EXHIBIT 99.2
AGREEMENT AND PLAN OF MERGER
Dated as of December 16, 1996,
Among
CAMDEN PROPERTY TRUST
CAMDEN SUBSIDIARY, INC.
And
PARAGON GROUP, INC.
TABLE OF CONTENTS
PAGE
ARTICLE I THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.2 Closing . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 1.3 Effective Time . . . . . . . . . . . . . . . . . . . . . 3
SECTION 1.4 Amendment of Operating Partnership Agreement . . . . . . 3
SECTION 1.5 Effects of the Merger . . . . . . . . . . . . . . . . . . 4
SECTION 1.6 Articles of Incorporation and Bylaws . . . . . . . . . . 4
SECTION 1.7 Trust Managers . . . . . . . . . . . . . . . . . . . . . 4
SECTION 1.8 Officers . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 1.9 Purchase of Common Stock by the Operating . . . . . . . . 4
Partnership
ARTICLE II EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT
CORPORATIONS; EXCHANGE OF CERTIFICATES . . . . . . . . . . . . . . . . 5
SECTION 2.1 Effect on Capital Stock . . . . . . . . . . . . . . . . . 5
(a) Cancellation of Treasury Stock . . . . . . . . . . . . . . . . 5
(b) Conversion of Common Stock . . . . . . . . . . . . . . . . . . 5
(c) Shares of Camden Common Stock . . . . . . . . . . . . . . . . 5
SECTION 2.2 Exchange of Certificates . . . . . . . . . . . . . . . . . 6
(a) Exchange Agent . . . . . . . . . . . . . . . . . . . . . . . . 6
(b) Camden to Provide Merger Consideration . . . . . . . . . . . . 6
(c) Exchange Procedure . . . . . . . . . . . . . . . . . . . . . . 6
(d) Record dates for Final Dividends; Distributions with
Respect to Unexchanged Shares . . . . . . . . . . . . . . . 7
(e) No Further Ownership Rights in Common Stock . . . . . . . . . 8
(f) No Liability . . . . . . . . . . . . . . . . . . . . . . . . . 8
(g) No Fractional Shares . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE III REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . 9
SECTION 3.1 Representations and Warranties of the Company . . . . . . 9
(a) Organization, Standing and Corporate Power of the Company . . 9
(b) Company Subsidiaries . . . . . . . . . . . . . . . . . . . . . 10
(c) Capital Structure . . . . . . . . . . . . . . . . . . . . . . 10
(d) Authority; Noncontravention; Consents . . . . . . . . . . . . 11
(e) SEC Documents; Financial Statements; Undisclosed Liabilities . 13
(f) Absence of Certain Changes or Events . . . . . . . . . . . . . 14
(g) Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(h) Properties . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(i) Environmental Matters . . . . . . . . . . . . . . . . . . . . 16
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(j) Related Party Transactions . . . . . . . . . . . . . . . . . . 17
(k) Absence of Changes in Benefit Plans; ERISA Compliance . . . . 17
(l) Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(m) No Payments to Employees, Officers or Directors . . . . . . . 19
(n) Brokers; Schedule of Fees and Expenses . . . . . . . . . . . . 19
(o) Compliance with Laws . . . . . . . . . . . . . . . . . . . . . 19
(p) Contracts; Debt Instruments . . . . . . . . . . . . . . . . . 20
(q) Opinion of Financial Advisor . . . . . . . . . . . . . . . . . 20
(r) State Takeover Statutes . . . . . . . . . . . . . . . . . . . 21
(s) Registration Statement . . . . . . . . . . . . . . . . . . . . 21
(t) Investment Company Act of 1940 . . . . . . . . . . . . . . . . 21
(u) Vote Required . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 3.2 Representations and Warranties of Camden . . . . . . . . 21
(a) Organization, Standing and Corporate Power of Camden
and Camden Sub. . . . . . . . . . . . . . . . . . . . . . 21
(b) Camden Subsidiaries . . . . . . . . . . . . . . . . . . . . . 22
(c) Capital Structure . . . . . . . . . . . . . . . . . . . . . . 22
(d) Authority; Noncontravention; Consents . . . . . . . . . . . . 23
(e) SEC Documents; Financial Statements; Undisclosed
Liabilities . . . . . . . . . . . . . . . . . . . . . . . . 25
(f) Absence of Certain Changes or Events . . . . . . . . . . . . . 26
(g) Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(h) Properties . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(i) Environmental Matters . . . . . . . . . . . . . . . . . . . . 28
