<PAGE>
As filed with the Securities and Exchange Commission on February 26, 1998
Registration No. 333-45817
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
CAMDEN PROPERTY TRUST
(Exact name of registrant as specified in its charter)
Texas 6513 76-6088377
(State or Other (Primary Standard Industrial (I.R.S. Employer
Jurisdiction Classification Code Number) Identification No.)
of Incorporation
or Organization)
3200 Southwest Freeway, Suite 1500
Houston, Texas 77027
(713) 964-3555
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
Richard J. Campo
Chairman and Chief Executive Officer
Camden Property Trust
3200 Southwest Freeway, Suite 1500
Houston, Texas 77027
(713) 964-3555
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
Copies to:
Bryan L. Goolsby
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
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. [_] ___________________
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>
[LOGO OF CAMDEN PROPERTY TRUST APPEARS HERE]
March 3, 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 The
Houstonian, 111 North Post Oak Lane, Houston, Texas, on Wednesday, April 8,
1998, at 10:00 a.m., 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
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 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,
/s/ Richard J. Campo
Richard J. Campo
Chairman of the Board of Trust Managers
and Chief Executive Officer
<PAGE>
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 WEDNESDAY, APRIL 8, 1998
NOTICE IS HEREBY GIVEN that a special meeting in lieu of the annual meeting
of shareholders (the "Camden Special Meeting") of Camden Property Trust, a
Texas real estate investment trust ("Camden"), will be held at The Houstonian,
111 North Post Oak Lane, Houston, Texas, on Wednesday, April 8, 1998, at 10:00
a.m., 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"), 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 Camden Special
Meeting for the solicitation of additional votes, if necessary to approve
proposal 1, 2 or 3; and
5. To transact such other business as properly may come before the Camden
Special Meeting or any adjournment thereof.
Only holders of record of Camden Common Shares at the close of business on
February 27, 1998, the record date for the Camden Special Meeting, are
entitled to notice of and to vote at the Camden Special Meeting.
By Order of the Board of Trust
Managers,
LOGO
G. Steven Dawson
Senior Vice President--Finance,
Chief Financial Officer, Treasurer
and Assistant Secretary
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE CAMDEN 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 CAMDEN 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
March 3, 1998
<PAGE>
[LOGO OF OASIS RESIDENTIAL APPEARS HERE]
March 3, 1998
Dear Fellow Stockholders:
We cordially invite you to attend a special meeting of stockholders (the
"Oasis Special Meeting") of Oasis Residential, Inc. ("Oasis") to be held at
Oasis Del Mar, 9225 West Charleston Boulevard, Las Vegas, Nevada, on
Wednesday, April 8, 1998, at 10:00 a.m., local time.
At the Oasis Special 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 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. 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 Oasis Special Meeting.
It is important that your shares be represented at the Oasis Special Meeting.
Therefore, even if you plan to attend the Oasis Special Meeting in person,
please complete, date, sign and promptly return the proxy card in the envelope
provided or send the proxy card by facsimile to Oasis 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 card 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
merger.
Sincerely,
/s/ Scott S. Ingraham
Scott S. Ingraham
President and Chief Executive Officer
[LOGO OF OASIS RESIDENTIAL INC. APPEARS HERE]
<PAGE>
OASIS RESIDENTIAL, INC.
4041 EAST SUNSET ROAD
HENDERSON, NEVADA 89014
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON WEDNESDAY, APRIL 8, 1998
NOTICE IS HEREBY GIVEN that a special meeting of stockholders (the "Oasis
Special Meeting") of Oasis Residential, Inc., a Nevada corporation ("Oasis"),
will be held at Oasis Del Mar, 9225 West Charleston Boulevard, Las Vegas,
Nevada, on Wednesday, April 8, 1998, at 10:00 a.m., local time, for the
following purposes:
1. To consider and vote upon the merger (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"), 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"), 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 Oasis Special
Meeting for the solicitation of additional votes, if necessary to approve
the Merger pursuant to the Merger Agreement; and
3. To transact such other business as properly may come before the Oasis
Special Meeting or any adjournment thereof.
Only holders of record of shares of Oasis Common Stock at the close of
business on February 27, 1998, the record date for the Oasis Special Meeting,
are entitled to notice of and to vote at the Oasis Special Meeting.
By Order of the Board of Directors,
/s/ Allan O. Hunter, Jr.
Allan O. Hunter, Jr.
Executive Vice President, Chief
Operating Officer and Secretary
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE OASIS SPECIAL
MEETING. PLEASE SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD IN THE
ACCOMPANYING POSTAGE-PAID ENVELOPE OR SEND THE PROXY CARD VIA FACSIMILE TO
OASIS AT (702) 435-9445 SO THAT YOUR SHARES WILL BE REPRESENTED AT THE OASIS
SPECIAL MEETING. STOCKHOLDERS ATTENDING THE OASIS SPECIAL MEETING MAY VOTE
PERSONALLY ON ALL MATTERS THAT ARE CONSIDERED, IN WHICH EVENT THE SIGNED
PROXIES WILL BE REVOKED.
Las Vegas, Nevada
March 3, 1998
<PAGE>
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 APRIL 8, 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 April 8, 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 March 3, 1998.
SEE RISK FACTORS BEGINNING ON PAGE 8 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 March 3, 1998.
<PAGE>
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 APRIL 1, 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>
TABLE OF CONTENTS
<TABLE>
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PAGE
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<S> <C>
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.......................................... 5
Regulatory Matters...................................................... 5
Conditions to Consummation of the Merger; Effective Time of the Merger;
Termination Fees....................................................... 5
The Third Party Transaction............................................. 5
Management, Operations and Headquarters After the Merger................ 6
Dividends............................................................... 6
Anticipated Accounting Treatment........................................ 6
Interests of Certain Persons in the Merger.............................. 6
Federal Income Tax Consequences of the Merger........................... 7
Dissenters' Rights...................................................... 7
RISK FACTORS.............................................................. 8
Share Price Fluctuations................................................ 8
Effect of Market Interest Rates on Price of Camden Shares............... 8
Benefits to Certain Directors and Officers of Oasis; Possible Conflicts
of Interest............................................................ 8
Loss of Rights by Oasis Stockholders.................................... 8
Loss of Benefits if the Third Party Transaction Fails to Occur;
Dependence on the Las Vegas Market..................................... 8
Termination Payments if the Merger Fails to Occur....................... 9
Real Estate Investment Risks............................................ 9
No Limitation on Amount of Debt that May be Incurred and Possible
Inability to Repay Debt................................................ 10
Limited Control with Respect to Certain Properties...................... 10
Uninsured and Underinsured Losses Could Result in Loss of Value of
Property............................................................... 10
Possible Environmental Liabilities...................................... 11
Costs of Compliance with Fair Housing Amendments Act and Similar Laws... 11
Adverse Consequences of Failure to Qualify as a REIT.................... 12
Ownership Limits........................................................ 12
Competition............................................................. 13
Changes in Policies..................................................... 13
EQUIVALENT PER SHARE DATA................................................. 14
COMPARATIVE MARKET PRICES................................................. 15
Camden.................................................................. 15
Oasis................................................................... 15
SELECTED HISTORICAL AND UNAUDITED PRO FORMA COMBINED FINANCIAL AND
PROPERTY DATA............................................................ 16
THE SPECIAL MEETINGS...................................................... 20
The Merger.............................................................. 20
Camden Special Meeting.................................................. 20
Oasis Special Meeting................................................... 22
THE MERGER................................................................ 24
Background of the Merger................................................ 24
Reasons for the Merger; Recommendations of the Boards................... 28
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Opinions of Financial Advisors......................................... 32
Interests of Certain Persons in the Merger............................. 42
Headquarters........................................................... 43
Dividends.............................................................. 43
Anticipated Accounting Treatment....................................... 44
Resales of Camden Shares............................................... 44
Dissenters' Rights..................................................... 44
Regulatory Matters..................................................... 44
NYSE Listing........................................................... 45
Effect of the Merger on Oasis Debt Securities.......................... 45
MANAGEMENT OF CAMDEN..................................................... 46
Board of Trust Managers of Camden...................................... 46
Committees of the Camden Board......................................... 47
Compensation of Trust Managers......................................... 48
Meetings of the Camden Board and Committees............................ 48
Executive Officers of Camden........................................... 48
Section 16(a) Beneficial Ownership Reporting Compliance................ 49
Compensation Committee Report on Executive Officer Compensation........ 49
Compensation Committee Interlocks and Insider Participation............ 51
Executive Compensation................................................. 52
Performance Graph...................................................... 54
Certain Relationships and Transactions................................. 55
THE THIRD PARTY TRANSACTION.............................................. 55
THE MERGER AGREEMENT..................................................... 57
The Merger............................................................. 57
Camden Board of Trust Managers......................................... 59
Representations and Warranties......................................... 59
Certain Covenants...................................................... 59
Indemnification........................................................ 61
Conditions to Consummation of the Merger............................... 62
Termination............................................................ 63
Expenses and Termination Fees.......................................... 63
Extension, Waiver and Amendment........................................ 65
VOTING AGREEMENTS........................................................ 66
Oasis Voting Agreement................................................. 66
Camden Voting Agreement................................................ 66
CAMDEN PROPERTY TRUST UNAUDITED PRO FORMA COMBINED STATEMENT OF
OPERATIONS.............................................................. 67
CAMDEN PROPERTY TRUST UNAUDITED PRO FORMA COMBINED BALANCE SHEET......... 70
BUSINESS OF CAMDEN....................................................... 74
General................................................................ 74
Operating Strategy..................................................... 74
Financial Strategy..................................................... 75
Markets and Competition................................................ 76
The Camden Properties.................................................. 77
Camden Portfolio Summary............................................... 78
BUSINESS OF OASIS........................................................ 81
General................................................................ 81
Recent Developments.................................................... 81
Business Strategy...................................................... 82
Certain Pending Complaints............................................. 83
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
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<S> <C>
Property Operations..................................................... 83
Oasis Portfolio Summary................................................. 84
SECURITY OWNERSHIP........................................................ 86
Camden.................................................................. 86
Oasis................................................................... 88
DESCRIPTION OF CAMDEN SECURITIES.......................................... 90
Camden Common Shares.................................................... 90
Camden Preferred Shares................................................. 90
Restrictions on Transfer................................................ 95
Certain Federal Income Tax Considerations to Holders of Camden Series A
Preferred Shares....................................................... 96
COMPARATIVE RIGHTS OF SHAREHOLDERS........................................ 99
Capitalization.......................................................... 100
Voting Rights........................................................... 100
Voting Power............................................................ 101
Trust Managers and Directors............................................ 101
Power to Call Special Meetings; Action by Written Consent............... 101
Amendment of Charter Documents.......................................... 102
Mergers................................................................. 102
Certain Business Combinations........................................... 103
Control Share Acquisitions.............................................. 104
REIT Qualification Provisions........................................... 104
Indemnification......................................................... 105
Trust Manager and Director Liability.................................... 106
FEDERAL INCOME TAX CONSIDERATIONS......................................... 106
Tax Considerations Relating to the Merger............................... 107
Continuity of Interest Assumption....................................... 107
Cash in Lieu of Fractional Shares....................................... 107
Pre-Merger Dividend..................................................... 108
Taxation of Camden...................................................... 108
Requirements for Qualification.......................................... 109
Failure to Qualify...................................................... 114
Taxation of Taxable U.S. Shareholders................................... 114
Taxation of U.S. Shareholders on the Disposition of Common Shares....... 115
Capital Gains and Losses................................................ 115
Taxation of Tax-Exempt Shareholders..................................... 116
Taxation of Non-U.S. Shareholders....................................... 116
Other Tax Consequences.................................................. 119
RATIFICATION OF INDEPENDENT AUDITORS...................................... 119
EXPERTS................................................................... 119
LEGAL OPINIONS............................................................ 120
SHAREHOLDER PROPOSALS..................................................... 120
OTHER MATTERS............................................................. 120
</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>
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) Oasis' 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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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 forward-looking 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," "should" or "continue" or the
negative thereof or other comparable terminology. The matters set forth under
"RISK FACTORS" and certain other matters noted throughout this Joint Proxy
Statement/Prospectus and any document incorporated by reference herein and
exhibits hereto and thereto constitute cautionary statements identifying
important factors with respect to such forward-looking statements, including
certain risks and uncertainties, that could cause Camden's 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 Merger and the Third Party Transaction (as defined below), it
is anticipated that Camden will own interests in 152 multifamily properties
containing 49,786 units (including 6,704 units owned through the Partnership
(as defined below) and other 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. See "THE THIRD PARTY TRANSACTION."
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 owned and operated. 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 limited liability company in which Oasis owns a 50% membership
interest) with an average age of less than eight years, had one apartment
community comprising 340 units under construction and owned a 30,000 square
foot commercial center in Henderson, Nevada in which Oasis' headquarters is
located (the "Commercial
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Center"). Forty-three of the Oasis Properties are located in the greater Las
Vegas area. The weighted average occupancy rate of the Oasis Properties for the
year ended December 31, 1997 was 95%.
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 "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 20, 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 $29.3125, $21.5625 and $25.75,
respectively. The Camden Common Shares and shares of Oasis Common Stock and
Oasis Series A Preferred Stock are, and Camden Series A Preferred Shares are
expected to be, traded on the NYSE under the symbols "CPT," "OAS," "OASPrA" and
"CPTPrA," respectively. See "COMPARATIVE MARKET PRICES."
