7.2(h)
SEC 3.1(d)
Securities Act 3.1(e)
Series A Preferred Stock 2.1(b)
Shareholder Approvals 3.2(d)
Subsidiary 8.3
Surviving Corporation 1.1
Takeover Statute 3.1(r)
Taxes 3.1(l)(i)
Transactions Recital (h)
Transfer and Gains Taxes 5.11
Unconsolidated Camden Financial Statements 3.2(e)
Unconsolidated Company Financial Statements 3.1(e)
</TABLE>
<PAGE> 121
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "AGREEMENT")
dated December 16, 1997 is made and entered into by and among Camden Property
Trust, a Texas real estate investment trust ("CAMDEN"), Camden Subsidiary II,
Inc., a Delaware corporation and a direct wholly owned subsidiary of Camden
("CAMDEN SUB"), and Oasis Residential, Inc., a Nevada corporation (the
"COMPANY").
RECITALS
(a) The Board of Trust Managers of Camden and the
respective Boards of Directors of Camden Sub and the Company have approved the
merger of the Company with and into Camden Sub (the "MERGER"), upon the terms
and subject to the conditions set forth in this Agreement.
(b) Camden, Camden Sub and the Company desire to make
certain representations, warranties, covenants and agreements in connection
with the Merger and also to prescribe various conditions to the Merger.
(c) For federal income tax purposes it is intended
that the Merger qualify as a reorganization within the meaning of Section
368(a) of the Internal Revenue Code of 1986, as amended (the "CODE"), and that
this Agreement constitutes a plan of reorganization under Section 368 of the
Code.
(d) Concurrently with the execution of this Agreement
and as an inducement to Camden to enter into this Agreement, each of the
Persons listed on ANNEX A has entered into a voting agreement (the "COMPANY
VOTING AGREEMENT") pursuant to which such Person has agreed, among other
things, to vote its shares of common stock, par value $.01 per share, of the
Company (the "COMMON STOCK") in favor of this Agreement, the Merger and any
other matter that requires its vote in connection with the transactions
contemplated by this Agreement.
(e) Concurrently with the execution of this Agreement
and as an inducement to the Company to enter into this Agreement, each of the
Persons listed on ANNEX B has entered into a voting agreement (the "CAMDEN
VOTING AGREEMENT") pursuant to which such Person has agreed, among other
things, to vote its common shares of beneficial interest, par value $.01, of
Camden (the "CAMDEN COMMON STOCK") in favor of this Agreement, the Merger and
any other matter that requires its vote in connection with the transactions
contemplated by this Agreement.
(f) The transactions contemplated by this Agreement,
the Company Voting Agreement, the Camden Voting Agreement and the other
agreements and documents contemplated hereby, including, without limitation,
the Merger, shall be referred to collectively in this Agreement as the
"TRANSACTIONS."
NOW, THEREFORE, in consideration of the representations,
warranties, covenants and agreements contained in this Agreement, the parties
hereto agree as follows:
ARTICLE I
THE MERGER
SECTION 1.1 The Merger. Upon the terms and
subject to the conditions set forth in this Agreement, and in accordance with
the Delaware General Corporation Law (the "DGCL") and the Nevada General
Corporation Law (the "NGCL"), the Company shall be merged with and into Camden
Sub at the Effective Time (as defined below). Camden Sub shall be the
surviving corporation (the "SURVIVING CORPORATION") in the Merger and shall
become a wholly owned subsidiary of Camden. From and after the Effective Time,
the identity and separate corporate existence of the Company shall cease and
Camden Sub shall succeed to and assume all the rights and obligations of the
Company.
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<PAGE> 122
SECTION 1.2 Closing. The closing of the Merger
will take place at 10:00 a.m., local time, on the second business day after
satisfaction or waiver of the conditions set forth in Article VI (the "CLOSING
DATE"), at the offices of Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P., 2001
Ross Avenue, Suite 3000, Dallas, Texas 75201, or at such other time, date and
place as is agreed to by the parties hereto.
SECTION 1.3 Effective Time. As soon as
practicable following the satisfaction or waiver of the conditions set forth in
Article VI, the parties shall file a certificate of merger or other appropriate
documents (the "CERTIFICATE OF MERGER") executed in accordance with the DGCL
and articles of merger or other appropriate documents (the "ARTICLES OF
MERGER") executed in accordance with the NGCL and shall make all other filings
or recordings required under the DGCL or the NGCL. The Merger shall become
effective upon the later of (i) the filing of the Articles of Merger with the
Secretary of State of the State of Nevada in accordance with the NGCL and (ii)
the filing of the Certificate of Merger with the Secretary of State of the
State of Delaware, or at such later time that Camden, Camden Sub and the
Company have agreed upon and designated in such filings in accordance with
applicable law (the time the Merger becomes effective being the "EFFECTIVE
TIME"), it being understood that the parties shall cause the Effective Time to
occur on the Closing Date.
SECTION 1.4 Effects of the Merger. The Merger
shall have the effects set forth in the DGCL and the NGCL. Among other effects
of the Merger, upon consummation of the Merger, the Surviving Corporation shall
succeed to all powers and rights of the Company, and shall be liable for all
obligations and responsibilities of the Company (including, without limitation,
the managing member of Oasis Martinique LLC, and shall become and be bound by
all of the terms and provisions of the Oasis Martinique LLC Agreement binding
upon the managing member of Oasis Martinique LLC).
SECTION 1.5 Certificate of Incorporation and
Bylaws. The Certificate of Incorporation of Camden Sub, as in effect
immediately prior to the Effective Time, shall be the Certificate of
Incorporation of the Surviving Corporation, until duly amended in accordance
with applicable law. The Bylaws of Camden Sub, as in effect immediately prior
to the Effective Time, shall be the Bylaws of the Surviving Corporation, until
duly amended in accordance with applicable law. Prior to the Effective Time,
Camden shall amend its Bylaws to the extent necessary to increase the size of
its Board of Trust Managers as provided in Section 5.6 and shall appoint Scott
Ingraham (or such other person designated by the Company in the event Scott
Ingraham is unable or unwilling to serve) to fill such vacancy and serve in
accordance with Camden's Bylaws.
SECTION 1.6 Trust Managers. The Trust Managers
of Camden immediately following the Effective Time shall be the persons named
on SCHEDULE 1.6 attached hereto, each of whom shall serve in accordance with
the Texas Real Estate Investment Trust Act, as amended, and Camden's Bylaws.
Such Trust Managers of Camden shall be appointed to the committees of Camden's
Board of Trust Managers as indicated on SCHEDULE 1.6. Immediately following
the Effective Time, Camden shall cause the size and composition of the Board of
Directors of Camden Sub to be the same as Camden's Board of Trust Managers.
SECTION 1.7 Officers. The officers of Camden
Sub immediately following the Effective Time shall be the persons named on
SCHEDULE 1.7 attached hereto, all of whom shall serve until the earlier of
their resignation or removal or until their respective successors are duly
elected and qualified, as the case may be.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
SECTION 2.1 Effect on Capital Stock. By virtue
of the Merger and without any action on the part of the holder of any shares of
capital stock of Camden, Camden Sub or the Company:
SECTION 2.2 Conversion of Camden Sub Common
Stock. At the Effective Time, each share of common stock, par value $.01 per
share, of Camden Sub outstanding immediately prior to the Effective Time shall,
automatically and without any action on the part of the holder thereof, be
converted into one share of common stock, par value $.01 per share, of the
Surviving Corporation.
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<PAGE> 123
SECTION 2.3 Cancellation of Certain Shares of
Company Capital Stock. At the Effective Time, each share of Common Stock and
each share of Series A Cumulative Convertible Preferred Stock, par value $.01
per share, of the Company (the "SERIES A PREFERRED STOCK" and, together with
the Common Stock, the "COMPANY SHARES") held by the Company as treasury stock
or owned by any Company Subsidiary (as defined below) shall, automatically and
without any action on the part of the holder thereof, be canceled and retired
and all rights in respect thereof shall cease to exist without any conversion
thereof or payment therefor.
(a) Conversion of Common Stock. At the Effective
Time, each share of Common Stock outstanding immediately prior to the Effective
Time shall, except as otherwise provided in Section 2.1(b), automatically and
without any action on the part of the holder thereof, cease to be outstanding
and be converted into .759 of a share of Camden Common Stock (the "COMMON STOCK
EXCHANGE RATIO"). If prior to the Effective Time the outstanding shares of
Camden Common Stock shall have been increased, decreased, changed into or
exchanged for a different number or kind of shares or securities as a result of
a reorganization, recapitalization, reclassification, stock dividend, stock
split, reverse stock split, or other similar change in Camden's capitalization,
then an appropriate and proportionate adjustment shall be made in the Common
Stock Exchange Ratio.
(b) Conversion of Series A Preferred Stock. At the
Effective Time, each share of Series A Preferred Stock outstanding immediately
prior to the Effective Time shall, except as otherwise provided in clause (b)
above, automatically and without any action on the part of the holder thereof,
cease to be outstanding and be converted into one share of Series A Cumulative
Convertible Preferred Stock, par value $.01 per share (the "CAMDEN PREFERRED
STOCK" and, together with the Camden Common Stock, the "CAMDEN SHARES"), of
Camden (the "PREFERRED STOCK EXCHANGE RATIO" and, together with the Common
Stock Exchange Ratio, the "EXCHANGE RATIO"), and shall have a liquidation
preference of $25.00. The terms of the Camden Preferred Stock shall be the
same as the terms of the Series A Preferred Stock; provided, however, that the
Camden Preferred Stock shall have such voting rights as the parties shall
reasonably agree are necessary in order to insure that the Merger constitutes a
reorganization within the meaning of Section 368(a) of the Code; provided,
further, that the cumulative cash dividends payable in amount per share shall
equal the greater of (i) $2.25 per annum or (ii) the cash dividends paid or
payable on a number of shares of Camden Common Stock equal to the number of
shares of Camden Common Stock into which a share of Camden Preferred Stock is
convertible, and shares of Camden Preferred Stock shall be convertible into
shares of Camden Stock at a conversion price of $32.4638 per share of Camden
Common Stock, subject to certain adjustments.
(c) Options. To the extent that acceleration by the
Company of the exercisability of any outstanding option to purchase shares of
Company Common Stock (each, a "COMPANY OPTION") is permitted but not required
by the applicable governing instrument, then the Company shall not elect to
cause such acceleration to occur. In connection therewith, at the Effective
Time, to the extent not prohibited by the terms of the relevant governing
instrument, each Company Option that is outstanding and unexercised immediately
prior thereto shall cease to represent a right to acquire shares of Common
Stock and shall be converted automatically into an option to purchase shares of
Camden Common Stock in an amount and at an exercise price determined as
provided below (and otherwise subject to the terms of the Company's 1995 Equity
Participation Plan, the Company's Stock Option Plan for Outside Directors and
the Company's 1993 Stock Option Plan (collectively, the "COMPANY EMPLOYEE STOCK
PLANS"), and the agreements evidencing grants thereunder, including, subject to
the provisions of the first sentence of this Section 2.1(e), the accelerated
vesting of Company Options that shall occur in connection with and by virtue of
the Merger as and to the extent required by the Company Employee Stock Plans or
such agreements):
(i) the number of shares of Camden Common Stock
to be subject to the option shall be equal to the product of the number of
shares of Common Stock subject to the original option and the Common Stock
Exchange Ratio, provided that any fractional share of Camden Common Stock
resulting from such multiplication shall be rounded down to the nearest whole
share; and
(ii) the exercise price per share of Camden Common
Stock under the option shall be equal to the exercise price per share of Common
Stock under the original option divided by the Common Stock Exchange Ratio,
provided that such exercise price shall be rounded up to the nearest whole
cent.
The adjustment provided herein with respect to any Company Options that are
"incentive stock options" (as defined in Section 422 of the Code) shall be and
is intended to be effected in a manner that is consistent with Section 424(a)
of
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<PAGE> 124
the Code and, to the extent it is not so consistent, Section 424(a) shall
override anything to the contrary contained herein. The duration and other
terms of the new option shall be the same as the original option except that
all references to the Company shall be deemed to be references to Camden.
SECTION 2.4 Oasis Martinique LLC Units. At the
Effective Time, each Oasis Martinique LLC Unit which is outstanding immediately
prior thereto shall cease to be exchangeable for one share of Common Stock and
shall automatically be exchangeable, subject to the provisions of the Oasis
Martinique LLC Agreement and the Oasis Martinique Exchange Rights Agreement,
for .759 of a share of Camden Common Stock.
SECTION 2.5 Exchange of Certificates; Final
Company Dividend.
(a) Exchange Agent. Prior to the Effective Time,
Camden Sub shall appoint American Stock Transfer & Trust Company to act as
exchange agent (the "EXCHANGE AGENT") in the Merger.
(b) Camden To Provide Merger Consideration. At or
prior to the Effective Time, Camden Sub shall provide to the Exchange Agent,
for the benefit of the holders of the Company Shares, certificates representing
Camden Shares issuable in exchange for certificates representing outstanding
Company Shares pursuant to Section 2.1 ("CERTIFICATES") and an estimated amount
in cash sufficient to satisfy Camden's obligations under Section 2.2(g). At or
prior to the Effective Time, the Company shall provide to the Exchange Agent,
for the benefit of the holders of the Company Shares, cash payable in respect
of dividends pursuant to Section 2.2(d)(i).
(c) Exchange Procedure. As soon as reasonably
practicable after the Effective Time and in no event later than ten (10)
business days thereafter, the Exchange Agent shall mail to each holder of
record of Company Shares whose shares were converted into Camden Shares
pursuant to Section 2.1 (i) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon delivery of the Certificates to the Exchange Agent and
shall be in a form and have such other provisions as Camden Sub may reasonably
specify) and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for certificates evidencing Camden Shares. Upon
surrender of a Certificate for cancellation to the Exchange Agent or to such
other agent or agents as may be appointed by Camden Sub, together with such
letter of transmittal, duly executed, and such other documents as may
reasonably be required by the Exchange Agent, the holder of such Certificate
shall be entitled to receive in exchange therefor a certificate representing
the number of whole Camden Shares to which the holder is entitled, an amount of
cash in lieu of any fractional Camden Shares in accordance with Section 2.2(g)
and any dividends or other distributions to which such holder is entitled
pursuant to Section 2.2(d), and the Certificate so surrendered shall forthwith
be canceled. In the event of a transfer of ownership of Company Shares that is
not registered in the transfer records of the Company, payment may be made to a
Person other than the Person in whose name the Certificate so surrendered is
registered if such Certificate shall be properly endorsed or otherwise be in
proper form for transfer and the Person requesting such payment either shall
pay any transfer or other taxes required by reason of such payment being made
to a Person other than the registered holder of such Certificate or establish
to the satisfaction of Camden Sub that such tax or taxes have been paid or are
not applicable. Until surrendered as contemplated by this Section 2.2, each
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive upon such surrender such whole number of Camden
Shares provided by Section 2.1, an amount in cash in lieu of any fractional
Camden Share in accordance with Section 2.2(g) and any dividends or other
distributions to which such holder is entitled pursuant to Section 2.2(d). No
interest will be paid or will accrue on the consideration payable upon the
surrender of any Certificate or on any cash payable pursuant to Section 2.2(d)
or Section 2.2(g).
(d) Record Dates for Final Dividends; Distributions
with Respect to Unexchanged Shares.
(i) To the extent necessary to satisfy the
requirements of Section 857(a)(1) of the Code for the taxable year of the
Company ending at the Effective Time, the Company shall declare a dividend (the
"FINAL COMPANY DIVIDEND") to holders of Company Shares, the record date for
which shall be close of business on the last business day prior to the
Effective Time, in an amount equal to the minimum dividend sufficient to permit
the Company to satisfy such requirements. If the Company determines it
necessary to declare the Final Company Dividend, it shall notify Camden at
least ten days prior to the date for the Company Stockholder Meeting (as
defined below), and Camden shall declare a dividend per share to holders of
Camden Common Stock, the record date for which shall be the close of business
on the last business day prior to the Effective Time, in an amount per share
equal to the quotient obtained by
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dividing (x) the Final Company Dividend per share of Common Stock paid by the
Company by (y) the Exchange Ratio. The Final Company Dividend shall be paid
upon presentation of the Certificates for exchange in accordance with this
Article II.
(ii) No dividends or other distributions with
respect to Camden Shares with a record date after the Effective Time shall be
paid to the holder of any unsurrendered Certificate with respect to the Camden
Shares represented thereby, and no cash payment in lieu of fractional shares
shall be paid to any such holder pursuant to Section 2.2(g), in each case until
the surrender of such Certificate in accordance with this Article II. Subject
to the effect of applicable escheat laws, as soon as reasonably practicable
following surrender of any such Certificate there shall be paid to the holder
of such Certificate, without interest, (i) at the time of such surrender, the
amount of any cash payable in lieu of any fractional Camden Share to which such
holder is entitled pursuant to Section 2.2(g) and (ii) if such Certificate is
exchangeable for one or more whole Camden Shares, (x) at the time of such
surrender the amount of dividends or other distributions with a record date
after the Effective Time theretofore paid with respect to such whole Camden
Shares and (y) at the appropriate payment date, the amount of dividends or
other distributions with a record date after the Effective Time but prior to
such surrender and with a payment date subsequent to such surrender payable
with respect to such whole Camden Shares.
(e) No Further Ownership Rights in Common Stock. All
Camden Shares delivered, and cash in lieu of any fractional shares thereof
paid, upon the surrender of Certificates in accordance with the terms of this
Article II shall be deemed to have been paid in full satisfaction of all rights
pertaining to such shares; provided, however, that the Company shall transfer
to the Exchange Agent cash sufficient to pay any dividends or make any other
distributions with a record date prior to the Effective Time which may have
been declared or made by the Company on such shares in accordance with the
terms of this Agreement or prior to the date of this Agreement and that remain
unpaid at the Effective Time and have not been paid prior to such surrender,
and there shall be no further registration of transfers on the stock transfer
books of the Company or its transfer agent of the Company Shares that were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Surviving Corporation or Camden for any
reason, they shall be canceled and exchanged as provided in this Article II.
(f) No Liability. None of Camden, Camden Sub, the
Company or the Exchange Agent shall be liable to any Person in respect of any
shares or funds delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law. All Certificates and funds held by
the Exchange Agent for payment to the holders of unsurrendered Certificates
that remain unclaimed for six months after the Effective Time shall be
redelivered by the Exchange Agent to Camden, upon demand, and any holders of
Certificates who have not theretofore complied with Section 2.2(c) shall
thereafter look only to Camden for delivery of any shares or funds, subject to
applicable escheat and other similar laws.
(g) No Fractional Shares. Notwithstanding any other
provision of this Agreement, no certificates or scrip for fractional Camden
Shares shall be issued upon the surrender for exchange of Certificates and no
dividend or distribution or any other right with respect to Camden Shares shall
relate to any fractional security, and such fractional interests shall not
entitle the holder thereof to vote or to any other rights of a shareholder. In
lieu of any such fractional shares, each holder of Company Shares who would
otherwise have been entitled to a fraction of a Camden Share upon surrender of
Certificates for exchange pursuant to this Article II shall be entitled to
receive from the Exchange Agent a cash payment (without interest) in lieu of
such fractional share equal to such fraction multiplied by the average closing
price per share of Camden Common Stock on the New York Stock Exchange (the
"NYSE") during the five trading days immediately following the Effective Time.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 Representations and Warranties of
the Company. The Company represents and warrants to Camden and Camden Sub as
follows:
(a) Organization, Standing and Corporate Power of the
Company. The Company is a corporation duly organized and validly existing
under the laws of Nevada and has the requisite corporate power and
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authority to carry on its business as now being conducted. The Company is duly
qualified or licensed to do business and is in good standing in each
jurisdiction in which the nature of its business or the ownership or leasing of
its properties makes such qualification or licensing necessary, other than in
such jurisdictions where the failure to be so qualified or licensed,
individually or in the aggregate, would not have a material adverse effect on
the business, properties, assets, financial condition or results of operations
of the Company and the Company Subsidiaries taken as a whole (a "MATERIAL
ADVERSE EFFECT"). The Company has delivered to Camden complete and correct
copies of its Articles of Incorporation and Bylaws, each as amended or
supplemented to the date of this Agreement.
(b) Company Subsidiaries. SCHEDULE 3.1(b) to the
Company Disclosure Letter (as defined below) sets forth each Subsidiary of the
Company (collectively, the "COMPANY SUBSIDIARIES") and the ownership interest
therein of the Company. Except as set forth on SCHEDULE 3.1(b) to the Company
Disclosure Letter, (A) all the outstanding shares of capital stock of each
Company Subsidiary that is a corporation have been validly issued and are fully
paid and nonassessable, are owned by the Company or a Company Subsidiary free
and clear of all pledges, claims, liens, charges, encumbrances and security
interests of any kind or nature whatsoever (collectively, "LIENS") and (B) all
equity interests in each Company Subsidiary that is a partnership, joint
venture, limited liability company or trust are owned by the Company or one or
more Company Subsidiaries free and clear of all Liens. Except for the capital
stock of or other equity or ownership interests in the Company Subsidiaries,
and except as set forth on SCHEDULE 3.1(b) to the Company Disclosure Letter,
the Company does not own, directly or indirectly, any capital stock or other
ownership interest in any Person. Each Company Subsidiary that is a
corporation is duly incorporated and validly existing under the laws of its
jurisdiction of incorporation and has the requisite corporate power and
authority to carry on its business as now being conducted, and each Company
Subsidiary that is a partnership, limited liability company or trust is duly
organized and validly existing under the laws of its jurisdiction of
organization and has the requisite power and authority to carry on its business
as now being conducted. Each Company Subsidiary is duly qualified or licensed
to do business and is in good standing in each jurisdiction in which the nature
of its business or the ownership or leasing of its properties makes such
qualification or licensing necessary, other than in such jurisdictions where
the failure to be so qualified or licensed, individually or in the aggregate,
would not have a Material Adverse Effect. Copies of the charter documents,
bylaws, organization documents and partnership and joint venture agreements of
each Company Subsidiary, each as amended to the date of this Agreement, have
been previously delivered or made available to Camden.
(c) Capital Structure. The authorized capital stock
of the Company consists of 100,000,000 shares of Common Stock, 15,000,000
shares of preferred stock, par value $.01 per share (the "PREFERRED STOCK"),
and 45,000,000 shares of excess stock, par value $.01 per share (the "EXCESS
SHARES"). On the date hereof, (i) 16,326,476 shares of Common Stock and
4,165,000 shares of Series A Preferred Stock were issued and outstanding, (ii)
no shares of Common Stock or Series A Preferred Stock were held by the Company
in its treasury, (iii) no options to purchase shares of Common Stock were
available for issuance to employees or directors of the Company or any Company
Subsidiary under the Company Employee Stock Plans, (iv) 1,170,500 shares of
Common Stock were issuable upon exercise of outstanding Company Options, (v)
886,022 shares of Common Stock were reserved for issuance upon exchange of
Oasis Martinique LLC Units, (vi) 4,165,000 shares of Common Stock were reserved
for issuance upon conversion of the Series A Preferred Stock and (vii) no
Excess Shares were outstanding. On the date of this Agreement, except as set
forth above in this Section 3.1(c), no shares of capital stock or other voting
securities of the Company were issued, reserved for issuance or outstanding.
There are no outstanding stock appreciation rights relating to the capital
stock of the Company. All outstanding shares of capital stock of the Company
are duly authorized, validly issued, fully paid and nonassessable and not
subject to preemptive rights. Except as set forth on SCHEDULE 3.1(c) to the
Company Disclosure Letter, there are no bonds, debentures, notes or other
indebtedness of the Company having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matters on which
stockholders of the Company may vote. Except (A) for the Company Options and
the Oasis Martinique LLC Units, (B) as set forth in SCHEDULE 3.1(c) to the
Company Disclosure Letter, or (C) as otherwise permitted under Section 4.1,
there are no outstanding securities, options, warrants, calls, rights,
commitments, agreements, arrangements or undertakings of any kind to which the
Company or any Company Subsidiary is a party or by which such entity is bound,
obligating the Company or any Company Subsidiary to issue, deliver or sell, or
cause to be issued, delivered or sold, additional shares of capital stock,
voting securities or other ownership interests of the Company or any Company
Subsidiary or obligating the Company or any Company Subsidiary to issue, grant,
extend or enter into any such security, option, warrant, call, right,
commitment, agreement, arrangement or undertaking. Except (1) for the Oasis
Martinique Exchange Rights Agreement, the Oasis Martinique LLC Agreement and
the Oasis Martinique Loan and Security Agreement and (2) as set forth on
SCHEDULE 3.1(c) to the Company Disclosure Letter, there are no outstanding
contractual obligations of the
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Company or any Company Subsidiary to repurchase, redeem or otherwise acquire
any shares of capital stock of the Company or any capital stock, voting
securities or other ownership interests in any Company Subsidiary or make any
material investment (in the form of a loan, capital contribution or otherwise)
to any Person.
(d) Authority; Noncontravention; Consents. The
Company has the requisite corporate power and authority to enter into this
Agreement and, subject to approval of this Agreement by the vote of the holders
of the Company Shares required to approve this Agreement and the Transactions
(the "COMPANY STOCKHOLDER APPROVAL"), to consummate the Transactions to which
the Company is a party. The execution and delivery of this Agreement by the
Company and the consummation by the Company of the Transactions to which the
Company is a party have been duly authorized by all necessary corporate action
on the part of the Company, subject to approval of this Agreement pursuant to
the Company Stockholder Approval. This Agreement has been duly executed and
delivered by the Company and, assuming the due authorization, execution and
delivery hereof and thereof by Camden and Camden Sub, constitute valid and
binding obligations of the Company, enforceable against the Company in
accordance with their terms, except that such enforceability may be subject to
(i) bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting creditors' rights generally or (ii) by general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law). Except as set forth in SCHEDULE 3.1(d) to the
Company Disclosure Letter, the execution and delivery of this Agreement by the
Company does not, and the consummation of the Transactions to which the Company
is a party and compliance by the Company with the provisions of this Agreement
will not, conflict with, or result in any violation of, or default (with or
without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or to loss of a
material benefit under, or result in the creation of any Lien upon any of the
properties or assets of the Company or any Company Subsidiary under, (i) the
Articles of Incorporation or the Bylaws of the Company or the comparable
charter or organizational documents or partnership or similar agreement (as the
case may be) of any Company Subsidiary, each as amended or supplemented as of
the date of this Agreement, (ii) any loan or credit agreement, note, bond,
mortgage, indenture, reciprocal easement agreement, lease or other agreement,
instrument, permit, concession, contract, franchise or license applicable to
the Company or any Company Subsidiary or their respective properties or assets
or (iii) subject to the governmental filings and other matters referred to in
the following sentence, any judgment, order, decree, statute, law, ordinance,
rule or regulation (collectively, "LAWS") applicable to the Company or any
Company Subsidiary, or their respective properties or assets, other than, in
the case of clause (ii) or (iii), any such conflicts, violations, defaults,
rights or Liens that individually or in the aggregate would not (x) have a
Material Adverse Effect or (y) prevent the consummation of the Transactions.
No consent, approval, order or authorization of, or registration, declaration
or filing with, any federal, state or local government or any court,
administrative or regulatory agency or commission or other governmental
authority or agency, domestic or foreign (a "GOVERNMENTAL ENTITY"), is required
by or with respect to the Company or any Company Subsidiary in connection with
the execution and delivery of this Agreement by the Company or the consummation
by the Company of the Transactions, except for (i) the filing by any Person in
connection with any of the Transactions of a pre-merger notification and report
form under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended
(the "HSR ACT"), to the extent applicable, (ii) the filing with the Securities
and Exchange Commission (the "SEC") of (x) a joint proxy statement relating to
the approval by the Company's stockholders and Camden's shareholders of the
transactions contemplated by this Agreement (as amended or supplemented from
time to time, the "PROXY STATEMENT") and (y) such reports under Section 13(a)
of the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), as may
be required in connection with this Agreement and the transactions contemplated
by this Agreement, (iii) the filing of Articles of Merger with the Secretary of
State of the State of Nevada and the Certificate of Merger with the Secretary
of State of the State of Delaware, (iv) such filings as may be required in
connection with the payment of any Transfer and Gains Taxes (as defined below)
and (v) such other consents, approvals, orders, authorizations, registrations,
declarations and filings (A) as are set forth in SCHEDULE 3.1(b) to the Company
Disclosure Letter, (B) as may be required under (x) federal, state or local
environmental laws or (y) the "blue sky" laws of various states or (C) which,
if not obtained or made, would not prevent or delay in any material respect the
consummation of any of the Transactions or otherwise prevent the Company from
performing its obligations under this Agreement in any material respect or
have, individually or in the aggregate, a Material Adverse Effect.