(j) Related Party Transactions . . . . . . . . . . . . . . . . . . 28
(k) Absence of Changes in Benefit Plans; ERISA Compliance . . . . 29
(l) Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(m) No Payments to Employees, Officers or Directors . . . . . . . 30
(n) Brokers; Schedule of Fees and Expenses . . . . . . . . . . . . 31
(o) Compliance with Laws . . . . . . . . . . . . . . . . . . . . . 31
(p) Contracts; Debt Instruments . . . . . . . . . . . . . . . . . 31
(q) Interim Operations of Camden Sub . . . . . . . . . . . . . . . 32
(r) Opinion of Financial Advisor . . . . . . . . . . . . . . . . . 32
(s) State Statutes . . . . . . . . . . . . . . . . . . . . . . . . 32
(t) Registration Statement . . . . . . . . . . . . . . . . . . . . 32
(u) Vote Required . . . . . . . . . . . . . . . . . . . . . . . . 32
(v) Investment Company Act Of 1940 . . . . . . . . . . . . . . . . 32
ARTICLE IV COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 4.1 Conduct of Business by the Company . . . . . . . . . . . 33
SECTION 4.2 Conduct of Business by Camden . . . . . . . . . . . . . . 35
SECTION 4.3 Other Actions . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE V ADDITIONAL COVENANTS . . . . . . . . . . . . . . . . . . . . . 38
SECTION 5.1 Preparation of the Registration Statement and the
Proxy Statement; Shareholders Meeting and Camden
Shareholders Meeting . . . . . . . . . . . . . . . . . . . . . . . 38
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SECTION 5.2 Access to Information; Confidentiality . . . . . . . . . . 40
SECTION 5.3 Commercially Reasonable Efforts; Notification . . . . . . 41
SECTION 5.4 Affiliates . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 5.5 Tax Treatment . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 5.6 Camden Board of Trust Managers . . . . . . . . . . . . . . 42
SECTION 5.7 No Solicitation of Transactions by the Company . . . . . . 42
SECTION 5.8 Public Announcements . . . . . . . . . . . . . . . . . . . 43
SECTION 5.9 Listing . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 5.10 Letters of Accountants . . . . . . . . . . . . . . . . . . 43
SECTION 5.11 Transfer and Gains Taxes . . . . . . . . . . . . . . . . . 44
SECTION 5.12 Benefit Plans and Other Employee Arrangements . . . . . . 44
SECTION 5.13 Indemnification; Directors' and Officers' Insurance . . . 45
SECTION 5.14 Reit Qualification of Paradim . . . . . . . . . . . . . . 48
SECTION 5.15 Termination of Certain Employment Agreements . . . . . . . 48
ARTICLE VI CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . 48
SECTION 6.1 Conditions to Each Party's Obligation to Effect
the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
(a) Shareholder Approvals . . . . . . . . . . . . . . . . . . . . . 48
(b) HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
(c) Listing of Shares . . . . . . . . . . . . . . . . . . . . . . . 48
(d) Registration Statement . . . . . . . . . . . . . . . . . . . . 48
(e) No Injunctions or Restraints . . . . . . . . . . . . . . . . . 49
(f) Blue Sky Laws . . . . . . . . . . . . . . . . . . . . . . . . . 49
(g) Related Transactions . . . . . . . . . . . . . . . . . . . . . 49
(h) Certain Actions and Consents . . . . . . . . . . . . . . . . . 49
SECTION 6.2 Conditions to Obligations of Camden . . . . . . . . . . . . 49
(a) Representations and Warranties . . . . . . . . . . . . . . . . 49
(b) Performance of Obligations of the Company . . . . . . . . . . . 50
(c) Material Adverse Change . . . . . . . . . . . . . . . . . . . . 50
(d) Opinions Relating to REIT and Partnership Status . . . . . . . 50
(e) Other Tax Opinion . . . . . . . . . . . . . . . . . . . . . . . 50
(f) Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 6.3 Conditions to Obligations of the Company . . . . . . . . . 51
(a) Representations and Warranties . . . . . . . . . . . . . . . . 51
(b) Performance of Obligations of Camden . . . . . . . . . . . . . 51
(c) Material Adverse Change . . . . . . . . . . . . . . . . . . . 51
(d) Opinion Relating to REIT Status . . . . . . . . . . . . . . . . 51
(e) Other Tax Opinion . . . . . . . . . . . . . . . . . . . . . . . 52
(f) Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