SPECIAL MEETINGS; VOTES REQUIRED
Camden. The Camden Special Meeting will be held on Wednesday, April 8, 1998,
at 10:00 a.m., local time, at The Houstonian, 111 North Post Oak Lane, Houston,
Texas. 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 to approve any of the Camden Proposals. Only
holders of Camden Common Shares of record at the close of business on February
27, 1998 (the "Record Date") will be entitled to vote at the Camden Special
Meeting. 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. Each of the proposal to approve the Merger pursuant
to the Merger Agreement and the proposal to ratify Deloitte and Touche LLP as
independent auditors of Camden 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 vote required to elect the various
nominees as members of the Camden Board is described below under "MANAGEMENT OF
CAMDEN--Board of Trust Managers of Camden." The affirmative vote of the holders
of Camden Common Shares representing 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 February 20, 1998, there were
31,719,036 Camden Common Shares outstanding and entitled to vote. As of
February 20, 1998, the members of the Camden Board, executive officers of
Camden and their affiliates beneficially owned 894,927 Camden Common Shares
(excluding 610,333 Camden Common Shares issuable as of February 20, 1998 upon
the exercise of vested options, 1,389,304 units held in joint ventures and
114,958 restricted Camden Common Shares held in the Rabbi Trust (as defined
below)), representing approximately 2.8% 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 Wednesday, April 8, 1998, at
10:00 a.m., local time, at Oasis Del Mar, 9225 West Charleston Boulevard, Las
Vegas, Nevada. At the Oasis Special Meeting, stockholders will consider and
vote upon (i) a proposal to 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 to
approve the Merger pursuant to the Merger Agreement. 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 holders of a majority of the
outstanding shares of Oasis Common Stock represented in person or
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by proxy, at the Oasis Special Meeting will constitute a quorum for purposes of
the Oasis Special Meeting. The affirmative vote of the holders of a majority of
the shares of Oasis Common Stock outstanding and entitled to vote is required
to approve the Merger pursuant to the Merger Agreement. The affirmative vote of
the holders of shares of Oasis Common Stock representing 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 February 20, 1998,
there were 16,326,477 shares of Oasis Common Stock outstanding and entitled to
vote. As of February 20, 1998, the members of the Board of Directors of Oasis
(the "Oasis Board"), executive officers of Oasis and their affiliates
beneficially owned 1,231,769 shares of Oasis Common Stock (excluding 765,625
shares issuable as of February 20, 1998 upon the exercise of vested stock
options), representing approximately 7.5% 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, holding
an aggregate of 496,089 shares or approximately 1.6% of the outstanding Camden
Common Shares as of February 20, 1998, agreed to vote the 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 Mr. Jones and the Scotsman Trust, holding an
aggregate of 995,642 shares or approximately 6.1% of the outstanding shares of
Oasis Common Stock as of February 20, 1998, agreed to vote the shares of Oasis
Common Stock then owned or thereafter acquired by them in favor of the Merger.
See "VOTING AGREEMENTS."
RISK FACTORS
Shareholders of Camden and stockholders of Oasis should carefully evaluate
the matters set forth under "RISK FACTORS" beginning on page 8 of this Joint
Proxy Statement/Prospectus.
THE MERGER
As described under "THE MERGER AGREEMENT--The Merger," pursuant to the Merger
Agreement, at the Effective Time (as defined below under "THE SPECIAL
MEETINGS--The Merger"), 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").
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
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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 December
15, 1997, 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 & Co. ("Merrill Lynch"), an international investment
banking firm familiar with Oasis and its business, has delivered a written
opinion to 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 Common Share
Exchange Ratio is fair to Oasis stockholders from a financial point of view. A
copy of the Merrill Lynch Opinion, dated December 16, 1997, which sets forth
the assumptions 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."
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 to effect the Merger 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 THIRD PARTY TRANSACTION
Following the Effective Time, Camden expects to form a joint venture
partnership (the "Partnership"), and transfer to the Partnership 18 multifamily
properties located in Las Vegas and one multi-family property located
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in Laughlin, Nevada, containing an aggregate of 5,119 apartment units (the
"Third Party Transaction 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 Third Party Transaction
Properties. Camden is seeking an equity capital commitment from a third party
investor to own a majority equity position in the Partnership of approximately
80%. Such transactions are collectively referred to herein as the "Third Party
Transaction." 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 Third Party Transaction Properties, see
"BUSINESS OF OASIS--Oasis Portfolio Summary." No assurance can be given that
the Third Party Transaction will be consummated at all, or, if it is
consummated, that it will be consummated on terms favorable to Camden. If the
Third Party Transaction 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 Third Party Transaction Fails to Occur; Dependence on the Las
Vegas Market" and "THE THIRD PARTY TRANSACTION."
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." Camden has paid dividends in the past
on the Camden Common Shares at rates lower than the rates at which Oasis has
paid dividends on the Oasis Common Stock. Although Camden can give no assurance
as to the amount of the dividends it may pay in the future, dividends initially
will be paid, and may continue to be paid, on the Camden Common Shares at rates
lower than the historical Oasis Common Stock dividend rates.
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 and 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
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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."
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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 Common Share Exchange Ratio was fixed at the time of execution of the
Merger Agreement. The relative prices of the Camden Shares and the Oasis Shares
at the Effective Time, however, 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 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. See "THE MERGER--
Dividends."
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 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 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 THIRD PARTY TRANSACTION 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
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Effective Time, Camden expects to form the Partnership, and transfer to the
Partnership 18 multifamily properties located in Las Vegas and one multifamily
property located in Laughlin, Nevada, containing an aggregate of 5,119
apartment units. Camden is seeking an equity capital commitment from a third
party investor to own a majority equity position in the Partnership of
approximately 80%. No assurance can be given that the Third Party Transaction
will be consummated at all, or, if it is consummated, that it will be
consummated on terms favorable to Camden. If the Third Party Transaction 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 THIRD PARTY TRANSACTION."
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 and the Third Party
Transaction, Camden will have increased its interests in apartment communities
from 100 communities at December 31, 1997 to 152 communities, 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
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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' properties under development. Camden will be subject to the risks of
real estate development with respect to such 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.
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-to-total-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 of the Oasis Properties, Oasis has invested through
limited liability companies in which Oasis owns less than a 100% interest and
is subject to certain consent rights of the 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
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.
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
10
<PAGE>
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 Camden
Properties (as defined below under "BUSINESS OF CAMDEN--General") and the
Oasis Properties have been subjected to Phase I or similar environmental
audits (which involve inspection without soil sampling 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 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
11
<PAGE>
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
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. Furthermore, President Clinton's fiscal 1999 budget
proposal includes a provision that, if enacted in its present form, would
result in the immediate taxation of all gain inherent in a C corporation's
assets upon an election by the corporation to become a REIT in
taxable years beginning after January 1, 1999, and thus could effectively
preclude Camden from re-electing to be taxed as a REIT following a loss of its
REIT status.
Oasis believes that, commencing with 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."
12
<PAGE>
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.
13
<PAGE>
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.
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 COMMON 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.................. 27.45
Oasis pro forma equivalent(B)........................ 20.83
</TABLE>
- --------
(A) Assumes that in the Merger each share of Oasis Common Stock is converted
into 0.759 of a Camden Common Share, resulting in total weighted average
outstanding Camden Common Shares of 40,747,000 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.
14
<PAGE>
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 20, 1998, there were approximately 700
holders of record and approximately 23,000 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 20,
1998)................................... $30 9/16 $28 15/16 --
</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 20, 1998, the last reported sales price of a
Camden Common Share on the NYSE was $29.3125.
OASIS
The Oasis Common Stock has been traded on the NYSE under the symbol "OAS"
since October 22, 1993. As of February 20, 1998, there were approximately 325
holders of record and approximately 7,200 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 20,
1998).................................. $22 3/4 $ 21 9/16 --
</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 20, 1998, the last reported sales prices of a share
of Oasis Common Stock and Oasis Series A Preferred Stock on the NYSE were
$21.5625 and $25.75, respectively.
15
<PAGE>
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 and
the Third Party Transaction as if they had occurred on January 1, 1997 for
purposes of the operating data and December 31, 1997 for purposes of the
balance sheet and property data. The Third Party Transaction adjustments are
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. See "CAMDEN PROPERTY TRUST UNAUDITED PRO FORMA COMBINED
STATEMENT OF OPERATIONS" and "CAMDEN PROPERTY TRUST UNAUDITED PRO FORMA
COMBINED BALANCE SHEET."
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.
16
<PAGE>
CAMDEN PROPERTY TRUST
SELECTED HISTORICAL AND UNAUDITED PRO FORMA
COMBINED FINANCIAL AND PROPERTY DATA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
CAMDEN
CAMDEN PROPERTY TRUST PREDECESSORS
----------------------------------------------------------------- ------------
YEARS ENDED DECEMBER 31,
--------------------------------------------------- JULY 29 TO JANUARY 1
PRO FORMA DECEMBER 31, TO JULY 28,
1997 1997(1) 1996 1995 1994 1993 1993
--------- --------- --------- -------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA
Revenues:
Rental income............ $ 267,774 $ 187,928 $ 105,785 $ 92,275 $ 71,468 $ 16,785 $ 16,721
Other property income.... 10,280 9,510 4,453 3,617 2,811 539 590
--------- --------- --------- -------- -------- -------- --------
Total property income... 278,054 197,438 110,238 95,892 74,279 17,324 17,311
Equity in income of joint
ventures................ 1,044 1,141 -- -- -- -- --
Fee and asset
management.............. 2,132 743 949 1,029 721 -- --
Other income............. 1,044 467 419 353 456 243 310
--------- --------- --------- -------- -------- -------- --------
Total revenues.......... 282,274 199,789 111,606 97,274 75,456 17,567 17,621
--------- --------- --------- -------- -------- -------- --------
Expenses:
Property operating and
maintenance............. 91,838 70,595 40,604 37,093 29,352 6,907 7,380
Real estate taxes........ 25,366 21,028 13,192 11,481 8,962 1,910 1,989
General and
administrative.......... 8,165 4,473 2,631 2,263 2,574 291 343
Interest................. 38,989 28,537 17,336 13,843 8,807 1,340 4,364
Depreciation and
amortization............ 64,301 44,836 23,894 20,264 16,239 3,572 3,045
Minority interest in
consolidated
partnership............. 179 -- -- -- -- -- --
--------- --------- --------- -------- -------- -------- --------
Total expenses.......... 228,838 169,469 97,657 84,944 65,934 14,020 17,121
--------- --------- --------- -------- -------- -------- --------
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 3,547 500
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 3,547 500
Minority interest in
Operating Partnership... (1,655) (1,655) -- -- -- -- --
--------- --------- --------- -------- -------- -------- --------
Net income............... 68,553 38,438 8,713 12,330 9,522 3,547 $ 500
========
Preferred share
dividends............... (9,372) -- (4) (39) (20) --
--------- --------- --------- -------- -------- --------
Net income to common
shareholders............ $ 59,181 $ 38,438 $ 8,709 $ 12,291 $ 9,502 $ 3,547
========= ========= ========= ======== ======== ========
Basic earnings per
share................... $ 1.53 $ 1.46 $ 0.59 $ 0.86 $ 0.78 $ 0.39
Diluted earnings per
share................... $ 1.49 $ 1.41 $ 0.58 $ 0.86 $ 0.77 $ 0.39
Distributions per common
share................... $ 1.96 $ 1.96 $ 1.90 $ 1.84 $ 1.76 $ 0.68
Weighted average number
of common shares
outstanding............. 38,648 26,257 14,849 14,325 12,188 9,069
Weighted average number
of common shares
outstanding plus
dilutive potential
common shares........... 40,747 28,356 14,979 14,414 12,310 9,114
</TABLE>
17
<PAGE>
CAMDEN PROPERTY TRUST
SELECTED HISTORICAL AND UNAUDITED PRO FORMA
COMBINED FINANCIAL AND PROPERTY DATA--(CONTINUED)
(IN THOUSANDS, EXCEPT PROPERTY DATA AMOUNTS)
<TABLE>
<CAPTION>
CAMDEN
CAMDEN PROPERTY TRUST PREDECESSORS
------------------------------------------------------------------ ------------
YEARS ENDED DECEMBER 31,
---------------------------------------------------- JULY 29 TO JANUARY 1
PRO FORMA DECEMBER 31, TO JULY 28,
1997 1997(1) 1996 1995 1994 1993 1993
---------- ---------- -------- -------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA (AT
END OF PERIOD)
Real estate assets...... $2,131,430 $1,397,138 $646,545 $607,598 $510,324 $296,545
Accumulated
depreciation........... (94,665) (94,665) (56,369) (36,800) (17,731) (3,388)
Total assets............ 2,077,424 1,323,620 603,510 582,352 504,284 304,345
Notes payable........... 706,079 480,754 244,182 235,459 149,547 111,513
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 1,950
Shareholders'/partners'
equity................. 1,210,115 710,564 295,428 267,829 277,604 175,984
Common shares
outstanding............ 44,085 31,694 16,521 14,514 14,273 9,162
OTHER DATA
Cash flows provided by
(used in):
Operating activities.... $ 65,974 $ 41,267 $ 37,594 $ 33,560 $ 16,554 $ 1,942
Investing activities.... (73,709) (41,697) (97,003) (198,087) (237,346) (4,297)
Financing activities.... 11,837 2,560 59,404 159,388 226,171 1,073
Funds from operations
("FFO")(2).............. 75,753 39,999 35,260 28,604 7,119 3,545
PROPERTY DATA
Number of operating
properties
(at end of period)..... 152 100 48 50 48 32 17
Number of operating
units
(at end of period)..... 49,786 34,669 17,611 16,742 15,783 11,064 6,040
Number of operating
units
(weighted average)(3).. 38,439 29,280 17,362 16,412 13,694 7,935 5,996
Weighted average monthly
total property income
per unit(3)............ $ 601 $ 562 $ 529 $ 487 $ 452 $ 420 $ 414
Properties under
development
(at end of period)..... 7 6 6 9 8 3
</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 the Third Party Transaction
Properties.
18
<PAGE>
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 321 units owned through a
limited liability company in which Oasis owns a 50% membership interest.
(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.