(e) SEC Documents; Financial Statements; Undisclosed
Liabilities. The Company has filed all required reports, schedules, forms,
statements and other documents with the SEC since December 31, 1993 (the
"COMPANY SEC DOCUMENTS"). All of the Company SEC Documents (other than
preliminary material), as of their respective filing dates, complied in all
material respects with all applicable requirements of the Securities Act of
1933, as amended (the "SECURITIES ACT"), and the Exchange Act and, in each
case, the rules and regulations promulgated
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thereunder applicable to such Company SEC Documents. None of the Company SEC
Documents at the time of filing and effectiveness contained any untrue
statement of a material fact or omitted to state any material fact required to
be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading, except
to the extent such statements have been modified or superseded by later Company
SEC Documents. The consolidated financial statements of the Company included
in the Company SEC Documents complied as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto, have been prepared in accordance with generally
accepted accounting principles ("GAAP") (except, in the case of unaudited
statements, as permitted by Form 10-Q of the SEC) applied on a consistent basis
during the periods involved (except as may be indicated in the notes thereto)
and fairly presented, in accordance with the applicable requirements of GAAP,
the consolidated financial position of the Company as of the dates thereof and
the consolidated results of operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal year-end audit
adjustments). The audited financial statements of the unconsolidated Company
Subsidiaries previously delivered to Camden (the "UNCONSOLIDATED COMPANY
FINANCIAL STATEMENTS") have been prepared in accordance with GAAP applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto) and fairly presented, in accordance with the applicable
requirements of GAAP, the financial position of such Company Subsidiaries,
taken as a whole, as of the dates thereof, the results of their respective
operations and cash flows for the periods then ended. Except as set forth in
the Company SEC Documents, in the Unconsolidated Company Financial Statements,
in SCHEDULE 3.1(e) to the Company Disclosure Letter or as permitted by Section
4.1 (for the purposes of this sentence, as if Section 4.1 had been in effect
since September 30, 1997), neither the Company nor any Company Subsidiary has
any liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) required by GAAP to be set forth on a consolidated
balance sheet of the Company or, to the Knowledge of the Company, of any
unconsolidated Company Subsidiary or in the notes thereto and which,
individually or in the aggregate, would have a Material Adverse Effect.
(f) Absence of Certain Changes or Events. Except as
disclosed in the Company SEC Documents or in SCHEDULE 3.1(f) to the Company
Disclosure Letter, since the date of the most recent financial statements
included in the Company SEC Documents (the "FINANCIAL STATEMENT DATE") and to
the date of this Agreement, the Company and the Company Subsidiaries have
conducted their business only in the ordinary course and there has not been (i)
any change that would have a Material Adverse Effect (a "MATERIAL ADVERSE
CHANGE"), nor has there been any occurrence or circumstance that with the
passage of time would reasonably be expected to result in a Material Adverse
Change, (ii) except for regular quarterly dividends paid on Company Shares as
set forth on SCHEDULE 3.1(f) to the Company Disclosure Schedule, in each case
with customary record and payment dates, any declaration, setting aside or
payment of any dividend or other distribution (whether in cash, stock or
property) with respect to any of the Company's capital stock, other than any
dividend required to be paid pursuant to Section 2.2, (iii) any split,
combination or reclassification of any of the Company's capital stock or,
except for the issuance of the Oasis Martinique LLC Units, any issuance or the
authorization of any issuance of any other securities in respect of, in lieu of
or in substitution for, or giving the right to acquire by exchange or exercise,
shares of its capital stock or any issuance of an ownership interest in, any
Company Subsidiary except as permitted by Section 4.1, (iv) any damage,
destruction or loss, not covered by insurance, that has or would have a
Material Adverse Effect or (v) any change in accounting methods, principles or
practices by the Company or any Company Subsidiary, except insofar as may have
been disclosed in the Company SEC Documents or required by a change in GAAP.
(g) Litigation. Except as disclosed in the Company
SEC Documents or in SCHEDULE 3.1(g) to the Company Disclosure Letter, and other
than personal injury and other routine tort litigation arising from the
ordinary course of operations of the Company and the Company Subsidiaries (i)
which are covered by adequate insurance or (ii) for which all material costs
and liabilities arising therefrom are reimbursable pursuant to common area
maintenance or similar agreements, there is no suit, action or proceeding
pending or threatened in writing against or affecting the Company or any
Company Subsidiary that, individually or in the aggregate, could reasonably be
expected to (A) have a Material Adverse Effect or (B) prevent the consummation
of any of the Transactions, nor is there any judgment, decree, injunction, rule
or order of any Governmental Entity or arbitrator outstanding against the
Company or any Company Subsidiary having, or which, insofar as reasonably can
be foreseen, in the future would have, any such effect.
(h) Properties. Except as provided in SCHEDULE 3.1(h)
of the Company Disclosure Letter, the Company or one of the Company
Subsidiaries owns fee simple title to each of the real properties identified in
SCHEDULE
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3.1(h) of the Company Disclosure Letter (the "COMPANY PROPERTIES"), which are
all of the real estate properties owned by them, in each case (except as
provided below) free and clear of liens, mortgages or deeds of trust, claims
against title, charges which are liens, security interests or other
encumbrances on title ("ENCUMBRANCES"). The Company Properties (other than the
Company Properties under development) are not subject to any rights of way,
written agreements, laws, ordinances and regulations affecting building use or
occupancy, or reservations of an interest in title (collectively, "PROPERTY
RESTRICTIONS"), except for (i) Encumbrances and Property Restrictions set forth
in the Company Disclosure Letter, (ii) Property Restrictions imposed or
promulgated by law or any governmental body or authority with respect to real
property, including zoning regulations, provided they do not materially
adversely affect the current use of any Company Property, (iii) Encumbrances
and Property Restrictions disclosed on existing title reports or existing
surveys (in either case copies of which title reports and surveys have been
delivered or made available to Camden, provided, however, that platting of
development land will not be shown on existing title reports) and (iv)
mechanics', carriers', workmen's, repairmen's liens and other Encumbrances,
Property Restrictions and other limitations of any kind, if any, which,
individually or in the aggregate, are not substantial in amount, do not
materially detract from the value of or materially interfere with the present
use of any of the Company Properties subject thereto or affected thereby, and
do not otherwise have a Material Adverse Effect and which have arisen or been
incurred only in the ordinary course of business. Except as provided in
SCHEDULE 3.1(h), valid policies of title insurance have been issued insuring
the Company's or the applicable Company Subsidiaries' fee simple title to the
Company Properties in amounts at least equal to the purchase price thereof,
subject only to the matters disclosed above and on the Company Disclosure
Letter, and such policies are, at the date hereof, in full force and effect and
no material claim has been made against any such policy. Except as provided in
SCHEDULE 3.1(h) of the Company Disclosure Letter, (i) the Company has no
Knowledge that any certificate, permit or license from any governmental
authority having jurisdiction over any of the Company Properties or any
agreement, easement or other right which is necessary to permit the lawful use
and operation of the buildings and improvements on any of the Company
Properties or which is necessary to permit the lawful use and operation of all
driveways, roads and other means of egress and ingress to and from any of the
Company Properties has not been obtained and is not in full force and effect,
or of any pending threat of modification or cancellation of any of same; (ii)
the Company has not received written notice of any violation of any federal,
state or municipal law, ordinance, order, regulation or requirement affecting
any portion of any of the Company Properties issued by any governmental
authority; (iii) there are no material structural defects relating to the
Company Properties; (iv) there are no Company Properties whose building systems
are not in working order in any material respect; (v) there is no physical
damage to any Company Property in excess of $100,000 for which there is no
insurance in effect covering the cost of the restoration; or (vi) there is no
current renovation or restoration to any Company Property the remaining cost of
which exceeds $100,000. Neither the Company nor any of the Company
Subsidiaries has received any notice to the effect that (A) any condemnation or
rezoning proceedings are pending or threatened with respect to any of the
Company Properties or (B) any zoning, building or similar law, code, ordinance,
order or regulation is or will be violated by the continued maintenance,
operation or use of any buildings or other improvements on any of the Company
Properties or by the continued maintenance, operation or use of the parking
areas. All work to be performed, payments to be made and actions to be taken
by the Company or the Company Subsidiaries prior to the date hereof pursuant to
any agreement entered into with a governmental body or authority in connection
with a site approval, zoning reclassification or other similar action relating
to the Company Properties (e.g., Local Improvement District, Road Improvement
District, Environmental Mitigation) has been performed, paid or taken, as the
case may be, and the Company has no Knowledge of any planned or proposed work,
payments or actions that may be required after the date hereof pursuant to such
agreements.
(i) Environmental Matters. None of the Company, any
of the Company Subsidiaries or, to the Company's Knowledge, any other Person
has caused or permitted (a) the unlawful presence of any hazardous substances,
hazardous materials, toxic substances or waste materials (collectively,
"HAZARDOUS MATERIALS") on any of the Company Properties, or (b) any unlawful
spills, releases, discharges or disposal of Hazardous Materials to have
occurred or be presently occurring on or from the Company Properties as a
result of any construction on or operation and use of such properties, which
presence or occurrence would, individually or in the aggregate, have a Material
Adverse Effect; and in connection with the construction on or operation and use
of the Company Properties, the Company and the Company Subsidiaries have not
failed to comply with all applicable local, state and federal environmental
laws, regulations, ordinances and administrative and judicial orders relating
to the generation, recycling, reuse, sale, storage, handling, transport and
disposal of any Hazardous Materials, except for failures to comply that would
not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
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(j) Related Party Transactions. Set forth in SCHEDULE
3.1(j) of the Company Disclosure Letter is a list of all arrangements,
agreements and contracts entered into by the Company or any of the Company
Subsidiaries with (i) any Person who is an officer, director or Affiliate of
the Company or any of the Company Subsidiaries, any relative of any of the
foregoing or any entity of which any of the foregoing is an Affiliate or (ii)
any Person who acquired Company Shares in a private placement. Such documents,
copies of all of which have previously been delivered or made available to
Camden, are listed in SCHEDULE 3.1(j) of the Company Disclosure Letter.
(k) Absence of Changes in Benefit Plans; ERISA
Compliance.
(i) Except as disclosed in the Company SEC
Documents or in SCHEDULE 3.1(k) (i) to the Company Disclosure Letter and except
as permitted by Section 4.1 (for the purpose of this sentence, as if Section
4.1 had been in effect since December 31, 1996), since the date of the most
recent audited financial statements included in the Company SEC Documents,
there has not been any adoption or amendment by the Company or any Company
Subsidiary of any bonus, pension, profit sharing, deferred compensation,
incentive compensation, stock ownership, stock purchase, stock option, phantom
stock, retirement, vacation, severance, disability, death benefit,
hospitalization, medical or other employee benefit plan, arrangement or
understanding (whether or not legally binding, or oral or in writing) providing
benefits to any current or former employee, officer or director of the Company,
any Company Subsidiary, or any Person affiliated with the Company under Section
414 (b), (c), (m) or (o) of the Code (collectively, "COMPANY BENEFIT PLANS").
(ii) Except as described in the Company SEC
Documents or in SCHEDULE 3.1(k) (ii) to the Company Disclosure Letter or as
would not have a Material Adverse Effect, (A) all Company Benefit Plans of the
Company and the Company Subsidiaries, including any such plan that is an
"employee benefit plan" as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), are in compliance with all
applicable requirements of law, including ERISA and the Code, and (B) neither
the Company nor any Company Subsidiary has any liabilities or obligations with
respect to any such Company Benefit Plan, whether accrued, contingent or
otherwise, nor to the Knowledge of the Company are any such liabilities or
obligations expected to be incurred. Except as set forth in SCHEDULE 3.1(k)
(ii) to the Company Disclosure Letter, the execution of this Agreement and
performance of the Transactions will not (either alone or upon the occurrence
of any additional or subsequent events) constitute an event under any Company
Benefit Plan of the Company or a Company Subsidiary, policy, arrangement or
agreement or any trust or loan that will or may result in any payment (whether
of severance pay or otherwise), acceleration, forgiveness of indebtedness,
vesting, distribution, increase in benefits or obligation to fund benefits with
respect to any employee or director. The only severance agreements or
severance policies applicable to the Company or the Company Subsidiaries are
the agreements and policies specifically referred to in SCHEDULE 3.1(k) (ii) to
the Company Disclosure Letter, which Schedule sets forth the amounts payable
thereunder.
(l) Taxes.
(i) Each of the Company and each Company
Subsidiary has (A) filed all Tax returns and reports required to be filed by it
(after giving effect to any filing extension properly granted by a Governmental
Entity having authority to do so) and all such returns and reports are accurate
and complete in all material respects; and (B) paid (or the Company has paid on
its behalf) all Taxes shown on such returns and reports as required to be paid
by it, and, except as disclosed in the Company SEC Documents or in SCHEDULE
3.1(l)(i) to the Company Disclosure Letter, the most recent financial
statements contained in the Company SEC Documents reflect an adequate reserve
for all material Taxes payable by the Company (and by those Company
Subsidiaries whose financial statements are contained therein) for all taxable
periods and portions thereof through the date of such financial statements.
True, correct and complete copies of all federal, state and local Tax returns
and reports for the Company and each Company Subsidiary, and all written
communications relating thereto, have been delivered or made available to
representatives of Camden. Since the Financial Statement Date, the Company has
incurred no liability for taxes under Sections 857(b), 860(c) or 4981 of the
Code, and neither the Company nor any Company Subsidiary has incurred any
material liability for Taxes other than in the ordinary course of business. To
the Knowledge of the Company, no event has occurred, and no condition or
circumstance exists, which presents a material risk that any material Tax
described in the preceding sentence will be imposed upon the Company. Except
as set forth on SCHEDULE 3.1(L)(I) to the Company Disclosure Letter, to the
Knowledge of the Company, no deficiencies for any Taxes have been proposed,
asserted or assessed against the Company or any of the Company Subsidiaries,
and no requests for waivers of the time to assess any such
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Taxes are pending. As used in this Agreement, "TAXES" shall include all
federal, state, local and foreign income, property, sales, excise and other
taxes, tariffs or governmental charges of any nature whatsoever, together with
penalties, interest or additions to Tax with respect thereto.
(ii) The Company (A) for all taxable years
commencing with 1993 through the most recent December 31, has been subject to
taxation as a real estate investment trust (a "REIT") within the meaning of the
Code and has satisfied all requirements to qualify as a REIT for such years,
(B) has operated, and intends to continue to operate, in such a manner as to
qualify as a REIT for the tax year ending upon the Closing Date, and (C) has
not taken or omitted to take any action which would reasonably be expected to
result in a challenge to its status as a REIT, and to the Company's Knowledge,
no such challenge is pending or threatened. Each Company Subsidiary which is a
partnership, joint venture or limited liability company has been since its
formation and continues to be treated for federal income tax purposes as a
partnership and not as a corporation or an association taxable as a
corporation. Each Company Subsidiary which is a corporation for federal income
tax purposes has been since its formation, and continues to be treated for
federal income tax purposes as, a "qualified REIT subsidiary" as defined in
Section 856(i) of the Code. Except as set forth on SCHEDULE 3.1(l)(ii) to the
Company Disclosure Letter, neither the Company nor any Company Subsidiary holds
any asset (x) the disposition of which would be subject to rules similar to
Section 1374 of the Code as a result of an election under IRS Notice 88-19 or
(y) that is subject to a consent filed pursuant to Section 341(f) of the Code
and the regulations thereunder.
(m) No Payments to Employees, Officers or Directors.
Except as set forth on SCHEDULE 3.1(m) to the Company Disclosure Letter or as
otherwise specifically provided for in this Agreement, there is no employment
or severance contract, or other agreement requiring payments to be made or
increasing any amounts payable thereunder on a change of control or otherwise
as a result of the consummation of any of the Transactions, with respect to any
employee, officer or director of the Company or any Company Subsidiary.
(n) Brokers; Schedule of Fees and Expenses. No
broker, investment banker, financial advisor or other Person, other than
Merrill Lynch & Co. ("MERRILL LYNCH"), the fees and expenses of which have
previously been disclosed to Camden and will be paid by the Company, is
entitled to any broker's, finder's, financial advisor's or other similar fee or
commission in connection with the Transactions based upon arrangements made by
or on behalf of the Company or any Company Subsidiary.
(o) Compliance with Laws. To the Knowledge of the
Company, except as disclosed in the Company SEC Documents and except as set
forth in SCHEDULE 3.1(o) to the Company Disclosure Letter, neither the Company
nor any of the Company Subsidiaries has violated or failed to comply with any
statute, law, ordinance, regulation, rule, judgment, decree or order of any
Governmental Entity applicable to its business, properties or operations,
except for violations and failures to comply that would not, individually or in
the aggregate, reasonably be expected to result in a Material Adverse Effect.
(p) Contracts; Debt Instruments.
(i) To the Knowledge of the Company, neither the
Company nor any Company Subsidiary is in violation of or in default under (nor
does there exist any condition which upon the passage of time or the giving of
notice or both would cause such a violation of or default under) any material
loan or credit agreement, note, bond, mortgage, indenture, lease, permit,
concession, franchise, license or any other material contract, agreement,
arrangement or understanding (each, a "MATERIAL CONTRACT") to which it is a
party or by which it or any of its properties or assets is bound, except as set
forth in SCHEDULE 3.1(p)(i) to the Company Disclosure Letter and except for
violations or defaults that would not, individually or in the aggregate, result
in a Material Adverse Effect, nor, except as set forth in SCHEDULE 3.1(p)(i) to
the Company Disclosure Letter, will the consummation of the Transactions
(including the satisfaction of the condition to the obligations of Camden and
Camden Sub set forth in Section 6.2(f)) result in any third party having any
right of termination, amendment, acceleration, or cancellation of or loss or
change in a material benefit under any Material Contract.
(ii) Except for any of the following expressly
identified in the Company SEC Documents and except as permitted by Section 4.1,
SCHEDULE 3.1(p)(ii) to the Company Disclosure Letter sets forth (x) a list of
all loan or credit agreements, notes, bonds, mortgages, indentures and other
agreements and instruments
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pursuant to which any Indebtedness of the Company or any of the Company
Subsidiaries, other than Indebtedness payable to the Company or a Company
Subsidiary or to any third-party partner or joint venturer in any Company
Subsidiary, in an aggregate principal amount in excess of $100,000 per item is
outstanding or may be incurred and (y) the respective principal amounts
outstanding thereunder on November 30, 1997. For purposes of this Section
3.1(p) (ii) and Section 3.2(p) (ii), "INDEBTEDNESS" shall mean, with respect to
any Person, without duplication, (A) all indebtedness of such Person for
borrowed money, whether secured or unsecured, (B) all obligations of such
Person under conditional sale or other title retention agreements relating to
property purchased by such Person, (C) all capitalized lease obligations of
such Person, (D) all obligations of such Person under interest rate or currency
hedging transactions (valued at the termination value thereof) and (E) all
guarantees of such Person of any such Indebtedness of any other Person.
(q) Opinion of Financial Advisor. The Company has
received the opinion of Merrill Lynch, satisfactory to the Company, a copy of
which has been provided to Camden, to the effect that the Exchange Ratio is
fair to the stockholders of the Company from a financial point of view.
(r) State Takeover Statutes. The Company has taken
all action necessary, if any, to exempt transactions between Camden and the
Company and its Affiliates from the operation of any "fair price,"
"moratorium," "control share acquisition" or any other anti-takeover statute or
similar statute enacted under the state or federal laws of the United States or
similar statute or regulation (a "TAKEOVER STATUTE").
(s) Registration Statement and Proxy Statement. The
information supplied or to be supplied by the Company or its Subsidiaries for
inclusion in (i) the Registration Statement will not at the time it becomes
effective under the Securities Act contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading or (ii) the Proxy
Statement, including any amendment and supplement thereto, will not, either at
the date mailed to stockholders of the Company or at the time of the Company
Stockholder Meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they
were made, not misleading. The Registration Statement and the Proxy Statement
will each comply as to form in all material respects with all applicable laws,
including the provisions of the Securities Act and the Exchange Act and the
rules and regulations promulgated thereunder, except that no representation is
made by the Company with respect to information supplied by Camden for
inclusion therein.
(t) Vote Required. The affirmative vote of at least a
majority of the outstanding shares of Common Stock is the only vote of the
holders of any class or series of the Company's capital stock necessary (under
applicable law or otherwise) to approve this Agreement and the Transactions.
SECTION 3.2 Representations and Warranties of
Camden. Camden represents and warrants to the Company as follows:
(a) Organization, Standing and Corporate Power of
Camden and Camden Sub. Camden is a real estate investment trust, and Camden
Sub is a corporation, in each case duly organized and validly existing under
the laws of its jurisdiction of organization or incorporation and each has the
requisite corporate power and authority to carry on its business as now being
conducted. Each of Camden and Camden Sub is duly qualified or licensed to do
business and is in good standing in each jurisdiction in which the nature of
its business or the ownership or leasing of its properties makes such
qualification or licensing necessary, other than in such jurisdictions where
the failure to be so qualified or licensed, individually or in the aggregate,
would not have a material adverse effect on the business, properties, assets,
financial condition or results of operations of Camden and the Camden
Subsidiaries (as defined below), taken as a whole (an "CAMDEN MATERIAL ADVERSE
EFFECT"). Each of Camden and Camden Sub has delivered to the Company complete
and correct copies of its Declaration of Trust or Articles of Incorporation and
Bylaws (as the case may be), each as amended or supplemented to the date of
this Agreement.
(b) Camden Subsidiaries. SCHEDULE 3.2(b) to the Camden
Disclosure Letter (as defined below) sets forth each Subsidiary of Camden
(collectively, the "CAMDEN SUBSIDIARIES"), other than Camden Sub, and the
ownership interest therein of Camden. Except as set forth in SCHEDULE 3.2(b)
to the Camden Disclosure Letter, (A) all the outstanding shares of capital
stock of each Camden Subsidiary that is a corporation have been validly issued
and
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are fully paid and nonassessable and are owned by Camden or a Camden Subsidiary
free and clear of all Liens and (B) all equity interests in each Camden
Subsidiary that is a partnership, joint venture, limited liability company or
trust are owned by Camden or one or more Camden Subsidiaries free and clear of
all Liens. Except for the capital stock of or other equity or ownership
interests in the Camden Subsidiaries and except as set forth in SCHEDULE 3.2(b)
to the Camden Disclosure Letter, Camden does not own, directly or indirectly,
any capital stock or other ownership interest in any Person. Each Camden
Subsidiary (other than Camden Sub) that is a corporation is duly incorporated
and validly existing under the laws of its jurisdiction of incorporation and
has the requisite corporate power and authority to carry on its business as now
being conducted, and each Camden Subsidiary that is a partnership, limited
liability company or trust is duly organized and validly existing under the
laws of its jurisdiction of organization and has the requisite power and
authority to carry on its business as now being conducted. Each Camden
Subsidiary is duly qualified or licensed to do business and is in good standing
in each jurisdiction in which the nature of its business or the ownership or
leasing of its properties makes such qualification or licensing necessary,
other than in such jurisdictions where the failure to be so qualified or
licensed, individually or in the aggregate, would not have a Camden Material
Adverse Effect. Copies of the charter documents, bylaws, organization
documents and partnership and joint venture agreements of each Camden
Subsidiary, each as amended to the date of this Agreement, have been previously
delivered or made available to the Company.
(c) Capital Structure. The authorized capital stock
of Camden consists of 100,000,000 shares of Camden Common Stock and 10,000,000
preferred shares of beneficial interest, par value $.01 per share (the "CAMDEN
PREFERRED SHARES"). On the date hereof, (i) 31,920,880 shares of Camden
Common Stock and no Camden Preferred Shares were issued and outstanding, (ii)
no shares of Camden Stock or Camden Preferred Shares were held by Camden in its
treasury, (iii) 1,751,825 shares of Camden Common Stock were available for
issuance under Camden's employee benefit or incentive plans ("CAMDEN EMPLOYEE
STOCK PLANS"), and (iv) 565,600 shares of Camden Common Stock were issuable
upon exercise of outstanding stock options (the "CAMDEN OPTIONS") to purchase
shares of Camden Common Stock. On the date of this Agreement, except as set
forth in this Section 3.2(c), no shares of capital stock or other voting
securities of Camden were issued, reserved for issuance or outstanding. There
are no outstanding stock appreciation rights relating to the capital stock of
Camden. All outstanding shares of capital stock of Camden are, and all Camden
Shares that may be issued pursuant to this Agreement will be, when issued, duly
authorized, validly issued, fully paid and nonassessable and not subject to
preemptive rights. Except as set forth on SCHEDULE 3.2(c) to the Camden
Disclosure Letter, there are no bonds, debentures, notes or other indebtedness
of Camden having the right to vote (or convertible into, or exchangeable for,
securities having the right to vote) on any matters on which shareholders of
Camden may vote. Except (A) for the Camden Options, (B) as set forth in
SCHEDULE 3.2(c) to the Camden Disclosure Letter, (C) as otherwise permitted
under Section 4.2, (D) as contemplated under Camden's dividend reinvestment
plan and (E) as contemplated by this Agreement, there are no outstanding
securities, options, warrants, calls, rights, commitments, agreements,
arrangements or undertakings of any kind to which Camden or any Camden
Subsidiary is a party or by which such entity is bound, obligating Camden or
any Camden Subsidiary to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock, voting securities or
other ownership interests of Camden or of any Camden Subsidiary or obligating
Camden or any Camden Subsidiary to issue, grant, extend or enter into any such
security, option, warrant, call, right, commitment, agreement, arrangement or
undertaking. Except as set forth on SCHEDULE 3.2(c) to the Camden Disclosure
Letter, there are no outstanding contractual obligations of Camden or any
Camden Subsidiary to repurchase, redeem or otherwise acquire any shares of
capital stock or other ownership interests in any Camden Subsidiary or make any
material investment (in the form of a loan, capital contribution or otherwise)
in any Person.
(d) Authority; Noncontravention; Consents. Each of
Camden and Camden Sub has the requisite corporate power and authority to enter
into this Agreement and, subject to approval of this Agreement by the vote of
the holders of the Camden Common Stock required to approve this Agreement and
the Transactions, including, without limitation, the issuance of the Camden
Shares in connection with the Merger (the "CAMDEN SHAREHOLDER APPROVAL" and,
together with the Company Stockholder Approval, the "SHAREHOLDER APPROVALS"),
to consummate the Transactions to which Camden or Camden Sub (as the case may
be) is a party. The execution and delivery of this Agreement by each of Camden
and Camden Sub and the consummation by each of Camden and Camden Sub of the
Transactions to which Camden or Camden Sub (as the case may) is a party have
been duly authorized by all necessary corporate action on the part of each of
Camden and Camden Sub, subject to approval of this Agreement pursuant to the
Camden Shareholder Approval. This Agreement has been duly executed and
delivered by each of Camden and Camden Sub and, assuming the due authorization,
execution and delivery hereof by the Company, constitutes a valid and binding
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obligation of each of Camden and Camden Sub (as the case may be), enforceable
against each of Camden and Camden Sub (as the case may be) in accordance with
its terms, except that such enforceability may be subject to (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting creditors' rights generally or (ii) by general principles of equity
(regardless of whether enforcement is sought in a proceeding in equity or at
law). Except as set forth in SCHEDULE 3.2(d) to the Camden Disclosure Letter,
the execution and delivery of this Agreement by each of Camden and Camden Sub
do not, and the consummation of the Transactions to which Camden or Camden Sub
(as the case may be) is a party and compliance by each of Camden and Camden Sub
with the provisions of this Agreement will not, conflict with, or result in any
violation of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration of
any obligation or to loss of a material benefit under, or result in the
creation of any Lien upon any of the properties or assets of Camden, Camden
Sub, or any other Camden Subsidiary under, (i) the Declaration of Trust,
Certificate of Incorporation or Bylaws (as the case may be) of Camden and
Camden Sub or the comparable charter or organizational documents or partnership
or similar agreement (as the case may be) of any other Camden Subsidiary, each
as amended or supplemented to the date of this Agreement, (ii) any loan or
credit agreement, note, bond, mortgage, indenture, reciprocal easement
agreement, lease or other agreement, instrument, permit, concession, franchise
or license applicable to Camden, Camden Sub or any other Camden Subsidiary or
their respective properties or assets or (iii) subject to the governmental
filings and other matters referred to in the following sentence, any Laws
applicable to Camden, Camden Sub or any other Camden Subsidiary or their
respective properties or assets, other than, in the case of clause (ii) or
(iii), any such conflicts, violations, defaults, rights or Liens that
individually or in the aggregate would not (x) have a Camden Material Adverse
Effect or (y) prevent the consummation of the Transactions. No consent,
approval, order or authorization of, or registration, declaration or filing
with, any Governmental Entity is required by or with respect to Camden, Camden
Sub or any Camden Subsidiary in connection with the execution and delivery of
this Agreement or the consummation by Camden or Camden Sub, as the case may be,
of any of the Transactions, except for (i) the filing by any Person in
connection with any of the Transactions of a pre-merger notification and report
form under the HSR Act to the extent applicable, (ii) the filing with the SEC
of (x) the Proxy Statement and a registration statement on Form S-4 (or other
appropriate form) in connection with the registration of the Camden Shares to
be issued in the Merger (the "REGISTRATION STATEMENT") and (y) such reports
under Section 13 (a) of the Exchange Act as may be required in connection with
this Agreement and the transactions contemplated by this Agreement, (iii) the
filing of the Articles of Merger with the Secretary of State of the State of
Nevada and the Certificate of Merger with the Secretary of State of the State
of Delaware, (iv) such filings as may be required in connection with the
payment of any Transfer and Gains Taxes and (v) such other consents, approvals,
orders, authorizations, registrations, declarations and filings as are set
forth in SCHEDULE 3.2(d) to the Camden Disclosure Letter or (A) as may be
required under (x) federal, state or local environmental laws or (y) the "blue
sky" laws of various states or (B) which, if not obtained or made, would not
prevent or delay in any material respect the consummation of any of the
Transactions or otherwise prevent Camden or Camden Sub from performing their
respective obligations under this Agreement in any material respect or have,
individually or in the aggregate, a Camden Material Adverse Effect.