(g) The Investment Company Act Opinion . . . . . . . . . . . . . . 52
ARTICLE VII BOARD ACTIONS . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 7.1 Board Actions . . . . . . . . . . . . . . . . . . . . . . 52
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER . . . . . . . . . . . . . . 53
SECTION 8.1 Termination . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 8.2 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . 55
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SECTION 8.3 Effect of Termination . . . . . . . . . . . . . . . . . . 58
SECTION 8.4 Amendment . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 8.5 Extension; Waiver . . . . . . . . . . . . . . . . . . . . 58
ARTICLE IX GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 9.1 Nonsurvival of Representations and Warranties . . . . . . 59
SECTION 9.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 9.3 Certain Definitions . . . . . . . . . . . . . . . . . . . 60
SECTION 9.4 Interpretation . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 9.5 Counterparts . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 9.6 Entire Agreement; No Third-Party Beneficiaries . . . . . . 62
SECTION 9.7 Governing Law . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 9.8 Assignment . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 9.9 Enforcement . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 9.10 Severability . . . . . . . . . . . . . . . . . . . . . . . 63
EXHIBITS:
A Form of Amended and Restated Operating Partnership Agreement
B Form of Affiliates Letter
C Terms of Severance
D Form of Registration Rights Agreement
E Forms of Letters and Certificates Supporting Tax Opinion
F Forms of Letters and Certificates Supporting Tax Opinion
G Form of Lock-Up Agreement
Annex A - Parties to Company Voting Agreement
Annex B - Parties to Camden Voting Agreement
SCHEDULES:
Schedule 1.7 Trust Managers of Camden
Schedule 1.8 Officers of Surviving Corporation
Schedule 3.1(b) Company Subsidiaries
Schedule 3.1(c) Capital Structure
Schedule 3.1(d) Authority; Noncontravention; Consents
Schedule 3.1(e) SEC Documents; Financial Statements; Undisclosed Liabilities
Schedule 3.1(f) Certain Changes or Events
Schedule 3.1(g) Litigation
Schedule 3.1(h) Company Properties
Schedule 3.1(j) Company Related Party Transactions
Schedule 3.1(k)(i) Changes in Benefit Plans
Schedule 3.1(k)(ii) ERISA Compliance
Schedule 3.1(l) Taxes
Schedule 3.1(m) Payments to Employees, Officers and Directors
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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) Taxes
Schedule 3.2(m) Payments to Employees, Officers or Directors
Schedule 3.2(p)(i) Contracts
Schedule 3.2(p)(ii) Debt Instruments
Schedule 4.1 Conduct of Business by the Company (Exceptions to Covenants)
Schedule 4.2 Conduct of Business by Camden (Exceptions to Covenants)
Schedule 5.15 Termination of Employment
Schedule 8.2(b) Competing Transactions (exceptions)
Schedule 9.3 Persons with "Knowledge" of the Company or Camden.
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Index of Defined Terms
In
Agreement and Plan of Merger
Term Section
---- -------
"Affiliate" 9.3
"Agreement" Title
"Articles of Merger" 1.3
"Base Amount'' 8.2(b)
"Break-Up Expenses" 8.2(b)
"Break-Up Fee" 8.2(b)
"Break-Up Fee Tax Opinion" 8.2(b)
"Camden Benefit Plans" 3.2(k) (i)
"Camden Common Stock" Recital (f)
"Camden" Title
"Camden Disclosure Letter" 9.3
"Camden Options" 3.2(c)
"Camden Employee Stock Plans" 3.2(c)
"Camden Financial Statement Date" 3.2(f)
"Camden Interests" 9.3
"Camden Management Company" 9.3
"Camden Material Adverse Change" 3.2(f)
"Camden Material Adverse Effect" 3.2(a)
"Camden Options" 3.2(c)
"Camden Preferred Stock" 3.2(c)
"Camden Properties" 3.2(h)
"Camden SEC Documents" 3.2(e)
"Camden Shareholder Approvals" 3.2(d)
"Camden Shareholders Meeting" 5.1(e)
"Camden Subsidiary" 9.3
"Camden Voting Agreement" Recital (f)
"Certificate of Merger" 1.3
"Certificates" 2.2(c)
"Closing Date" 1.2
"Code" Recital (d)
"Common Stock" Recital (b)
"Company" Title
"Company Disclosure Letter" 9.3
"Company Employee Stock Plans" 3.1(c)
"Company Options" 3.1(c)
"Company Properties" 3.1(h)
"Company SEC Documents" 3.1(e)
"Company Shareholder Approvals" 3.1(d)