19
<PAGE>
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 Wednesday, April 8, 1998, at 10:00 a.m., local
time, at The Houstonian, 111 North Post Oak Lane, Houston, Texas, 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
to approve any of the Camden Proposals.
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
PURSUANT TO THE MERGER AGREEMENT, FOR ELECTION OF EACH OF THE NOMINEES NAMED IN
THIS JOINT
20
<PAGE>
PROXY STATEMENT/PROSPECTUS AS A MEMBER OF THE CAMDEN BOARD, FOR RATIFICATION
OF DELOITTE & TOUCHE LLP AS CAMDEN'S INDEPENDENT AUDITORS AND FOR THE PROPOSAL
TO POSTPONE OR ADJOURN THE CAMDEN SPECIAL MEETING TO SOLICIT ADDITIONAL VOTES,
IF NECESSARY IN ORDER TO OBTAIN SUFFICIENT VOTES TO APPROVE ANY OF THE CAMDEN
PROPOSALS.
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. 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. Each of the proposal to approve the
Merger pursuant to the Merger Agreement and the proposal to ratify Deloitte
and Touche LLP as independent auditors of Camden 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. 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 vote required to elect to
various nominees as members of the Camden Board is described below under
"MANAGEMENT OF CAMDEN--Board of Trust Managers of Camden." 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 the
holders of Camden Common Shares representing 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 any proposal has received sufficient votes for approval.
As of February 20, 1998, there were 31,719,036 Camden Common Shares
outstanding and entitled to vote at the Camden Special Meeting, with each
share being entitled to one vote. As of February 20, 1998, the members of the
Camden Board and the executive officers of Camden and their affiliates were
deemed to beneficially own a total of 894,927 Camden Common Shares (excluding
610,333 Camden Common Shares issuable as of February 20, 1998 upon the
exercise of vested options, 1,389,304 units held in joint ventures and 114,958
restricted Camden Common Shares held in the Rabbi Trust), representing
approximately 2.8% 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,
holding an aggregate of 496,089 Camden Common Shares or approximately 1.6% of
the outstanding Camden Common Shares as of February 20, 1998, agreed to vote
the Camden Common Shares then owned or thereafter acquired by them in favor of
the Merger.
Recommendation. THE CAMDEN BOARD UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS OF
CAMDEN VOTE FOR APPROVAL OF THE MERGER PURSUANT TO THE MERGER AGREEMENT, FOR
ELECTION OF EACH OF THE NOMINEES NAMED IN THIS JOINT PROXY
STATEMENT/PROSPECTUS AS A MEMBER OF THE CAMDEN BOARD, FOR RATIFICATION OF
DELOITTE & TOUCHE LLP AS CAMDEN'S INDEPENDENT AUDITORS AND FOR APPROVAL OF THE
PROPOSAL TO POSTPONE OR ADJOURN THE CAMDEN SPECIAL MEETING TO SOLICIT
ADDITIONAL VOTES, IF NECESSARY TO OBTAIN SUFFICIENT VOTES TO APPROVE ANY OF
THE CAMDEN PROPOSALS.
Other Matters. Camden is unaware of any matter to be presented at the Camden
Special Meeting other than the Camden Proposals. If any other business is
brought before the Camden Special Meeting, the proxies named in the proxy card
will vote in their discretion the shares represented by the proxy with respect
to the matter.
21
<PAGE>
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 Wednesday, April 8, 1998, at 10:00 a.m.,
local time, at Oasis Del Mar, 9225 West Charleston Boulevard, Las Vegas,
Nevada, 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 pursuant to 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 to approve the
Merger pursuant to the Merger Agreement.
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) 435-9445. 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 PURSUANT TO THE MERGER AGREEMENT AND FOR THE PROPOSAL
TO POSTPONE OR ADJOURN THE OASIS SPECIAL MEETING TO SOLICIT ADDITIONAL VOTES,
IF NECESSARY INDICATES TO OBTAIN SUFFICIENT VOTES TO APPROVE THE MERGER
PURSUANT TO THE MERGER AGREEMENT.
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 holders of a majority of the shares of Oasis Common Stock
represented in person or by proxy at the Oasis Special Meeting will constitute
a quorum for purposes of the Oasis Special Meeting. 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 pursuant to the Merger Agreement. 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 the holders of Oasis Common
Stock representing a majority of the shares represented in person or by proxy
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 20, 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 February 20, 1998, the members of the Oasis
Board and the executive officers of Oasis and their affiliates beneficially
owned a total of 1,231,769 shares of Oasis Common Stock (excluding 765,625
shares issuable as of February 20, 1998 upon the exercise of vested options),
representing approximately 7.5% 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 Mr. Jones
and the Scotsman Trust, holding an aggregate of 995,642 shares or
approximately 6.1% of the outstanding shares of Oasis Common Stock
22
<PAGE>
as of February 20, 1998, agreed to vote the shares of Oasis Common Stock then
owned or thereafter acquired by them in favor of the Merger.
Recommendation. THE OASIS BOARD UNANIMOUSLY RECOMMENDS THAT THE OASIS
STOCKHOLDERS VOTE FOR APPROVAL OF THE MERGER PURSUANT TO THE MERGER AGREEMENT
AND FOR THE PROPOSAL TO POSTPONE OR ADJOURN THE OASIS SPECIAL MEETING TO
SOLICIT ADDITIONAL VOTES, IF NECESSARY IN ORDER TO OBTAIN SUFFICIENT VOTES TO
APPROVE THE MERGER PURSUANT TO THE MERGER AGREEMENT.
Other Matters. Oasis is unaware of any matter to be presented at the Oasis
Special Meeting other than the proposal to approve the Merger pursuant to the
Merger Agreement. If any other business is properly brought before the Oasis
Special Meeting, the proxies named in the proxy card will vote in their
discretion the shares represented by the proxy with respect to the matter.
23
<PAGE>
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.
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 Oasis'
financial advisor in connection with 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.
24
<PAGE>
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. Campo and Oden 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. 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 Common Stock, 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 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 possible 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 stockholder 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
Oasis. 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
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
25
<PAGE>
of a combination 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 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 certain of 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
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.
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.
26
<PAGE>
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 possible terms of a
combination, including the status of price discussions. The Oasis Board
conducted extensive discussions with respect to these terms and were advised
by counsel to Oasis and by 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. 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. 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 and answered questions about Camden posed by the Oasis directors. 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.
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.
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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,
although no assurance can be given that the benefits described below will be
realized by Camden if the Merger is consummated:
(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 Third Party Transaction.
(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 may 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 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 Third Party Transaction, 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.
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(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 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 Third Party Transaction 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 Third Party Transaction 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 15, 1997 oral
opinion of DLJ, which was confirmed in writing on December 15, 1997,
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.
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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 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, although no
assurance can be given that the benefits described below will be realized by
Oasis stockholders if the Merger is consummated:
(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 of $22.1875, 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 Third Party Transaction, 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 Third Party Transaction, the combined company would own
interests in 52,469 apartment units located in nine states and fifteen
core markets as compared to Oasis' existing portfolio of 15,117
apartment units 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
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to potential investors, and ultimately should result in an improved
ability to access favorably priced equity and debt capital for its
shareholders.
(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
Oasis stockholders to exchange their Oasis Shares for Camden Shares on
a tax-free-basis (except with respect to the receipt of cash in lieu
of fractional Camden Shares).
(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 Common Share Exchange Ratio is fair to Oasis
stockholders from a financial point of view as of the date of the
opinion, 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 February
20, 1998, Oasis stockholders would receive for each share of Oasis
Common Stock a fraction of a Camden Common Share with a value of
$22.2482.
(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.
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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 effect 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 opinion 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.
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.
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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 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.
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
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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 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
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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% 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
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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.
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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.
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 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 Oasis Series A 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 stockholder value. At the meeting of the Oasis Board held on
December 16, 1997, Merrill Lynch delivered the Merrill Lynch Opinion to the
Oasis Board
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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
Common Share Exchange Ratio is fair to Oasis 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 COMMON
SHARE EXCHANGE RATIO 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.
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 were 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 would be substantially similar to the draft referred to above dated
December 14, 1997.
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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
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.
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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.
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.
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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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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 Oasis' management
and the Oasis Board have interests in the Merger in addition to their interests
as stockholders of Oasis. 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
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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 and Hunter is a director and executive
officer of Oasis, Mr. Eeds is an executive officer and a former director 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."
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
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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." Camden has paid dividends in the past
on the Camden Common Shares at rates lower than the rates at which Oasis has
paid dividends on the Oasis Common Stock. Although Camden can give no assurance
as to the amount of the dividends it may pay in the future, dividends initially
will be paid, and may continue to be paid, on the Camden Common Shares at rates
lower than the historical Oasis Common Stock dividend rates.
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 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
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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 "CPTPrA,"
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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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.
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
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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 thirteen
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 Corporation, 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. Prior to his employment with Oasis, Mr. Ingraham joined the
predecessor company to Oasis, the Robert V. Jones Corp., an apartment real
estate development company, in 1992. Prior to 1992, Mr. Ingraham 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.
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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 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.
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.
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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.
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.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely upon a review of Form 4s and Form 5s furnished to Camden with
respect to the year ended December 31, 1997, no person failed to disclose on a
timely basis, as disclosed in such forms, reports required by Section 16(a) of
the Exchange Act, except that Michael W. Biggs, the Senior Vice President--
Asset Management of Camden, failed to file with the Commission on a timely
basis one required report relating to a total of two transactions, which
report was subsequently filed, and James M. Hinton, the Senior Vice
President--Development of Camden failed to file with the Commission on a
timely basis one required report relating to a total of two transactions,
which report will be subsequently filed.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE OFFICER COMPENSATION
The Compensation Committee, which consists entirely of non-employee trust
managers, reviews and approves all remuneration arrangements for Camden's
executive officers, trust managers and other employees and all compensation
plans, including Camden's 1993 Share Incentive Plan. The Compensation
Committee held four meetings during 1997 and a meeting on February 13, 1998 to
vote on 1997 compensation issues and set salaries for 1998 for executive
officers.
Objectives and Compensation Philosophy
Camden's objectives are to produce consistent earnings growth and
selectively invest in favorable markets. In order to meet its objectives,
Camden must attract, reward, motivate and retain key executives who are
capable of achieving Camden's objectives in a competitive industry. Camden's
philosophy for compensating executive officers is that an incentive-based
compensation system tied to Camden's financial performance and portfolio
growth will best align the interests of its executives with the objectives of
Camden. In accordance with this philosophy, Camden has adopted a compensation
system designed to meet Camden's objectives by making a significant portion of
each executive's compensation dependent on Camden's and such executive's
performance.
Camden's executive compensation system consists of the following elements:
base salary determined by the Compensation Committee based on its assessment
of individual performance, contributions to Camden and peer group comparisons;
an annual bonus that is directly related to the performance of the executive's
department and Camden as a whole; and grants of restricted shares and options
designed to motivate individuals to enhance
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<PAGE>
the long-term value of the Camden Common Shares. The Compensation Committee
does not allocate a fixed percentage of compensation to each of these three
elements, nor does the Compensation Committee use specific qualitative or
quantitative measures or factors in assessing individual performance, except
with respect to the award of bonuses, as described below.
Base Salary
In 1997, base salary levels and annual increases for executive officers were
determined by the Compensation Committee based on an evaluation of the
responsibilities of the position held and the experience of the particular
individuals compared to companies of similar size, complexity and, where
comparable, in the same industry. In addition to comparing base salary
compensation of other companies, consideration was given to the overall
corporate performance. Actual salaries are based on the executive's skill and
ability to influence Camden's financial performance and growth in both the
short-term and the long-term.
Bonus Compensation
Camden's executive officers participate in a bonus incentive program whereby
the individual executives are eligible for bonuses based on a percentage of
base salary. The bonus percentage is based on competitive analysis and on the
executive's ability to influence Camden's success in achieving its objectives.
Earned bonuses are determined annually in part on the basis of performance
against pre-established goals and in part based on the discretion of the
Compensation Committee. The eligible bonus percentage is allocated in part to
the achievement of Camden goals, in part to the achievement of individual
goals, and in part to discretionary evaluation by the Compensation Committee.
Specific individual goals for each officer are established at the beginning of
the year and are tied to the functional responsibilities of each executive.
Individual goals include both objective financial measures as well as
subjective factors, such as efficiency in managing capital resources and
successful acquisitions or development. Camden's goals are based on operating
performance, as measured by Camden's funds from operations. The Compensation
Committee requires executives to receive at least 25% and up to 50% of their
annual bonus in the form of restricted shares.
Share Option and Restricted Share Program
The Compensation Committee believes that by providing the executives who
have substantial responsibility for the management and growth of Camden with
an opportunity to increase their ownership of Camden Common Shares, the best
interest of shareholders and executives will be closely aligned. Therefore,
executives are eligible to receive options from time to time, giving them the
right to purchase Camden Common Shares or restricted shares. During 1997, the
Compensation Committee did not adhere to any firmly established formulas or
schedules for the issuance of options or restricted shares. The Compensation
Committee granted options and restricted shares based on the recommendations
of an independent compensation consultant and an assessment of the performance
of the executive's department and Camden as a whole. The terms of certain of
such options entitle grantees holding 20,000 or more of such options that have
vested to be eligible for reloads upon the exercise thereof. Such options vest
over a three-year period.
In order to tie executive compensation to the long-term performance of
Camden, the Compensation Committee requires executives to receive at least 25%
and up to 50% of their annual bonus in the form of restricted shares. For the
portion of the bonus paid in the form of restricted shares, the executive
receives shares valued at 150% of the cash value of such portion of the bonus.
The number of shares to be issued is determined based on the market share
price at the date of grant. Such restricted shares vest 25% on the grant date,
with the remaining shares vesting 25% on each anniversary of the date of grant
for the next three years.