(e) SEC Documents; Financial Statements; Undisclosed
Liabilities. Camden has filed all required reports, schedules, forms,
statements and other documents with the SEC since December 31, 1993 (the
"CAMDEN SEC DOCUMENTS"). All of the Camden SEC Documents (other than
preliminary material), as of their respective filing dates, complied in all
material respects with all applicable requirements of the Securities Act and
the Exchange Act and, in each case, the rules and regulations promulgated
thereunder. None of the Camden SEC Documents at the time of filing and
effectiveness contained any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they
were made, not misleading, except to the extent such statements have been
modified or superseded by later Camden SEC Documents. The consolidated
financial statements of Camden included in the Camden SEC Documents complied as
to form in all material respects with applicable accounting requirements and
the published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with GAAP (except, in the case of unaudited statements,
as permitted by Form 10-Q of the SEC) applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto) and fairly
presented, in accordance with the applicable requirements of GAAP, the
consolidated financial position of Camden and the Camden Subsidiaries, taken as
a whole, as of the dates thereof and the consolidated results of operations and
cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments). The audited financial
statements of the unconsolidated Camden Subsidiaries previously delivered to
the Company (the "UNCONSOLIDATED CAMDEN FINANCIAL STATEMENTS") have been
prepared in accordance with GAAP applied on a consistent basis during the
periods involved
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(except as may be indicated in the notes thereto) and fairly presented, in
accordance with the applicable requirements of GAAP, the financial position of
such Camden Subsidiaries, taken as a whole, as of the dates thereof and the
results of their respective operations and cash flows for the periods then
ended. Except as set forth in the Camden SEC Documents, in the Unconsolidated
Camden Financial Statements, in SCHEDULE 3.2(e) to the Camden Disclosure Letter
or as permitted by Section 4.2 (for the purpose of this sentence, as if Section
4.2 had been in effect since September 30, 1997), neither Camden nor any Camden
Subsidiary has any liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) required by GAAP to be set forth on a
consolidated balance sheet of Camden or, to the Knowledge of Camden, of any
unconsolidated Camden Subsidiary or in the notes thereto and which,
individually or in the aggregate, would have a Camden Material Adverse Effect.
(f) Absence of Certain Changes or Events. Except as
disclosed in the Camden SEC Documents or in SCHEDULE 3.2(f) to the Camden
Disclosure Letter, since the date of the most recent financial statements
included in the Camden SEC Documents (the "CAMDEN FINANCIAL STATEMENT DATE") to
the date of this Agreement, Camden and the Camden Subsidiaries have conducted
their business only in the ordinary course and there has not been (i) any
change that would have a Camden Material Adverse Effect (a "CAMDEN MATERIAL
ADVERSE CHANGE"), nor has there been any occurrence or circumstance that with
the passage of time would reasonably be expected to result in a Camden Material
Adverse Change, (ii) except for regular quarterly dividends on Camden Common
Stock as set forth on SCHEDULE 3.2(f) to the Company Disclosure Schedule, any
declaration, setting aside or payment of any dividend or distribution (whether
in cash, stock or property) with respect to any of Camden's capital stock,
other than any dividend required to be paid pursuant to Section 2.2, (iii) any
split, combination or reclassification of any of Camden's capital stock or any
issuance or the authorization of any issuance of any other securities in
respect of, in lieu of or in substitution for, or giving the right to acquire
by exchange or exercise, shares of its capital stock or any issuance of an
ownership interest in any Camden Subsidiary, except as permitted by Section
4.2, (iv) any damage, destruction or loss, not covered by insurance, that has
or would have a Camden Material Adverse Effect or (v) any change in accounting
methods, principles or practices by Camden or any Camden Subsidiary except
insofar as may have been disclosed in the Camden SEC Documents or required by a
change in GAAP.
(g) Litigation. Except as disclosed in the Camden SEC
Documents or in SCHEDULE 3.2(g) of the Camden Disclosure Letter, and other than
personal injury and other routine tort litigation arising from the ordinary
course of operations of Camden, and the Camden Subsidiaries (i) which are
covered by adequate insurance or (ii) for which all material costs and
liabilities arising therefrom are reimbursable pursuant to common area
maintenance or similar agreements, there is no suit, action or proceeding
pending or threatened in writing against or affecting Camden or any Camden
Subsidiary that, individually or in the aggregate, could reasonably be expected
to (A) have a Camden Material Adverse Effect or (B) prevent the consummation of
any of the Transactions, nor is there any judgment, decree, injunction, rule or
order of any Governmental Entity or arbitrator outstanding against Camden or
any Camden Subsidiary or having, or which, insofar as reasonably can be
foreseen, in the future would have any such effect.
(h) Properties. Except as provided in SCHEDULE 3.2(h)
of the Camden Disclosure Letter, Camden or one of the Camden Subsidiaries own
fee simple title or a leasehold interest in to each of the real properties
identified in SCHEDULE 3.2(h) of the Camden Disclosure Letter (the "CAMDEN
PROPERTIES"), which are all of the real estate properties owned by them, in
each case (except as provided below) free and clear of Encumbrances. The
Camden Properties (other than the Camden Properties under development) are not
subject to any Property Restrictions, except for (i) Encumbrances and Property
Restrictions set forth in the Camden Disclosure Letter, (ii) Property
Restrictions imposed or promulgated by law or any governmental body or
authority with respect to real property, including zoning regulations, provided
they do not materially adversely affect the current use of any Camden Property,
(iii) Encumbrances and Property Restrictions disclosed on existing title
reports or existing surveys (in either case copies of which title reports and
surveys have been delivered or made available to the Company, provided,
however, that platting of development land will not be shown on existing title
reports), and (iv) mechanics', carriers', workmen's, repairmen's liens and
other Encumbrances, Property Restrictions and other limitations of any kind, if
any, which, individually or in the aggregate, are not substantial in amount, do
not materially detract from the value of or materially interfere with the
present use of any of the Camden Properties subject thereto or affected
thereby, and do not otherwise have a Camden Material Adverse Effect and which
have arisen or been incurred only in the ordinary course of business. Except
as provided in SCHEDULE 3.2(h) of the Camden Disclosure Letter, valid policies
of title insurance have been issued insuring Camden's or the applicable Camden
Subsidiaries' fee simple title to the Camden Properties in amounts at least
equal to the purchase price thereof, subject only to the matters disclosed
above and on the Camden Disclosure Letter, and such
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policies are, at the date hereof, in full force and effect and no material
claim has been made against any such policy. Except as provided in SCHEDULE
3.2(h) of the Camden Disclosure Letter, (i) Camden has no Knowledge that any
certificate, permit or license from any governmental authority having
jurisdiction over any of the Camden Properties or any agreement, easement or
other right which is necessary to permit the lawful use and operation of the
buildings and improvements on any of the Camden Properties or which is
necessary to permit the lawful use and operation of all driveways, roads and
other means of egress and ingress to and from any of the Camden Properties has
not been obtained and is not in full force and effect, or of any pending threat
of modification or cancellation of any of same; (ii) Camden has not received
written notice of any violation of any federal, state or municipal law,
ordinance, order, regulation or requirement affecting any portion of any of the
Camden Properties issued by any governmental authority; (iii) there are no
material structural defects relating to the Camden Properties; (iv) there are
no Camden Properties whose building systems are not in working order in any
material respect; (v) there is no physical damage to any Camden Property in
excess of $100,000 for which there is no insurance in effect covering the cost
of the restoration; or (vi) there is no current renovation or restoration to
any Camden Property the remaining cost of which exceeds $100,000. Neither
Camden nor any of the Camden Subsidiaries has received any notice to the effect
that (A) any condemnation or rezoning proceedings are pending or threatened
with respect to any of the Camden Properties or (B) any zoning, building or
similar law, code, ordinance, order or regulation is or will be violated by the
continued maintenance, operation or use of any buildings or other improvements
on any of the Camden Properties or by the continued maintenance, operation or
use of the parking areas. All work to be performed, payments to be made and
actions to be taken by Camden or Camden Subsidiaries prior to the date hereof
pursuant to any agreement entered into with a governmental body or authority in
connection with a site approval, zoning reclassification or other similar
action relating to the Camden Properties (e.g., Local Improvement District,
Road Improvement District, Environmental Mitigation) has been performed, paid
or taken, as the case may be, and Camden has no Knowledge of any planned or
proposed work, payments or actions that may be required after the date hereof
pursuant to such agreements.
(i) Environmental Matters. None of Camden, any of the
Camden Subsidiaries or, to the Knowledge of Camden, any other Person has caused
or permitted (a) the unlawful presence of any Hazardous Materials on any of the
Camden Properties, or (b) any unlawful spills, releases, discharges or disposal
of Hazardous Materials to have occurred or be presently occurring on or from
the Camden Properties as a result of any construction on or operation and use
of such properties, which presence or occurrence would, individually or in the
aggregate, have a Camden Material Adverse Effect; and in connection with the
construction on or operation and use of the Camden Properties, Camden and the
Camden Subsidiaries have not failed to comply with all applicable local, state
and federal environmental laws, regulations, ordinances and administrative and
judicial orders relating to the generation, recycling, reuse, sale, storage,
handling, transport and disposal of any Hazardous Materials, except for
failures to comply that would not, individually or in the aggregate, reasonably
be expected to have a Camden Material Adverse Effect.
(j) Related Party Transactions. Set forth in SCHEDULE
3.2(j) of the Camden Disclosure Letter is a list of all arrangements,
agreements and contracts entered into by Camden, Camden Sub or any of the
Camden Subsidiaries with (i) any Person who is an officer, director or
Affiliate of Camden, Camden Sub or any of the Camden Subsidiaries, any relative
of any of the foregoing or any entity of which any of the foregoing is an
Affiliate or (ii) any Person who acquired Camden Common Stock in a private
placement. Such documents, copies of all of which have previously been
delivered or made available to the Company, are listed in SCHEDULE 3.2(j) of
the Camden Disclosure Letter.
(k) Absence of Changes in Benefit Plans; ERISA
Compliance.
(i) Except as disclosed in the Camden SEC
Documents or in SCHEDULE 3.2(k)(i) to the Camden Disclosure Letter and except
as permitted by Section 4.2 (for the purpose of this sentence, as if Section
4.2 had been in effect since December 31, 1996), since the date of the most
recent audited financial statements included in the Camden SEC Documents, there
has not been any adoption or amendment by Camden or any Camden Subsidiary of
any bonus, pension, profit sharing, deferred compensation, incentive
compensation, stock ownership, stock purchase, stock option, phantom stock,
retirement, vacation, severance, disability, death benefit, hospitalization,
medical or other employee benefit plan, arrangement or understanding (whether
or not legally binding or oral or in writing) providing benefits to any current
or former employee, officer or director of Camden, any Camden Subsidiary, or
any Person affiliated with Camden under Section 414 (b), (c), (m) or (o) of the
Code (collectively, "CAMDEN BENEFIT PLANS").
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(ii) Except as described in the Camden SEC
Documents or in SCHEDULE 3.2(k)(ii) to the Camden Disclosure Letter or as
would not have a Camden Material Adverse Effect, (A) all Camden Benefit Plans,
including any such plan that is an "employee benefit plan" as defined in
Section 3(3) of ERISA, are in compliance with all applicable requirements of
law, including ERISA and the Code, and (B) neither Camden nor any Camden
Subsidiary has any liabilities or obligations with respect to any such Camden
Benefit Plans, whether accrued, contingent or otherwise, nor to the Knowledge
of Camden are any such liabilities or obligations expected to be incurred.
Except as set forth in SCHEDULE 3.2(k)(ii) to the Camden Disclosure Letter,
the execution of the Agreement and the performance of the Transactions will not
(either alone or upon the occurrence of any additional or subsequent events)
constitute an event under any Camden Benefit Plan, policy, arrangement or
agreement or any trust or loan that will or may result in any payment (whether
of severance pay or otherwise), acceleration, forgiveness of indebtedness,
vesting, distribution, increase in benefits or obligation to fund benefits with
respect to any employee or director. The only severance agreements or
severance policies applicable to Camden or Camden Subsidiaries are the
agreement and policies specifically referred to in SCHEDULE 3.2(k)(ii) to the
Camden Disclosure Letter.
(l) Taxes.
(i) Each of Camden and each Camden Subsidiary has
(A) filed all Tax returns and reports required to be filed by it (after giving
effect to any filing extension properly granted by a Governmental Entity having
authority to do so) and all such returns and reports are accurate and complete
in all material respects; and (B) paid (or Camden has paid on its behalf) all
Taxes shown on such returns and reports as required to be paid by it, and,
except as disclosed in the Camden SEC Documents, the most recent financial
statements contained in the Camden SEC Documents reflect an adequate reserve
for all material Taxes payable by Camden (and by those Camden Subsidiaries and
whose financial statements are contained therein) for all taxable periods and
portions thereof through the date of such financial statements. True, correct
and complete copies of all federal, state and local Tax returns and reports for
Camden and each Camden Subsidiary and all written communications relating
thereto have been delivered or made available to representatives of the Company
or will be delivered or made available to representatives of the Company within
ten business days following the execution of this Agreement. Since the Camden
Financial Statement Date, Camden has incurred no liability for Taxes under
Sections 857(b), 860(c) or 4981 of the Code, and neither Camden nor any Camden
Subsidiary has incurred any material liability for Taxes other than in the
ordinary course of business. To the Knowledge of Camden, no event has
occurred, and no condition or circumstance exists, which presents a material
risk that any material Tax described in the preceding sentence will be imposed
upon Camden. Except as set forth on SCHEDULE 3.2(l), to the Knowledge of
Camden, no deficiencies for any Taxes have been proposed, asserted or assessed
against Camden or any of the Camden Subsidiaries, and no requests for waivers
of the time to assess any such Taxes are pending.
(ii) Camden (A) for all taxable years commencing
with 1993 through the most recent December 31, has been subject to taxation as
a REIT within the meaning of the Code and has satisfied all requirements to
qualify as a REIT for such years, (B) has operated, and intends to continue to
operate, in such a manner as to qualify as a REIT for the tax year ending
December 31 of its taxable year that includes the Closing Date, and (C) has not
taken or omitted to take any action which would reasonably be expected to
result in a challenge to its status as a REIT, and to Camden's Knowledge, no
such challenge is pending or threatened. Each Camden Subsidiary which is a
partnership, joint venture or limited liability company has been treated since
its formation and continues to be treated for federal income tax purposes as a
partnership and not as a corporation or as an association taxable as a
corporation. Each Camden Subsidiary which is a corporation for federal income
tax purposes and with respect to which all of the outstanding capital stock is
owned solely by Camden (or solely by a Camden Subsidiary that is a corporation
wholly-owned by Camden) has been since its formation and continues to be
treated for federal income tax purposes as, a "qualified REIT subsidiary" as
defined in Section 856(i) of the Code. Commencing with the taxable year of
Camden ending December 31, 1993, Camden has not owned more than ten percent
(10%) of the outstanding voting securities of any corporation (other than the
Camden wholly owned subsidiaries) as determined under and in accordance with
the provisions of Section 856(c)(14)(B) of the Code. Neither Camden nor any
Camden Subsidiary holds any asset (x) the disposition of which would be subject
to rules similar to Section 1374 of the Code as a result of an election under
IRS Notice 88-19 or (y) that is subject to a consent filed pursuant to Section
341(f) of the Code and the regulations thereunder.
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(m) No Payments to Employees, Officers or Directors.
Except as set forth in SCHEDULE 3.2(m) to the Camden Disclosure Letter or as
otherwise specifically provided for in this Agreement, there is no employment
or severance contract, or other agreement requiring payments to be made or
increasing any amounts payable thereunder on a change of control or otherwise
as a result of the consummation of any of the Transactions, with respect to any
employee, officer or director of Camden or any Camden Subsidiary.
(n) Brokers; Schedule of Fees and Expenses. No
broker, investment banker, financial advisor or other Person, other than
Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"), the fees and
expenses of which have previously been disclosed to the Company and will be
paid by Camden, is entitled to any broker's, finder's, financial advisor's or
other similar fee or commission in connection with the Transactions based upon
arrangements made by or on behalf of Camden or any other Camden Subsidiary.
(o) Compliance with Laws. To the Knowledge of Camden,
except as disclosed in the Camden SEC Documents, neither Camden nor any of the
Camden Subsidiaries has violated or failed to comply with any statute, law,
ordinance, regulation, rule, judgment, decree or order of any Governmental
Entity applicable to its business, properties or operations, except for
violations and failures to comply that would not, individually or in the
aggregate, reasonably be expected to result in a Camden Material Adverse
Effect.
(p) Contracts; Debt Instruments.
(i) To the Knowledge of Camden, neither Camden
nor any Camden Subsidiary is in violation of or in default under (nor does
there exist any condition which upon the passage of time or the giving of
notice or both would cause such a violation of or default under) any Material
Contract to which it is a party or by which it or any of its properties or
assets is bound, except as set forth in SCHEDULE 3.2(p)(i) to the Camden
Disclosure Letter and except for violations or defaults that would not,
individually or in the aggregate, result in a Camden Material Adverse Effect,
nor, except as set forth in SCHEDULE 3.2(p)(i) to the Camden Disclosure Letter,
will the consummation of the Transactions (including the satisfaction of the
condition to the obligations of the Company set forth in Section 6.3(f)) result
in any third party having any right of termination, amendment, acceleration or
cancellation of or loss or change in a material benefit under any Material
Contract.
(ii) Except for any of the following expressly
identified in the most recent financial statements contained in the Camden SEC
Documents and except as permitted by Section 4.2, SCHEDULE 3.2(p)(ii) to the
Camden Disclosure Letter sets forth (x) a list of all loan or credit
agreements, notes, bonds, mortgages, indentures and other agreements and
instruments pursuant to which any Indebtedness of Camden or any of the Camden
Subsidiaries, other than Indebtedness payable to Camden or a Camden Subsidiary
or to any third-party partner or joint venturer in any Camden Subsidiary, in an
aggregate principal amount in excess of $100,000 per item is outstanding or may
be incurred and (y) the respective principal amounts outstanding thereunder on
November 30, 1997.
(q) Interim Operations of Sub. Camden Sub was formed
solely for the purpose of engaging in the transactions contemplated by this
Agreement and has not engaged in any business activities or conducted any
operations other than in connection with the transactions contemplated by this
Agreement.
(r) Opinion of Financial Advisor. Camden has received
the opinion of DLJ, satisfactory to Camden, a copy of which has been provided
to the Company, to the effect that the Exchange Ratio fair to Camden and the
shareholders of Camden from a financial point of view.
(s) State Takeover Statutes. Camden has taken all
action necessary, if any, to exempt transactions with the Company and its
Affiliates from the operation of Takeover Statutes.
(t) Registration Statement and Proxy Statement. The
information supplied or to be supplied by Camden or its Subsidiaries for
inclusion in (i) the Registration Statement will not at the time it becomes
effective under the Securities Act contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading or (ii) the Proxy
Statement, including any amendments and supplements thereto, will not, either
at the date mailed to shareholders of Camden or at the time of the Camden
Shareholder Meeting, contain any untrue statement of a material fact or omit to
state any material fact required
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to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
Registration Statement and the Proxy Statement will each comply as to form in
all material respects with all applicable laws, including the provisions of the
Securities Act and the Exchange Act and the rules and regulations promulgated
thereunder, except that no representation is made by Camden with respect to
information supplied by the Company for inclusion therein.
(u) Vote Required. The affirmative vote of a majority
of the shares present in person or by proxy at the Camden Shareholder Meeting
is the only vote of the holders of any class or series of Camden's capital
stock necessary (under applicable law or otherwise) to approve this Agreement
and the Transactions.
ARTICLE IV
COVENANTS
SECTION 4.1 Conduct of Business by the Company.
During the period from the date of this Agreement to the Effective Time, the
Company shall, and shall cause (or, in the case of Company Subsidiaries that
the Company does not control, shall use commercially reasonable efforts to
cause) the Company Subsidiaries each to, carry on its businesses in the usual,
regular and ordinary course in substantially the same manner as heretofore
conducted and, to the extent consistent therewith, use commercially reasonable
efforts to preserve intact its current business organization, goodwill and
ongoing businesses. Without limiting the generality of the foregoing, the
following additional restrictions shall apply, although the parties hereto
agree that nothing contained in this Article IV or in any other provision of
this Agreement shall restrict or prohibit the performance by Oasis Martinique
LLC or the Company of their respective obligations under or the exercise of
their respective rights under the Oasis Martinique LLC Agreement, the Oasis
Martinique Exchange Rights Agreement or the Oasis Martinique Loan and Security
Agreement: During the period from the date of this Agreement to the Effective
Time, except as set forth in SCHEDULE 4.1 to the Company Disclosure Letter, the
Company shall not and shall cause (or, in the case of Company Subsidiaries
which it does not control, shall use commercially reasonable efforts to cause)
the Company Subsidiaries not to (and not to authorize or commit or agree to):
(a) (i) except as set forth on SCHEDULE 4.1 to
the Company Disclosure Schedule, declare, set aside or pay any dividends on, or
make any other distributions in respect of any of the Company's capital stock
other than the dividend required to be paid pursuant to Section 2.2(d)(i), (ii)
split, combine or reclassify any capital stock or other partnership interests
or issue or authorize the issuance of any other securities in respect of, in
lieu of or in substitution for shares of such capital stock or partnership
interests or (iii) purchase, redeem or otherwise acquire any shares of capital
stock of the Company or any options, warrants or rights to acquire, or security
convertible into, shares of such capital stock or partnership interests;
(b) except (i) as contemplated under or required
pursuant to Section 4.1(e) and (ii) in connection with the exercise of stock
options or issuance of shares pursuant to stock rights or warrants outstanding
on the date of this Agreement, issue, deliver or sell, or grant any option or
other right in respect of, any shares of capital stock, any other voting
securities (including partnership interests) of the Company or any Company
Subsidiary or any securities convertible into, or any rights, warrants or
options to acquire, any such shares, voting securities or convertible
securities except to the Company or a Company Subsidiary;
(c) except as otherwise contemplated by this
Agreement, amend the articles or certificate of incorporation, bylaws,
partnership agreement or other comparable charter or organizational documents
of the Company or any Company Subsidiary;
(d) in the case of the Company or any Company
Subsidiary, merge or consolidate with any Person;
(e) in any transaction or series of related
transactions involving capital, securities or other assets or indebtedness of
the Company, a Company Subsidiary, or any combination thereof in excess of
$100,000, without obtaining the prior written consent of Camden, which consent
shall not unreasonably be withheld or delayed: (i) acquire or agree to acquire
by merging or consolidating with, or by purchasing all or a substantial portion
of the
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equity securities or all or substantially all of the assets of, or by any other
manner, any business or any corporation, partnership, limited liability
company, joint venture, association, business trust or other business
organization or division thereof or interest therein; (ii) subject to any
Encumbrance or Lien or sell, lease or otherwise dispose of any of the Company
Properties or any material assets or assign or encumber the right to receive
income, dividends, distributions and the like except pursuant to contracts or
agreements in effect at the date of this Agreement and set forth on SCHEDULE
4.1 to the Company Disclosure Letter; (iii) make or agree to make any new
capital expenditures, except in accordance with budgets relating to the Company
or the Company Subsidiaries that have been previously delivered to Camden; or
(iv) incur any indebtedness for borrowed money or guarantee any such
indebtedness of another Person (except in connection with the refinancing,
refunding or amendment of the "Bonds," as that term is defined in the Oasis
Martinique LLC Agreement), issue or sell any debt securities or warrants or
other rights to acquire any debt securities of the Company, guarantee any debt
securities of another Person (except in connection with the refinancing,
refunding or amendment of the "Bonds," as that term is defined in the Oasis
Martinique LLC Agreement), enter into any "keep well" or other agreement to
maintain any financial statement condition of another person or enter into any
arrangement having the economic effect of any of the foregoing, prepay or
refinance any indebtedness (except the "Bonds," as that term is defined in the
Oasis Martinique LLC Agreement) or make any loans, advances or capital
contributions to, or investments in, any other Person except to the extent
required by the Oasis Martinique LLC Agreement;
(f) engage in any transactions of the types described
in clauses (i), (ii), (iii) and (iv) of paragraph (e) above, whether or not
related, involving, in the aggregate, capital, securities or other assets or
indebtedness of the Company or a Company Subsidiary, or any combination thereof
in excess of $500,000, without obtaining the prior written consent of Camden
(which consent shall not be unreasonably withheld or delayed);
(g) make any tax election (unless required by law or
necessary to preserve the Company's status as a REIT or the status of any
Company Subsidiary as a partnership for federal income tax purposes or as a
"qualified REIT subsidiary" under Section 856(i) of the Code, as the case may
be);
(h) (i) change in any material manner any of its
methods, principles or practices of accounting in effect at the Financial
Statement Date, or (ii) make or rescind any express or deemed election relating
to taxes, settle or compromise any claim, action, suit, litigation, proceeding,
arbitration, investigation, audit or controversy relating to taxes, except in
the case of settlements or compromises relating to taxes on real property in an
amount not to exceed, individually or in the aggregate, $100,000, or change any
of its methods of reporting income or deductions for federal income tax
purposes from those employed in the preparation of its federal income tax
return for the most recently completed taxable year except, in the case of
clause (i), as may be required by the SEC, applicable law or GAAP;
(i) except as provided in this Agreement, adopt any
new employee benefit plan, incentive plan, severance plan, stock option or
similar plan, grant new stock appreciation rights or amend any existing plan or
rights, except such changes as are required by law or which are not more
favorable to participants than provisions presently in effect;
(j) pay, discharge, settle or satisfy any claims,
liabilities or objections (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge or satisfaction in
the ordinary course of business consistent with past practice or in accordance
with their terms, of liabilities reflected or reserved against in, or
contemplated by, the most recent consolidated financial statements (or the
notes thereto) of the Company included in the Company SEC Documents or incurred
in the ordinary course of business consistent with past practice and other than
the severance payments contemplated by and paid pursuant to Section 5.12(b)
hereof;
(k) settle any shareholder derivative or class action
claims arising out of or in connection with any of the Transactions; and
(l) enter into or amend or otherwise modify any
agreement or arrangement with Persons that are Affiliates or, as of the date
hereof, are executive officers or directors of the Company or any Company
Subsidiary without the consent of Camden.
SECTION 4.2 Conduct of Business by Camden.
During the period from the date of this Agreement to the Effective Time, Camden
shall, and shall cause (or, in the case of Camden Subsidiaries that Camden
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does not control, shall use commercially reasonable efforts to cause) the
Camden Subsidiaries each to carry on its businesses in the usual, regular and
ordinary course in substantially the same manner as heretofore conducted and,
to the extent consistent therewith, use commercially reasonable efforts to
preserve intact its current business organization, goodwill and ongoing
businesses. Without limiting the generality of the foregoing, the following
additional restrictions shall apply: During the period from the date of this
Agreement to the Effective Time, except as set forth in SCHEDULE 4.2 to the
Camden Disclosure Letter, Camden shall not and shall cause (or, in the case of
Camden Subsidiaries which Camden does not control, shall use commercially
reasonable efforts to cause) the Camden Subsidiaries not to (and not to
authorize or commit or agree to):
(a) (i) except as set forth on SCHEDULE 4.2 to the
Camden Disclosure Schedule, declare, set aside or pay any dividends on, or make
any other distributions in respect of, any of Camden capital stock or
partnership interests or stock in any Camden Subsidiary that is not directly or
indirectly wholly-owned by Camden, other than the dividend required to be paid
pursuant to Section 2.2(d) (i), (ii) except to the extent provided in Section
2.1 hereof, split, combine or reclassify any capital stock or partnership
interests or issue or authorize the issuance of any other securities in respect
of, in lieu of or in substitution for shares of such capital stock or
partnership interests or (iii) purchase, redeem or otherwise acquire any shares
of capital stock of Camden or any options, warrants or rights to acquire, or
security convertible into, shares of capital stock of Camden;
(b) except as permitted by, contemplated under or
required pursuant to this Agreement, Camden's dividend reinvestment plan and
Camden Employee Stock Plans or as approved by the Compensation Committee of the
Board of Trust Managers of Camden, and the exercise of stock options or
warrants outstanding on the date hereof, issue, deliver or sell, or grant any
option or other right in respect of, any shares of capital stock, any other
voting securities of the Camden or any Camden Subsidiary or any securities
convertible into, or any rights, warrants or options to acquire, any such
shares, voting securities or convertible securities except to Camden or a
Camden Subsidiary;
(c) except as otherwise contemplated by this
Agreement, amend the declaration of trust, charter, articles or certificate of
incorporation, bylaws, code of regulations, partnership agreement or other
comparable charter or organizational documents of Camden or any Camden
Subsidiary;
(d) in the case of Camden or any Camden Subsidiary,
merge or consolidate with any Person;
(e) in any transaction or series of related
transactions involving capital, securities, other assets or indebtedness of
Camden or a Camden Subsidiary or any combination thereof in excess of $100,000,
without obtaining the prior written consent of the Company, which consent shall
not unreasonably be withheld or delayed: (i) acquire or agree to acquire by
merging or consolidating with, or by purchasing all or a substantial portion of
the equity securities or all or substantially all assets of, or by any other
manner, any business or any corporation, partnership, limited liability
company, joint venture, association, business trust or other business
organization or division thereof or interest therein; (ii) subject to any
Encumbrance or Lien or sell, lease or otherwise dispose of any of the Camden
Properties or any material assets or assign or encumber the right to receive
income, dividends, distributions and the like; (iii) make or agree to make any
new capital expenditures, except in accordance with budgets relating to Camden
or Camden Subsidiaries that have been previously delivered to the Company; or
(iv) incur any indebtedness for borrowed money or guarantee any such
indebtedness of another Person, issue or sell any debt securities or warrants
or other rights to acquire any debt securities of Camden, guarantee any debt
securities of another Person or enter into any "keep well" or other agreement
to maintain any financial statement condition of another Person or enter into
any arrangement having the economic effect of any of the foregoing;
(f) engage in any transactions of the types described
in clauses (i), (ii), (iii) and (iv) of paragraph (e) above, whether or not
related, involving, in the aggregate, capital, securities or other assets or
obligations of Camden or an Camden Subsidiary or any combination thereof in
excess of $500,000 without obtaining the prior written consent of the Company
(which consent shall not be unreasonably withheld or delayed);
(g) make any tax election (unless required by law or
necessary to preserve Camden's status as a REIT or the status of any Camden
Subsidiary as a partnership for federal income tax purposes or as a "qualified
REIT subsidiary" under Section 856(i) of the Code, as the case may be);
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(h) (i) change in any material manner any of its
methods, principles or practices of accounting in effect at the Camden
Financial Statement Date, or (ii) make or rescind any express or deemed
election relating to taxes, settle or compromise any claim, action, suit,
litigation, proceeding, arbitration, investigation, audit or controversy
relating to taxes, except in the case of settlements or compromises relating to
taxes on real property in an amount not to exceed, individually or in the
aggregate, $100,000, or change any of its methods of reporting income or
deductions for federal income tax purposes from those employed in the
preparation of its federal income tax return for the most recently completed
fiscal year, except, in the case of clause (i), as may be required by the SEC,
applicable law or GAAP;
(i) enter into or amend or otherwise modify any
agreement or arrangement with Persons that are Affiliates or, as of the date
hereof, are executive officers, trust managers or directors of Camden or any
Camden Subsidiary without the consent of the Company.