"Company Shareholders Meeting" 5.1(b)
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"Company Subsidiary" 9.3
"Company Voting Agreement Recital (e)
"Effective Time" 1.3
"Excess Common Stock" 3.1(c)
"Excess Camden Shares" 2.2(g) (ii)
"Exchange Act" 3.1(d)
"Exchange Agent" 2.2(a)
"Exchange Fund" 2.2(b)
"Exchange Trust" 2.2(g) (ii)
"Exchange Ratio" 2.1(b)
"Expense Fee Base Amount" 8.2(b)
"Financial Statement Date" 3.1(f)
"GAAP" 3.1(e)
"Governmental Entity" 3.1(d)
"GP Holdings" 9.3
"Hazardous Materials" 3.1(i)
"HSR Act" 3.1(d)
"Indebtedness" 3.1(p) (ii)
"Indemnified Liabilities" 5.13(a)
"Indemnified Parties" 5.13(a)
"Indemnifying Parties" 5.13(a)
"Knowledge" 9.3
"Laws" 3.1(d)
"Liens" 3.1(b)
"LP Holdings" 9.3
"Material Adverse Change" 3.1(f)
"Material Adverse Effect" 3.1(a)
"Merger" Recital (b)
"Merger Consideration" 2.1(b)
"Xxxxxxx Xxxxx" 3.1(n)
"MGCL" 1.1
"New Partnership" Recital (h)
"NYSE" 2.2(g) (ii)
"Operating Partnership" 9.3
"Operating Partnership Agreement" Recital (h)
"Operating Partnership Transaction" 1.4
"PaineWebber" 3.2(n)
"Partnership Merger" 5.1(d)
"Person" 9.3
"Preferred Stock" 3.1(c)
"Property Restrictions" 3.1(h)
"Proxy Statement" 3.1(d)
"Qualifying Income" 8.2(b)
"Registration Statement" 3.2(d)
"REIT" 3.1(l) (ii)
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"REIT Requirements" 8.2(b)
"Required Partnership Vote" 9.3
"Residential Management Holdings" 9.3
"SDAT" 1.3
"SEC" 3.1(d)
"Shareholder Approvals" 3.2(d)
"Securities Act" 3.1(e)
"Stock Incentive Plan" 5.12(b) (i)
"Stock Purchase Agreement" Recital (g)
"Subsidiary'' 9.3
"Superior Competing Transaction" 7.1(d)
"Surviving Corporation" 1.1
"Takeover Statute" 3.1(r)
"Taxes" 3.1(l) (i)
"Termination Expense Base Amount" 8.2(c)
"Termination Expense Tax Opinion" 8.2(c)
"Termination Expenses" 8.2(c)
"TPMP" 9.3
"Transactions" Recital (i)
"Transfer and Gains Taxes" 5.11
"Unconsolidated Company Financial Statements" 3.1(e)
"Unconsolidated Camden Financial Statements" 3.2(e)
"Units" 3.1(c)
"1940 Act" 3.1(t)
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THIS AGREEMENT AND PLAN OF MERGER (this "AGREEMENT") dated as of
December 16, 1996 is made and entered into between Camden Property Trust, a
Texas real estate investment trust ("CAMDEN"), Camden Subsidiary, Inc., a
Delaware corporation and a direct wholly-owned subsidiary of Camden ("CAMDEN
SUB"), and Paragon Group, Inc., a Maryland corporation (the "COMPANY").
RECITALS
(a) Certain capitalized terms used herein shall have the meanings assigned
to them in Section 9.3.
(b) The respective Boards of Directors of Camden, Camden Sub and the
Company have approved the merger of the Company with and into Camden Sub,
Camden's direct wholly-owned subsidiary, as set forth below (the "MERGER"),
upon the terms and subject to the conditions set forth in this Agreement,
whereby each issued and outstanding share of common stock, par value $.01 per
share, of the Company (the "COMMON STOCK") will be converted into the right
to receive the Merger Consideration (as defined below).
(c) 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.
(d) 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").
(e) 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 in favor of this Agreement, the Merger and any other matter
which requires its vote in connection with the transactions contemplated by
this Agreement, including the consent to certain amendments to the Operating
Partnership Agreement (as defined in Section 1.4) and, as applicable, the
consent to the Operating Partnership Transaction (as defined in Section 1.4).
(f) 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 which requires its vote in connection with the transactions
contemplated by this Agreement.
(g) Simultaneously with the execution of this Agreement, the Camden
Management Company (as defined below) and TPMP (as defined below) have
entered into a Stock Purchase Agreement (the "STOCK PURCHASE AGREEMENT")
providing for the sale by TPMP of all of the issued and outstanding voting
stock of the Residential Management Corporation (as defined below) owned by
TPMP to an entity designated by Camden simultaneously with the completion of
the other Transactions (as defined below).