The Compensation Committee has established a rabbi trust (the "Rabbi
Trust"), in which restricted shares may be granted for the benefit of certain
officers. Vested restricted shares and the related accumulated dividends held
by the Rabbi Trust may be purchased by the officer at any time within 20 years
from the date of vesting of such shares for a price equal to (i) 10% of the
fair value of the shares on the date the shares were awarded to the
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Rabbi Trust and (ii) 5% of the amount of dividends declared and paid into the
Rabbi Trust with respect to such shares.
CEO Performance Evaluation
For 1997, the Compensation Committee evaluated the CEO's performance based on
Camden's objectives to maximize long-term profitability for its shareholders.
Camden believes such objectives are achieved by providing quality housing for
its residents through sophisticated property management and innovative
operating strategies and selectively investing in favorable markets while
maintaining a conservative capital structure. Camden achieved its objectives in
1997 through the successful acquisition and integration of Paragon Group, Inc.,
by increasing its profitability resulting primarily through higher operating
margins (obtained through its addition of 1,778 units of newly developed
properties), disciplined management of Camden's assets and by skillful day-to-
day operations. The commitment to generate consistent earnings growth requires
Camden to consider selective disposition of properties and redeployment of
capital if management determines a property cannot meet long-term earnings
growth expectations. During 1997, Camden disposed of five properties: Sierra
Pines, Hayes Place, Bay Crest, Bay Place and The Lakes. Based on Camden
achieving its corporate goals and objectives, Mr. Campo received a 3.4%
increase in his base salary and received restricted share awards, options and a
bonus amount which were based upon the relative achievement of the various
stated goals and objectives.
The report of the Compensation Committee shall not be deemed incorporated by
reference by any general statement incorporating by reference this Joint Proxy
Statement/Prospectus into any filing under the Securities Act or under the
Exchange Act, except to the extent that Camden specifically incorporates this
information by reference, and shall not otherwise be deemed filed under such
acts.
The foregoing report is given by the following members of the Compensation
Committee:
F. Gardner Parker
George A. Hrdlicka
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No person who served as a member of Camden's Compensation Committee during
1997 (i) was an officer or employee of Camden during such year, (ii) was
formerly an officer of Camden or (iii) was a party to any material transaction
set forth below under "--Certain Relationships and Transactions."
No executive officer of Camden served as a member of the compensation or
similar committee or board of directors of any other entity, one of whose
executive officers served on the Compensation Committee or the Camden Board.
51
<PAGE>
EXECUTIVE COMPENSATION
The following table summarizes the compensation for the years ended December
31, 1997, 1996 and 1995 of Camden's Chief Executive Officer and each of
Camden's other four most highly compensated officers (collectively, the "Named
Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
--------------------------- ---------------------------
OTHER
ANNUAL SECURITIES
COMPEN- RESTRICTED SHARE UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(1) SATION(2) AWARDS(1)(3) OPTIONS(4)
- --------------------------- ---- -------- -------- --------- ---------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Richard J. Campo......... 1997 $249,493 $137,500 $2,375 $1,211,719 160,000
Chairman of the Board of
Trust 1996 241,055 123,750 2,375 765,313 150,000
Managers and Chief
Executive Officer 1995 232,875 82,500 2,138 310,008 --
D. Keith Oden............ 1997 249,493 137,500 2,375 1,211,719 160,000
President and Chief
Operating Officer 1996 241,055 123,750 2,375 765,313 150,000
1995 232,875 82,500 2,138 310,008 --
H. Malcolm Stewart....... 1997 157,448 101,250 2,250 400,156 20,000
Senior Vice President--
Construction 1996 152,125 61,875 2,375 321,750 --
1995 146,970 41,250 2,138 130,754 --
G. Steven Dawson......... 1997 144,147 61,875 2,201 226,500 20,000
Senior Vice President--
Finance, 1996 139,275 56,375 2,375 280,103 --
Chief Financial Officer,
Treasurer and 1995 134,550 41,250 2,138 130,754 --
Assistant Secretary
James Hinton............. 1997 134,600 68,750 2,375 323,500 20,000
Senior Vice President--
Development 1996 130,000 30,938 2,375 205,313 --
1995 108,700 20,625 2,138 65,375 --
</TABLE>
- --------
(1) The Compensation Committee requires executives to receive at least 25%,
and up to 50%, of their annual bonus in the form of restricted shares. For
the portion of the bonus paid in the form of restricted shares, the
executive received shares valued at 150% of the cash value of such portion
of the bonus. The number of shares issued was determined based on the
market share price at the date of grant. Such restricted shares vest 25%
on the grant date (the "25% Vested Shares"), with the remaining shares
vesting 25% on each anniversary of the date of grant for the next three
years. The Camden Common Shares related to the 25% Vested Shares are
included in the above table under Bonus and the unvested portion of the
restricted shares are included in the above table under Restricted Share
Awards.
(2) Consists of matching contributions under Camden's 401(k) savings plan.
(3) At December 31, 1997, the aggregate value of the 212,444 restricted shares
outstanding based on the closing share price of $31.00 at December 31,
1997 was $6,585,764. In February 1998, Camden awarded 114,132 restricted
shares with three- to five-year vesting periods from the date of grant.
The February 1998 grants pertained to 1997 compensation. The aggregate
value of restricted shares including the grants made in February 1998
based on the share price of $31.00 on December 31, 1997 was $10,123,856.
Distributions on restricted shares were paid at the same rate as paid to
all shareholders.
(4) The table includes a total of 380,000 options granted in February 1998,
which related to the performance of Camden in 1997. All options have a
three-year vesting period.
52
<PAGE>
The following table contains information concerning the grant of share
options to the Named Executive Officers. The table includes a total of 380,000
unexercisable options granted in February 1998, which related to the
performance of Camden in 1997.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF
SHARE PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM
- ------------------------------------------------------------------------------------- ------------------------------
PERCENT OF TOTAL
NUMBER OF COMMON OPTIONS GRANTED TO EXERCISE OF
SHARES UNDERLYING EMPLOYEES IN BASE PRICE EXPIRATION
NAME OPTIONS GRANTED(1) FISCAL YEAR 1997 ($/SHARE) DATE 5% 10%
- ---- ------------------ ------------------ ----------- ---------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Richard J. Campo........ 160,000 33% $29.31 2/15/2008 $ 2,948,880 $ 7,474,640
D. Keith Oden........... 160,000 33% 29.31 2/15/2008 2,948,880 7,474,640
H. Malcolm Stewart...... 20,000 4% 29.31 2/15/2008 368,610 934,330
G. Steven Dawson........ 20,000 4% 29.31 2/15/2008 368,610 934,330
James M. Hinton......... 20,000 4% 29.31 2/15/2008 368,610 934,330
</TABLE>
- --------
(1) All such options vest in equal installments over three years and expire ten
years from date of grant.
The following table sets forth information with respect to the Named
Executive Officers concerning unexercised options held at December 31, 1997. No
Named Executive Officer exercised any options during 1997. The table includes a
total of 380,000 unexercisable options granted in February 1998, which related
to the performance of Camden in 1997.
AGGREGATED EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF COMMON SHARES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
DECEMBER 31, 1997 DECEMBER 31, 1997
------------------------- -------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Richard J. Campo............ 150,000 310,000 $1,250,000 $870,000
D. Keith Oden............... 150,000 310,000 1,250,000 870,000
H. Malcolm Stewart.......... 52,000 20,000 351,000 33,750
G. Steven Dawson............ 47,000 20,000 407,250 33,750
James M. Hinton............. 10,000 20,000 70,000 33,750
</TABLE>
Employment Agreements
Camden has entered into an employment agreement with each of the Named
Executive Officers. The terms of such agreements expire at various times
through August 20, 1999. Such agreements provide for minimum salary levels as
well as various incentive compensation arrangements, which are payable based on
the attainment of specific goals. The agreements also provide for severance
payments in the event certain situations occur, such as termination without
cause or a change of control. The severance payments vary based on the Named
Executive Officer's position from one times the current salary base for Messrs.
Dawson, Hinton and Stewart to 2.99 times the average annual compensation over
the previous three fiscal years for Messrs. Campo and Oden. The agreements
restrict each of the Named Executive Officers from competing with Camden
anywhere within a 30-mile radius of any of Camden's properties during the terms
thereof and, except in certain circumstances, for a period of one year after
termination thereof.
53
<PAGE>
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 Camden's initial public offering
(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.
CAMDEN PROPERTY TRUST
Total Return Performance
[GRAPH APPEARS HERE]
<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>
54
<PAGE>
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. Camden owns 100% of the non-voting stock of CCI and 1% of the
voting stock. The remainder of the voting stock of CCI is owned by Messrs.
Campo and Dawson. Locator fees paid by Camden to CCI were $79,000 for the year
ended December 31, 1997. 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.
Messrs. Campo and Oden (collectively, the "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. Camden owns 100% of the non-voting stock of CamTel and 1% of
the voting stock. The remainder of the voting stock of CamTel is owned by
Messrs. Campo, Dawson, Hrdlicka, Oden, Parker and Webster. 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. Messrs. Cooper
and Levey collectively own interests of 1% to 50% in 12 of the 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 THIRD PARTY TRANSACTION
Following the Effective Time, Camden expects to form the Partnership, and
transfer to the Partnership 18 multifamily properties located in Las Vegas and
one multifamily property located in Laughlin, Nevada, containing an aggregate
of 5,119 apartment units. Camden intends to retain a minority equity position
in the Partnership of approximately 20% and to continue to provide property
management services for the Third Party Transaction Properties. Camden is
seeking an equity capital commitment from a third party investor to own a
majority equity position in the Partnership of approximately 80%. 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 Third Party Transaction Properties, see "BUSINESS OF
OASIS--Oasis Portfolio Summary." Following the Merger and the Third Party
Transaction, it is anticipated that Camden will own interests in 152
multifamily properties containing 49,786 units (including 6,704 units owned
through the Partnership and other 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.
55
<PAGE>
Camden expects that the Partnership will assume existing first mortgage debt
on two of the Third Party Transaction Properties. Camden is considering a
number of financing proposals for first mortgage debt relating to the other 17
Third Party Transaction Properties.
Camden expects that the Third Party Transaction 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 Third Party Transaction will be
consummated at all, or, if it is consummated, that it will be consummated on
terms favorable to Camden. If the Third Party Transaction 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 Third Party Transaction Fails to
Occur; Dependence on the Las Vegas Market."
56
<PAGE>
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
57
<PAGE>
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.
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.
58
<PAGE>
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 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-
59
<PAGE>
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 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); (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.
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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 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."
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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 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
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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
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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
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.
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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 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.
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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 219,143 and 776,499
shares, respectively, of Oasis Common Stock, constituting in the aggregate
approximately 6.1% of the shares of Oasis Common Stock outstanding on February
20, 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 249,069 and 247,020 Camden
Common Shares, respectively, constituting in the aggregate approximately 1.6%
of the Camden Common Shares outstanding on February 20, 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.
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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 Third Party Transaction as if the Third Party
Transaction had occurred on January 1, 1997 (see Note E to the Unaudited Pro
Forma Combined Statement of Operations). The Merger and the Third Party
Transaction 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 Third Party Transaction 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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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
-------------------- ----------------------------------------------------
THIRD PARTY
MERGER CAMDEN TRANSACTION 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) 72,245 (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>
68
<PAGE>
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
========
Calculation of depreciation of real estate owned for the year ended
December 31, 1997 is as follows:
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 Third Party Transaction, (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 THIRD PARTY TRANSACTION."
(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.
69
<PAGE>
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
the Third Party Transaction 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 the Third Party Transaction have been made. The Merger and the Third
Party Transaction 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.
70
<PAGE>
CAMDEN PROPERTY TRUST
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
DECEMBER 31, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
-------------------- -----------------------------------------------------
THIRD PARTY
MERGER CAMDEN TRANSACTION AS FURTHER
CAMDEN OASIS(A) ADJUSTMENTS(B) COMBINED ADJUSTMENTS(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>
71
<PAGE>
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:
<TABLE>
<CAPTION>
SERIES A ADDITIONAL DISTRIBUTIONS IN
PREFERRED COMMON PAID-IN EXCESS OF NET
SHARES SHARES CAPITAL 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>
72
<PAGE>
(H) Represents the Third Party Transaction adjustments to reflect the net
effect of (i) the transfer of the Third Party Transaction Properties 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>
THIRD PARTY THIRD PARTY
TRANSACTION THIRD PARTY SECURED TRANSACTION
ASSETS AND 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>
73
<PAGE>
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.
74
<PAGE>
Several of Camden's core markets are targeted by Camden for continued
acquisitions 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
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 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
75
<PAGE>
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.
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.
76
<PAGE>
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.
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.
77
<PAGE>
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:
<TABLE>
<CAPTION>
DEC. 1997 AVG.
MO. RENTAL RATES
NUMBER YEAR PLACED AVERAGE UNIT 1997 AVERAGE --------------------
PROPERTY AND LOCATION OF UNITS IN SERVICE SIZE (SQ. FT.) OCCUPANCY (1) 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
</TABLE>
78
<PAGE>
<TABLE>
<CAPTION>
DEC. 1997 AVG.
MO. RENTAL RATES
NUMBER YEAR PLACED AVERAGE UNIT 1997 AVERAGE --------------------
PROPERTY AND LOCATION OF UNITS IN SERVICE SIZE (SQ. FT.) OCCUPANCY (1) PER UNIT PER SQ. FT.
--------------------- -------- ----------- -------------- ------------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
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
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>
79
<PAGE>
- --------
(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.
(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 OF
PROPERTY AND LOCATION UNITS 1/28/98 COMPLETION 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, 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.
80
<PAGE>
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 owned and operated. 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 limited liability company in which Oasis
owns a 50% interest), had one apartment community comprising 340 units under
construction, and owned 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. At December 31, 1997, the weighted
average occupancy rate of the Oasis Properties (excluding four properties in
lease-up and the 321 units owned through a limited liability company in which
Oasis owns a 50% membership interest) was 93.4% and the Commercial Center was
100% occupied.