(j) pay, discharge, settle or satisfy any claims,
liabilities or objections (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge or satisfaction in
the ordinary course of business consistent with past practice or in accordance
with their terms, of liabilities reflected or reserved against in, or
contemplated by, the most recent consolidated financial statements (or the
notes thereto) of Camden included in the Camden SEC Documents or incurred in
the ordinary course of business consistent with past practice;
(k) except as provided in this Agreement, adopt any
new employee benefit plan, incentive plan, severance plan, stock option or
similar plan, grant new stock appreciation rights or amend any existing plan or
rights, except such changes as are required by law or which are not more
favorable to participants than provisions presently in effect; and
(l) settle any shareholder derivative or class action
claims arising out of or in connection with any of the Transactions.
SECTION 4.3 Other Actions. Each of Company on
the one hand and Camden and Camden Sub on the other hand shall not and shall
use commercially reasonable efforts to cause its respective Subsidiaries and
joint ventures not to take any action that would result in (i) any of the
representations and warranties of such party (without giving effect to any
"Knowledge" qualification) set forth in this Agreement that are qualified as to
materiality becoming untrue, (ii) any of such representations and warranties
(without giving effect to any "Knowledge" qualification) that are not so
qualified becoming untrue in any material respect or (iii) except as
contemplated by Section 7.1, any of the conditions to the Merger set forth in
Article VI not being satisfied.
ARTICLE V
ADDITIONAL COVENANTS
SECTION 5.1 Preparation of the Registration
Statement and the Proxy Statement; Company Stockholder Meeting and Camden
Shareholder Meeting.
(a) As soon as practicable following the date of this
Agreement, the Company and Camden shall prepare and file with the SEC a
preliminary Proxy Statement in form and substance satisfactory to each of
Camden and the Company, and Camden shall prepare and file with the SEC the
Registration Statement, in which the Proxy Statement will be included as a
prospectus. Each of the Company and Camden shall use all reasonable efforts to
(i) respond to any comments of the SEC and (ii) have the Registration Statement
declared effective under the Securities Act and the rules and regulations
promulgated thereunder as promptly as practicable after such filing and to keep
the Registration Statement effective as long as is reasonably necessary to
consummate the Merger. Each of the Company and Camden will use all reasonable
efforts to cause the Proxy Statement to be mailed to the Company's stockholders
or Camden's shareholders, respectively, as promptly as practicable after the
Registration Statement is declared effective under the Securities Act. Each
party will notify the other promptly of the receipt of any comments from the
SEC and of any request by the SEC for amendments or supplements to the
Registration Statement or the Proxy Statement or for additional information and
will supply the other with copies of all correspondence between such party or
any of its representatives and the SEC, with respect to the Registration
Statement or the Proxy Statement. Whenever any event occurs which is required
to be set forth in an amendment or supplement to the Registration Statement or
the Proxy
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Statement, Camden or the Company, as the case may be, shall promptly inform the
other of such occurrences and cooperate in filing with the SEC and/or mailing
to the shareholders of Camden and the shareholders of the Company such
amendment or supplement. The Proxy Statement shall include the recommendations
of the Board of Trust Managers of Camden in favor of the issuance of Camden
Shares and of the Board of Directors of the Company in favor of the Merger,
provided that the recommendation of the Board of Directors of the Company may
not be included or may be withdrawn if the Board of Directors of the Company,
after having consulted with and considered the advice of outside legal counsel,
has reasonably determined in good faith that the making of the recommendation,
or the failure to withdraw the recommendation, would constitute a breach of the
fiduciary duties of the members of the Board of Directors of the Company under
applicable law. Camden also shall take any action required to be taken under
any applicable state securities or "blue sky" laws in connection with the
issuance of the Camden Shares pursuant to the Merger, and the Company shall
furnish all information concerning the Company and the holders of the Common
Stock and rights to acquire Common Stock pursuant to the Company Employee Stock
Plans as may be reasonably requested in connection with any such action.
Camden will use its best efforts to obtain, prior to the effective date of the
Registration Statement, all necessary state securities or "blue sky" permits or
approvals required to carry out the Transactions and will pay or cause a Camden
Subsidiary to pay all expenses incident thereto.
(b) The Company will, as soon as practicable following
the date of this Agreement (but in no event sooner than 30 days following the
date the Proxy Statement is mailed to the stockholders of the Company), duly
call, give notice of, convene and hold a meeting of its stockholders (the
"COMPANY STOCKHOLDER MEETING") for the purpose of obtaining the Company
Stockholder Approval. The Company will, through its Board of Directors,
recommend to its stockholders approval of this Agreement and the Transactions;
provided that the recommendation of the Board of Directors of the Company may
be withdrawn if the Board of Directors of the Company, after having consulted
with and considered the advice of outside legal counsel, has reasonably
determined in good faith that the making of the recommendation, or the failure
to withdraw the recommendation, would constitute a breach of fiduciary duties
of the members of the Board of Directors of the Company under applicable law.
(c) Camden will, as soon as practicable following the
date of this Agreement (but in no event sooner than 30 days following the date
the Proxy Statement is mailed to the shareholders of Camden), duly call, give
notice of, convene and hold a meeting of its shareholders (the "CAMDEN
SHAREHOLDER MEETING") for the purpose of obtaining the Camden Shareholder
Approval. Camden will, through its Board of Trust Managers, recommend to its
shareholders approval of this Agreement and the Transactions, including, but
not limited to the requisite vote of such shareholders approving the issuance
of the Camden Shares in connection with the Merger in accordance with the rules
of the NYSE.
SECTION 5.2 Access to Information;
Confidentiality. Subject to the requirements of confidentiality agreements
with third parties, each of the Company and Camden shall, and shall cause each
of its respective Subsidiaries and joint ventures to, afford to the other party
and to the officers, employees, accountants, counsel, financial advisors and
other representatives of such other party, reasonable access during normal
business hours during the period prior to the Effective Time to all their
respective properties, books, contracts, commitments, personnel and records
and, during such period, each of the Company and Camden shall, and shall cause
each of its respective Subsidiaries to, furnish promptly to the other party (a)
a copy of each report, schedule, registration statement and other document
filed by it during such period pursuant to the requirements of federal or state
securities laws and (b) all other information concerning its business,
properties and personnel as such other party may reasonably request. Each of
the Company and Camden will hold, and will use commercially reasonable efforts
to cause its and its respective Subsidiaries and joint ventures' officers,
employees, accountants, counsel, financial advisors and other representatives
and Affiliates to hold, any nonpublic information in confidence to the extent
required by, and in accordance with, and will comply with the provisions of the
letter agreement between the Company and Camden (the "CONFIDENTIALITY
AGREEMENT").
SECTION 5.3 Commercially Reasonable Efforts;
Notification.
(a) Subject to the terms and conditions herein
provided, the Company and Camden shall: (a) to the extent required, promptly
make their respective filings and thereafter make any other required
submissions under the HSR Act with respect to the Merger; (b) use all
commercially reasonable efforts to cooperate with one another in (i)
determining which filings are required to be made prior to the Effective Time
with, and which consents, approvals, permits or authorizations are required to
be obtained prior to the Effective Time from, governmental or regulatory
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authorities of the United States, the several states and foreign jurisdictions
and any third parties in connection with the execution and delivery of this
Agreement, and the consummation of the transactions contemplated by such
agreements and (ii) timely making all such filings and timely seeking all such
consents, approvals, permits and authorizations (c) use all commercially
reasonable efforts to obtain in writing any consents required from third
parties to effectuate the Merger, such consents to be in reasonably
satisfactory form to the Company and Camden; and (d) use all commercially
reasonable efforts to take, or cause to be taken, all other action and do, or
cause to be done, all other things necessary, proper or appropriate to
consummate and make effective the transactions contemplated by this Agreement.
If, at any time after the Effective Time, any further action is necessary or
desirable to carry out the purpose of this Agreement, the proper officers and
directors of the Company and Camden shall use all commercially reasonable
efforts to take all such necessary action.
(b) The Company shall give prompt notice to Camden,
and Camden or Camden Sub shall give prompt notice to the Company, if (i) any
representation or warranty made by it contained in this Agreement that is
qualified as to materiality becoming untrue or inaccurate in any respect or any
such representation or warranty that is not so qualified becoming untrue or
inaccurate in any material respect or (ii) the failure by it to comply with or
satisfy in any material respect any covenant, condition or agreement to be
complied with or satisfied by it under this Agreement; provided, however, that
no such notification shall affect the representations, warranties, covenants or
agreements of the parties or the conditions to the obligations of the parties
under this Agreement.
SECTION 5.4 Affiliates. Prior to the Closing
Date, the Company shall deliver to Camden a letter identifying all Persons who
are, at the time this Agreement is submitted for approval to the shareholders
of the Company, "affiliates" of the Company for purposes of Rule 145 under the
Securities Act. The Company shall use its best efforts to cause each such
Person to deliver to Camden on or prior to the Closing Date a written agreement
substantially in the form attached as EXHIBIT A hereto.
SECTION 5.5 Tax Treatment. Each of Camden and
the Company shall use its reasonable best efforts to cause the Merger to
qualify as a reorganization under the provisions of Sections 368(a) of the Code
and to obtain the opinions of counsel referred to in Sections 6.2(e) and
6.3(e).
SECTION 5.6 Camden Board of Trust Managers.
Camden shall take all steps necessary to increase the number of trust managers
of Camden from seven trust managers to eight trust managers effective as of the
Effective Time and to fill the vacancy in accordance with Section 1.5.
SECTION 5.7 No Solicitation of Transactions by
the Company.
(a) The Company shall not, directly or indirectly,
through any officer, director, employee, representative or agent of the Company
or any Company Subsidiary, (i) solicit, initiate, or encourage any inquiries or
proposals that constitute, or could reasonably be expected to lead to, a
proposal or offer for a merger, consolidation, business combination, sale of
substantial assets, sale of shares of capital stock (including without
limitation by way of a tender offer) or similar transactions involving the
Company or a Company Subsidiary, other than the Transactions (any of the
foregoing inquiries or proposals, a "COMPETING TRANSACTION"), (ii) engage in
negotiations or discussions concerning, or provide any nonpublic information to
any person or entity relating to, any Competing Transaction, or (iii) agree to,
approve or recommend any Competing Transaction; provided, however, that nothing
contained in this Agreement shall prevent the Company or its directors or any
other employee, representative or agent of the Company from (A) furnishing
nonpublic information to, or entering into discussions or negotiations with,
any Person in connection with an unsolicited bona fide written Competing
Transaction submitted to the Company, its Board of Directors or its
stockholders if and only to the extent that (1) the Company's Board of
Directors believes in good faith (after consultation with its financial
advisor) that such Competing Transaction would, if consummated, result in a
transaction more favorable to the Company's stockholders from a financial point
of view than the Transactions and the Company's Board of Directors determines
in good faith after consultation with outside legal counsel that such action is
necessary for the Company to comply with its fiduciary duties to its
stockholders under applicable law and (2) prior to furnishing such nonpublic
information to, or entering into discussions or negotiations with, such person
or entity, the Company's Board of Directors receives from such Person an
executed confidentiality agreement with terms no less favorable to the Company
than those contained in the Confidentiality Agreement; or (B) complying with
Rule 14e-2 promulgated under the Exchange Act with regard to a Competing
Transaction. The Company will immediately cease
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and cause to be terminated any existing activities, discussions or negotiations
with any parties conducted heretofore with respect to any of the foregoing.
(b) The Company shall (i) promptly notify Camden after
receipt by it (or its advisors) of any Competing Transaction or any inquiries
indicating that any Person is considering making or wishes to make a Competing
Transaction, (ii) promptly notify Camden after receipt of any request for
nonpublic information relating to the Company or any Company Subsidiary or for
access to the Company's or any Company Subsidiary's properties, books or
records by any Person that may be considering making, or has made, a Competing
Transaction and (iii) subject to the fiduciary duties of the Company's Board of
Directors under applicable law as advised by its outside counsel, keep Camden
advised of the status and principal financial terms of any such Competing
Transaction, indication or request.
SECTION 5.8 Public Announcements. Camden and
Camden Sub on the one hand and the Company on the other hand will consult with
each other before issuing, and provide each other the opportunity to review and
comment upon, any press release or other public statements with respect to the
Transactions, including the Merger, and shall not issue any such press release
or make any such public statement prior to such consultation, except as may be
required by applicable law, court process or by obligations pursuant to any
listing agreement with any national securities exchange. The parties agree
that the initial press release to be issued with respect to the Transactions
will be in the form agreed to by the parties hereto prior to the execution of
this Agreement.
SECTION 5.9 Listing. Camden will promptly
prepare and submit to the NYSE a supplemental listing application covering the
Camden Shares issuable in the Merger. Prior to the Effective Time, Camden
shall use its best efforts to have NYSE approve for listing, upon official
notice of issuance, the Camden Shares to be issued in the Merger.
SECTION 5.10 Letters of Accountants.
(a) The Company shall use its reasonable best efforts
to cause to be delivered to Camden "comfort" letters of Coopers & Lybrand
L.L.P., the Company's independent public accountants, dated and delivered the
date on which the Registration Statement shall become effective and as of the
Effective Time, and addressed to Camden, in form and substance reasonably
satisfactory to Camden and reasonably customary in scope and substance for
letters delivered by independent public accountants in connection with
transactions such as those contemplated by this Agreement.
(b) Camden shall use its reasonable best efforts to
cause to be delivered to the Company "comfort" letters of Deloitte & Touche,
LLP, Camden's independent public accountants, dated the date on which the
Registration Statement shall become effective and as of the Effective Time, and
addressed to the Company, in form and substance reasonably satisfactory to the
Company and reasonably customary in scope and substance for letters delivered
by independent public accountants in connection with transactions such as those
contemplated by this Agreement.
SECTION 5.11 Transfer and Gains Taxes. Camden
and the Company shall cooperate in the preparation, execution and filing of all
returns, questionnaires, applications or other documents regarding any real
property transfer or gains, sales, use, transfer, value added stock transfer
and stamp taxes, any transfer, recording, registration and other fees and any
similar taxes which become payable in connection with the Transactions
(together with any related interests, penalties or additions to tax, "TRANSFER
AND GAINS TAXES"). From and after the Effective Time, Camden shall pay or
shall cause to be paid, as appropriate, without deduction or withholding from
any amounts payable to the holders of Common Stock, all Transfer and Gains
Taxes (other than any such taxes that are solely the liability of the holders
of Common Stock under applicable state law).
SECTION 5.12 Benefit Plans and Other Employee
Arrangements.
(a) After the Effective Time Camden shall provide
benefits to employees of the Company and the Company Subsidiaries that are not
less favorable to such employees than those provided to similarly situated
employees of Camden and the Camden Subsidiaries. With respect to any Camden
Benefit Plan which is an "employee benefit plan" as defined in Section 3(3) of
ERISA, solely for purposes of determining eligibility to participate, vesting,
and entitlement to benefits but not for purposes of accrual of pension
benefits, service with the Company or any
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Company Subsidiary shall be treated as service with Camden or the Camden
Subsidiaries (as applicable); provided, however, that such service shall not be
recognized to the extent that such recognition would result in a duplication of
benefits (or is not otherwise recognized for such purposes under the Camden
Benefit Plans). Except as otherwise provided herein, Camden shall be under no
obligation to maintain the compensation and benefits currently provided by the
Company to its employees. Camden shall, and shall cause Camden Sub and all
other Camden Subsidiaries to, honor in accordance with their terms all benefits
vested as of the Effective Time under the Company Benefit Plans and under other
contracts, arrangements or commitments described in SCHEDULE 5.12 to the
Company Disclosure Letter. No provision of this Section 5.12 shall create any
rights in any employee or director of the Company or any Company Subsidiary
hereunder in respect of continued or resumed employment by Camden or the
Surviving Corporation following the Effective Time. Nothing contained in any
provision of this Agreement shall modify or limit the rights of the employees,
or the obligations of the Company, under the employment agreements listed on
SCHEDULE 5.12 to the Company Disclosure Schedule, all of which obligations
shall be assumed by the Surviving Corporation at the Effective Time.
(b) As of the Effective Time, the Company shall pay
the severance obligations to those employees, and in the amounts, set forth in
SCHEDULE 3.1(k)(ii) to the Company Disclosure Letter.
SECTION 5.13 Indemnification.
(a) To the extent, if any, not provided by an existing
right of indemnification or other agreement or policy, Camden shall indemnify,
defend and hold harmless each person who is now or has been at any time prior
to the date hereof or who becomes prior to the Effective Time, an officer or
director of the Company or any Company Subsidiary (the "INDEMNIFIED PARTIES")
against all losses, claims, damages, costs, expenses (including attorneys' fees
and expenses), liabilities or judgments or amounts that are paid in settlement
of, with the approval of the indemnifying party (which approval shall not be
unreasonably withheld), or otherwise in connection with any threatened or
actual claim, action, suit proceeding or investigation based on or arising out
of the fact that such person is or was a director or officer of the Company or
any Company Subsidiary at or prior to the Effective Time, including matters
based on or arising out of or pertaining to this Agreement or the Transactions
("INDEMNIFIED LIABILITIES"), in each case to the full extent the Company would
have been permitted under applicable law and its charter documents to indemnify
the Indemnified Parties (and Camden shall pay expenses in advance of the final
disposition of any such action or proceeding to each Indemnified Party to the
full extent permitted by law subject to the limitations set forth in the fourth
sentence of this Section 5.13 (a)). Any Indemnified Parties proposing to
assert the right to be indemnified under this Section 5.13 shall, promptly
after receipt of notice of commencement of any action against such Indemnified
Parties in respect of which a claim is to be made under this Section 5.13
against Camden, notify Camden of the commencement of such action, enclosing a
copy of all papers served. If any such action is brought against any of the
Indemnified Parties and such Indemnified Parties notify Camden of its
commencement, Camden will be entitled to participate in and, to the extent that
Camden elects by delivering written notice to such Indemnified Parties promptly
after receiving notice of the commencement of the action from the Indemnified
Parties, to assume the defense of the action and after notice from it to the
Indemnified Parties of its election to assume the defense, Camden will not be
liable to the Indemnified Parties for any legal or other expenses except as
provided below. If Camden assumes the defense, Camden shall have the right to
settle such action without the consent of the Indemnified Parties; provided,
however, that Camden shall be required to obtain such consent (which consent
shall not be unreasonably withheld) if the settlement includes any admission of
wrongdoing on the part of the Indemnified Parties or any decree or restriction
on the Indemnified Parties; provided, further, that Camden, in the defense of
any such action shall not, except with the consent of the Indemnified Parties
(which consent shall not be unreasonably withheld), consent to entry of any
judgment or enter into any settlement that does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such Indemnified
Parties of a release from all liability with respect to such action. The
Indemnified Parties will have the right to employ their own counsel in any such
action, but the fees, expenses and other charges of such counsel will be at the
expense of such Indemnified Parties unless (i) the employment of counsel by the
Indemnified Parties has been authorized in writing by Camden, (ii) the
Indemnified Parties have reasonably concluded (based on written advice of
counsel) that there may be legal defenses available to them that are different
from or in addition to those available to Camden, (iii) a conflict or potential
conflict exists (based on written advice of counsel to the Indemnified Parties)
between the Indemnified Parties and Camden (in which case Camden will not have
the right to direct the defense of such action on behalf of the Indemnified
Parties) or (iv) Camden has not in fact employed counsel to assume the defense
of such action within a reasonable time after receiving notice of the
commencement of the action, in each of which cases the reasonable fees,
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disbursements and other charges of counsel will be at the expense of Camden.
It is understood that Camden shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable
fees, disbursements and other charges of more than one separate firm admitted
to practice in such jurisdiction at any one time from all such Indemnified
Parties unless (a) the employment of more than one counsel has been authorized
in writing by Camden, (b) any of the Indemnified Parties have reasonably
concluded (based on advice of counsel) that there may be legal defenses
available to them that are different from or in addition to those available to
other Indemnified Parties or (c) a conflict or potential conflict exists (based
on advice of counsel to the Indemnified Parties) between any of the Indemnified
Parties and the other Indemnified Parties, in each case of which Camden shall
be obligated to pay the reasonable and appropriate fees and expenses of such
additional counsel or counsels. Camden will not be liable for any settlement
of any action or claim effected without its written consent (which consent
shall not be unreasonably withheld).
(b) In the event that Camden or any of it respective
successors or assigns (i) consolidates with or merges into any other Person and
shall not be the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers all or substantially all of its
properties and assets to any Person, then, and in each such case the successors
and assigns of such entity shall assume the obligations set forth in this
Section 5.13, which obligations are expressly intended to be for the
irreversible benefit of, and shall be enforceable by, each Indemnified Party
covered hereby.
(c) For a period of six years from the Effective Date,
Camden shall use its best efforts to provide that portion of directors' and
officers' liability insurance that serves to reimburse the persons currently
covered by the Company's directors' and officers' liability insurance policy
with respect to claims against such officers and directors arising from facts
or events which occurred before the Effective Time, which insurance shall
contain at least the same coverage, and contain terms and conditions that in
all material respects are no less advantageous, as that coverage currently
provided by the Company; provided, however, that officers and directors of the
Company or any Company Subsidiary may be required to make application and
provide customary representations and warranties to Camden's insurance carrier
for the purpose of obtaining such insurance; and provided, further, that such
coverage will have a single aggregate limit of liability for such six-year
period in an amount not less than the annual aggregate limit of liability of
such coverage currently provided by the Company.
(d) The provisions of this Section 5.13 are intended
to be for the benefit of, and shall be enforceable by, each Indemnified Party,
his or her heirs and his or her personal representatives and shall be binding
on all successors and assigns of Camden.
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.1 Conditions to Each Party's
Obligation To Effect the Merger. The respective obligation of each party to
effect the Merger and to consummate the other Transactions contemplated to
occur on the Closing Date is subject to the satisfaction or waiver on or prior
to the Effective Time of the following conditions:
(a) Shareholder Approvals. This Agreement shall have
been approved and adopted by the Shareholder Approvals.
(b) HSR Act. The waiting period (and any extension
thereof) applicable to the Merger under the HSR Act shall have been terminated
or shall have expired.
(c) Listing of Shares. The NYSE shall have approved
for listing the Camden Shares to be issued in the Merger, subject to official
notice of issuance.
(d) Registration Statement. The Registration
Statement shall have become effective under the Securities Act and shall not be
the subject of any stop order or proceedings by the SEC seeking a stop order.
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(e) No Injunctions or Restraints. No temporary
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the Merger or any of the other Transactions
shall be in effect.
(f) Blue Sky Laws. Camden shall have received all
state securities or "blue sky" permits and other authorizations necessary to
issue the Camden Shares pursuant to this Agreement.
(g) Related Transactions. The Company Voting
Agreement and the Camden Voting Agreement shall remain in full force and effect
and the respective transactions contemplated thereby shall have been
consummated prior to, or are being consummated simultaneously with, the Merger.
(h) Certain Actions and Consents. All material
actions by or in respect of or filings with any Governmental Entity required
for the consummation of the Transactions shall have been obtained or made.
SECTION 6.2 Conditions to Obligations of Camden
and Camden Sub. The obligations of Camden and Camden Sub to effect the Merger
and to consummate the other Transactions contemplated to occur on the Closing
Date are further subject to the following conditions, any one or more of which
may be waived by Camden:
(a) Representations and Warranties. The
representations and warranties of the Company set forth in this Agreement shall
be true and correct as of the Closing Date, as though made on and as of the
Closing Date, except to the extent the representation or warranty is expressly
limited by its terms to another date, and Camden shall have received a
certificate (which certificate may be qualified by Knowledge to the same extent
as such representations and warranties are so qualified) signed on behalf of
the Company by the chief executive officer or the chief financial officer of
the Company to such effect. This condition shall be deemed satisfied unless
any or all breaches of the Company's representations and warranties in this
Agreement (without giving effect to any materiality qualification or
limitation) is reasonably expected to have a Material Adverse Effect.
(b) Performance of Obligations of the Company. The
Company shall have performed in all material respects all obligations required
to be performed by it under this Agreement at or prior to the Effective Time,
and Camden shall have received a certificate signed on behalf of the Company by
the chief executive officer or the chief financial officer of the Company to
such effect.
(c) Material Adverse Change. Since the date of this
Agreement, there shall have been no Material Adverse Change and Camden shall
have received a certificate of the chief executive officer or chief financial
officer of the Company certifying to such effect.
(d) Opinion Relating to REIT Status. Camden shall
have received an opinion of Counsel to the Company, dated as of the Closing
Date, reasonably satisfactory to Camden that, commencing with its taxable year
ended December 31, 1993 through the Closing Date, the Company was organized in
conformity with the requirements for qualification as a REIT under the Code and
its method of operation has enabled it to so qualify (with customary
exceptions, assumptions and qualifications and based upon customary
representations) during such period.
(e) Other Tax Opinion. Camden shall have received an
opinion dated as of the Closing Date from Counsel to Camden, based upon
certificates and letters, to the effect that the Merger will qualify as a
reorganization under the provisions of Section 368(a) of the Code.
(f) Consents. All consents and waivers (including,
without limitation, waivers of rights of first refusal) from third parties
necessary in connection with the consummation of the Transactions shall have
been obtained, other than such consents and waivers from third parties, which,
if not obtained, would not result, individually or in the aggregate, in a
Camden Material Adverse Effect or a Material Adverse Effect.
(g) Legal Opinion. Camden and Camden Sub shall have
received an opinion from legal counsel to the Company substantially in the form
attached hereto as EXHIBIT B.
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Notwithstanding the foregoing, Camden shall not be
obligated to effect the Merger if the failure of one or more of the conditions
set forth in Sections 6.2(a), 6.2(c) and 6.2(f) to be satisfied, in the
aggregate, causes a Camden Material Adverse Effect.
SECTION 6.3 Conditions to Obligations of the
Company.
The obligation of the Company to effect the Merger and to
consummate the other Transactions contemplated to occur on the Closing Date is
further subject to the following conditions, any one or more of which may be
waived by the Company:
(a) Representations and Warranties. The
representations and warranties of Camden set forth in this Agreement shall be
true and correct as of the date of this Agreement and as of the Closing Date,
as though made on and as of the Closing Date, except to the extent the
representation or warranty is expressly limited by its terms to another date,
and the Company shall have received a certificate (which certificate may be
qualified by Knowledge to the same extent as the representations and warranties
of Camden contained herein are so qualified) signed on behalf of Camden by the
chief executive officer and the chief financial officer of such party to such
effect. This condition shall be deemed satisfied unless any or all breaches of
Camden's representations and warranties in this Agreement (without giving
effect to any materiality qualification or limitation) is reasonably expected
to have a Camden Material Adverse Effect.
(b) Performance of Obligations of Camden. Camden
shall have performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Effective Time, and the
Company shall have received a certificate of Camden signed on behalf of such
party by the chief executive officer or the chief financial officer of such
party to such effect.
(c) Material Adverse Change. Since the date of this
Agreement, there shall have been no Camden Material Adverse Change and the
Company shall have received a certificate of the chief executive officer or
chief financial officer of Camden certifying to such effect.
(d) Opinion Relating to REIT Status. The Company
shall have received an opinion of Counsel to Camden dated as of the Closing
Date, reasonably satisfactory to the Company, that, commencing with its taxable
year ended December 31, 1993 through the Closing Date, Camden was organized in
conformity with the requirements for qualification as a REIT under the Code and
its method of operation has enabled it to so qualify and that, after giving
effect to the Merger, Camden's proposed method of operation will enable it to
continue to meet the requirements for qualification and taxation as a REIT
under the Code (with customary exceptions, assumptions and qualifications and
based upon customary representations).
(e) Other Tax Opinion. The Company shall have
received an opinion dated as of the Closing Date from Counsel to the Company,
based upon certificates and letters, to the effect that the Merger will qualify
as a reorganization under the provisions of Section 368(a) of the Code.