At February 20, 1998, Oasis employed approximately 480 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 (280 units); Oasis Terrace (336
units); and Oasis Trails (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.
81
<PAGE>
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 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 unit
apartment community called Oasis Interlocken on a 19.5 acre parcel located in
the master planned community of Interlocken, Colorado and plans to complete
the project in the second quarter 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 its 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 or acquiring 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 also, from time to time, disposed of properties in order to enhance
stockholder value.
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
82
<PAGE>
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.
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 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 limited liability company in which Oasis owns a 50% membership
interest), 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-five 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-eight 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.
83
<PAGE>
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% 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
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).. 12,293 10,971,826 893 94.6%(4) 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
</TABLE>
84
<PAGE>
<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>
California
Oasis Martinique(5).... 714 1997 642,176 899 97.7%(8) $895 $1.00
Oasis Sea Palms(7)..... 138 1997 123,300 893 96.1%(8) 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%(4) $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 Third Party Transaction Property. See "THE
THIRD PARTY TRANSACTION."
(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
limited liability company in which Oasis holds a 50% member interest.
(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.
(8) Includes average occupancy rates only for the period during which Oasis
had an ownership interest.
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>
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 1,398,040 103.3 1,033
===== ========= ===== =====
</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>
SECURITY OWNERSHIP
CAMDEN
The following table sets forth certain information regarding the beneficial
ownership of Camden Common Shares as of February 20, 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 of February 20, 1998 and the number of Camden Common Shares
into which partnership 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 BENEFICIALLY OWNED AT THE
SHARES BENEFICIALLY OWNED EFFECTIVE TIME
----------------------------- --------------------------
NAME AND ADDRESS OF BENEFICIAL OWNERS (1) AMOUNT PERCENT OF CLASS(2) AMOUNT PERCENT OF CLASS
- ----------------------------------------- --------- ------------------- --------- ----------------
<S> <C> <C> <C> <C>
Wellington Management
Company, LLP(3)........ 4,186,572 13.2% 4,186,572 9.5%
Vanguard/Windsor Funds,
Inc.--
Windsor Fund(4)........ 3,147,800 9.9% 3,147,800 7.1%
William R. Cooper(5).... 1,670,248 5.0% 1,670,248 3.7%
ABKB/LaSalle Securities
Limited
Partnership(6)......... 1,250,475 3.9% 2,363,947 5.4%
PGI Associates,
L.P.(7)................ 1,095,282 3.3% 1,095,282 2.4%
LaSalle Advisors Capital
Management(6).......... 472,700 1.5% 472,700 1.1%
Richard J. Campo(8)..... 481,735 1.5% 481,735 1.1%
D. Keith Oden(9)........ 479,077 1.5% 479,077 1.1%
Lewis A. Levey(10)...... 312,933 * 312,933 *
H. Malcolm Stewart(11).. 76,905 * 76,905 *
G. Steven Dawson(12).... 67,530 * 67,530 *
James M. Hinton(13)..... 21,521 * 21,521 *
Steven A. Webster(14)... 16,000 * 16,000 *
F. Gardner
Parker(14)(15)......... 14,400 * 14,400 *
George A. Hrdlicka(14).. 14,000 * 14,000 *
All trust managers and
executive officers as a
group (13
persons)(16)........... 3,009,522 8.9% 3,009,522 6.4%
</TABLE>
- --------
* Less than 1%
(1) The address for Wellington Management Company, LLP is 75 State Street,
Boston, Massachusetts 02109. The address for Vanguard/Windsor Funds,
Inc.--Windsor Fund is 100 Vanguard Boulevard, P. O. Box 2600, Malvern,
Pennsylvania 19355. The address for ABKB/LaSalle Securities Limited
Partnership and LaSalle Advisors Capital Management is 200 East Randolph
Drive, Chicago, Illinois 60601. The address for PGI Associates, L.P.
("PGI") is Ten Thousand North Central Expressway, Suite 1150, Dallas,
Texas 75231. The address for Messrs. Cooper, Campo, Oden, Levey, Stewart,
Dawson, Hinton, Webster, Parker and Hrdlicka is c/o Camden Property
Trust, 3200 Southwest Freeway, Suite 1500, Houston, Texas 77027.
(2) For purposes of this calculation, the number of Camden Common Shares
deemed outstanding includes 31,719,036 Camden Common Shares currently
outstanding and the number of Camden Common Shares issuable to the named
person or entity upon redemption of units held by such person or entity
or upon the exercise of options held by such person that are exercisable
within 60 days of February 20, 1998.
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<PAGE>
(3) Pursuant to information contained in a Schedule 13G filed with the
Commission in February 1998, Camden was informed that as of December 31,
1997, Wellington Management Company, LLP possessed dispositive and voting
power of 4,186,572 and 60,700 Camden Common Shares, respectively.
(4) Pursuant to information contained in a Schedule 13G filed with the
Commission in February 1998, Camden was informed that as of December 31,
1997, Vanguard/Windsor Funds--Windsor Fund possessed voting and
dispositive power of 3,147,800 Camden Common Shares.
(5) In addition to 312,047 Camden Common Shares and units owned by Mr. Cooper
directly, Mr. Cooper's Camden Common Shares and units owned include
1,095,282 units which are held by PGI, the general partner of which is a
company controlled by Mr. Cooper, and 240,941 units held by Gateway Mall
Associates I, L.P., a partnership in which Mr. Cooper serves as a general
partner of the general partner, and 21,978 units held by WRC Holdings,
Inc.
(6) Pursuant to information contained in a Schedule 13G filed with the
Commission in February 1998, Camden was informed that as of December 31,
1997, ABKB/LaSalle Securities Limited Partnership possessed dispositive
and voting power of 1,250,475 and 1,208,549 Camden Common Shares,
respectively, and LaSalle Advisors Capital Management possessed
dispositive and voting power of 472,700 and 227,800 Camden Common Shares,
respectively. Camden Common Shares beneficially owned at the Effective
Time include 1,113,472 Camden Common Shares to be obtained in the Merger
in exchange for the 1,467,026 shares of Oasis Common Stock beneficially
owned by ABKB/LaSalle Securities Limited Partnership as of February 20,
1998.
(7) PGI is a Texas limited partnership, the general partner of which is a
company controlled by Mr. Cooper and the limited partners of which
consist of Messrs. Cooper and Levey, entities wholly owned by them and
eight former officers of Paragon or its affiliates. PGI owns 1,095,282
units.
(8) Includes 200,000 Camden Common Shares which may be purchased upon
exercising vested options and 32,666 vested restricted Camden Common
Shares held in the Rabbi Trust. Does not include (i) 260,000 Camden
Common Shares underlying options that have not vested, (ii) 9,348 Camden
Common Shares of the 18,696 Camden Common Shares owned by Centeq (Mr.
Campo owns 50% of the common shares of Centeq) or (iii) 77,702 restricted
Camden Common Shares held in the Rabbi Trust that have not vested.
(9) Includes 200,000 Camden Common Shares which may be purchased upon
exercising vested options and 32,057 vested restricted Camden Common
Shares held in the Rabbi Trust. Does not include (i) 260,000 Camden
Common Shares underlying options that have not vested, (ii) 9,348 Camden
Common Shares of the 18,696 Camden Common Shares owned by Centeq (Mr.
Oden owns 50% of the common shares of Centeq) or (iii) 77,702 restricted
Camden Common Shares held in the Rabbi Trust that have not vested.
(10) In addition to 71,992 Camden Common Shares and units owned by Mr. Levey
directly, Mr. Levey's Camden Common Shares and units owned include
240,941 units held by Gateway Mall Associates I, L.P., a partnership in
which Mr. Levey serves as a general partner of the general partner.
(11) Includes 52,000 Camden Common Shares which may be purchased upon
exercising vested options and 14,516 vested restricted Camden Common
Shares held in the Rabbi Trust. Does not include 20,000 Camden Common
Shares underlying options that have not vested or 28,998 restricted
Camden Common Shares held in the Rabbi Trust that have not vested.
(12) Includes 47,000 Camden Common Shares which may be purchased upon
exercising vested options and 13,919 vested restricted Camden Common
Shares held in the Rabbi Trust. Does not include 20,000 Camden Common
Shares underlying options that have not vested or 21,729 restricted
Camden Common Shares held in the Rabbi Trust that have not vested.
(13) Includes 806 Camden Common Shares that are owned by trusts for the
benefit of each of Mr. Hinton's two minor children, for whom Mr. Hinton
and his wife are acting as trustees, 10,000 Camden Common Shares which
may be purchased upon exercising vested options and 8,993 vested
restricted Camden Common Shares held in the Rabbi Trust. Does not include
20,000 Camden Common Shares underlying options that have not vested, or
20,133 restricted Camden Common Shares held in the Rabbi Trust that have
not vested.
(14) Includes 8,000 Camden Common Shares which may be purchased upon
exercising vested options.
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<PAGE>
(15) Includes 200 Camden Common Shares that are owned by Mr. Parker's wife and
100 Camden Common Shares that are owned by trusts for the benefit of each
of Mr. Parker's two children, for whom his wife is acting as trustee.
(16) Includes 894,927 Camden Common Shares, 1,389,304 units, 610,333 Camden
Common Shares subject to options exercisable within 60 days of February
20, 1998 and 114,958 restricted Camden Common Shares held in the Rabbi
Trust, all of which are deemed outstanding pursuant to Rule 13d-3(d)(1).
Shares and/or units beneficially owned by more than one individual have
been counted only once for this purpose. Does not include 616,667 Camden
Common Shares underlying options that have not vested. See Notes (8),
(9), (11), (12) and (13) above. Does not include 255,657 restricted
Camden Common Shares held in the Rabbi Trust that have not vested. See
Notes (8), (9), (11), (12) and (13) above.
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 20, 1998.
<TABLE>
<CAPTION>
CAMDEN COMMON STOCK
OASIS COMMON STOCK BENEFICIALLY OWNED AT
BENEFICIALLY OWNED THE EFFECTIVE TIME
-------------------- -------------------------
NAME AND ADDRESS OF BENEFICIAL OWNERS AMOUNT(1) PERCENT(2) AMOUNT(3) PERCENT(2)
- ------------------------------------- --------- ---------- ------------- -----------
<S> <C> <C> <C> <C>
DIRECTORS AND CERTAIN EXECUTIVE
OFFICERS:
Robert V. Jones(4)............... 1,251,767 7.6 1,052,081 2.4
Scott S. Ingraham(5)............. 315,619 1.9 324,942 *
Allan O. Hunter, Jr.(6).......... 236,569 1.4 222,249 *
Walter B. Eeds(7)................ 123,139 * 136,156 *
John M. Clayton(8)............... 3,750 * 7,590 *
John M. Galvin(9)................ 15,000 * 13,662 *
Edward R. Muller(10)............. 3,300 * 4,781 *
Peter L. Rhein(9)................ 14,000 * 12,903 *
Robert H. Smith(9)............... 30,400 * 25,350 *
Gina Anastasi(11)................ 1,600 * 4,629 *
Executive Officers and Directors
as a Group (12 persons)......... 1,997,394 11.7 1,813,453 4.0
5% HOLDERS:
LaSalle Advisors Limited
Partnership and
ABKB/LaSalle Securities Limited
Partnership(12)................. 1,467,026 9.0 2,363,947 5.4
Morgan Stanley, Dean Witter,
Discovery & Co., and Morgan
Stanley Management, Inc.(13).... 1,408,589 8.6 1,069,119 2.4
</TABLE>
- --------
* Less than 1%
(1) Includes shares subject to options that are exercisable within 60 days
after February 20, 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; Gina Anastasi, 4,500
options; and all executive officers and directors as a group, 391,875
options.
(2) Percentage of beneficial ownership as of February 20, 1998 for each
person includes shares subject to options held by that person that are
exercisable within 60 days after February 20, 1998, and is computed as if
those shares were outstanding on February 20, 1998.
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<PAGE>
(3) Includes shares subject to options that are exercisable within 60 days
after February 20, 1998 and options that will automatically become vested
at the Effective Time, each as adjusted by the Common Share Exchange
Ratio, as follows: Robert V. Jones, 294,112 options; Scott S. Ingraham,
265,650 options; Allan O. Hunter, Jr., 170,775 options; Walter B. Eeds,
94,875 options; John M. Clayton, 7,590 options; John M. Galvin, 9,108
options; Edward R. Mueller, 4,554 options; Peter L. Rhein, 9,108 options;
Robert H. Smith, 9,108 options; Gina Anastasi, 4,554 options; and all
executive officers and directors as a group, 878,542 options.
(4) 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.
(5) Includes 750 shares held by minor children of Mr. Ingraham and 237,500
shares issuable upon the exercise of currently exercisable options.
(6) 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.
(7) Includes 68,750 shares issuable upon the exercise of currently
exercisable options.
(8) Includes 3,750 shares issuable upon the exercise of currently exercisable
options.
(9) Includes 9,000 shares issuable upon the exercise of currently exercisable
options.
(10) Includes 3,000 shares issuable upon the exercise of currently exercisable
options.
(11) Includes 1,500 shares issuable upon the exercise of currently exercisable
options.
(12) 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. LaSalle reports that it
exercises sole voting and dispositive power over 419,200 shares, shared
voting power over 159,926 shares and shared dispositive power over
434,626 shares; ABKB reports that it exercises sole voting and
dispositive power over 144,050 shares, shared voting power over 373,365
shares and shared dispositive power over 469,150 shares; Messrs. Morrill
and Pauley report that they each exercise sole voting and dispositive
power over 563,250 shares, shared voting power over 553,291 shares and
shared dispositive power over 903,776 shares. Camden Common Shares
beneficially owned at the Effective Time include 1,250,475 Camden Common
Shares beneficially owned by ABKB as of February 20, 1998.
(13) Based on information set forth in a Schedule 13G filed as of February 11,
1998 by Morgan Stanley, Dean Witter, Discover & Co. ("Morgan Stanley")
and Morgan Stanley Asset Management, Inc. ("Morgan Stanley Asset
Management"). The address for Morgan Stanley is 1585 Broadway, New York,
New York 10036. The address for Morgan Stanley Asset Management is 1221
Avenue of the Americas, New York, New York 10020. Morgan Stanley reports
that it exercises shared voting power over 1,298,589 shares and shared
dispositive power over 1,408,589 shares. Morgan Stanley Asset Management
reports that it exercises shared voting power over 858,400 shares and
shared dispositive power over 968,000 shares.
89
<PAGE>
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 20, 1998, 31,719,036 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 4,776,716
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 are expected to be listed on the NYSE under
the symbol "CPTPrA."
90
<PAGE>
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.
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.
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<PAGE>
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.
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
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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.
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
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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.
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 part, 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,
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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.
"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."
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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 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
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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 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
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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 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.
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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 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,
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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.
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.
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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 20, 1998, Camden shareholders and Oasis stockholders will
hold approximately 31,719,036 and 12,391,796 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.
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,
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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 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.
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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
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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 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
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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.
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, including, without limitation, foreign persons (except
to the extent discussed below under "--Taxation of Non-U.S. Shareholders"),
dealers in securities, regulated investment companies, life insurance
companies, other financial institutions, tax-exempt organizations (except to
the extent discussed below under "--Taxation of Tax-Exempt Shareholders"),
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. Furthermore, the summary below does
not consider the effect of any foreign, state, local or other tax laws that may
be applicable to holders of Oasis Common Stock, Oasis Series A Preferred Stock
or capital shares of Camden. Neither Camden nor Oasis has requested or will
receive a ruling from the Service as to the tax consequences of the Merger.
Thus, no assurance can be provided that the statements set forth herein (which
are, in any event, not binding on the Service or courts) will not be challenged
by the Service or will be sustained by a court if so challenged.
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
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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 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
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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 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, dated as of
the date of the closing of the Merger, to the effect 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
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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 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 and that the availability or nature of such
election is not modified as proposed in President Clinton's fiscal 1999 budget
proposal.
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
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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. 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,
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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 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.)
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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.
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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 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). In addition, President Clinton's fiscal 1999 budget proposal
contains a provision that, if enacted in its present form, would significantly
curtail the ability of REITs, such as Camden, to form and then hold non-voting
interests in corporations like CCI and CamTel. Under this proposal, the
"grandfathered" status of any such existing entity would terminate if such
entity engaged in a new trade or business or acquired substantial new assets
after the date of first committee action.
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.
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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. In addition, President Clinton's
fiscal 1999 budget proposal includes a provision that, if enacted in its
present form, would result in the immediate taxation of all gain inherent in a
C corporation's assets upon an election by the corporation to become a REIT in
taxable years beginning after January 1, 1999, and thus could effectively
preclude Camden from re-electing to be taxed as a REIT following a loss of its
REIT status.
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 made by Camden that are properly
designated as capital gain dividends will be taxed as gains from the sale or
disposition of a capital asset. Depending on the period of time Camden held the
assets that produced such gains, and on certain designations, if any, that may
be made by Camden, such gains may be taxable to non-corporate U.S. Shareholders
at a 20%, 25% or 28% rate (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.
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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.
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.
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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 by Camden to Non-U.S. Shareholders that are not attributable
to gain from sales or exchanges by Camden of United States real property
interests and are not designated by Camden as capital gains dividends will be
treated as dividends of ordinary income to the extent that they are made out
of Camden's current or accumulated earnings and profits. Such distributions
ordinarily will be subject to withholding of United States federal income 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 or, if an income
tax treaty applies, as attributable to a United States permanent
establishment, 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 are generally not subject to
withholding. Any such distributions received by a Non-U.S. Shareholder that is
a corporation may also be subject to an additional branch profits tax at a 30%
rate or such lower rate as may be specified by an applicable income tax
treaty. 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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Pursuant to current Treasury Regulations, dividends paid to an address in a
country outside the United States are generally presumed to be paid to a
resident of such country for purposes of determining the applicability of
withholding discussed above and the applicability of a tax treaty rate. Under
Treasury Regulations not currently in effect, however, a Non-U.S. Shareholder
who wished to claim the benefit of an applicable treaty rate would be required
to satisfy certain certification and other requirements. Under certain
treaties, lower withholding rates generally applicable to dividends do not
apply to dividends from a REIT, such as Camden. Certain certification and
disclosure requirements must be satisfied to be exempt from withholding under
the effectively connected income and permanent establishment exemptions
discussed above.
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.
For FIRPTA withholding purposes (discussed below), such distributions (i.e.,
distributions that are not made out of earnings and profits of Camden) will be
treated as consideration for the sale or exchange of Camden Common Shares. To
the extent that such distributions 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. For withholding purposes, pursuant to current Treasury Regulations,
Camden is required to treat all distributions as if made out of current or
accumulated earnings and profits. However, amounts so withheld are generally
refundable to the extent it is determined subsequently that such distribution
was, in fact, in excess of the Camden's current and accumulated earnings and
profits. A Non-U.S. Shareholder may obtain such a refund by filing the
appropriate claim for refund with the IRS.
Distributions to a Non-U.S. Shareholder that are designated by Camden at the
time of distribution as capital gains dividends (other than those arising from
the disposition of a "United States real property interest") generally will not
be subject to United States federal income taxation, unless (i) investment in
the Camden Common Shares is effectively connected with the Non-U.S.
Shareholder's United States trade or business (or, if an income tax treaty
applies, is attributable to a United States permanent establishment of the Non-
U.S. Shareholder), in which case the Non-U.S. Shareholder will be subject to
the same treatment as U.S. Shareholders with respect to such gain (except that
a shareholder that is a foreign corporation may also be subject to the 30%
branch profits tax, as discussed above) or (ii) the Non-U.S. Shareholder is a
nonresident alien individual who is present in the United States for 183 days
or more during the taxable year and has a "tax home" in the United States, in
which case the nonresident alien individual will be subject to a 30% tax on the
individual's capital gains.
Distributions to a Non-U.S. Shareholder that are attributable to gain from
sales or exchanges by Camden of "United States real property interests" will
cause the Non-U.S. Shareholder to be treated as recognizing such gain as income
effectively connected with a United States trade or business. A Non-U.S.
Shareholder would thus generally be entitled to offset its gross income by
allowable deductions and would pay tax on the resulting taxable income at the
same rates applicable to domestic shareholders (subject to a special
alternative minimum tax in the case of nonresident alien individuals). Also,
such gain may be subject to a 30% branch profits tax in the hands of a Non-U.S.
Shareholder that is a corporation and is not entitled to treaty relief or
exemption, as discussed above. Camden is required to withhold 35% of any such
distribution. That amount is creditable against the Non-U.S. Shareholder's
United States federal income tax liability. To the extent that such withholding
exceeds the actual tax owed by the Non-U.S. Shareholder, the Non-U.S.
Shareholder may claim a refund from the IRS.
Camden or any nominee (e.g., a broker holding shares in street name) may rely
on a certificate of non-foreign status on Form W-8 or Form W-9 to determine
whether withholding is required on gains realized from the disposition of
United States real property interests. A domestic person who holds Camden
Common Shares on behalf of a Non-U.S. Shareholder will bear the burden of
withholding.
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Sale of Camden Common Shares. Gain recognized by a Non-U.S. Shareholder upon
the sale or exchange of Camden Common Shares generally will not be subject to
United States taxation unless such shares constitute a "United States real
property interest" within the meaning of the Foreign Investment in Real
Property Tax Act of 1980 ("FIRPTA"). Camden Common Shares will not constitute
a "United States real property interest" so long as Camden is a "domestically
controlled REIT." A "domestically controlled REIT" is a REIT in which at all
times during a specified testing period less than 50% in value of its stock is
held directly or indirectly by Non-U.S. Shareholders. Camden believes that it
is a "domestically controlled REIT," and therefore that the sale of Camden
Common Shares are not subject to taxation under the FIRPTA. However, because
the Camden Common Shares are publicly traded, no assurance can be given that
Camden will continue to be a "domestically-controlled REIT." Notwithstanding
the foregoing, gain from the sale or exchange of Camden Common Shares not
otherwise subject to FIRPTA will be taxable to a Non-U.S. Shareholder's United
States trade or business (or, if an income tax treaty applies, is attributable
to a United States permanent establishment of the Non-U.S. Shareholder), or
(ii) the Non-U.S. Shareholder is a nonresident alien individual who is present
in the United States for 183 days or more during the taxable year and has a
"tax home" in the United States. In such case, the nonresident alien
individual will be subject to a 30% tax on the amount of such individual's
gain.
If Camden does not qualify as or ceases to be a "domestically-controlled
REIT," gain arising from the sale or exchange by a Non-U.S. Shareholder of
Camden Common Shares would be subject to United States taxation under FIRPTA
as a sale of a "United States real property interest" unless the shares are
"regularly traded" (as defined by applicable Treasury Regulations) on an
established securities market (e.g., the NYSE) and the selling Non-U.S.
Shareholder held no more than 5% (after applying certain constructive
ownership rules) of the Camden Common Shares during the shorter of (i) the
period during which the taxpayer held such shares or (ii) the five-year period
ending on the date of the disposition of such shares. If gain on the sale or
exchange of Camden Common Shares were subject to taxation under FIRPTA, the
Non-U.S. Shareholder would be subject to regular United States income tax with
respect to such gain in the same manner as a U.S. Shareholder (subject to any
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 foreign corporations), and the purchaser of
the shares would be required to withhold and remit to the IRS 10% of the
purchase price. The 10% withholding tax will not apply if the shares are
"regularly traded" in an established securities market.
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 above, (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" (generally, a foreign corporation controlled
by United States shareholders) for United States tax purposes or (c) derives
50% or more of its gross income for certain periods from the conductof a trade
or business in the United States) 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
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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 deduction or exemption) to such
portion, and to apply the withholding rules of FIRPTA discussed above 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 ABOVE 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.
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. In addition, neither
CCI nor CamTel will qualify as a REIT or a partnership and, accordingly, each
will be subject to federal, state and local income taxes on its taxable income
at regular corporate rates. As a result, each of CCI and CamTel will only be
able to distribute out its net after-tax earnings to its shareholders,
including Camden, thereby reducing the cash available for distribution by
Camden to its shareholders.
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.
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.
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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, will deliver an opinion to Camden 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 their discretion with respect to those matters.
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 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 their discretion with respect to those matters.
BY ORDER OF THE BOARD OF TRUST BY ORDER OF THE BOARD OF DIRECTORS
MANAGERS OF CAMDEN PROPERTY TRUST OF OASIS RESIDENTIAL, INC.
/s/ Richard J. Campo /s/ Scott S. Ingraham
Richard J. Campo Scott S. Ingraham
Chairman of the Board and President and Chief Executive
Chief Executive Officer 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>
TABLE OF CONTENTS
ARTICLE I
THE MERGER
<TABLE>
<C> <S> <C>
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
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
Section 3.1 Representations and Warranties of the Company.............. I-6
Section 3.2 Representations and Warranties of Camden................... I-13
ARTICLE IV
COVENANTS
Section 4.1 Conduct of Business by the Company......................... I-21
Section 4.2 Conduct of Business by Camden.............................. I-22
Section 4.3 Other Actions.............................................. I-24
ARTICLE V
ADDITIONAL COVENANTS
Section 5.1 Preparation of the Registration Statement and the Proxy
Statement; Company Stockholder Meeting and Camden
Shareholder Meeting........................................ I-24
Section 5.2 Access to Information; Confidentiality..................... I-25
Section 5.3 Commercially Reasonable Efforts; Notification.............. I-26
Section 5.4 Affiliates................................................. I-26
Section 5.5 Tax Treatment.............................................. I-26
Section 5.6 Camden Board of Trust Managers............................. I-26
Section 5.7 No Solicitation of Transactions by the Company............. I-26
Section 5.8 Public Announcements....................................... I-27
Section 5.9 Listing.................................................... I-27
Section 5.10 Letters of Accountants..................................... I-27
Section 5.11 Transfer and Gains Taxes................................... I-28
Section 5.12 Benefit Plans and Other Employee Arrangements.............. I-28
Section 5.13 Indemnification............................................ I-28
</TABLE>
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ARTICLE VI
CONDITIONS PRECEDENT
<TABLE>
<C> <S> <C>
Conditions to Each Party's Obligation To Effect the
Section 6.1 Merger.................................................... I-30
Section 6.2 Conditions to Obligations of Camden and Camden Sub........ I-30
Section 6.3 Conditions to Obligations of the Company.................. I-31
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
Section 7.1 Termination............................................... I-32
Section 7.2 Expenses.................................................. I-33
Section 7.3 Effect of Termination..................................... I-35
Section 7.4 Amendment................................................. I-35
Section 7.5 Extension; Waiver......................................... I-36
ARTICLE VIII
GENERAL PROVISIONS
Section 8.1 Nonsurvival of Representations and Warranties............. I-36
Section 8.2 Notices................................................... I-36
Section 8.3 Certain Definitions....................................... I-37
Section 8.4 Interpretation............................................ I-37
Section 8.5 Counterparts.............................................. I-37
Section 8.6 Entire Agreement; No Third-Party Beneficiaries............ I-37
Section 8.7 GOVERNING LAW............................................. I-38
Section 8.8 Assignment................................................ I-38
Section 8.9 Enforcement............................................... I-38
Section 8.10 Severability.............................................. I-38
</TABLE>
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EXHIBITS:
<TABLE>
<C> <S>
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
SCHEDULES:
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
SEC Documents; Financial Statements; Undisclosed
Schedule 3.1(e) 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
Conduct of Business by the Company (Exceptions to
Schedule 4.1 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>
iii
<PAGE>
INDEX OF DEFINED TERMS
<TABLE>
<CAPTION>
TERM SECTION
- ---- -------
<S> <C>
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)
</TABLE>
iv
<PAGE>
<TABLE>
<CAPTION>
TERM SECTION
- ---- -------
<S> <C>
Encumbrances........................................................ 3.1(h)
ERISA............................................................... 3.1(k)(ii)
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>
v
<PAGE>
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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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,
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<PAGE>
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.