(f) Consents. All consents and waivers (including,
without limitation, waivers or rights of first refusal) from third parties
necessary in connection with the consummation of the Transactions shall have
been obtained, other than such consents and waivers from third parties, which,
if not obtained, would not have a Camden Material Adverse Effect or a Material
Adverse Effect.
(g) Legal Opinion. The Company shall have received an
opinion from Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P. substantially in the
form attached hereto as EXHIBIT C.
Notwithstanding the foregoing, the Company shall not be
obligated to effect the Merger if the failure of one or more of the conditions
set forth in Sections 6.3(a), 6.3(c) and 6.3(f) to be satisfied, in the
aggregate, causes a Material Adverse Effect.
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ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.1 Termination. This Agreement may be
terminated at any time prior to the filing of the Certificate of Merger with
the Secretary of State of the State of Delaware and the filing of the Articles
of Merger with the Secretary of State of the State of Nevada, whether before or
after either of the Shareholder Approvals are obtained:
(a) by mutual written consent duly authorized by the
respective Boards of Directors of Camden and the Company;
(b) by Camden, upon a breach of any covenant or
agreement on the part of the Company set forth in this Agreement such that the
condition set forth in Section 6.2 (b) hereof would be incapable of being
satisfied by June 30, 1998 (or as otherwise extended);
(c) by the Company, upon a breach of any covenant or
agreement on the part of Camden set forth in this Agreement such that the
condition set forth in Section 6.3(b) would be incapable of being satisfied by
June 30, 1998 (or as otherwise extended);
(d) by Camden, if any representation or warranty of
the Company set forth in this Agreement shall have become untrue such that the
condition set forth in Section 6.2 (a) hereof would be incapable of being
satisfied by June 30, 1998 (or as otherwise extended);
(e) by the Company, if any representation or warranty
of Camden set forth in this Agreement shall have become untrue such that the
condition set forth in Section 6.3 (a) hereof would be incapable of being
satisfied by June 30, 1998 (or as otherwise extended);
(f) by either Camden or the Company, if any judgment,
injunction, order, decree or action by any Governmental Entity of competent
authority preventing the consummation of the Merger shall have become final and
nonappealable;
(g) by either Camden or the Company, if the Merger
shall not have been consummated before June 30, 1998; provided, however, that a
party that has willfully and materially breached a representation, warranty or
covenant of such party set forth in this Agreement shall not be entitled to
exercise its right to terminate under this Section 7.1(g);
(h) by either Camden or the Company (unless the
Company is in breach of its obligations under Section 5.1(b)) if, upon a vote
at a duly held Company Stockholder Meeting or any adjournment thereof, the
Company Stockholder Approval shall not have been obtained as contemplated by
Section 5.1;
(i) by either Camden (unless Camden is in breach of
its obligations under 5.1(c)) or the Company if, upon a vote at a duly held
Camden Shareholder Meeting or any adjournment thereof, the Camden Shareholder
Approval shall not have been obtained as contemplated by Section 5.1;
(j) by the Company, if, prior to the Company
Stockholder Meeting, the Board of Directors of the Company shall have withdrawn
or modified in any manner adverse to Camden its approval or recommendation of
the Merger or this Agreement for the reason provided in Section 5.1(b) hereof;
provided, however, that the right to terminate this Agreement under this
Section 7.1(j) shall not be available to the Company if it, at such time, is in
material breach of its covenant set forth in Section 5.7 hereof; or
(k) by Camden, if (i) prior to the Company Shareholder
Meeting, the Board of Directors of the Company shall have withdrawn or modified
in any manner adverse to Camden its approval or recommendation of the Merger or
this Agreement for the reason provided in Section 5.1(b) hereof or (ii) the
Company shall have entered into a definitive agreement with respect to any
Competing Transaction.
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SECTION 7.2 Expenses.
(a) Except as otherwise specified in this Section 7.2
or agreed in writing by the parties, all out-of-pocket costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such cost or expense, except that
those expenses incurred in connection with the printing and mailing of the
Proxy Statement and the Registration Statement, as well as the filing fee
related thereto, shall be shared equally by Camden and the Company.
(b) If this Agreement is terminated (i) pursuant to
Sections 7.1(b), (j) or (k); or (ii) pursuant to Section 7.1(h) and the Company
shall have entered into an agreement to consummate a Competing Transaction on
or prior to the date of termination or, within six months from the date of such
termination, the Company consummates a Competing Transaction or enters into an
agreement to consummate a Competing Transaction that is subsequently
consummated and, in any event specified in clauses (i) or (ii) above, if the
Company is not entitled to terminate this Agreement by reason of Sections
7.1(c), (e), (f), (g) or (i), then, in addition to any other right or remedy
that may be available, the Company shall promptly (and in any event within two
days of receipt by the Company of written notice from Camden) pay to Camden (by
wire transfer of immediately available funds to an account designated by
Camden) the Break-Up Fee (as defined below). The termination of this Agreement
pursuant to this Section 7.2(b) shall not be effective until receipt by Camden
of the Break-Up Fee.
(c) If this Agreement is terminated pursuant to
Section 7.1(h) and no agreement for a Competing Transaction shall have been
entered into on or prior to the date of termination and, within six months from
the date of such termination, the Company does not consummate a Competing
Transaction and does not enter into an agreement to consummate a Competing
Transaction that is subsequently consummated, and if the Company is not
entitled to terminate this Agreement by reason of Sections 7.1(c), (e), (f),
(g) or (i), then, in addition to any other right or remedy that may be
available, the Company shall promptly (and in any event within two days of
receipt by the Company of written notice from Camden) pay to Camden by wire
transfer of immediately available funds to an account designed by Camden) the
Fee (as defined below). The termination of this Agreement pursuant to this
Section 7.2(c) shall not be effective until receipt by Camden of the Fee.
(d) If this Agreement is terminated pursuant to
Section 7.1(d), and if the Company is not entitled to terminate this Agreement
by reason of Sections 7.1(c), (e), (f), (g) or (i), then, in addition to any
other right or remedy that may be available, the Company shall promptly (and in
any event within two days of receipt by the Company of written notice from
Camden) pay to Camden (by wire transfer of immediately available funds to an
account designated by Camden) the Break-Up Expenses (as defined below). The
termination of this Agreement pursuant to this Section 7.2(d) shall not be
effective until receipt by Camden of the Break-Up Expenses.
(e) If this Agreement is terminated pursuant to
Section 7.1(c), and if Camden is not entitled to terminate this Agreement by
reason of Sections 7.1(b), (d), (f), (g), (h), (i) or (k), then, in addition to
any other right or remedy that may be available, Camden shall promptly (and in
any event within two days of receipt by Camden of written notice from the
Company) pay to the Company (by wire transfer of immediately available funds to
an account designated by the Company) the Break-Up Fee. The termination of
this Agreement pursuant to this Section 7.2(e) shall not be effective until
receipt by the Company of the Break-Up Fee.
(f) If this Agreement is terminated pursuant to
Section 7.1(e), and if Camden is not entitled to terminate this Agreement by
reason of Sections 7.1(b), (d), (f), (g), (h), (i) or (k), then, in addition to
any other right or remedy that may be available, Camden shall promptly (and in
any event within two days of receipt by Camden of written notice from the
Company) pay to the Company (by wire transfer of immediately available funds to
an account designated by the Company) the Break-Up Expenses. The termination
of this Agreement pursuant to this Section 7.2(f) shall not be effective until
receipt by the Company of the Break-Up Expenses.
(g) If this Agreement is terminated pursuant to
Section 7.1(i), and if Camden is not entitled to terminate this Agreement by
reasons in Section 7.1(b), (d), (f), (g), (h) or (k), then, in addition to any
other right or remedy that may be available, Camden shall promptly (and in any
event within two days of receipt by Camden of written notice from the Company)
pay to the Company (by wire transfer of immediately available funds to an
account
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designated by the Company) the Fee. The termination of this Agreement pursuant
to this Section 7.2(g) shall not be effective until receipt by the Company of
the Fee.
(h) The "BREAK-UP FEE" shall be an amount equal to the
lesser of (i) $20,000,000 (the "BASE AMOUNT") or (ii) the sum of (A) the
maximum amount that can be paid to Camden or the Company, as the case may be,
without causing it to fail to meet the requirements of Sections 856(c) (2) and
(3) of the Code determined as if the payment of such amount did not constitute
income described in Sections 856(c) (2) (A)-(H) and 856(c) (3) (A)-(I) of the
Code ("QUALIFYING INCOME"), as determined by independent accountants to Camden
or the Company, as the case may be, and (B) in the event Camden or the Company,
as the case may be, receives a letter from outside counsel (the "BREAK-UP FEE
TAX OPINION") indicating that Camden or the Company, as the case may be, has
received a ruling from the IRS holding that receipt of the Base Amount would
either constitute Qualifying Income or would be excluded from gross income
within the meaning of Sections 856(c) (2) and (3) of the Code (the "REIT
REQUIREMENTS") or that the receipt of the remaining balance of the Base Amount
following the receipt of and pursuant to such ruling would not be deemed
constructively received prior thereto, the Base Amount less the amount payable
under clause (A) above. A party's obligation to pay any unpaid portion of the
Break-Up Fee shall terminate three years from the date of this Agreement. In
the event that Camden or the Company, as the case may be, is not able to
receive the full Base Amount, the other party shall place the unpaid amount in
escrow and shall not release any portion thereof unless and until Camden or the
Company, as the case may be, receives any one or combination of the following:
(i) a letter from its independent accountants indicating the maximum amount
that can be paid at that time without causing it to fail to meet the REIT
Requirements or (ii) a Break-Up Fee Tax Opinion, in which event the Camden or
the Company, as the case may be, shall pay to the other party the lesser of the
unpaid Base Amount or the maximum amount stated in the letter referred to in
(i) above or, as applicable, the Break-Up Fee Tax Opinion. The "FEE" shall be
an amount equal to the lesser of (i) $3,000,000 (the "FEE BASE AMOUNT") and
(ii) the sum of (A) the maximum amount that can be paid to Camden or the
Company, as the case may be, without causing it to fail to meet the
requirements of Sections 856(c) (2) and (3) of the Code determined as if the
payment of such amount did not constitute Qualifying Income, as determined by
independent accountants to Camden or the Company, as the case may be, and (b)
in the event Camden or the Company, as the case may be, receives a Break-Up Tax
Opinion indicating that Camden or the Company, as the case may be, has received
a ruling from the IRS holding that receipt of the Fee Base Amount would either
constitute Qualifying Income or would be excluded from gross income within the
meaning of the REIT Requirements or that receipt of the remaining balance of
the Fee Base Amount following the receipt of and pursuant to such ruling would
not be deemed constructively received prior thereto, the Fee Base Amount less
the amount payable under clause (A) above. A party's obligation to pay any
unpaid portion of the Fee shall terminate three years from the date of this
Agreement. In the event that Camden or the Company, as the case may be, is not
able to receive the full Fee Base Amount, the other party shall place the
unpaid amount in escrow and shall not release any portion thereof unless and
until Camden or the Company, as the case may be, receives any one or
combination of the following: (i) a letter from its independent accountants
indicating the maximum amount that can be paid at that time without causing it
to fail to meet the REIT Requirements or (ii) a Break-Up Fee Tax Opinion, in
which event Camden or the Company, as the case may be, shall pay to the other
party the lesser of the unpaid Fee Base Amount or the maximum amount stated in
the letter referred to in (i) above or, as applicable, the Break-Up Fee Tax
Opinion. The "BREAK-UP EXPENSES" shall be an amount equal to the lesser of (a)
the payee's out-of-pocket expenses incurred in connection with this Agreement
and the Transaction, including, without limitation, all attorneys',
accountants' and investment bankers' fees and expenses (the "BREAK-UP EXPENSE
BASE AMOUNT") and (b) the sum of (1) the maximum amount that can be paid to
Camden or the Company, as the case may be, without causing it to fail to meet
the requirements of Sections 856(c) (2) and (3) of the Code determined as if
the payment of such amount did not constitute Qualifying Income, as determined
by independent accountants to Camden or the Company, as the case may be, and
(2) in the event Camden or the Company, as the case may be, receives a Break-Up
Tax Opinion indicating that Camden or the Company, as the case may be, has
received a ruling from the IRS holding that receipt of the Break- Up Expense
Base Amount would either constitute Qualifying Income or would be excluded from
gross income within the meaning of the REIT Requirements or that receipt of the
remaining balance of the Break-Up Expense Base Amount following the receipt of
and pursuant to such ruling would not be deemed constructively received prior
thereto, the Break-Up Expense Base Amount less the amount payable under clause
(a) above. A party's obligation to pay any unpaid portion of the Break-Up
Expenses shall terminate three years from the date of this Agreement. In the
event that Camden or the Company, as the case may be, is not able to receive
the full Break-Up Expense Base Amount, the other party shall place the unpaid
amount in escrow and shall not release any portion thereof unless and until
Camden or the Company, as the case may be, receives any one or combination of
the following: (i) a letter from its independent accountants indicating the
maximum amount that can be paid at that time
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without causing it to fail to meet the REIT Requirements or (ii) a Break-Up Fee
Tax Opinion, in which event Camden or the Company, as the case may be, shall
pay to the other party the lesser of the unpaid Break-Up Expense Base Amount or
the maximum amount stated in the letter referred to in (i) above or, as
applicable, the Break-Up Fee Tax Opinion.
SECTION 7.3 Effect of Termination. In the event
of termination of this Agreement by either the Company or Camden as provided in
Section 7.1, this Agreement shall forthwith become void and have no effect,
without any liability or obligation on the part of Camden, or the Company,
other than the last sentence of Section 5.2, Section 7.2 and this Section 7.3.
Notwithstanding the foregoing, no party shall be relieved from liability for
any willful, material breach of this Agreement.
SECTION 7.4 Amendment. This Agreement may be
amended by the parties in writing by action of their respective Boards of
Directors at any time before or after any Shareholder Approvals are obtained
and prior to the filing of the Certificate of Merger with the Secretary of
State of the State of Delaware and the Articles of Merger with Secretary of
State of the State of Nevada; provided, however, that, after the Shareholder
Approvals are obtained, no such amendment, modification or supplement shall
alter the amount or change the form of the consideration to be delivered to the
Company's shareholders or alter or change any of the terms or conditions of
this Agreement if such alteration or change would adversely affect the
Company's stockholders Camden's shareholders, in each case without further
approval of such stockholders and shareholders.
SECTION 7.5 Extension; Waiver. At any time
prior to the Effective Time, the parties may (a) extend the time for the
performance of any of the obligations or other acts of the other party, (b)
waive any inaccuracies in the representations and warranties of the other party
contained in this Agreement or in any document delivered pursuant to this
Agreement or (c) subject to the proviso of Section 7.4, waive compliance with
any of the agreements or conditions of the other party contained in this
Agreement. Any agreement on the part of a party to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party. The failure of any party to this Agreement to assert any
of its rights under this Agreement or otherwise shall not constitute a waiver
of those rights.
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.1 Nonsurvival of Representations and
Warranties. None of the representations and warranties in this Agreement or in
any instrument delivered pursuant to this Agreement shall survive the Effective
Time. This Section 8.1 shall not limit any covenant or agreement of the
parties which by its terms contemplates performance after the Effective Time.
SECTION 8.2 Notices. All notices, requests,
claims, demands and other communications under this Agreement shall be in
writing and shall be deemed given if delivered personally, sent by overnight
courier (providing proof of delivery) to the parties or sent by telecopy
(providing confirmation of transmission) at the following addresses or telecopy
numbers (or at such other address or telecopy number for a party as shall be
specified by like notice):
(a) if to Camden, to
Richard J. Campo
Chairman and Chief Executive Officer
Camden Property Trust
3200 Southwest Freeway, Suite 1500
Houston, Texas 77027
Telecopy: (713) 964-3599
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with a copy to:
Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P.
2001 Ross Avenue, Suite 3000
Dallas, Texas 75201
Attention: Bryan L. Goolsby
Telecopy: (214) 849-5599
(b) if to the Company, to
Oasis Residential, Inc.
4041 East Sunset Road
Henderson, Nevada 89014
Attention: Scott S. Ingraham
Telecopy: (702) 435-6894
with a copy to:
Latham & Watkins
650 Town Center Drive, 20th Floor
Costa Mesa, California 92626
Attention: Jeffrey T. Pero
Telecopy: (714) 755-8290
SECTION 8.3 Certain Definitions. For purposes
of this Agreement:
An "AFFILIATE" of any Person means another Person that
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such first Person.
"CAMDEN DISCLOSURE LETTER" means the letter previously
delivered to the Company by Camden disclosing certain information in connection
with this Agreement.
"COMPANY DISCLOSURE LETTER" means the letter previously
delivered to Camden by the Company disclosing certain information in connection
with this Agreement.
"KNOWLEDGE" where used herein with respect to the Company
shall mean the actual knowledge of the persons named in SCHEDULE 8.3 to the
Company Disclosure Letter and where used with respect to Camden shall mean the
actual knowledge of the persons named in SCHEDULE 8.3 to the Camden Disclosure
Letter.
"OASIS MARTINIQUE EXCHANGE RIGHTS AGREEMENT" means the
Exchange Rights Agreement dated as of October 23, 1997 by and among the
Company, Oasis Martinique, LLC and each Unitholder listed on the signature page
thereto.
"OASIS MARTINIQUE LLC" means Oasis Martinique, LLC, a
Delaware limited liability company.
"OASIS MARTINIQUE LLC AGREEMENT" means the Amended and
Restated Limited Liability Company Agreement dated as of October 23, 1997 by
and among the Company, IFT Properties, Ltd., a California limited partnership,
and ISCO, a California general partnership.
"OASIS MARTINIQUE LLC UNITS" shall mean "LLC Units," as
that term is defined in the Oasis Martinique LLC Agreement.
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<PAGE> 155
"OASIS MARTINIQUE LOAN AND SECURITY AGREEMENT" means the
Loan and Security Agreement dated as of October 23, 1997 by and among the
Company, IFT Properties, Ltd., a California limited partnership, ISCO, a
California general partnership, Edward M. Israel and Robert Cohen.
"PERSON" means an individual, corporation, partnership,
limited liability company, joint venture, association, trust, unincorporated
organization or other entity.
"SUBSIDIARY" of any Person means any Affiliate controlled
by such Person directly, or indirectly through one or more intermediaries.
SECTION 8.4 Interpretation. When a reference is
made in this Agreement to a Section, such reference shall be to a Section of
this Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement. Whenever
the words "include," "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation."
SECTION 8.5 Counterparts. This Agreement may be
executed in one or more counterparts, all of which shall be considered one and
the same agreement and shall become effective when one or more counterparts
have been signed by each of the parties and delivered to the other parties.
SECTION 8.6 Entire Agreement; No Third-Party
Beneficiaries. This Agreement, the Confidentiality Agreement and the other
agreements entered into in connection with the Transactions (a) constitute the
entire agreement and supersedes all prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter of
this Agreement and, (b) except for the provisions of Article II, Section 5.12
and Section 5.13, are not intended to confer upon any Person other than the
parties hereto any rights or remedies.
SECTION 8.7 GOVERNING LAW. THIS AGREEMENT SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
TEXAS, REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE
PRINCIPLES OF CONFLICT OF LAWS THEREOF.
SECTION 8.8 Assignment. Neither this Agreement
nor any of the rights, interests or obligations under this Agreement shall be
assigned or delegated, in whole or in part, by operation of law or otherwise by
any of the parties without the prior written consent of the other parties.
Subject to the preceding sentence, this Agreement will be binding upon, inure
to the benefit of, and be enforceable by, the parties and their respective
successors and assigns.
SECTION 8.9 Enforcement. The parties agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions of this Agreement in any
court of the United States located in the State of Texas or in any Texas State
court located in Texas, this being in addition to any other remedy to which
they are entitled at law or in equity. In addition, each of the parties hereto
(a) consents to submit itself (without making such submission exclusive) to the
personal jurisdiction of any federal court located in the State of Texas or any
Texas State court in the event any dispute arises out of this Agreement or any
of the transactions contemplated by this Agreement and (b) agrees that it will
not attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court.
SECTION 8.10 Severability. 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
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<PAGE> 156
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 8.10.
IN WITNESS WHEREOF, Camden, Camden Sub and the Company
have caused this Agreement to be signed by their respective officers thereunto
duly authorized, all as of the date first written above.
CAMDEN PROPERTY TRUST
By: /s/ Richard J. Campo
----------------------------
Richard J. Campo
Chairman of the Board
CAMDEN SUBSIDIARY II, INC.
By: /s/ Richard J. Campo
----------------------------
Richard J. Campo
Chairman of the Board
OASIS RESIDENTIAL, INC.
By: /s/ Scott S. Ingraham
----------------------------
Scott S. Ingraham
President and Chief Operating
Officer
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ANNEX II
CAMDEN PROPERTY TRUST
FORM OF
STATEMENT OF DESIGNATION, PREFERENCES AND RIGHTS
OF SERIES A CUMULATIVE CONVERTIBLE PREFERRED SHARES OF
BENEFICIAL INTEREST
Section I Number of Shares and Designation. This series of
Preferred Shares of Beneficial Interest shall be designated as Series A
Cumulative Convertible Preferred Shares of Beneficial Interest (the "Series A
Preferred Shares") and up to Five Million (5,000,000) shall be the number of
such Preferred Shares of Beneficial Interest constituting such series.
Section II Definitions. For purposes of the Series A Preferred
Shares, the following terms shall have the meanings indicated:
"Act" shall mean the Securities Act of 1933, as amended.
"affiliate" of a person means a person that directly, or indirectly
through one or more intermediaries, controls or is controlled by, or
is under common control with, the person specified.
"Trust Managers" shall mean the Trust Managers of the Trust or any
committee authorized by such Trust Managers to perform any of its
responsibilities with respect to the Series A Preferred Shares.
"Business Day" shall mean any day other than a Saturday, Sunday or a
day on which state or federally chartered banking institutions in New
York, New York are not required to be open.
"Call Date" shall have the meaning set forth in paragraph (b) of
Section 5 hereof.
"Common Shares" shall mean Common Shares of Beneficial Interest, $.01
par value per share, of the Trust or such shares of the Trust's
capital shares into which such Common Shares of Beneficial Interest
shall be reclassified.
"Constituent Person" shall have the meaning set forth in paragraph (e)
of Section 7 hereof.
"Conversion Price" shall mean the conversion price per each Common
Share for which each Series A Preferred Share is convertible, as such
Conversion Price may be adjusted pursuant to paragraph (d) of Section
7. The initial conversion price shall be $32.4638 (equivalent to a
conversion rate of 0.7701 Common Shares for each Series A Preferred
Share).
"Current Market Price" of publicly traded Common Shares or any other
class or series of capital shares or other security of the Trust or of
any similar security of any other issuer for any day shall mean the
last reported sales price, regular way on such day, or, if no sale
takes place on such day, the average of the reported closing bid and
asked prices regular way on such day, in either case as reported on
the New York Stock Exchange ("NYSE") or, if such security is not
listed or admitted for trading on the NYSE, on the principal national
securities exchange on which such security is listed or admitted for
trading or, if not listed or admitted for trading on any national
securities exchange, on the National Market of the National
Association of Securities Dealers, Inc. Automated Quotations System
("NASDAQ") or, if such security is not quoted on such National Market,
the average of the closing bid and asked prices on such day in the
over-the-counter market as reported by NASDAQ or, if bid and asked
prices for such security on such day shall not have been reported
through NASDAQ, the average of the bid and asked prices on such day as
furnished by any NYSE member firm regularly making a market in such
security selected for such purpose by the Chief Executive Officer or
the Trust
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<PAGE> 158
Managers or if any class or series of securities are not publicly
traded, the fair value of the shares of such class as determined
reasonably and in good faith by the Trust Managers.
"Distribution" shall have the meaning set forth in paragraph (d)(iii)
of Section 7 hereof.
"Dividend Payment Date" shall mean, with respect to each Dividend
Period, the fifteenth day of February, May, August and November, in
each year, commencing on _________, 1998; provided, however, that if
any Dividend Payment Date falls on any day other than a Business Day,
the dividend payment due on such Dividend Payment Date shall be paid
on the Business Day immediately following such Dividend Payment Date.
"Dividend Periods" shall mean quarterly dividend periods commencing on
January 1, April 1, July 1 and October 1 of each year and ending on
and including the day preceding the first day of the next succeeding
Dividend Period (other than the initial Dividend Period, which shall
commence on the Issue Date and end on and include _________, 1998).
"Fair Market Value" shall mean the average of the daily Current Market
Prices of a Common Share during five consecutive Trading Days selected
by the Trust commencing not more than 20 Trading Days before, and
ending not later than, the earlier of the day in question and the day
before the "ex" date with respect to the issuance or distribution
requiring such computation. The term "'ex' date," when used with
respect to any issuance or distribution, means the first day on which
the Common Share trades regular way, without the right to receive such
issuance or distribution, on the exchange or in the market, as the
case may be, used to determine that day's Current Market Price.
"Funds Available for Distribution" shall mean funds from operations
(net income, computed in accordance with generally accepted accounting
principles excluding gains or losses from debt restructuring and sales
of property, plus depreciation and amortization) minus non-revenue
generating capital expenditures and debt principal amortization, as
determined by the Trust Managers on a basis consistent with the
policies and practices adopted by the Trust for reporting publicly its
results of operations and financial condition.
"Issue Date" shall mean ____________, 1998.
"Junior Shares" shall mean the Common Shares and any other class or
series of capital shares of the Trust over which the Series A
Preferred Shares have preference or priority in the payment of
dividends or in the distribution of assets on any liquidation,
dissolution or winding up of the Trust.
"Non-Electing Share" shall have the meaning set forth in paragraph (e)
of Section 7 hereof.
"Parity Shares" shall have the meaning set forth in paragraph (b) of
Section 8 hereof.
"Permitted Common Shares Cash Distributions" means cash dividends and
cash distributions paid on Common Shares after December 31, 1997 not
in excess of the sum of the Trust's cumulative undistributed net
earnings at December 31, 1997, plus the cumulative amount of Funds
Available for Distribution after December 31, 1997, minus the
cumulative amount of dividends accumulated, accrued or paid on the
Series A Preferred Shares or any other class of Preferred Shares after
January 1, 1998.
"Person" shall mean any individual, firm, partnership, corporation or
other entity and shall include any successor (by merger or otherwise)
of such entity.
"Press Release" shall have the meaning set forth in paragraph (a)(i)
of Section 5 hereof.
"Series A Preferred Shares" shall have the meaning set forth in
Section 1 hereof.
"set apart for payment" shall be deemed to include, without any action
other than the following, the recording by the Trust in its accounting
ledgers of any accounting or bookkeeping entry which indicates,
pursuant to a declaration of dividends or other distribution by the
Trust Managers, the allocation of funds to be so paid on any series or
class of capital shares of the Trust; provided, however, that if any
funds for any class or series of
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<PAGE> 159
Junior Shares or any class or series of Parity Shares are placed in a
separate account of the Trust or delivered to a disbursing, paying or
other similar agent, then "set apart for payment" with respect to the
Series A Preferred Shares shall mean placing such funds in a separate
account or delivering such funds to a disbursing, paying or other
similar agent.
"Trading Day", as to any securities, shall mean any day on which such
securities are traded on the NYSE or, if such securities are not
listed or admitted for trading on the NYSE, on the principal national
securities exchange on which such securities are listed or admitted
or, if such securities are not listed or admitted for trading on any
national securities exchange, on the National Market of NASDAQ or, if
such securities are not quoted on such National Market, in the
securities market in which such securities are traded.
"Transaction" shall have the meaning set forth in paragraph (e) of
Section 7 hereof.
"Transfer Agent" means American Stock Transfer and Trust or such other
U.S. bank with aggregate capital, surplus and undivided profits, as
shown on its last published report, of at least $50,000,000 as may be
designated by the Trust Managers or their designee as the transfer
agent for the Series A Preferred Shares.
"Voting Preferred Shares" shall have the meaning set forth in Section
9 hereof.
Section III Dividends.
3.1 The holders of Series A Preferred Shares shall be
entitled to receive, when and as declared by the Trust Managers out of funds
legally available for that purpose, cumulative dividends payable in cash in an
amount per Series A Preferred Share equal to the greater of (i) $.5625 per
quarter (equivalent to $2.25 per annum) or (ii) the cash dividends paid or
payable on the number of Common Shares, or portion thereof, into which a Series
A Preferred Share is convertible, in each case with appropriate proration for
partial quarters. The amount referred in clause (ii) of this paragraph (a)
with respect to each Dividend Period shall be determined as of the applicable
Dividend Payment Date by multiplying the number of Common Shares, or portion
thereof calculated to the fourth decimal point, into which a Series A Preferred
Share would be convertible at the opening of business on such Dividend Payment
Date (based on the Conversion Price then in effect) by the quarterly cash
dividend payable or paid for such Dividend Period in respect of a Common Share
outstanding as of the record date for the payment of dividends on the Common
Shares with respect to such Dividend Period or, if different, with respect to
the most recent quarterly period for which dividends with respect to the Common
Shares have been declared. Such dividends shall be cumulative from the Issue
Date, whether or not in any Dividend Period or Periods such dividends shall be
declared or there shall be funds of the Trust legally available for the payment
of such dividends, and shall be payable quarterly in arrears on the Dividend
Payment Dates, commencing on the first Dividend Payment Date after the Issue
Date. Each such dividend shall be payable in arrears to the holders of record
of the Series A Preferred Shares, as they appear on the records of the Trust at
the close of business on a record date which shall be not more than 60 days
prior to the applicable Dividend Payment Date and shall be fixed by the Trust
Managers to coincide with the record date for the regular quarterly dividends,
if any, payable with respect to the Common Shares. Accumulated, accrued and
unpaid dividends for any past Dividend Periods may be declared and paid at any
time, without reference to any regular Dividend Payment Date, to holders of
record on such date, which date shall not precede by more than 45 days the
payment date thereof, as may be fixed by the Trust Managers. The amount of
accumulated, accrued and unpaid dividends on any Series A Preferred Share, or
fraction thereof, at any date shall be the amount of any dividends thereon
calculated at the applicable rate to and including such date, whether or not
earned or declared, which have not been paid in cash.
3.2 The amount of dividends payable per Series A
Preferred Share for each full Dividend Period shall be computed by dividing the
annual dividend by four. The amount of dividends payable per Series A
Preferred Share for the initial Dividend Period, or any other period shorter or
longer than a full Dividend Period, shall be computed ratably on the basis of
twelve 30-day months and a 360-day year. Holders of Series A Preferred Shares
shall not be entitled to any dividends, whether payable in cash, property or
shares, in excess of cumulative dividends, as herein provided, on the Series A
Preferred Shares. No interest, or sum of money in lieu of interest, shall be
payable in respect of any dividend payment or payments on the Series A
Preferred Shares that may be in arrears.
3.3 So long as any of the Series A Preferred Shares
are outstanding, no dividends, except as described in the immediately following
sentence, shall be declared or paid or set apart for payment by the Trust or
other
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distribution of cash or other property declared or made directly or indirectly
by the Trust or any affiliate or any person acting on behalf of the Trust or
any of its affiliates with respect to any class or series of Parity Shares for
any period unless dividends equal to the full amount of accumulated, accrued
and unpaid dividends have been or contemporaneously are declared and paid or
declared and a sum sufficient for the payment thereof have been or
contemporaneously are set apart for such payment on the Series A Preferred
Shares for all Dividend Periods terminating on or prior to the Dividend Payment
Date with respect to such class or series of Parity Shares. When dividends are
not paid in full or a sum sufficient for such payment is not set apart, as
aforesaid, all dividends declared upon the Series A Preferred Shares and all
dividends declared upon any other class or series of Parity Shares shall be
declared ratably in proportion to the respective amounts of dividends
accumulated, accrued and unpaid on the Series A Preferred Shares and
accumulated, accrued and unpaid on such Parity Shares.
3.4 So long as any of the Series A Preferred Shares
are outstanding, no dividends (other than dividends or distributions paid in
shares of or options, warrants or rights to subscribe for or purchase Junior
Shares) shall be declared or paid or set apart for payment by the Trust or
other distribution of cash or other property declared or made directly or
indirectly by the Trust or any affiliate or any person acting on behalf of the
Trust or any of its affiliates with respect to any Junior Shares, nor shall any
Junior Shares be redeemed, purchased or otherwise acquired (other than a
redemption, purchase or other acquisition of Common Shares made for purposes of
an employee incentive or benefit plan of the Trust or any subsidiary) for any
consideration (or any moneys be paid to or made available for a sinking fund
for the redemption of any such shares) directly or indirectly by the Trust or
any affiliate or any person acting on behalf of the Trust or any of its
affiliates (except by conversion into or exchange for Junior Shares), nor shall
any other cash or other property otherwise be paid or distributed to or for the
benefit of any holder of Junior Shares in respect thereof, directly or
indirectly, by the Trust or any affiliate or any person acting on behalf on the
Trust or any of its affiliates unless in each case (i) the full cumulative
dividends (including all accumulated, accrued and unpaid dividends) on all
outstanding Series A Preferred Shares and any other Parity Shares of the Trust
shall have been paid or such dividends have been declared and set apart for
payment for all past Dividend Periods with respect to the Series A Preferred
Shares and all past dividend periods with respect to such Parity Shares and
(ii) sufficient funds shall have been paid or set apart for the payment of the
full dividend for the current Dividend Period with respect to the Series A
Preferred Shares and the current dividend period with respect to such Parity
Shares.
Section IV Liquidation Preference.
4.1 In the event of any liquidation, dissolution or
winding up of the Trust, whether voluntary or involuntary, before any payment
or distribution of the assets of the Trust (whether capital or surplus) shall
be made to or set apart for the holders of Junior Shares, the holders of Series
A Preferred Shares shall be entitled to receive $25.00 per Series A Preferred
Share plus an amount equal to all dividends (whether or not earned or declared)
accumulated, accrued and unpaid thereon to the date of final distribution to
such holders; but such holders shall not be entitled to any further payment.
Until the holders of the Series A Preferred Shares have been paid the
liquidation preference in full, no payment will be made to any holder of Junior
Shares upon the liquidation, dissolution or winding up of the Trust. If, upon
any liquidation, dissolution or winding up of the Trust, the assets of the
Trust, or proceeds thereof, distributable among the holders of Series A
Preferred Shares shall be insufficient to pay in full the preferential amount
aforesaid and liquidating payments on any other shares of any class or series
of Parity Shares, then such assets, or the proceeds thereof, shall be
distributed among the holders of Series A Preferred Shares and any such other
Parity Shares ratably in the same proportion as the respective amounts that
would be payable on such Series A Preferred Shares and any such other Parity
Shares if all amounts payable thereon were paid in full. For the purposes of
this Section 4, (i) a consolidation or merger of the Trust with one or more
corporations, (ii) a sale or transfer of all or substantially all of the
Trust's assets, or (iii) a statutory share exchange shall not be deemed to be a
liquidation, dissolution or winding up, voluntary or involuntary, of the Trust.
4.2 Subject to the rights of the holders of any Parity
Shares, upon any liquidation, dissolution or winding up of the Trust, after
payment shall have been made in full to the holders of Series A Preferred
Shares and any Parity Shares, as provided in this Section 4, any other series
or class or classes of Junior Shares shall, subject to the respective terms
thereof, be entitled to receive any and all assets remaining to be paid or
distributed, and the holders of the Series A Preferred Shares and any Parity
Shares shall not be entitled to share therein.
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Section V Redemption at the Option of the Trust.
5.1 Series A Preferred Shares shall be redeemable by
the Trust prior to April 30, 2001. On and after April 30, 2001, the Trust, at
its option may redeem Series A Preferred Shares, in whole or from time to time
in part; as set forth herein, subject to the provisions described below:
(a) Series A Preferred Shares may be redeemed, in
whole, or in part, at the option of the Trust, at any time on or after
April 30, 2001 by issuing and delivering to each holder for each
Series A Preferred Share to be redeemed such number of authorized but
previously unissued Common Shares as equals the liquidation preference
(excluding any accumulated, accrued and unpaid dividends, if any, to
the Call Date (as defined in paragraph (b) below), which are to be
paid in cash, whether or not earned or declared, as provided below)
per Series A Preferred Share divided by the Conversion Price as in
effect as of the opening of business on the Call Date; provided,
however, that the Trust may redeem Series A Preferred Shares pursuant
to this paragraph (a)(i) only if for 20 Trading Days, within any
period of 30 consecutive Trading Days, including the last Trading Day
of such 30-Trading Day period, the Current Market Price of the Common
Shares on each of such 20 Trading Days equals or exceeds the
Conversion Price in effect on such Trading Days. In order to exercise
its redemption option pursuant to this paragraph (a)(i), the Trust
must issue a press release announcing the redemption (the "Press
Release") prior to the opening of business on the second Trading Day
after the condition in the preceding sentence has, from time to time,
been satisfied. The Trust may not issue a Press Release prior to
March 31, 2001. The Press Release shall announce the redemption and
set forth the number of Series A Preferred Shares that the Trust
intends to redeem; or
(b) Each Series A Preferred Share may be
redeemed, in whole or in part, at the option of the Trust at any time
on or after April 30, 2001 out of funds legally available therefor at
a redemption price payable in cash equal to $32.4638 per Series A
Preferred Share (plus an amount equal to all accumulated, accrued and
unpaid dividends, if any, to the Call Date, whether or not earned or
declared, as provided below).
5.2 Series A Preferred Shares shall be redeemed by the
Trust on the date specified in the notice to holders required under paragraph
(d) of this Section 5 (the "Call Date"). The Call Date shall be selected by
the Trust, shall be specified in the notice of redemption and shall be not less
than 30 days nor more than 60 days after (i) the date on which the Trust issues
the Press Release, if such redemption is pursuant to paragraph (a)(i) of this
Section 5, and (ii) the date notice of redemption is sent by the Trust, if such
redemption is pursuant to paragraph (a)(ii) of this Section 5. Upon any
redemption of Series A Preferred Shares pursuant to this paragraph (a)(i) or
(a)(ii) of this Section 5, the Trust shall pay in cash to the holder of such
shares an amount equal to all accumulated, accrued and unpaid dividends, if
any, to the Call Date, whether or not earned or declared. Immediately prior to
authorizing any redemption of the Series A Preferred Shares, and as a condition
precedent for such redemption, the Company, by resolution of its Trust
Managers, shall declare a mandatory dividend on the Series A Preferred Shares
payable in cash on the Call Date in an amount equal to all accumulated, accrued
and unpaid dividends as of the Call Date on the Series A Preferred Shares to be
redeemed, which amount shall be added to the redemption price. If the Call
Date falls after a dividend payment record date and prior to the corresponding
Dividend Payment Date, then each holder of Series A Preferred Shares at the
close of business on such dividend payment record date shall be entitled to the
dividend payable on such shares on the corresponding Dividend Payment Date
notwithstanding the redemption of such shares prior to such Dividend Payment
Date. Except as provided above, the Trust shall make no payment or allowance
for accumulated or accrued dividends on Series A Preferred Shares called for
redemption or on the Common Shares issued upon such redemption.
5.3 If full cumulative dividends on all outstanding
Series A Preferred Shares and any other class or series of Parity Shares of the
Trust have not been paid or declared and set apart for payment, no Series A
Preferred Shares may be redeemed unless all outstanding Series A Preferred
Shares are simultaneously redeemed and neither the Trust nor any affiliate of
the Trust may purchase or acquire Series A Preferred Shares, otherwise than
pursuant to a purchase or exchange offer made on the same terms to all holders
of Series A Preferred Shares.
5.4 If the Trust shall redeem Series A Preferred
Shares pursuant to paragraph (a) of this Section 5, notice of such redemption
shall be given to each holder of record of the shares to be redeemed and, if
such redemption is pursuant to paragraph (a)(i) of this Section 5, such notice
shall be given not more than four Business Days after the date on which the
Trust issues the Press Release. Such notice shall be provided by first class
mail, postage prepaid, at such holder's address as the same appears on the
shareholder records of the Trust, or by publication in The
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Wall Street Journal or The New York Times, or if neither such newspaper is then
being published, any other daily newspaper of national circulation not less
than 35 nor more than 60 days prior to the Call Date. If the Trust elects to
provide such notice by publication, it shall also promptly mail notice of such
redemption to the holders of the Series A Preferred Shares to be redeemed.
Neither the failure to mail any notice required by this paragraph (d), nor any
defect therein or in the mailing thereof, to any particular holder, shall
affect the sufficiency of the notice or the validity of the proceedings for
redemption with respect to the other holders. Any notice which was mailed in
the manner herein provided shall be conclusively presumed to have been duly
given on the date mailed whether or not the holder receives the notice. Each
such mailed or published notice shall state, as appropriate: (1) the Call
Date; (2) the number of Series A Preferred Shares to be redeemed and, if fewer
than all such shares held by such holder are to be redeemed, the number of such
shares to be redeemed from such holder; (3) whether redemption will be for
Common Shares pursuant to paragraph (a)(i) of this Section 5 or for cash
pursuant to paragraph (a)(ii) of this Section 5, and, if redemption will be for
Common Shares, the number of Common Shares (or fraction of a Common Share) to
be issued with respect to each Series A Preferred Share to be redeemed; (4) the
place or places at which certificates for such shares are to be surrendered for
certificates representing Common Shares; (5) the then-current Conversion Price;
and (6) that dividends on the Series A Preferred Shares to be redeemed shall
cease to accrue on such Call Date except as otherwise provided herein. Notice
having been published or mailed as aforesaid, from and after the Call Date
(unless the Trust shall fail to issue and make available the number of Common
Shares and/or amount of cash necessary to effect such redemption, including all
accumulated, accrued and unpaid dividends to the Call Date, whether or not
earned or declared), (i) except as otherwise provided herein, dividends on the
Series A Preferred Shares so called for redemption shall cease to accumulate or
accrue on the Series A Preferred Shares called for redemption (except that, in
the case of a Call Date after a dividend record date and prior to the related
Dividend Payment Date, holders of Series A Preferred Shares on the dividend
record date will be entitled on such Dividend Payment Date to receive the
dividend payable on such shares), (ii) said shares shall no longer be deemed to
be outstanding, and (iii) all rights of the holders thereof as holders of
Series A Preferred Shares of the Trust shall cease (except the rights to
receive the Common Shares and/or cash payable upon such redemption, without
interest thereon, upon surrender and endorsement of their certificates if so
required and to receive any dividends payable thereon). The Trust's obligation
to provide Common Shares and/or cash in accordance with the preceding sentence
shall be deemed fulfilled if, on or before the Call Date, the Trust shall
deposit with a bank or trust company (which may be an affiliate of the Trust)
that has an office in the Borough of Manhattan, the City of New York, or in
Houston, Texas and that has, or is an affiliate of a bank or trust company that
has, a capital and surplus of at least $50,000,000, such number of Common
Shares and such amount of cash as is necessary for such redemption, in trust,
with irrevocable instructions that such Common Shares and/or cash be applied to
the redemption of the Series A Preferred Shares so called for redemption. In
the case of any redemption pursuant to paragraph (a)(i) of this Section 5, at
the close of business on the Call Date, each holder of Series A Preferred
Shares to be redeemed (unless the Trust defaults in the delivery of the Common
Shares or cash payable on such Call Date) shall be deemed to be the record
holder of the number of Common Shares into which such Series A Preferred Shares
are to be converted at redemption, regardless of whether such holder has
surrendered the certificates representing the Series A Preferred Shares to be
so redeemed. No interest shall accrue for the benefit of the holders of Series
A Preferred Shares to be redeemed on any cash so set aside by the Trust.
Subject to applicable escheat laws, any such cash unclaimed at the end of two
years from the Call Date shall revert to the general funds of the Trust, after
which reversion the holders of Series A Preferred Shares so called for
redemption shall look only to the general funds of the Trust for the payment of
such cash.
As promptly as practicable after the surrender in accordance with said
notice of the certificates for any such shares so redeemed (properly endorsed
or assigned for transfer, if the Trust shall so require and if the notice shall
so state), such certificates shall be exchanged for certificates representing
Common Shares and/or any cash (without interest thereon) for which such shares
have been redeemed in accordance with such notice. If fewer than all the
outstanding Series A Preferred Shares are to be redeemed, shares to be redeemed
shall be selected by the Trust from outstanding Series A Preferred Shares not
previously called for redemption by lot or, with respect to the number of
Series A Preferred Shares held of record by each holder of such shares, pro
rata (as nearly as may be) or by any other method as may be determined by the
Trust Managers in its discretion to be equitable. If fewer than all the Series
A Preferred Shares represented by any certificate are redeemed, then a new
certificate representing the unredeemed shares shall be issued without cost to
the holders thereof.
5.5 In the case of any redemption pursuant to
paragraph (a)(i) of this Section 5, no fractional Common Shares or scrip
representing fractions of Common Shares shall be issued upon redemption of the
Series A Preferred Shares. Instead of any fractional interest in a Common
Share that would otherwise be deliverable upon redemption of Series A Preferred
Shares, the Trust shall pay to the holder of such share an amount in cash
(computed
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to the nearest cent) based upon the Current Market Price of the Common Shares
on the Trading Day immediately preceding the Call Date. If more than one share
shall be surrendered for redemption at one time by the same holder, the number
of full Common Shares issuable upon redemption thereof shall be computed on the
basis of the aggregate number of Series A Preferred Shares so surrendered.
5.6 In the case of any redemption pursuant to
paragraph (a)(i) of this Section 5, the Trust covenants that any Common Shares
issued upon redemption of Series A Preferred Shares shall be validly issued,
fully paid and non-assessable. The Trust shall use its best efforts to list,
subject to official notice of issuance, the Common Shares required to be
delivered upon any such redemption of Series A Preferred Shares, prior to such
redemption, upon each national securities exchange, if any, upon which the
outstanding Common Shares are listed at the time of such delivery.
The Trust shall take any action necessary to ensure that any Common
Shares issued upon the redemption of Series A Preferred Shares are freely
transferable and not subject to any resale restrictions under the Act, or any
applicable state securities or blue sky laws (other than any Common Shares
issued upon redemption of any Series A Preferred Shares which are held by an
"affiliate" (as defined in Rule 144 under the Act) of the Trust).
Section VI Shares To Be Retired. All Series A Preferred Shares
which shall have been issued and reacquired in any manner by the Trust shall be
restored to the status of authorized, but unissued Preferred Shares, without
designation as to series. The Trust may also retire any unissued Series A
Preferred Shares, and such shares shall then be restored to the status of
authorized but unissued Preferred Shares, without designation as to series.
Section VII Conversion.
Holders of Series A Preferred Shares shall have the right to convert
all or a portion of such shares into Common Shares, as follows:
7.1 Subject to and upon compliance with the provisions
of this Section 7, a holder of Series A Preferred Shares shall have the right,
at such holder's option, at any time to convert such shares, in whole or in
part, into the number of fully paid and nonassessable shares of authorized but
previously unissued Common Shares obtained by dividing the aggregate
liquidation preference (excluding any accumulated, accrued and unpaid
dividends) of such shares by the Conversion Price (as in effect at the time and
on the date provided for in the last clause of paragraph (b) of this Section 7)
by surrendering such shares to be converted, such surrender to be made in the
manner provided in paragraph (b) of this Section 7; provided, however, that the
right to convert Series A Preferred Shares called for redemption pursuant to
Section 5 shall terminate at the close of business on the Call Date fixed for
such redemption, unless the Trust shall default in making payment of Common
Shares and/or cash payable upon such redemption under Section 5 hereof.
7.2 In order to exercise the conversion right, the
holder of each Series A Preferred Share to be converted shall surrender the
certificate representing such share, duly endorsed or assigned to the Trust or
in blank, at the office of the Transfer Agent, accompanied by written notice to
the Trust that the holder thereof elects to convert such Series A Preferred
Shares. Unless the shares issuable on conversion are to be issued in the same
name as the name in which such Series A Preferred Shares are registered, each
share surrendered for conversion shall be accompanied by instruments of
transfer, in form satisfactory to the Trust, duly executed by the holder or
such holder's duly authorized attorney and an amount sufficient to pay any
transfer or similar tax (or evidence reasonably satisfactory to the Trust
demonstrating that such taxes have been paid).
Holders of Series A Preferred Shares at the close of business on a
dividend payment record date shall be entitled to receive the dividend payable
on such shares on the corresponding Dividend Payment Date notwithstanding the
conversion thereof following such dividend payment record date and prior to
such Dividend Payment Date. However, Series A Preferred Shares surrendered for
conversion during the period between the close of business on any dividend
payment record date and the opening of business on the corresponding Dividend
Payment Date (except shares converted after the issuance of notice of
redemption with respect to a Call Date during such period, such Series A
Preferred Shares being entitled to such dividend on the Dividend Payment Date)
must be accompanied by payment of an amount equal to the dividend payable on
such shares on such Dividend Payment Date. A holder of Series A Preferred
Shares on a dividend payment record date who (or whose transferee) tenders any
such shares for conversion into Common Shares
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on such Dividend Payment Date will receive the dividend payable by the Trust on
such Series A Preferred Shares on such date, and the converting holder need not
include payment of the amount of such dividend upon surrender of Series A
Preferred Shares for conversion. Except as provided above, the Trust shall
make no payment or allowance for unpaid dividends, whether or not in arrears,
on converted shares or for dividends on the Common Shares issued upon such
conversion.
As promptly as practicable after the surrender of certificates for
Series A Preferred Shares as aforesaid, the Trust shall issue and shall deliver
at such office to such holder, or send on such holder's written order, a
certificate or certificates for the number of full Common Shares issuable upon
the conversion of such Series A Preferred Shares in accordance with provisions
of this Section 7, and any fractional interest in respect of a Common Share
arising upon such conversion shall be settled as provided in paragraph (c) of
this Section 7.
Each conversion shall be deemed to have been effected immediately
prior to the close of business on the date on which the certificates for Series
A Preferred Shares shall have been surrendered and such notice received by the
Trust as aforesaid, and the person or persons in whose name or names any
certificate or certificates for Common Shares shall be issuable upon such
conversion shall be deemed to have become the holder or holders of record of
the shares represented thereby at such time on such date and such conversion
shall be at the Conversion Price in effect at such time on such date unless the
share transfer books of the Trust shall be closed on that date, in which event
such person or persons shall be deemed to have become such holder or holders of
record at the close of business on the next succeeding day on which such
transfer books are open, but such conversion shall be at the Conversion Price
in effect on the date on which such shares shall have been surrendered and such
notice received by the Trust.
7.3 No fractional Common Share or scrip representing
fractions of a Common Share shall be issued upon conversion of the Series A
Preferred Shares. Instead of any fractional interest in a Common Share that
would otherwise be deliverable upon the conversion of Series A Preferred
Shares, the Trust shall pay to the holder of such share an amount in cash based
upon the Current Market Price of the Common Shares on the Trading Day
immediately preceding the date of conversion. If more than one share shall be
surrendered for conversion at one time by the same holder, the number of full
Common Shares issuable upon conversion thereof shall be computed on the basis
of the aggregate number of Series A Preferred Shares so surrendered.
7.4 The Conversion Price shall be adjusted from time
to time as follows:
(i) If the Trust shall after the Issue Date (A)
pay a dividend or make a distribution on its capital shares of Common
Shares, (B) subdivide its outstanding Common Shares into a greater
number of shares, (C) combine its outstanding Common Shares into a
smaller number of shares or (D) issue any capital shares by
reclassification of its Common Shares, the Conversion Price in effect
at the opening of business on the day following the date fixed for the
determination of shareholders entitled to receive such dividend or
distribution or at the opening of business on the day following the
day on which such subdivision, combination or reclassification becomes
effective, as the case may be, shall be adjusted so that the holder of
any Series A Preferred Share thereafter surrendered for conversion
shall be entitled to receive the number of Common Shares (or fraction
of a Common Share) that such holder would have owned or have been
entitled to receive after the happening of any of the events described
above had such Series A Preferred Share been converted immediately
prior to the record date in the case of a dividend or distribution or
the effective date in the case of a subdivision, combination or
reclassification. An adjustment made pursuant to this paragraph
(d)(i) of this Section 7 shall become effective immediately after the
opening of business on the day next following the record date (except
as provided in paragraph (h) below) in the case of a dividend or
distribution and shall become effective immediately after the opening
of business on the day next following the effective date in the case
of a subdivision, combination or reclassification.
(ii) If the Trust shall issue after the Issue Date
rights, options or warrants to all holders of Common Shares entitling
them (for a period expiring within 45 days after the record date
described below in this paragraph (d)(ii) of this Section 7) to
subscribe for or purchase Common Shares at a price per share less than
the Fair Market Value per Common Share on the record date for the
determination of shareholders entitled to receive such rights or
warrants, then the Conversion Price in effect at the opening of
business on the day next following such record date shall be adjusted
to equal the price determined by multiplying (A) the Conversion Price
in effect immediately prior to the opening of business on the day
following the date fixed for such
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determination by (B) a fraction, the numerator of which shall be the
sum of (X) the number of Common Shares outstanding at the close of
business on the date fixed for such determination and (Y) the number
of shares that the aggregate proceeds to the Trust from the exercise
of such rights or warrants for Common Shares would purchase at such
Fair Market Value, and the denominator of which shall be the sum of
(XX) the number of Common Shares outstanding on the close of business
on the date fixed for such determination and (YY) the number of
additional Common Shares offered for subscription or purchase pursuant
to such rights or warrants. Such adjustment shall become effective
immediately after the opening of business on the day next following
such record date (except as provided in paragraph (h) below). In
determining whether any rights or warrants entitle the holders of
Common Shares to subscribe for or purchase Common Shares at less than
such Fair Market Value, there shall be taken into account any
consideration received by the Trust upon issuance and upon exercise of
such rights or warrants, the value of such consideration, if other
than cash, to be determined in good faith by the Trust Managers.
(iii) If the Trust shall distribute to all
holders of its Common Shares any capital shares of the Trust (other
than Common Shares) or evidence of its indebtedness or assets
(including cash, but excluding cash dividends and cash distributions
to the extent the same constitute Permitted Common Shares Cash
Distributions and cash dividends which result in a payment of an equal
cash dividend to the holders of the Series A Preferred Shares pursuant
to subparagraph (ii) of Section 3(a) hereof) or rights or warrants to
subscribe for or purchase any of its securities (excluding those
rights and warrants issued to all holders of Common Shares entitling
them for a period expiring within 45 days after the record date
referred to in paragraph (d) (ii) of this Section 7 above to subscribe
for or purchase Common Shares, which rights and warrants are referred
to in and treated under such paragraph (d)(ii) above) (any of the
foregoing being hereinafter in this paragraph (d)(iii) called the
"Distribution"), then in each such case the Conversion Price shall be
adjusted so that it shall equal the price determined by multiplying
(A) the Conversion Price in effect immediately prior to the close of
business on the date fixed for the determination of shareholders
entitled to receive such Distribution by (B) a fraction, the numerator
of which shall be the Fair Market Value per Common Share on the record
date mentioned below less the then fair market value (as determined by
the Board of Trust Managers, whose determination shall be conclusive
and described in a Board resolution), of the portion of the capital
shares or assets or evidences of indebtedness so distributed or of
such rights or warrants applicable to one Common Share, and the
denominator of which shall be the Fair Market Value per Common Share
on the record date mentioned below. Such adjustment shall become
effective immediately at the opening of business on the Business Day
next following (except as provided in paragraph (h) below) the record
date for the determination of shareholders entitled to receive such
Distribution. For the purposes of this paragraph (d)(iii), the
distribution of a right or warrant to subscribe or purchase any of the
Trust's securities, which is distributed not only to the holders of
the Common Shares on the date fixed for the determination of
shareholders entitled to such Distribution of such right or warrant,
but also is distributed with Common Shares delivered to a Person
converting Series A Preferred Shares after such determination date,
shall not require an adjustment of the Conversion Price pursuant to
this paragraph (d)(iii); provided that if on the date, if any, on
which a person converting Series A Preferred Shares such person would
no longer be entitled to receive such right or warrant with Common
Shares (other than as a result of the termination of all such right or
warrant), a distribution of such rights or warrants shall be deemed to
have occurred and the Conversion Price shall be adjusted as provided
in this paragraph (d)(iii) and such day shall be deemed to be "the
date fixed for the determination of the shareholders entitled to
receive such distribution" and "the record date" within the meaning of
the two preceding sentences.
(iv) No adjustment in the Conversion Price shall
be required unless such adjustment would require a cumulative increase
or decrease of at least 1% in such price; provided however, that any
adjustments that by reason of this paragraph (d)(iv) are not required
to be made shall be carried forward and taken into account in any
subsequent adjustment until made; and provided, further, that any
adjustment shall be required and made in accordance with the
provisions of this Section 7 (other than this paragraph (d)(iv)) not
later than such time as may be required in order to preserve the
tax-free nature of a distribution to the holders of Common Shares.
Notwithstanding any other provisions of this Section 7, the Trust
shall not be required to make any adjustment of the Conversion Price
for the issuance of any Common Shares pursuant to any plan providing
for the reinvestment of dividends or interest payable on securities of
the Trust and the investment of additional optional amounts in Common
Shares under such plan. All calculations under this Section 7 shall
be made to the nearest cent (with $.005 being rounded upward) or to
the nearest one-tenth of a share (with .05 of
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a share being rounded upward), as the case may be. Anything in this
paragraph (d) of this Section 7 to the contrary notwithstanding, the
Trust shall be entitled, to the extent permitted by law, to make such
reductions in the Conversion Price, in addition to those required by
this paragraph (d), as it in its discretion shall determine to be
advisable in order that any Shares dividends, subdivision of shares,
reclassification or combination of shares, distribution of rights or
warrants to purchase Shares or securities, or a distribution of other
assets (other than cash dividends) hereafter made by the Trust to its
shareholders shall not be taxable, or if that is not possible, to
diminish any income taxes that are otherwise payable because of such
event.