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
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<PAGE>
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 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
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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 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.
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(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 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.
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(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 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,
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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(D) 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 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
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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 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',
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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.
(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.
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(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 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.
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(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.
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<PAGE>
(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 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
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<PAGE>
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 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
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<PAGE>
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 (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
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<PAGE>
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 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
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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").
(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
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(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.
(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
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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 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.
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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 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
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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 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
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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
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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 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
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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 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
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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 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.
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(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
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
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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, 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,
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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.
(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
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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.
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
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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.
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);
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(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.
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
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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
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
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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 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
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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 VII
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
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
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<PAGE>
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.
"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.
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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 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.
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<PAGE>
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
/s/ Richard J. Campo
By: _________________________________
Richard J. Campo
Chairman of the Board
Camden Subsidiary II, Inc.
/s/ Richard J. Campo
By: _________________________________
Richard J. Campo
Chairman of the Board
Oasis Residential, Inc.
/s/ Scott S. Ingraham
By: _________________________________
Scott S. Ingraham
President and Chief Operating
Officer
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<PAGE>
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 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.
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"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 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.
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<PAGE>
"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
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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.
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.
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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 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
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(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 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
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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 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
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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 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
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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 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
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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,
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
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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.
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 VII 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
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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 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:
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(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, 1998
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 shareholders of the Company.
In arriving at the opinion set forth below, we have, among other things:
(i) Reviewed certain publicly available business and financial
information relating to the Acquiror and the Company which we 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 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;
(iii) 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;
(iv) 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;
(v) 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;
(vi) Compared the proposed financial terms of the Transaction with the
financial terms of certain other transactions which we deemed to be
relevant;
(vii) Participated in certain discussions and negotiations among
representatives of the Acquiror and the Company and their financial
and legal advisors;
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(viii) Reviewed the potential pro forma impact of the Transaction;
(ix) Reviewed a draft dated December 14, 1997 of the Agreement; and
(x) 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.
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 shareholders of the Company.
Very truly yours,
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
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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.
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,
II-1
<PAGE>
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 certain tax aspects of the Merger
**8.2 Form of Opinion of Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P.
regarding REIT status
**8.3 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)
*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 8.2 hereto)
23.4 Consent of Latham & Watkins (included in Exhibit 8.3 hereto)
*23.5 Consent of Donaldson, Lufkin & Jenrette Securities Corporation
*23.6 Consent of Merrill Lynch & Co.
II-2
<PAGE>
*24 Powers of Attorney
**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
- --------------
* Previously filed.
** Filed herewith.
(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.
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.
II-3
<PAGE>
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>
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 25th day of February, 1998.
CAMDEN PROPERTY TRUST
By: /s/ Richard J. Campo
----------------------------------------------
Richard J. Campo
Chairman of the Board and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title and Capacity Date
----------- ------------------ ----
<S> <C> <C>
/s/ Richard J. Campo Chairman of the Board of Trust February 25, 1998
- --------------------------- Managers and Chief Executive
Richard J. Campo Officer (Principal Executive
Officer)
* President, Chief Operating February 25, 1998
- --------------------------- Officer
D. Keith Oden and Trust Manager
/s/ G. Steven Dawson Senior Vice President-Finance, February 25, 1998
- --------------------------- Chief Financial Officer,
G. Steven Dawson Treasurer
and Assistant Secretary
(Principal
Financial and Accounting
Officer)
* Trust Manager February 25, 1998
- ---------------------------
George A. Hrdlicka
* Trust Manager February 25, 1998
- ---------------------------
F. Gardner Parker
* Trust Manager February 25, 1998
- ---------------------------
Steven A. Webster
* Trust Manager February 25, 1998
- ---------------------------
William R. Cooper
* Trust Manager February 25, 1998
- ---------------------------
Lewis A. Levey
</TABLE>
*By: /s/ Richard J. Campo
-----------------------------------------
Richard J. Campo
Attorney-in-Fact
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Page
Exhibit No. Description Number
- ----------- ----------- ------
<S> <C> <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 certain tax aspects of the Merger
**8.2 Form of Opinion of Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P.
regarding REIT status
**8.3 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)
</TABLE>
<PAGE>
**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 8.2 hereto)
23.4 Consent of Latham & Watkins (included in Exhibit 8.3 hereto)
*23.5 Consent of Donaldson, Lufkin & Jenrette Securities Corporation
*23.6 Consent of Merrill Lynch & Co.
*24 Powers of Attorney
**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
- -------
* Previously filed.
** Filed herewith.
<PAGE>
Exhibit 8.1
February 25, 1998
Camden Property Trust
3200 Southwest Freeway
Suite 1500
Houston, Texas 77027
Sir/Madam:
We have acted as counsel to Camden Property Trust ("Camden"), a Texas real
estate investment trust, in connection with the execution and delivery of the
Agreement and Plan of Merger (the "Agreement") dated as of December 16, 1997, as
amended by Amendment No. 1, dated as of February 4, 1998, by and among Camden,
Oasis Residential, Inc. ("Oasis"), a Nevada corporation and Camden Subsidiary
II, Inc. ("Camden Sub"), a Delaware corporation wholly owned by Camden. This
opinion letter is being furnished to you, pursuant to Section 6.2(e) of the
Agreement, in connection with the Registration on Form S-4, containing the Joint
Proxy Statement/Prospectus of Camden and Oasis, filed with the Securities and
Exchange Commission on February 16, 1998 (file number 333-45817), as amended
through the date hereof (the "Proxy Statement/Prospectus"). Unless otherwise
defined herein or the context hereof otherwise requires, each term used herein
with initial capitalized letters has the meaning given to such term in the
Agreement.
In connection with the preparation of this opinion, we have examined and
with your consent relied upon (without any independent investigation or review
thereof) the following documents (including all exhibits and schedules thereto):
(1) the Agreement; (2) the Proxy Statement/Prospectus; (3) representations and
certifications made to us by Camden and Camden Sub; (4) representations and
certifications made to us by Oasis; and (5) such other instruments, opinions and
documents related to the formation, organization and operation of Camden, Camden
Sub and Oasis or to the consummation of the Merger and the transactions
contemplated thereby as we have deemed necessary or appropriate.
In connection with rendering this opinion, we have assumed (and, with your
consent, are relying thereon, without any independent investigation or review
thereof) that:
1. All information contained in each of the documents we have examined
and relied upon in connection with the preparation of this opinion is accurate,
all copies are accurate, and all signatures are genuine. We have also assumed
that there has been (or will be by the Effective Time of the Merger) due
execution and delivery of all documents where due execution and delivery are
prerequisites to the effectiveness thereof.
2. The Merger will be effective and will qualify as a statutory merger
under applicable state law.
3. Camden Sub is a "qualified REIT subsidiary" as defined in section
856(i) of the Code.
4. Since the date of its organization, Oasis has qualified, and through
the Effective Time of the Merger, will continue to qualify as a real estate
investment trust pursuant to Sections 856 through 859 of the Code.
<PAGE>
5. Each entity formed as a partnership or limited liability company under
applicable state law, in which Camden, Oasis or Camden Sub owns a direct or
indirect interest, is, for federal income tax purposes, properly classified as a
partnership; and further, that each such entity has been classified as a
partnership for federal income tax purposes during the entire period of its
existence during which Camden, Oasis or Camden Sub has owned such direct or
indirect interest therein.
6. There does not exist any plan or intention on the part of Oasis
shareholders to engage in a sale, exchange, transfer, distribution (including a
distribution by a partnership to its partners or by a corporation to its
shareholders), redemption or reduction in any way of any such Oasis
shareholders' risk of ownership by short sale or otherwise, or other
disposition, directly or indirectly (collectively, a "Sale") with respect to
shares of Camden Common Stock to be received by Oasis shareholders in the Merger
such that the aggregate fair market value, as of the Effective Time of the
Merger, of the shares of Camden Common Stock subject to such Sales would exceed
fifty percent (50%) of the aggregate fair market value of all outstanding shares
of Oasis capital stock immediately prior to the Merger.
7. To the extent any expenses relating to the Merger (or the "plan of
reorganization" within the meaning of Treas. Reg. 1.368-1(c) with respect to the
Merger) are funded directly or indirectly by a party other than the party
incurring such expenses, such expenses will be within the guidelines established
in Revenue Ruling 73-54, 1973-1 C.B. 187.
8. No outstanding indebtedness of Camden, Camden Sub or Oasis has or will
represent equity for tax purposes; no outstanding equity of Camden, Camden Sub
or Oasis has represented or will represent indebtedness for tax purposes.
9. Any representation or statement made "to the best of the knowledge" or
similarly qualified is correct without such qualification.
10. An opinion of counsel, substantially identical in form and substance
to this opinion, will be delivered by Latham & Watkins at the time the Merger is
consummated and will not be withdrawn.
11. The Merger will be consummated in accordance with the Agreement and as
described in the Proxy Statement/Prospectus (including satisfaction of all
covenants and conditions to the obligations of the parties without amendment or
waiver thereof); each of Camden and Oasis will comply with all reporting
obligations with respect to the Merger required under the Code, and the Treasury
Regulations thereunder; and the Agreement and all other documents and
instruments referred to therein or in the Proxy Statement/Prospectus are valid
and binding in accordance with their terms.
Based upon and subject to the foregoing, it is our opinion that the Merger
will qualify as a reorganization under the provisions of section 368(a) of the
Code. In addition to the assumptions set forth above, this opinion is subject
to the exceptions, limitations and qualifications set forth below:
1. This opinion represents and is based upon our best judgment regarding
the application of relevant current provisions of the Code and interpretations
of the foregoing as expressed in existing judicial decisions, administrative
regulations and published rulings and procedures. Our opinion is not binding
upon the Internal Revenue Service or the courts, and the Internal Revenue
Service is not precluded from asserting a contrary position. Furthermore, no
assurance can be given that future legislative, judicial or administrative
changes, on either a prospective or retroactive
<PAGE>
basis, would not adversely affect the accuracy of the opinion expressed herein.
Nevertheless, we undertake no responsibility to advise you of any new
developments in the application or interpretation of the federal income tax
laws.
2. This opinion addresses only the specific tax opinions set forth above,
and does not address any other federal, state, local or foreign tax consequences
that may result from the Merger or any other transaction (including any
transaction undertaken in connection with the Merger). In particular, we
express no opinion regarding, among other things:
(i) whether and the extent to which any Oasis shareholder who has
provided or will provide services to Camden will have compensation income under
any provision of the Code and the effects of such compensation income, including
but not limited to the effect upon the basis and holding period of the Camden
Common Stock received by any such Oasis shareholder in the Merger;
(ii) the potential application of the "golden parachute" provisions
(sections 280G, 3121(v)(2) and 4999) of the Code, the alternative minimum tax
provisions (sections 55, 56 and 57) of the Code or sections 305, 306, 357, and
708 of the Code, or the Regulations promulgated thereunder;
(iii) the tax consequences of the Merger to Camden, Camden Sub or
Oasis, including without limitation the recognition of any gain after
application of any provision of the Code, as well as the Treasury Regulations
promulgated thereunder and judicial interpretations thereof;
(iv) the basis of any equity interest in Camden acquired by Camden
Sub in the Merger;
(v) the tax consequences of the Merger (including the opinion set
forth above) as applied to specific Oasis shareholders and/or holders of options
or warrants for Oasis stock or that may be relevant to particular classes of
Oasis shareholders and/or holders of options or warrants for stock of Oasis,
including but not limited to dealers in securities, corporate shareholders
subject to the alternative minimum tax, foreign persons, and holders of shares
acquired upon exercise of stock options or in other compensatory transactions.
3. No opinion is expressed as to any transaction other than the Merger as
described in the Agreement and the Proxy Statement/Prospectus or to any
transaction whatsoever, including the Merger, if all the transactions described
in the Agreement and the Proxy Statement/Prospectus are not consummated in
accordance with the terms of such Agreement and the Proxy Statement/Prospectus
and without waiver or breach of any material provision thereof or if all of the
representations, warranties, statements and assumptions upon which we have
relied are not true and accurate at all relevant times. In the event any one of
the statements, representations, warranties or assumptions upon which we have
relied to issue this opinion is incorrect, our opinion might be adversely
affected and may not be relied upon. No ruling has been (or will be) sought
from the Internal Revenue Service by Camden or Oasis as to any of the federal
tax consequences addressed in this opinion.
4. This opinion is intended solely for the purposes set forth in Section
6.2(e) of the Agreement; it may not be relied upon for any other purpose or by
any other person or entity, and may not be made available to any other person or
entity without our prior written consent.
We hereby consent to the filing of this opinion letter as Exhibit 8.1 to
the Proxy Statement/Prospectus and to the reference to this firm under the
captions "Legal Opinions" and "Federal Income Tax Considerations" in the Proxy
<PAGE>
Statement/Prospectus. In giving the consent, we do not thereby admit that we
are an "expert" within the meaning of the Securities Act of 1933, as amended.
Sincerely yours,
Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P.
<PAGE>
EXHIBIT 8.2
February 25, 1998
Camden Property Trust
3200 Southwest Freeway
Suite 1500
Houston, Texas 77027
Oasis Residential, Inc.