7.5 If the Trust shall be a party to any transaction
(including without limitation a merger, consolidation, statutory share
exchange, issuer or self tender offer for all or a substantial portion of the
Common Shares outstanding, sale of all or substantially all of the Trust's
assets or recapitalization of the Common Shares, but excluding any transaction
as to which paragraph (d)(i) of this Section 7 applies) (each of the foregoing
being referred to herein as a "Transaction"), in each case as a result of which
Common Shares shall be converted into the right to receive Shares, securities
or other property (including cash or any combination thereof), each Series A
Preferred Share which is not converted into the right to receive Shares,
securities or other property in connection with such Transaction shall
thereupon be convertible into the kind and amount of shares, securities and
other property (including cash or any combination thereof) receivable upon such
consummation by a holder of that number of Common Shares into which one Series
A Preferred Share was convertible immediately prior to such Transaction,
assuming such holder of Common Shares (i) is not a Person with which the Trust
consolidated or into which the Trust merged or which merged into the Trust or
to which such sale or transfer was made, as the case may be ("Constituent
Person"), or an affiliate of a Constituent Person and (ii) failed to exercise
such holder's rights of election, if any, as to the kind or amount of Shares,
securities and other property (including cash) receivable upon such Transaction
provided that if the kind or amount of Shares, securities and other property
(including cash) receivable upon such Transaction is not the same for each
Common Share of the Trust held immediately prior to such Transaction by other
than a Constituent Person or an affiliate thereof and in respect of which such
rights of election shall not have been exercised ("Non-Electing Share"), then
for the purpose of this paragraph (e) the kind and amount of Shares, securities
and other property (including cash) receivable upon such Transaction by each
Non-Electing Share shall be deemed to be the kind and amount so receivable per
share by a plurality of the Non-Electing Shares). The Trust shall not be a
party to any Transaction unless the terms of such Transaction are consistent
with the provisions of this paragraph (e), and it shall not consent or agree to
the occurrence of any Transaction until the Trust has entered into an agreement
with the successor or purchasing entity, as the case may be, for the benefit of
the holders of the Series A Preferred Shares that will contain provisions
enabling the holders of the Series A Preferred Shares that remain outstanding
after such Transaction to convert into the consideration received by holders of
Common Shares at the Conversion Price in effect immediately prior to such
Transaction. The provisions of this paragraph (e) shall similarly apply to
successive Transactions.
7.6 If:
(i) the Trust shall declare a dividend (or any
other distribution) on the Common Shares (other than cash dividends
and cash distributions to the extent the same constitute Permitted
Common Shares Cash Distributions); or
(ii) the Trust shall authorize the granting to the
holders of the Common Shares of rights or warrants to subscribe for or
purchase any shares of any class or series of capital shares or any
other rights or warrants; or
(iii) there shall be any reclassification
of the Common Shares or any consolidation or merger to which the Trust
is a party and for which approval of any shareholders of the Trust is
required, or a statutory share exchange, or an issuer or self tender
offer by the Trust for all or a substantial portion of its outstanding
Common Shares (or an amendment thereto changing the maximum number of
shares sought or the amount or type of consideration being offered
therefor) or the sale or transfer of all or substantially all of the
assets of the Trust as an entirety; or
(iv) there shall occur the voluntary or
involuntary liquidation, dissolution or winding up of the Trust,
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then the Trust shall cause to be filed with the Transfer Agent and shall cause
to be mailed to each holder of Series A Preferred Shares at such holder's
address as shown on the records of the Trust, as promptly as possible, but at
least 15 days prior to the applicable date hereinafter specified, a notice
stating (A) the record date for the payment of such dividend, distribution or
rights or warrants, or, if a record date is not established, the date as of
which the holders of Common Shares of record to be entitled to such dividend,
distribution or rights or warrants are to be determined or (B) the date on
which such reclassification, consolidation, merger, statutory share exchange,
sale, transfer, liquidation, dissolution or winding up is expected to become
effective, and the date as of which it is expected that holders of Common
Shares of record shall be entitled to exchange their Common Shares for
securities or other property, if any, deliverable upon such reclassification,
consolidation, merger, statutory share exchange, sale, transfer, liquidation,
dissolution or winding up or (C) the date on which such tender offer commenced,
the date on which such tender offer is scheduled to expire unless extended, the
consideration offered and the other material terms thereof (or the material
terms of any amendment thereto). Failure to give or receive such notice or any
defect therein shall not affect the legality or validity of the proceedings
described in this Section 7.
7.7 Whenever the Conversion Price is adjusted as
herein provided, the Trust shall promptly file with the Transfer Agent an
officer's certificate setting forth the Conversion Price after such adjustment
and setting forth a brief statement of the facts requiring such adjustment
which certificate shall be conclusive evidence of the correctness of such
adjustment absent manifest error. Promptly after delivery of such certificate,
the Trust shall prepare a notice of such adjustment of the Conversion Price
setting forth the adjusted Conversion Price and the effective date such
adjustment becomes effective and shall mail such notice of such adjustment of
the Conversion Price to each holder of Series A Preferred Shares at such
holder's last address as shown on the Shares records of the Trust.
7.8 In any case in which paragraph (d) of this Section
7 provides that an adjustment shall become effective on the day next following
the record date for an event, the Trust may defer until the occurrence of such
event (A) issuing to the holder of any Series A Preferred Share converted after
such record date and before the occurrence of such event the additional Common
Shares issuable upon such conversion by reason of the adjustment required by
such event over and above the Common Shares issuable upon such conversion
before giving effect to such adjustment and (B) paying to such holder any
amount of cash in lieu of any fraction pursuant to paragraph (c) of this
Section 7.
7.9 There shall be no adjustment of the Conversion
Price in case of the issuance of any capital shares of the Trust in a
reorganization, acquisition or other similar transaction except as specifically
set forth in this Section 7. If any action or transaction would require
adjustment of the Conversion Price pursuant to more than one paragraph of this
Section 7, only one adjustment shall be made and such adjustment shall be the
amount of adjustment that has the highest absolute value.
7.10 If the Trust shall take any action affecting the
Common Shares, other than action described in this Section 7, that in the
opinion of the Trust Managers would materially adversely affect the conversion
rights of the holders of Series A Preferred Shares, the Conversion Price for
the Series A Preferred Shares may be adjusted, to the extent permitted by law,
in such manner, if any, and at such time as the Trust Managers, in its sole
discretion, may determine to be equitable under the circumstances.
7.11 The Trust shall at all times reserve and keep
available, free from preemptive rights, out of the aggregate of its authorized
but unissued Common Shares solely for the purpose of effecting conversion of
the Series A Preferred Shares, the full number of Common Shares deliverable
upon the conversion of all outstanding Series A Preferred Shares not
theretofore converted into Common Shares. For purposes of this paragraph (k),
the number of Common Shares that shall be deliverable upon the conversion of
all outstanding Series A Preferred Shares shall be computed as if at the time
of computation all such outstanding shares were held by a single holder.
The Trust covenants that any Common Shares issued upon conversion of
the Series A Preferred Shares shall be validly issued, fully paid and
non-assessable.
The Trust shall use its best efforts to list the Common Shares
required to be delivered upon conversion of the Series A Preferred Shares,
prior to such delivery, upon each national securities exchange, if any, upon
which the outstanding Common Shares are listed at the time of such delivery.
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The Trust shall take any action necessary to ensure that any Common
Shares issued upon conversion of Series A Preferred Shares are freely
transferable and not subject to any resale restrictions under the Act, or any
applicable state securities or blue sky laws (other than any Common Share held
by an "affiliate" (as defined in Rule 144 under the Act)).
7.12 The Trust will pay any and all documentary stamp
or similar issue or transfer taxes payable in respect of the issue or delivery
of Common Shares or other securities or property on conversion or redemption of
Series A Preferred Shares pursuant hereto; provided, however, that the Trust
shall not be required to pay any tax that may be payable in respect of any
transfer involved in the issue or delivery of Common Shares or other securities
or property in a name other than that of the holder of the Series A Preferred
Shares to be converted or redeemed, and no such issue or delivery shall be made
unless and until the person requesting such issue or delivery has paid to the
Trust the amount of any such tax or established, to the reasonable satisfaction
of the Trust, that such tax has been paid.
Section VIII Ranking. Any class or series of capital shares of
the Trust shall be deemed to rank:
8.1 prior or senior to the Series A Preferred Shares,
as to the payment of dividends and as to distribution of assets upon
liquidation, dissolution or winding up, if the holders of such class or series
shall be entitled to the receipt of dividends or of amounts distributable upon
liquidation, dissolution or winding up, as the case may be, in preference or
priority to the holders of Series A Preferred Shares;
8.2 on a parity with the Series A Preferred Shares, as
to the payment of dividends and as to distribution of assets upon liquidation,
dissolution or winding up, whether or not the dividend rates, dividend payment
dates or redemption or liquidation prices per share thereof be different from
those of the Series A Preferred Shares, if the holders of such class of Shares
or series and the Series A Preferred Shares shall be entitled to the receipt of
dividends and of amounts distributable upon liquidation, dissolution or winding
up in proportion to their respective amounts of accrued and unpaid dividends
per share or liquidation preferences, without preference or priority one over
the other ("Parity Shares"); and
8.3 junior to the Series A Preferred Shares, as to the
payment of dividends or as to the distribution of assets upon liquidation,
dissolution or winding up, if such Shares or series shall be Common Shares or
if the holders of Series A Preferred Shares shall be entitled to receipt of
dividends or of amounts distributable upon liquidation, dissolution or winding
up, as the case may be, in preference or priority to the holders of shares of
such class or series ("Junior Shares").
Section IX Voting.
9.1 If and whenever six quarterly dividends (whether
or not consecutive) payable on the Series A Preferred Shares or any series or
class of Parity Shares shall be in arrears (which shall, with respect to any
such quarterly dividend, mean that any such dividend has not been paid in
full), whether or not earned or declared, the number of managers then
constituting the Board of Trust Managers shall be increased by two (if not
already increased by reason of a similar arrearage with respect to any Parity
Shares) and the holders of Series A Preferred Shares, together with the holders
of shares of every other series of Parity Shares (any other such series, the
"Voting Preferred Shares"), voting as a single class regardless of series,
shall be entitled to elect the two additional Trust Managers to serve on the
Board of Trust Managers at any annual meeting of shareholders or special
meeting held in place thereof, or at a special meeting of the holders of the
Series A Preferred Shares and the Voting Preferred Shares called as hereinafter
provided. Whenever all arrears in dividends on the Series A Preferred Shares
and the Voting Preferred Shares then outstanding shall have been paid and
dividends thereon for the current quarterly dividend period shall have been
paid or declared and set apart for payment, then the right of the holders of
the Series A Preferred Shares and the Voting Preferred Shares to elect such
additional two managers shall cease (but subject always to the same provision
for the vesting of such voting rights in the case of any similar future
arrearages in six quarterly dividends), and the terms of office of all persons
elected as trust managers by the holders of the Series A Preferred Shares and
the Voting Preferred Shares shall forthwith terminate and the number of the
Trust Managers shall be reduced accordingly. At any time after such voting
power shall have been so vested in the holders of Series A Preferred Shares and
the Voting Preferred Shares, the Secretary of the Trust may, and upon the
written request of any holder of Series A Preferred Shares (addressed to the
Secretary at the principal office of the Trust) shall, call a special meeting
of the holders of the Series A Preferred Shares and of the Voting Preferred
Shares for the election of the two trust managers to be elected by them as
herein provided, such call to be made by notice similar to that provided in the
Bylaws of the Trust for a special meeting of the shareholders or as required by
law. If any
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such special meeting required to be called as above provided shall not be
called by the Secretary within 20 days after receipt of any such request, then
any holder of Series A Preferred Shares may call such meeting, upon the notice
above provided, and for that purpose shall have access to the shareholder
records of the Trust. The trust managers elected at any such special meeting
shall hold office until the next annual meeting of the shareholders or special
meeting held in lieu thereof if such office shall not have previously
terminated as above provided. If any vacancy shall occur among the Trust
Managers elected by the holders of the Series A Preferred Shares and the Voting
Preferred Shares, a successor shall be elected by the Board of Trust Managers,
upon the nomination of the then-remaining Trust Manager elected by the holders
of the Series A Preferred Shares and the Voting Preferred Shares or the
successor of such remaining Trust Manager, to serve until the next annual
meeting of the shareholders or special meeting held in place thereof if such
office shall not have previously terminated as provided above.
9.2 So long as any Series A Preferred Shares are
outstanding, in addition to any other vote or consent of shareholders required
by law or by the Amended and Restated Declaration of Trust, as amended, the
affirmative vote of at least 66 2/3% of the votes entitled to be cast by the
holders of the Series A Preferred Shares and the Voting Preferred Shares, at
the time outstanding, acting as a single class regardless of series, given in
person or by proxy, either in writing without a meeting or by vote at any
meeting called for the purpose, shall be necessary for effecting or validating:
(a) Any amendment, alteration or repeal of any of
the provisions of this amendment to the Amended and Restated
Declaration of Trust, the Amended and Restated Declaration of Trust or
the Bylaws of the Trust that materially adversely affects the voting
powers, rights or preferences of the holders of the Series A Preferred
Shares or the Voting Preferred Shares; provided, however, that the
amendment of the provisions of the Amended and Restated Declaration of
Trust so as to authorize or create, or to increase the authorized
amount of, any Junior Shares or any shares of any class ranking on a
parity with the Series A Preferred Shares or the Voting Preferred
Shares shall not be deemed to materially adversely affect the voting
powers, rights or preferences of the holders of Series A Preferred
Shares, and provided further, that if any such amendment, alteration
or repeal would materially adversely affect any voting powers, rights
or preferences of the Series A Preferred Shares or another series of
Voting Preferred Shares that are not enjoyed by some or all of the
other series which otherwise would be entitled to vote in accordance
herewith, the affirmative vote of at least 66 2/3% of the votes
entitled to be cast by the holders of all series similarly affected,
similarly given, shall be required in lieu of the affirmative vote of
at least 66 2/3% of the votes entitled to be cast by the holders of
the Series A Preferred Shares and the Voting Preferred Shares which
otherwise would be entitled to vote in accordance herewith; or
(b) The authorization or creation of, or the
increase in the authorized amount of, any shares of any class or any
security convertible into shares of any class ranking prior or senior
to the Series A Preferred Shares in the distribution of assets on any
liquidation, dissolution or winding up of the Trust or in the payment
of dividends; provided, however that no such vote of the holders of
Series A Preferred Shares shall be required if, at or prior to the
time when such amendment, alteration or repeal is to take effect, or
when the issuance of any such prior shares or convertible security is
to be made, as the case may be, provision is made for the redemption
of all Series A Preferred Shares at the time outstanding.
For purposes of the foregoing provisions of this Section 9, each
Series A Preferred Share shall have one vote per share, except that when any
other series of preferred Shares shall have the right to vote with the Series A
Preferred Shares as a single class on any matter, then the Series A Preferred
Shares and such other series shall have with respect to such matters one vote
per $25.00 of stated liquidation preference. Except as otherwise required by
applicable law or as set forth herein, the Series A Preferred Shares shall not
have any relative, participating, optional or other special voting rights and
powers other than as set forth herein, and the consent of the holders thereof
shall not be required for the taking of any corporate action.
Section X Record Holders. The Trust and the Transfer Agent may
deem and treat the record holder of any Series A Preferred Share as the true
and lawful owner thereof for all purposes, and neither the Trust nor the
Transfer Agent shall be affected by any notice to the contrary.
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ANNEX III
December 15, 1997
Board of Trust Managers
Camden Property Trust
3200 Southwest Freeway
Suite 1500
Houston, TX 77027
Dear Sirs:
You have requested our opinion as to the fairness from a financial
point of view to Camden Property Trust (the "Company") of the consideration to
be paid by the Company pursuant to the terms of the Agreement and Plan of
Merger, to be dated December 16, 1997 (the "Agreement"), by and among the
Company, Camden Subsidiary II, Inc. ("Camden Sub"), a wholly owned subsidiary
of the Company, and Oasis Residential, Inc. ("Oasis"), pursuant to which Oasis
will be merged (the "Merger") with and into Camden Sub.
Pursuant to the Agreement, (a) each share of common stock, par value
$.01 per share, of Oasis (the "Oasis Common Stock") will be converted into the
right to receive 0.759 (the "Common Share Exchange Ratio") of a common share of
beneficial interest, par value $.01 per share, of the Company (the "Company
Common Shares"), and (b) each share of Series A Cumulative Convertible
Preferred Stock, par value $.01 per share, of Oasis (the "Oasis Preferred
Stock") will be converted into the right to receive one (the "Preferred Share
Exchange Ratio" and, together with the Common Share Exchange Ratio, the
"Exchange Ratios") Series A Cumulative Convertible Preferred Share, par value
$.01 per share, of the Company (the "Company Preferred Share").
In arriving at our opinion, we have reviewed the drafts dated December
13, 1997 of the Agreement, the Company Voting Agreement, the Camden Voting
Agreement and the Option Agreement (as such latter agreements are defined in
the Agreement). We also have reviewed financial and other information that was
publicly available or furnished to us by the Company and Oasis including
information provided during discussions with their respective managements.
Included in the information provided during discussions with the respective
managements were certain financial projections of Oasis prepared by the
management of Oasis and adjusted by the management of the Company and certain
financial projections of the Company prepared by the management of the Company.
In addition, we have compared certain financial and securities data of the
Company and Oasis with various other companies whose securities are traded in
public markets, reviewed the historical stock prices and trading volumes of the
Company Common Shares and the Oasis Common Stock, reviewed prices and premiums
paid in certain other business combinations and conducted such other financial
studies, analyses and investigations as we deemed appropriate for purposes of
this opinion.
In rendering our opinion, we have relied upon and assumed the accuracy
and completeness of all of the financial and other information that was
available to us from public sources, that was provided to us by the Company and
Oasis or their respective representatives, or that was otherwise reviewed by
us. In particular, we have relied upon the estimates of the management of the
Company of the operating synergies achievable as a result of the Merger and
upon our discussions of such synergies with the management of Oasis. With
respect to the financial projections supplied to us, we have assumed that they
have been reasonably prepared on the basis reflecting the best currently
available estimates and judgments of the managements of the Company and Oasis
as to the future operating and financial performance of the Company and Oasis;
and we have assumed that the modifications made by the Company to Oasis's
financial projections were reasonably made on bases reflecting the best
currently available estimates and judgements of the Company's management as to
the future operating and financial performance of Oasis. We have not assumed
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any responsibility for making any independent evaluation of any assets or
liabilities or for making any independent verification of any of the
information reviewed by us. We have relied as to certain legal matters on
advice of counsel to the Company.
Our opinion is necessarily based on economic, market, financial and
other conditions as they exist on, and on the information made available to us
as of, the date of this letter. It should be understood that, although
subsequent developments may affect this opinion, we do not have any obligation
to update, revise or reaffirm this opinion. We are expressing no opinion
herein as to the prices at which the Company Common Shares or the Company
Preferred Shares will actually trade at any time. Our opinion does not address
the relative merits of the Merger and the other business strategies being
considered by the Company's Board of Trust Managers, nor does it address the
Board's decision to proceed with the Merger. Our opinion does not constitute a
recommendation to any shareholder as to how such shareholder should vote on the
proposed transaction.
Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"), as part
of its investment banking services, is regularly engaged in the valuation of
businesses and securities in connection with mergers, acquisitions,
underwrites, sales and distributions of listed and unlisted securities, private
placements and valuations for corporate and other purposes. We have provided
financial advisory services to, and acted as an underwriter for, the Company in
the past and may do so in the future. Specifically, we acted as lead
underwriter for the Company's 4.2 million common share offering in July, 1997
for which we received usual and customary fees. We have also provided
investment banking services to Oasis in the past.
Based upon the foregoing and such other factors as we deem relevant,
we are of the opinion that the Exchange Ratios were fair to the Company and
the holders of the Company Common Shares from a financial point of view.
Very truly yours,
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: /s/ Michael S. Dana
----------------------------
Michael S. Dana
Managing Director
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ANNEX IV
December 16, 1997
Board of Directors
Oasis Residential, Inc.
4041 East Sunset Road
Henderson, Nevada 89014
Members of the Board of Directors:
Camden Property Trust (the "Acquiror"), Camden Subsidiary II, Inc.
("Carlos"), a wholly owned subsidiary of the Acquiror, and Oasis Residential,
Inc. (the "Company") propose to enter into an Agreement and Plan of Merger,
dated as of December 16, 1997 (the "Agreement") pursuant to which the Company
will be merged with and into Carlos (a qualified Real Estate Investment Trust
("REIT") subsidiary) in a transaction (the "Transaction) in which each issued
and outstanding share of Company common stock, par value $.01 per share (the
"Company Shares") will be converted into the right to receive .759 shares (the
"Exchange Ratio") of Acquiror common stock, par value $.01 per share (the
"Acquiror Shares").
You have asked us whether in our opinion, the Exchange Ratio is fair
from a financial point of view to the Company.
In arriving at the opinion set forth below, we have, among other
things:
(1) Reviewed certain publicly available business and financial
information relating to the Acquiror and the Company which we
deemed to be relevant;
(2) Reviewed certain information, including financial forecasts,
relating to the business, earnings, funds from operations,
adjusted funds from operations, cash flow, assets, liabilities
and prospects of the Acquiror and the Company furnished to us by
the Acquiror and the Company, as well as the amount and timing of
the cost savings and related expenses and synergies expected to
result from the Transaction (the "Expected Synergies") furnished
to us by the Acquiror and the Company;
(3) Conducted discussions with members of senior management of the
Acquiror and the Company concerning the matters described in
clauses (1) and (2) above, as well as their respective businesses
and prospects before and after giving effect to the Transaction
and the Expected Synergies;
(4) Reviewed the market prices and valuation multiples for the
Acquiror Shares and the Company Shares and compared them with
those of certain publicly traded companies that we deemed
relevant;
(5) Reviewed the results of operations of the Acquiror and the Company
and compared them with those of certain publicly traded companies
that we deemed to be relevant;
(6) Compared the proposed financial terms of the Transaction with the
financial terms of certain other transactions which we deemed to
be relevant;
(7) Participated in certain discussions and negotiations among
representatives of the Acquiror and the Company and their
financial and legal advisors;
(8) Reviewed the potential pro forma impact of the Transaction;
(9) Reviewed a draft dated December 14, 1997 of the Agreement; and
(10) Reviewed such other financial studies and analyses and took into
account such other matters as we deemed necessary, including our
assessment of general economic, market and monetary conditions.
<PAGE> 173
Board of Directors
Oasis Residential, Inc.
December 16, 1997
Page 2
In preparing our opinion, we have assumed and relied on the accuracy
and completeness of all information supplied or otherwise made available to us,
discussed with or reviewed by or for us, or publicly available, and we have not
assumed any responsibility for independently verifying such information or
undertaken an independent evaluation or appraisal of any of the assets or
liabilities of the Acquiror or the Company or been furnished with any such
evaluation or appraisal. In addition, we have not assumed any obligation to
conduct any physical inspection of the properties or facilities of the Acquiror
or the Company. With respect to the financial forecast information and the
Expected Synergies furnished to or discussed with us by the Acquiror or the
Company, we have assumed that they have been reasonably prepared and reflect the
best currently available estimates and judgment of the Acquiror's or Company's
management as to the expected future financial performance of the Acquiror or
the Company, as the case may be, and the Expected Synergies. We have further
assumed that the Transaction will qualify as a tax-free reorganization for
United States federal income tax purposes. We have also assumed that the final
form of the Agreement will be substantially similar to the last draft thereof
reviewed by us.
Our opinion is necessarily based upon market, economic and other
conditions as they exist and can be evaluated on, and on the information made
available to us as of, the date hereof. We have assumed that in the course of
obtaining the necessary regulatory or other consents or approvals (contractual
or otherwise) for the Transaction, no restrictions, including any divestiture
requirements or amendment or modifications, will be imposed that will have a
material adverse effect on the contemplated benefits of the Transaction. We have
also assumed that the Transaction will not change the REIT status of the pro
forma entity.
We are acting as financial advisor to the Company in connection with
the Transaction and will receive a fee from the Company for our services, a
significant portion of which is contingent upon the consummation of the
Transaction. In addition, the Company has agreed to indemnify us for certain
liabilities arising out of our engagement. We have, in the past, provided
financial advisory services to the Company and the Acquiror and may continue to
do so and have received, and may receive, fees for the rending of such services.
In addition, in the ordinary course of our business, we may actively trade the
securities of the Company or the Acquiror, for our own account and for the
accounts of customers and, accordingly, may at any time hold a long or short
position in such securities.
This opinion is for the use and benefit of the Board of Directors of
the Company. Our opinion does not address the merits of the underlying decision
by the Company to engage in the Transaction and does not constitute a
recommendation to any shareholder of the Company as to how such shareholder
should vote on the proposed merger.
We are not expressing any opinion herein as to the prices at which the
shares of the Acquiror's common stock will trade following the announcement or
consummation of the Transaction.
On the basis of and subject to the foregoing, we are of the opinion
that, as of the date hereof, the Exchange Ratio is fair from a financial point
of view to the Company.
Very truly yours,
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
<PAGE> 174
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF OFFICERS AND DIRECTORS
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 Amended and Restated Declaration of Trust of Camden
Property Trust ("Camden") provides that Camden shall indemnify officers and
trust managers, as set forth below:
(a) Camden shall indemnify, to the fullest extent that
indemnification is permitted by Texas law in accordance with Camden's
Bylaws, every person who is or was a trust manager or officer of Camden
or its corporate predecessor and any person who is or was serving at
the request of Camden or its corporate predecessor as a director,
officer, partner, venturer, proprietor, trustee, employee, agent or
similar functionary of another real estate investment trust, foreign or
domestic corporation, partnership, joint venture, sole proprietorship,
trust, employee benefit plan or other enterprise with respect to all
reasonable 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 as well as against all
judgements, penalties, fines and amounts paid in settlement.
(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, Camden 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 Camden or its
corporate predecessor and any person who is or was serving at the
request of Camden or its corporate predecessor as a director, officer,
partner, venturer, proprietor, trustee, employee, agent or similar
functionary of another real estate investment trust, 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.
II-1
<PAGE> 175
The Second Amended and Restated Bylaws of Camden provide that Camden
may indemnify any trust manager or officer of Camden 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 Camden, or is or was serving
at the request of Camden 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
Camden, and that, in all other cases, his conduct was at least not opposed to
the best interests of Camden, 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 Camden, 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 Camden.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
EXHIBIT NO. DESCRIPTION
- ----------- -----------
2.1 Agreement and Plan of Merger (the "Merger Agreement"), dated
December 16, 1997, by and among Camden Property Trust ("Camden"),
Camden Subsidiary II, Inc. and Oasis Residential, Inc. (attached
as Annex I to the Joint Proxy Statement/Prospectus included in
Part I of this Registration Statement and incorporated by
reference herein). The form of Affiliate Letter, which is an
Exhibit to the Merger Agreement, is included as a separate
Exhibit to this Registration Statement (see Exhibit 10.1).
Pursuant to Item 601(b)(2) of Regulation S-K, the Schedules to
the Merger Agreement are omitted. A list briefly identifying the
contents of all omitted Schedules is incorporated by reference to
pages iii-iv of the Merger Agreement. The Registrant hereby
undertakes to furnish supplementally a copy of any omitted
Schedule to the Commission upon request.
2.2 Amendment No. 1 to Agreement and Plan of Merger, dated as of
February 4, 1998, by and among Camden Property Trust, Camden
Subsidiary II, Inc. and Oasis Residential, Inc. (filed as Exhibit
2.1 to Camden's Current Report in Form 8-K (File No. 1-12110)
filed on February 5, 1998 and incorporated by referenced herein)
3.1 Amended and Restated Declaration of Trust of Camden (filed as
Exhibit 3.1 to Camden's Annual Report on Form 10-K for the
year ended December 31, 1993 (File No. 1-12110), and
incorporated by reference herein)
3.2 Second Amended and Restated Bylaws of Camden (filed as Exhibit
3.1 to Camden's Annual Report on Form 10-K for the year ended
December 31, 1997 (File No. 1-12110) and incorporated by
reference herein)
4.1 Form of Statement of Designation, Preferences and Rights of
Series A Cumulative Convertible Preferred Shares
of Beneficial Interest (attached as Annex II to the Joint Proxy
Statement/Prospectus of this Registration Statement and
incorporated by reference herein)
4.2 Specimen certificate for Camden Common Shares (filed as Exhibit
4.1 to Camden's Registration Statement on Form S-11 filed on
September 15, 1993 (File No. 33-68736), and incorporated by
reference herein)
*4.3 Specimen certificate for Camden Series A Cumulative Convertible
Shares of Beneficial Interest
*5 Form of Opinion of Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P.
**8.1 Form of Opinion of Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P.
regarding Merger
**8.2 Form of Opinion of Latham & Watkins regarding Merger
**8.3 Form of Opinion of Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P.
regarding REIT status
**8.4 Form of Opinion of Latham & Watkins regarding REIT status
*10.1 Form of Affiliate Letter
10.2 Company Voting Agreement, dated December 16, 1997, between Camden
Property Trust and certain stockholders of Oasis Residential,
Inc. (filed as Exhibit 99.2 to Camden's Current Report on Form
8-K (File No. 1-12110) filed on December 17, 1997 and
incorporated by reference herein)
10.3 Camden Voting Agreement, dated December 16, 1997, between Oasis
Residential, Inc. and certain shareholders of Camden Property
Trust (filed as Exhibit 99.3 to Camden's Current Report on Form
8-K (File No. 1-12110) filed on December 17, 1997 and
incorporated by reference herein)
**10.4 Form of Consulting Agreement between Camden Property Trust and
Scott S. Ingraham
**10.5 Form of Consulting Agreement between Camden Property Trust and
Allan D. Hunter
II-2
<PAGE> 176
**10.6 Form of Consulting Agreement between Camden Property Trust and
Walter B. Eeds
*21.1 List of Subsidiaries
*23.1 Consent of Deloitte & Touche LLP
*23.2 Consent of Coopers & Lybrand L.L.P.
23.3 Consent of Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P. (included
in Exhibits 5, 8.1 and 8.3 hereto)
23.4 Consent of Latham & Watkins (included in Exhibit 8.2 and 8.4
hereto)
*23.5 Consent of Donaldson, Lufkin & Jenrette Securities Corporation
*23.6 Consent of Merrill Lynch & Co.