4041 East Sunset Road
Henderson, Nevada 89014
Ladies and Gentlemen:
We have acted as counsel to Camden Property Trust ("Camden"), a Texas real
estate investment trust, in connection with the execution and delivery of the
Agreement and Plan of Merger (the "Agreement") dated as of December 16, 1997, as
amended by Amendment No. 1, dated as of February 4, 1998, by and among Camden,
Oasis Residential, Inc. ("Oasis"), a Nevada corporation and Camden Subsidiary
II, Inc. ("Camden Sub"), a Delaware corporation wholly owned by Camden.
Pursuant to Section 6.3(d) of the Agreement, we have been asked to provide an
opinion on certain federal income tax matters related to Camden. Capitalized
terms used in this letter and not otherwise defined herein have the meaning set
forth in the Proxy Statement/Prospectus (as hereinbelow defined).
The opinions set forth in this letter are based on relevant provisions of
the Internal Revenue Code of 1986, as amended (the "Code"), Treasury Regulations
thereunder (including proposed and temporary Regulations), and interpretations
of the foregoing as expressed in court decisions, the legislative history and
existing administrative rulings and practices of the Internal Revenue Service
("IRS") (including its practices and policies in issuing private letter rulings,
which are not binding on the IRS except with respect to a taxpayer that receives
such a ruling), all as of the date hereof. These provisions and interpretations
are subject to change, which may or may not be retroactive in effect, that might
result in modifications of our opinion.
In rendering the following opinion, we have examined such statutes,
regulations, records, certificates and other documents as we have considered
necessary or appropriate as a basis for such opinion, including, but not limited
to, the following: (1) the Agreement, (2) the Registration Statement on Form S-
4, containing the Joint Proxy Statement/Prospectus of Camden and Oasis, filed
with the Securities and Exchange Commission on February 6, 1998 (file number
333-45817), as amended through the date hereof (the "Proxy
Statement/Prospectus"); (3) the Amended and Restated Declaration of Trust of
Camden and all amendments thereto through the date hereof (the "Charter"); and
(4) certain written representations of Camden contained in an Officer's
Certificate to counsel for Camden Property Trust Regarding Certain Income Tax
Matters, dated on or about the date hereof (the "Camden Officer's Certificate").
<PAGE>
In our review, we have assumed, with your consent, that all of the
representations and statements set forth in the documents we reviewed are true
and correct, and all of the obligations imposed under such documents including
without limitation the Charter, have been and will be performed or satisfied in
accordance with their terms. In connection with rendering the opinion herein,
we have also assumed (without any independent investigation or review thereof)
that:
1. Oasis is a validly organized and duly incorporated corporation
existing under the laws of the State of Nevada; and further, that commencing
with Oasis's taxable year ended December 31, 1993 and continuing through the
date hereof, Oasis has been organized and has operated in conformity with the
requirements for qualification and taxation as a real estate investment trust
("REIT") under the Code (including without limitation any and all asset, income
and diversity of ownership requirements thereunder) and has in fact qualified as
a REIT during such period.
2. The proposed operations of Oasis will enable Oasis to continue to
maintain its status as a REIT under the Code through the Merger; and further,
that the sources of income and assets of Oasis and the ownership of equity
interests in Oasis will be structured in a manner which will perpetuate its
status as a REIT during such future taxable years.
3. Each entity formed as a partnership or limited liability company under
applicable state law, in which Camden, Oasis or Camden Sub owns a direct or
indirect interest, is, for federal income tax purposes, properly classified as a
partnership; and further, that each such entity has been classified as a
partnership for federal income tax purposes during the entire period of its
existence during which Camden, Oasis or Camden Sub has owned such direct or
indirect interest therein.
4. Camden is a validly organized and duly formed real estate investment
trust existing under the laws of the State of Texas; and further, that Camden
Sub is a validly organized and duly incorporated corporation existing under the
laws of the State of Delaware.
5. The Merger will be consummated in accordance with the Agreement and as
described in the Proxy Statement/Prospectus (including satisfaction of all
covenants and conditions to the obligations of the parties without amendment or
waiver thereof); the Merger will qualify as a merger under the applicable laws
of Texas and Nevada; each of Camden and Oasis will comply with all reporting
obligations with respect to the Merger required under the Code, and the Treasury
Regulations thereunder; and the Agreement and all other documents and
instruments referred to therein or in the Proxy Statement/Prospectus are valid
and binding in accordance with their terms.
For purposes of rendering our opinion, we have not made an independent
investigation or audit of any of the facts set forth in any of the above-
referenced documents, including the Proxy Statement/Prospectus and the Camden
Officer's Certificate, or with regard to the assumptions set forth above.
Consequently, we have relied upon your representations and have assumed that the
information presented in such documents or otherwise furnished to us accurately
and completely describes all material facts relevant to our opinions. No facts
have come to our attention, however, that would cause us to conclude that such
facts or documents are inaccurate or incomplete in any material way.
Any inaccuracy in, or breach of, any of the aforementioned statements,
representations, warranties and assumptions or any change after the date hereof
in applicable law could adversely affect our opinion. No ruling has been (or
will be) sought from the IRS by Camden or Oasis as to the federal income tax
matters addressed in this opinion.
<PAGE>
Based upon our examination of the foregoing items and subject to and
limited by the assumptions, exceptions, limitations and qualifications set forth
herein, we are of the opinion that commencing with Camden's taxable year ended
December 31, 1993. Camden was organized and has operated in conformity with the
requirements for qualification and taxation as a real estate investment trust
("REIT") under the Code, 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, and the opinion and
discussion contained under the caption "Federal Income Tax Considerations" in
the Proxy Statement/Prospectus accurately reflects existing law and fairly
addresses the material federal income tax issues described therein.
We assume no obligation to advise you of any changes in our opinion
subsequent to the delivery of this opinion letter. Camden's qualification as a
REIT depends upon Camden's ability to meet on a continuing basis, through actual
annual operating and other results, the various requirements under the Code with
regard to, among other things, the sources of its gross income, the composition
of its assets, the level of its distributions to stockholders, and the diversity
of its stock ownership. We have not undertaken to review or audit Camden's
compliance with these requirements on a continuing basis. Accordingly, no
assurance can be given that the actual operating results of Camden, and the
entities in which Camden owns interests, the sources of their income, the nature
of their assets, the level of distributions to shareholders and the diversity of
stock ownership for any given taxable year has satisfied or will satisfy the
requirements under the Code for qualification and taxation as a REIT.
An opinion of counsel merely represents counsel's best judgment with
respect to the probable outcome on the merits and is not binding on the IRS or
the courts. There can be no assurance that positions contrary to our opinions
will not be taken by the IRS, or that a court considering the issues would not
hold contrary to such opinions.
This opinion letter has been prepared solely for your benefit pursuant to
Section 6.2(d) and 6.3(d) of the Agreement. The opinion may not be used or
relied upon by any other person or for any other purpose and may not be
disclosed, quoted, filed with a governmental agency or otherwise referred to
without our prior written consent. Notwithstanding the foregoing, we hereby
consent to the filing of this opinion letter as Exhibit 8.3 to the Proxy
Statement/Prospectus and to the reference to this firm under the caption "Legal
Opinions" in the Proxy Statement/Prospectus. In giving such consent, we do not
thereby admit that we are an "expert" within the meaning of the Securities Act
of 1933, as amended.
Sincerely yours,
Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P.
<PAGE>
Exhibit 8.3
February 25, 1998
Oasis Residential, Inc.
4041 East Sunset Road
Henderson, Nevada 89014
Re: Camden Property Trust
Registration Statement on Form S-4
----------------------------------
Ladies and Gentlemen:
We have acted as tax counsel to Oasis Residential, Inc., a Nevada
corporation (the "Company"), in connection with the preparation of the
-------
registration statement (as amended from time to time and together with all
exhibits thereto and all documents incorporated by reference therein, the
"Registration Statement") on Form S-4 of Camden Property Trust, a Texas real
- -----------------------
estate investment trust, as filed with the Securities and Exchange Commission on
February 6, 1998 (file number 333-45817).
This opinion is conditioned upon certain representations made by the
Company as to factual matters through a certificate of an officer of the Company
(the "Officer's Certificate"). In addition, this opinion is based upon the
---------------------
factual representations of the Company concerning its business and properties as
set forth in the Registration Statement.
In our capacity as such counsel, we have made such legal and factual
examinations and inquiries, including an examination of originals or copies
certified or otherwise identified to our satisfaction of such documents,
corporate records and other instruments, as we have deemed necessary or
appropriate for purposes of this opinion.
In our examination, we have assumed the authenticity of all documents
submitted to us as originals, the genuineness of all signatures thereon, the
legal capacity of natural persons executing such documents and the conformity to
authentic original documents of all documents submitted to us as copies.
We are opining herein as to the effect on the subject transaction only of
the federal income tax laws of the United States and we express no opinion with
respect to the applicability thereto, or the effect thereon, of other federal
laws, the laws of any state or other jurisdiction or as to any matters of
municipal law or the laws of any other local agencies with any state.
Based upon the facts set forth in the Registration Statement and Officer's
Certificate, it is our opinion that the Company was organized in conformity with
the requirements for qualification as a real estate investment trust under the
Internal Revenue Code of 1986, as amended (the "Code"), commencing with its
----
taxable year ending December 31, 1993, and its proposed method of operation will
enable it to meet the requirements for qualification and taxation as such a real
estate investment trust.
No opinion is expressed as to any matter not discussed herein.
<PAGE>
This opinion is based on various statutory provisions, regulations
promulgated thereunder and interpretations thereof by the Internal Revenue
Service and the courts having jurisdiction over such matters, all of which are
subject to change either prospectively or retroactively. Also, any variation or
difference in the facts from those set forth in the Registration Statement or
Officer's Certificate may affect the conclusions stated herein. Moreover, the
Company's qualification and taxation as a real estate investment trust depends
upon the Company's ability to meet, through actual annual operating results,
distribution levels and diversity of stock ownership, the various qualification
tests imposed under the Code, the results of which have not been and will not be
reviewed by Latham & Watkins. Accordingly, no assurance can be given that the
actual results of the Company's operation for any one taxable year will satisfy
such requirements.
This opinion is rendered only to you and is solely for your use and the use
of your shareholders in connection with the transactions set forth in the
Registration Statement. This opinion may not be relied upon by you or your
shareholders for any other purpose, or furnished to, quoted to or relied upon by
any other person, firm or corporation for any purpose, without our prior written
consent. We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name under the caption "Legal
Opinions" in the Registration Statement.
Very truly yours,
/s/ Latham & Watkins
<PAGE>
Exhibit 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Amendment No. 1 to
Registration Statement No. 333-45817 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 such
Registration Statement.
DELOITTE & TOUCHE LLP
Houston, Texas
February 25, 1998
<PAGE>
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. 333-45817) 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 25, 1998
<TABLE> <S> <C>
<PAGE>
<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>
Exhibit 99.1
CAMDEN PROPERTY TRUST
FORM OF PROXY FOR SPECIAL MEETING IN LIEU OF ANNUAL MEETING
TO BE HELD ON APRIL 8, 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 April 8, 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 AND 4.
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>
PLEASE MARK VOTE IN BOX IN THE FOLLOWING MANNER USING DARK INK ONLY.
<TABLE>
<S> <C> <C> <C>
1. Approval of the merger of FOR AGAINST ABSTAIN
Oasis Residential, Inc. with [_] [_] [_]
and into Camden Subsidiary
II, Inc. pursuant to the
Agreement and Plan of 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 FOR WITHHOLD Nominees:
Instruction: To withhold [_] AUTHORITY Richard J. Campo
authority to vote for any FOR ALL William R. Cooper
individual nominee, write in NOMINEES George A. Hrdlicka
that nominee's name on the [_] Lewis A. Levey
lines below D. Keith Oden
F. Gardner Parker
---------------------------- Steven A. Webster
----------------------------
----------------------------
----------------------------
----------------------------
3. Approval of the FOR AGAINST ABSTAIN
appointment of Deloitte & [_] [_] [_]
Touche LLP as independent
auditors
4. The postponement or FOR AGAINST ABSTAIN
adjournment of the meeting [_] [_] [_]
for solicitation of
additional votes, if
necessary to approve
proposals 1, 2 or 3
</TABLE>
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Special Meeting or any adjournment
or postponement thereof.
- --------------------------------------------------------------------------------
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 and 4.
--------------------------------
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>
Exhibit 99.2
OASIS RESIDENTIAL, INC.
FORM OF PROXY OF STOCKHOLDERS SPECIAL MEETING
TO BE HELD ON APRIL 8, 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 on April 8, 1998 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 Joint Proxy Statement/Prospectus.
THE BOARD OF DIRECTORS OF OASIS RESIDENTIAL, INC. RECOMMENDS A VOTE
FOR PROPOSALS 1 AND 2 DESCRIBED IN THIS PROXY CARD.
---
This Proxy will be voted as you specify above. UNLESS OTHERWISE MARKED, THIS
PROXY WILL BE VOTED FOR PROPOSALS 1 AND 2 DESCRIBED IN THIS PROXY CARD.
(PLEASE DATE AND SIGN ON REVERSE SIDE)
SEE REVERSE
SIDE
<PAGE>
Please mark your votes as in this
example using dark ink only: [X]
<TABLE>
<S> <C> <C> <C>
1. Approval of the Merger of Oasis FOR AGAINST ABSTAIN
Residential, Inc. with and into Camden
Subsidiary II, Inc. pursuant to the [_] [_] [_]
Agreement and 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 of FOR AGAINST ABSTAIN
the meeting for the solicitation of
additional votes, if necessary to approve [_] [_] [_]
proposal 1
</TABLE>
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Special Meeting or any adjournment or
postponement thereof.
- --------------------------------------------------------------------------------
This proxy when properly executed will be
voted in the manner directed herein by
the undersigned stockholder. If no
direction is made, this proxy will be
voted FOR the proposals described
above.
------------------------------
Signature
------------------------------
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).