24 Powers of Attorney (included on signature page)
*27.1 Financial Data Schedule
*99.1 Form of proxy solicited by the Board of Trust Managers of Camden
Property Trust
*99.2 Form of proxy solicited by the Board of Directors of Oasis
Residential, Inc.
*99.3 Consent of Scott S. Ingraham
- --------------
* Filed herewith.
** To be filed by amendment.
(b) Financial Statement Schedules
Included in documents incorporated by reference
(c) Item 4(b) Information
The opinions of Donaldson, Lufkin & Jenrette Securities
Corporation and Merrill Lynch & Co. are included as Annex III
and Annex IV, respectively, to the Joint Proxy
Statement/Prospectus included in this Registration Statement.
ITEM 22. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes as follows:
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;
(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. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high and of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in
the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective 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.
2. That, for the purpose of determining any liability under the
Securities Act of 1933, 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.
II-3
<PAGE> 177
4. That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the registrant's annual report pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to Section
15(d) of the Securities Exchange Act of 1934) 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.
5. That prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this registration
statement, by any person or party who is deemed to be an underwriter within the
meaning of Rule 145(c), the issuer undertakes that such reoffering prospectus
will contain the information called for by the applicable registration form with
respect to reofferings by persons who may be deemed underwriters, in addition to
the information called for by the other items of the applicable form.
6. That every prospectus (i) that is filed pursuant to paragraph (5)
immediately preceding, or (ii) that purports to meet the requirements of Section
10(a)(3) of the Act and is used in connection with an offering of securities
subject to Rule 415, will be filed as part of an amendment to the registration
statement and will not be used until such amendment is effective, and that, for
purposes of determining any liability under the Securities Act of 1933, 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.
7. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, 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 Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, 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.
(b) The undersigned registrant hereby undertakes to respond to requests
for information that is incorporated by reference into the prospectus pursuant
to Items 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first-class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
(c) The undersigned registrant hereby undertakes to supply by means of
a post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-4
<PAGE> 178
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant 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 5th day of February, 1998.
CAMDEN PROPERTY TRUST
By: /s/ Richard J. Campo
-------------------------------
Richard J. Campo
Chairman of the Board and
Chief Executive Officer
POWER OF ATTORNEY
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. Each of the undersigned officers and
directors of the registrant hereby constitutes Richard J. Campo, D. Keith Oden
and G. Steven Dawson, any of whom may act, his true and lawful attorneys-in-fact
with full power to sign for him and in his name in the capacities indicated
below and to file any and all amendments to the registration statement filed
herewith, making such changes in the registration statement as the registrant
deems appropriate, and generally to do all such things in his name and behalf in
his capacity as an officer and director to enable the registrant to comply with
the provisions of the Securities Act of 1933 and all requirements of the
Securities and Exchange Commission.
<TABLE>
<CAPTION>
SIGNATURE TITLE AND CAPACITY DATE
--------- ------------------ ----
<S> <C> <C>
/s/ Richard J. Campo Chairman of the Board of Trust February 5, 1998
- ---------------------------------------- Managers and Chief Executive
Richard J. Campo Officer (Principal Executive Officer)
/s/ D. Keith Oden February 5, 1998
- ---------------------------------------- President, Chief Operating Officer
D. Keith Oden and Trust Manager
/s/ G. Steven Dawson Senior Vice President-Finance, February 5, 1998
- ---------------------------------------- Chief Financial Officer, Treasurer
G. Steven Dawson and Assistant Secretary (Principal
Financial and Accounting Officer)
/s/ George A. Hrdlicka Trust Manager February 5, 1998
- ----------------------------------------
George A. Hrdlicka
/s/ F. Gardner Parker Trust Manager February 5, 1998
- ----------------------------------------
F. Gardner Parker
/s/ Steven A. Webster Trust Manager February 5, 1998
- ----------------------------------------
Steven A. Webster
/s/ William R. Cooper Trust Manager February 5, 1998
- ----------------------------------------
William R. Cooper
/s/ Lewis A. Levey Trust Manager February 5, 1998
- ----------------------------------------
Lewis A. Levey
</TABLE>
II-5
<PAGE> 179
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
2.1 Agreement and Plan of Merger (the "Merger Agreement"), dated
December 16, 1997, by and among Camden Property Trust ("Camden"),
Camden Subsidiary II, Inc. and Oasis Residential, Inc. (attached
as Annex I to the Joint Proxy Statement/Prospectus included in
Part I of this Registration Statement and incorporated by
reference herein). The form of Affiliate Letter, which is an
Exhibit to the Merger Agreement, is included as a separate
Exhibit to this Registration Statement (see Exhibit 10.1).
Pursuant to Item 601(b)(2) of Regulation S-K, the Schedules to
the Merger Agreement are omitted. A list briefly identifying the
contents of all omitted Schedules is incorporated by reference to
pages iii-iv of the Merger Agreement. The registrant hereby
undertakes to furnish supplementally a copy of any omitted
Schedule to the Commission upon request.
2.2 Amendment No. 1 to Agreement and Plan of Merger, dated as of
February 4, 1998, by and among Camden Property Trust, Camden
Subsidiary II, Inc. and Oasis Residential, Inc. (filed as Exhibit
2.1 to Camden's Current Report in Form 8-K (File No. 1-12110)
filed on February 5, 1998 and incorporated by referenced herein)
3.1 Amended and Restated Declaration of Trust of Camden (filed as
Exhibit 3.1 to Camden's Annual Report on Form 10-K for the year
ended December 31, 1993 (File No. 1-12110), and incorporated by
reference herein)
3.2 Second Amended and Restated Bylaws of Camden (filed as Exhibit
3.1 to Camden's Annual Report on Form 10-K for the year ended
December 31, 1997 (File No. 1-12110) and incorporated by
reference herein)
4.1 Form of Statement of Designation, Preferences and Rights of
Series A Cumulative Convertible Preferred Shares of Beneficial
Interest (attached as Annex II to the Joint Proxy
Statement/Prospectus of this Registration Statement and
incorporated by reference herein)
4.2 Specimen certificate for Camden Common Shares (filed as Exhibit
4.1 to Camden's Registration Statement on Form S-11 filed on
September 15, 1993 (File No. 33-68736), and incorporated by
reference herein)
*4.3 Specimen certificate for Camden Series A Cumulative Convertible
Shares of Beneficial Interest
*5 Form of Opinion of Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P.
**8.1 Form of Opinion of Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P.
regarding Merger
**8.2 Form of Opinion of Latham & Watkins regarding Merger
**8.3 Form of Opinion of Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P.
regarding REIT status
**8.4 Form of Opinion of Latham & Watkins regarding REIT status
*10.1 Form of Affiliate Letter
10.2 Company Voting Agreement, dated December 16, 1997, between Camden
Property Trust and certain stockholders of Oasis Residential,
Inc. (filed as Exhibit 99.2 to Camden's Current Report on Form
8-K (File No. 1-12110) filed on December 17, 1997 and
incorporated by reference herein)
10.3 Camden Voting Agreement, dated December 16, 1997, between Oasis
Residential, Inc. and certain shareholders of Camden Property
Trust (filed as Exhibit 99.3 to Camden's Current Report on Form
8-K (File No. 1-12110) filed on December 17, 1997 and
incorporated by reference herein)
**10.4 Form of Consulting Agreement between Camden Property Trust and
Scott S. Ingraham
**10.5 Form of Consulting Agreement between Camden Property Trust and
Allan D. Hunter
**10.6 Form of Consulting Agreement between Camden Property Trust and
Walter B. Eeds
*21.1 List of Subsidiaries
</TABLE>
<PAGE> 180
<TABLE>
<S> <C>
*23.1 Consent of Deloitte & Touche LLP
*23.2 Consent of Coopers & Lybrand L.L.P.
23.3 Consent of Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P. (included
in Exhibits 5, 8.1 and 8.3 hereto)
23.4 Consent of Latham & Watkins (included in Exhibit 8.2 and 8.4
hereto)
*23.5 Consent of Donaldson, Lufkin & Jenrette Securities Corporation
*23.6 Consent of Merrill Lynch & Co.
24 Powers of Attorney (included on signature page)
*27.1 Financial Data Schedule
*99.1 Form of proxy solicited by the Board of Trust Managers of Camden
Property Trust
*99.2 Form of proxy solicited by the Board of Directors of Oasis
Residential, Inc.
*99.3 Consent of Scott S. Ingraham
</TABLE>
- ---------
* Filed herewith.
** To be filed by amendment.
<PAGE> 1
EXHIBIT 4.3
FORM OF CERTIFICATE FOR SERIES A CUMULATIVE CONVERTIBLE
SHARES OF BENEFICIAL INTEREST
CAMDEN PROPERTY TRUST
A TEXAS REAL ESTATE INVESTMENT TRUST
Formed under the laws of the Par Value
State of Texas $.01 per share
CUSIP ____________
This certifies that
is the registered holder of
FULLY PAID AND NONASSESSABLE COMMON SHARES OF BENEFICIAL INTEREST OF
Camden Property Trust (the "Trust"), a real estate investment trust formed
pursuant to the laws of the State of Texas by Declaration of Trust made as of
May 21, 1993, as amended from time to time (the "Declaration of Trust"), a copy
of which may be obtained form the Trust upon written request. The provisions
of the Declaration of Trust are hereby incorporated in and made a part of this
certificate as fully as if set forth herein in their entirety to all of which
provisions the holder and every transferee or assignee hereof by accepting or
holding the same agrees to be bound. This certificate and the shares
represented hereby are negotiable and transferable on the books of the Trust by
the registered holder hereof in person or by attorney upon surrender of this
certificate properly endorsed or assigned. THIS certificate is issued by the
Trust Managers of Camden Property Trust, acting not individually but as Trust
Managers, and is not valid until countersigned and registered by a Transfer
Agent and Registrar.
Witness the facsimile signatures of the Trust's duly authorized
representatives.
Dated
Chairman of the Board Secretary
<PAGE> 2
[BACK]
CAMDEN PROPERTY TRUST
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE DECLARATION
OF TRUST, WHICH CONTAINS RESTRICTIONS ON OWNERSHIP AND TRANSFER FOR THE PURPOSE
OF THE TRUST'S MAINTENANCE OF ITS STATUS AS A REAL ESTATE INVESTMENT TRUST
UNDER THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"). EXCEPT AS
OTHERWISE PROVIDED PURSUANT TO THE DECLARATION OF TRUST OR BYLAWS NO PERSON MAY
(1) BENEFICIALLY OWN SHARES IN EXCESS OF 9.8% (OR SUCH OTHER PERCENTAGE AS MAY
BE PROVIDED IN THE BYLAWS OF THE TRUST) OF THE AGGREGATE VALUE OF ALL
OUTSTANDING SHARES, OR (2) BENEFICIALLY OWN SHARES THAT WOULD RESULT IN THE
TRUST BEING "CLOSELY HELD" UNDER THE CODE. IF THE RESTRICTIONS ON OWNERSHIP OR
TRANSFER ARE VIOLATED, THE SHARES REPRESENTED HEREBY WILL BE AUTOMATICALLY
CONVERTED INTO EXCESS SHARES, WHICH WILL BE HELD BY THE TRUST. THE TRUST HAS
THE OPTION TO REDEEM EXCESS SHARES UNDER CERTAIN CIRCUMSTANCES. A COPY OF THE
TRUST'S DECLARATION OF TRUST WILL BE SENT WITHOUT CHARGE TO EACH SHAREHOLDER
WHO SO REQUESTS.
THE TRUST WILL FURNISH TO ANY SHAREHOLDER UPON REQUEST, AND WITHOUT CHARGE, A
FULL STATEMENT OF THE VOTING POWERS, PREFERENCES, LIMITATIONS, RESTRICTIONS AND
RELATIVE RIGHTS OF EACH CLASS THE TRUST IS AUTHORIZED TO ISSUE.
The following abbreviations when used in the inscription In this
certificate, shall be construed as though they were written out in full
according to applicable laws or regulations.
<TABLE>
<S> <C>
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian under
TEN ENT - as tenants by the entireties ------- ------
and not as tenants in common (Cust) (Minor)
under Uniform Gifts to Minors
Act
--------------------
(State)
Additional abbreviations may also be used though not in the above list.
For value received __________________________________________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF NEW OWNER
- ----------------------------------------
- ----------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
__________________________________________Series A Cumulative Convertible Preferred Shares of Beneficial Interest
represented by the within Certificate, and do hereby irrevocable constitute and appoint_____________________________
Attorney to transfer the said shares on the books of the within-named Trust with full power of substitution in the
premises.
Dated
------------------
NOTICE: THE SIGNATURE(S) TO THIS ASSIGNMENT MUST CORRESPOND
WITH THE NAMES(S) AS WRITTEN UPON THE FACE OF THE CERTIFICATE --------------------------------------
IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR
ANY CHANGE WHATEVER. --------------------------------------
----------------------------------------------------
Signature(s) must be guaranteed by a commercial bank
or trust company or a member firm of a major stock
exchange
----------------------------------------------------
</TABLE>
<PAGE> 1
EXHIBIT 5
LIDDELL, SAPP, ZIVLEY, HILL & LABOON, L.L.P.
2001 ROSS AVENUE, SUITE 3000
DALLAS, TEXAS 75201
February 5, 1998
Camden Property Trust
3200 Southwest Freeway
Suite 1500
Houston, Texas 77027
Re: Camden Property Trust/Registration Statement on Form S-4
Gentlemen:
We have acted as securities counsel to Camden Property Trust, a Texas
real estate investment trust (the "Company"), in connection with the proposed
merger (the "Merger") of Oasis Residential, Inc. ("Oasis") with and into Camden
Merger Subsidiary II, Inc., a wholly owned subsidiary of the Company ("Camden
Sub"), pursuant to the Agreement and Plan of Merger, dated December 16, 1997,
by and among the Company, Camden Sub and Oasis, as amended by Amendment No. 1,
dated as of February 4, 1998 (such agreement, as amended, the "Merger
Agreement"). The Company has filed with the Securities and Exchange Commission
a registration statement on Form S-4 (the "Registration Statement") relating to
the Common Shares of Beneficial Interest of the Company, par value $.01 per
share (the "Common Shares"), and the Series A Cumulative Convertible Preferred
Shares of Beneficial Interest of the Company, par value $.01 per share (the
"Preferred Shares" and, together with the Common Shares, the "Shares"), to be
issued to stockholders of Oasis pursuant to the Merger Agreement.
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 Merger Agreement, 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.
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.
<PAGE> 2
Camden Property Trust
February 5, 1998
Page 2
Based upon the foregoing, and subject to the assumption,
qualifications and limitations hereinabove and hereinafter stated, it is our
opinion that the Shares have been duly authorized and, assuming (a) that the
Registration Statement shall have been declared effective by the Commission,
(b) the Company, Camden Sub and Oasis shall have either satisfied all
conditions to consummation of the Merger pursuant to the Merger Agreement or
such conditions shall have been lawfully waived, and (c) the Shares issuable
upon consummation of the Merger shall have been issued and delivered to the
stockholders of Oasis in accordance with the Merger Agreement, we are of the
opinion that the 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 headings "Legal
Opinions" and "The Merger Agreement--Conditions to Consummation of the Merger"
in the Joint Proxy Statement/Prospectus included in the Registration Statement,
and to the filing of this opinion as Exhibit 5 to the Registration Statement.
In giving this opinion, we do not admit that we are in the category of persons
whose consent is required under Section 7 of the Securities Act of 1933, as
amended, or the rules and regulations of the Securities and Exchange
Commission.
Very truly yours,
LIDDELL, SAPP, ZIVLEY, HILL & LaBOON, L.L.P.
<PAGE> 1
EXHIBIT 10.1
FORM OF AFFILIATE LETTER
[Date]
Camden Property Trust
3200 Southwest Freeway, Suite 1500
Houston, Texas 77027
Ladies and Gentlemen:
I understand that I may be deemed an "affiliate" of Oasis Residential,
Inc. (the "Company") within the meaning of Rule 145 ("Rule 145") promulgated
under the Securities Act of 1933, as amended (the "Securities Act"), although
nothing contained herein shall be construed as an admission of such status. As
a holder of shares of common stock, par value $.01 per share, of the Company
("Common Shares") and/or shares of Series A Cumulative Convertible Preferred
Stock, par value $.01 per share, of the Company ("Preferred Shares" and,
together with Common Shares, "Company Shares"), I am entitled to receive shares
of beneficial interest, $.01 per share ("Camden Common Shares"), of Camden
Properties Trust ("Camden") and/or shares of Series A Cumulative Convertible
Preferred Stock, par value $.01 per share, of Camden ("Camden Preferred Shares"
and, together with Camden Common Shares, "Camden Shares") in connection with
the merger of the Company and Camden Subsidiary II, Inc. ("Camden Sub")
pursuant to the terms of the Agreement and Plan of Merger, dated December 16,
1997, among Camden, Camden Sub and the Company (the "Merger").
With respect to the Company Shares and the Camden Shares, I hereby
agree as follows:
1. At and following the effective time of the Merger, I will not
offer to sell, sell or otherwise dispose of any Camden Shares except, in each
case, (i) in conformity with Rule 145, as amended from time to time, (ii)
pursuant to an effective registration statement under the Securities Act or
(iii) in a transaction that, in the opinion of counsel reasonably satisfactory
to Camden, is exempt from the registration requirements of the Securities Act.
2. In the event of a sale or other disposition of any Camden
Shares pursuant to Rule 145, I will supply Camden with evidence of compliance
with such Rule, in the form of a letter in the form of Exhibit I hereto, and an
opinion of counsel, reasonably satisfactory to Camden, indicating that any
proposed sale, transfer or other disposition of the Camden Shares is in
compliance with the Securities Act and the rules and regulations thereunder. I
understand that Camden may instruct its transfer agent to withhold the transfer
of any Camden Shares that I dispose of, but that upon receipt of such letter
the transfer agent shall effectuate the transfer of Camden Shares indicated as
transferred in such letter.
3. I acknowledge that appropriate legends will be placed on
certificates representing Camden Shares issued to the undersigned, which
legends will be removed by delivery of substitute certificates upon receipt of
an opinion in form and substance reasonably satisfactory to Camden to the
effect that such legends are no longer required for purposes of the Securities
Act.
4. I understand that exemptions to Rule 145 are limited. I have
obtained advice of counsel as to the nature and conditions of such exemptions,
including information with respect to the applicability of Rules 144, 144A and
145(d) promulgated under the Securities Act to the transfer of Camden Shares.
5. I acknowledge that I have carefully reviewed this letter and
understand the requirements hereof and the limitations imposed upon the sale,
transfer or other disposition of the Company Shares and the Camden Shares.
Very truly yours,
-----------------------
Name:
<PAGE> 2
EXHIBIT I
[date]
Camden Property Trust
3200 Southwest Freeway, Suite 1500
Houston, Texas 77027
Ladies and Gentlemen:
On ______________, I [sold/transferred/assigned] __ shares of [common
stock/Series A Cumulative Convertible Preferred Stock], par value $.01 per
share (the "Stock"), of Camden Properties Trust ("Camden"). The Stock was
received by me in connection with the merger of Oasis Residential, Inc. and a
subsidiary of Camden.
Based upon the most recent report or statement filed by Camden with
the Securities and Exchange Commission, the Stock [sold/transferred/assigned]
by me was within the prescribed limitations set forth in paragraph (e) of Rule
144 or Rule 144A promulgated under the Securities Act of 1933, as amended (the
"Securities Act").
I hereby represent that the Stock was [sold/transferred/assigned] in
"broker's transactions" within the meaning of Section 4(4) of the Securities
Act or in transactions directly with a "market maker" as that term is defined
in Section 3(a)(38) of the Securities Exchange Act of 1934, as amended. I
further represent that I have not solicited or arranged for the solicitation of
orders to buy the Stock, and that I have not made any payment in connection
with the offer or sale of the Stock to any person other than to the broker who
executed the order in respect of the sale.
Very truly yours,
<PAGE> 1
EXHIBIT 21.1
LIST OF SUBSIDIARIES
Camden Operating, L.P.
Camden Subsidiary, Inc.
Camden Subsidiary II, Inc.
<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-4 of our report dated January 16, 1998,
appearing in the Annual Report on Form 10-K of Camden Property Trust for the
year ended December 31, 1997 and to the reference to us under the heading
"Experts" in the Prospectus, which is part of this Registration Statement.
DELOITTE & TOUCHE LLP
Houston, Texas
February 6, 1998
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Joint Proxy
Statement on Form S-4 (File No. 333- ) of our report dated January 24, 1997,
except for Note 13 as to which the date is March 6, 1997, on our audits of the
consolidated financial statements and financial statement schedule of Oasis
Residential, Inc. as of December 31, 1996 and 1995, and for each of the three
years in the period ended December 31, 1996 which report is included in the
Annual Report on Form 10-K405, of our report dated June 29, 1997, on our audit
of the Historical Summary of Revenues and Direct Operating Expenses of Villa
Martinique Apartments for the year ended December 31, 1996 which report is
included in the Current Report on Form 8-K dated November 6, 1997, and of our
report dated January 23, 1998, on our audits of the consolidated financial
statements and financial statement schedule of Oasis Residential, Inc. as of
December 31, 1997 and 1996, and for each of the three years in the period ended
December 31, 1997 and 1996, and for each of the three years in the period ended
December 31, 1997, which report is included in the Current Report on Form 8-K
dated January 30, 1998. We also consent to the reference of our firm under the
caption "Experts."
/s/ COOPERS & LYBRAND L.L.P.
San Francisco, California
February 6, 1998
<PAGE> 1
EXHIBIT 23.5
CONSENT OF DONALDSON, LUFKIN
AND JENRETTE SECURITIES CORPORATION
We hereby consent to (i) the inclusion of our opinion letter, dated
December 17, 1997, to the Board of Trust Managers of Camden Property Trust
("Camden") as Annex III to the Joint Proxy Statement/Prospectus of Camden and
Oasis Residential, Inc. ("Oasis") relating to the merger of Camden and Oasis
and (ii) all references to DLJ in the sections captioned "Summary" and "The
Merger" of the Joint Proxy Statement/Prospectus of Camden and Oasis which forms
a part of this Registration Statement of Form S-4. In giving such consent, we
do not admit that we come within the category of persons whose consent is
required under, and we do not admit that we are "experts" for purposes of, the
Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: /s/ Michael S. Dana
--------------------------
Michael S. Dana
New York, New York
February 5, 1998
<PAGE> 1
EXHIBIT 23.6
CONSENT OF MERRILL LYNCH, PIERCE, FENNER & SMITH, INCORPORATED
We hereby consent to the use of our opinion letter dated December 16,
1997 to the Board of Directors of Oasis Residential, Inc. included as Appendix
IV to the Proxy Statement/Prospectus which forms a part of the Registration
Statement on Form S-4 relating to the proposed merger of Oasis Residential,
Inc., with and into Camden Property Trust and to the references to such opinion
in such Proxy Statement/Prospectus under the caption "Opinions of Financial
Advisors." In giving such consent, we do not admit that we come within the
category of persons whose consent is required under Section 7 of the Securities
Act of 1933, as amended, or the rules and regulations of the Securities and
Exchange Commission thereunder, nor do we thereby admit that we are experts
with respect to any part of such Registration Statement within the meaning of
the term "experts" as used in the Securities Act of 1933, as amended, or the
rules and regulations of the Securities and Exchange Commission thereunder.
MERRILL LYNCH, PIERCE, FENNER &
SMITH, INCORPORATED
Dated: February 5, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 10,516
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 1,397,138
<DEPRECIATION> 94,665
<TOTAL-ASSETS> 1,323,620
<CURRENT-LIABILITIES> 0
<BONDS> 480,754
0
0
<COMMON> 317
<OTHER-SE> 710,247
<TOTAL-LIABILITY-AND-EQUITY> 1,323,620
<SALES> 0
<TOTAL-REVENUES> 199,789
<CGS> 0
<TOTAL-COSTS> 91,623
<OTHER-EXPENSES> 44,836
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 28,537
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 38,438
<EPS-PRIMARY> 1.46
<EPS-DILUTED> 1.41
</TABLE>
<PAGE> 1
EXHIBIT 99.1
CAMDEN PROPERTY TRUST
FORM OF PROXY FOR SPECIAL MEETING IN LIEU OF ANNUAL MEETING
TO BE HELD ON _____________, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUST MANAGERS.
The undersigned hereby appoints Richard J. Campo, D. Keith Oden and G. Steven
Dawson, or any of them, proxies of the undersigned, with full powers of
substitution, to vote all of the common shares of beneficial interest of Camden
Property Trust that the undersigned is entitled to vote at the Special Meeting
in Lieu of Annual Meeting to be held on ____________, 1998 and at any
adjournment thereof, and authorizes and instructs said proxies to vote as set
forth on the reverse side.
THE BOARD OF TRUST MANAGERS RECOMMENDS A VOTE FOR ALL NOMINEES LISTED IN
PROPOSAL 2 AND FOR PROPOSALS 1, 3, 4 AND 5.
IMPORTANT - THIS PROXY MUST BE SIGNED AND DATED ON THE REVERSE SIDE.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
<PAGE> 2
PLEASE MARK VOTE IN BOX IN THE FOLLOWING MANNER USING DARK INK ONLY.
<TABLE>
<S> <C> <C> <C> <C>
1. Approval of the Agreement and Plan of FOR AGAINST ABSTAIN
Merger, dated December 16, 1998, by [ ] [ ] [ ]
and among Camden Property Trust,
Camden Subsidiary II, Inc. and Oasis
Residential, Inc., as amended
2. Election of Trust Managers WITHHOLD NOMINEES:
Instruction: To withhold authority FOR AUTHORITY Richard J. Campo
to vote for any individual nominee, [ ] [ ] William R. Cooper
write in that nominee's name on the George A. Hrdlicka
lines below. Lewis A. Levey
D. Keith Oden
------------------------------------- F. Gardner Parker
Steven A. Webster
-------------------------------------
-------------------------------------
3. Approval of the appointment of FOR AGAINST ABSTAIN
Deloitte & Touche LLP as independent [ ] [ ] [ ]
auditors
4. The postponement or adjournment of FOR AGAINST ABSTAIN
the meeting for the solicitation of [ ] [ ] [ ]
additional votes.
5. In their discretion, on such other FOR AGAINST ABSTAIN
matters as may properly come before [ ] [ ] [ ]
the meeting or any adjournment
thereof.
</TABLE>
- --------------------------------------------------------------------------------
This proxy when properly executed will be
voted in the manner directed herein by
the undersigned shareholder. If no
direction is made, this proxy will be
voted FOR all nominees listed in Proposal
2 and FOR Proposals 1, 3, 4 and 5.
-----------------------------------------
Signature
Dated:_______________________, 1998
NOTE: Please sign name exactly as it
appears on the stock certificate. Only
one of several joint owners need to
sign. Fiduciaries should give full
title.
<PAGE> 1
EXHIBIT 99.2
OASIS RESIDENTIAL, INC.
FORM OF PROXY FOR SPECIAL MEETING
TO BE HELD ON ______________, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF OASIS
RESIDENTIAL, INC.
The undersigned, a stockholder of Oasis Residential, Inc., a Nevada
corporation, hereby appoints Peter L. Rhein, Scott S. Ingraham, and each of
them (with full power to act without the other), the attorneys and proxies of
the undersigned, with full powers of substitution, to attend the Special
Meeting of Stockholders of said company to be held at _________ and at any
adjournment or adjournments thereof, and to vote the number of shares the
undersigned would be entitled to vote if personally present with respect to the
matters set forth in the Join Proxy Statement/Prospectus.
THE BOARD OF DIRECTORS OF OASIS RESIDENTIAL RECOMMENDS A VOTE
FOR PROPOSALS 1, 2 AND 3.
This Proxy will be voted as you specify above. UNLESS OTHERWISE MARKED, THIS
PROXY WILL BE VOTED FOR PROPOSALS 1, 2 AND 3.
(PLEASE DATE AND SIGN ON REVERSE SIDE)
SEE REVERSE
SIDE
<PAGE> 2
Please mark your votes as in this
example using dark ink only: [X]
<TABLE>
<S> <C> <C> <C> <C>
1. Approval of the Agreement and FOR AGAINST ABSTAIN
Plan of Merger, Dated
December 16, 1998, by and among [ ] [ ] [ ]
Camden Property Trust, Camden
Subsidiary II, Inc. and Oasis
Residential, Inc., as amended
2. The postponement or adjournment FOR AGAINST ABSTAIN
of the meeting for the
solicitation of additional votes. [ ] [ ] [ ]
3. In their discretion, on such FOR AGAINST ABSTAIN
other matters as may properly
come before the meeting or any [ ] [ ] [ ]
adjournment thereof
</TABLE>
- --------------------------------------------------------------------------------
This proxy when properly executed will be
voted in the manner directed herein by
the undersigned shareholder. If no
direction is made, this proxy will be
voted FOR Proposals 1, 2 and 3.
-----------------------------------------
Signature
Dated:_______________________, 1998
NOTE: (Please sign exactly as your name
or names appear. If more than one name
appears, all persons so designated should
sign. For joint accounts, each joint
owner should sign. Executors,
administrators, trustees, guardians, and
attorneys should so indicate when
signing).
<PAGE> 1
EXHIBIT 99.3
I, Scott S. Ingraham, do hereby consent to be named as a person to become
a trust manager of Camden Property Trust in the Registration Statement in Form
S-4 of Camden Property Trust to be filed with the Securities and Exchange
Commission.
/s/ SCOTT S. INGRAHAM
----------------------------
SCOTT S. INGRAHAM
Dated: February 5, 1998