(h) In connection with the Merger, the Second Amended and Restated
Agreement of Limited Partnership of the Operating Partnership (the "OPERATING
PARTNERSHIP AGREEMENT") will be amended and restated in its entirety
substantially in the form attached hereto as EXHIBIT A hereto, or if the
required consents to the contemplated amendments to the Operating Partnership
Agreement are not received, then at the option of the Company in its sole
discretion, the Operating Partnership will be merged with and into either (i)
a newly formed Delaware limited partnership (the "NEW PARTNERSHIP"), or (ii)
Camden Sub.
(i) The transactions contemplated by this Agreement, the Company Voting
Agreement, the Camden Voting Agreement, the Stock Purchase 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 corporation law of
Delaware (the "CORPORATION LAW") and the Maryland General Corporation Law
("MGCL"), the Company shall be merged with and into Camden Sub at the
Effective Time. Following the Merger, the separate corporate existence of
the Company shall cease and Camden Sub shall continue as the surviving
corporation (the "SURVIVING CORPORATION") and shall succeed to and assume all
the rights and obligations of the Company in accordance with the Corporation
Law.
SECTION 1.2 Closing. The closing of the Merger will take place at 10:00
a.m. on a date to be specified by the parties, which (subject to satisfaction
or
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waiver of the conditions set forth in Sections 6.2 and 6.3) shall be no later
than the second business day after satisfaction or waiver of the conditions
set forth in Section 6.1 (the "CLOSING DATE"), at the offices of Xxxxx &
Xxxxxxx L.L.P., 000 00xx Xxxxxx, X.X., Xxxxxxxxxx, X.X., unless another date
or place 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 Corporation Law and
articles of merger or other appropriate documents (the "ARTICLES OF MERGER")
executed in accordance with the MGCL and shall make all other filings or
recordings required under the Corporation Law or the MGCL. The Merger shall
become effective upon the later of: (i) the issuance of a certificate of
merger by the State Department of Assessments and Taxation of Maryland
("SDAT") in accordance with the MGCL and (ii) the filing of the Certificate
of Merger with the Secretary of State of the State of Delaware, or at such
later time which 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 Amendment of Operating Partnership Agreement. In connection
with the transactions contemplated by the Merger, the Operating Partnership
Agreement shall be amended and restated in its entirety substantially in the
form attached hereto as EXHIBIT A, effective as of the Effective Time;
provided, however, that in the event that the Required Partnership Vote is
not received, then at the option of the Company in its sole discretion and
assuming receipt of the necessary approvals set forth in Section 3.1(u), the
Operating Partnership will be merged with and into either (i) the New
Partnership, which will have a partnership agreement substantially in the
form attached hereto as EXHIBIT A or (ii) Camden Sub (such transaction, if
selected by the Company and submitted to the limited partners for approval
being hereinafter referred to as the "OPERATING PARTNERSHIP TRANSACTION").
In the case of (i) above, each Unit (as defined in Section 3.1(c)) will be
converted into units of partnership interest of the New Partnership based
upon the Exchange Ratio (as defined in Section 2.1(b)), as though each Unit
were a share of Common Stock and each unit of partnership interest in the New
Partnership were a share of Camden Common Stock. In the case of (ii) above,
Units shall be converted into shares of Camden Common Stock based upon the
Exchange Ratio, as though each Unit were a share of Common Stock.
SECTION 1.5 Effects of the Merger. The Merger shall have the effects set
forth in the Corporation Law and the MGCL.
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SECTION 1.6 Articles 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 the Board of Trust Managers
as provided in Section 5.6 and shall appoint Xxxxxxx X. Xxxxxx and Xxxxx X.
Xxxxx (or such other person or persons designated by the Company in the event
either of the designated persons is unable or unwilling to serve) to fill
such vacancies and serve in accordance with the Bylaws.
SECTION 1.7 Trust Managers. The Trust Managers of Camden immediately
following the Effective Time shall be the persons named on SCHEDULE 1.7
attached hereto, each of whom shall serve in accordance with the Texas REIT
Act and Camden's Bylaws. Such Trust Managers of Camden shall be appointed to
the committees of the Camden Board of Trustees as indicated on SCHEDULE 1.7.
Immediately following the Effective Time, Camden shall cause the size and
composition of the Board of Directors of each of Camden Sub, GP Holdings and
LP Holdings to be the same as Camden's Board of Trust Managers.
SECTION 1.8 Officers. The officers of Camden Sub immediately following
the Effective Time shall be the persons named on SCHEDULE 1.8 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. The parties shall cooperate to determine, prior to the
filing of the Registration Statement, the full extent of the involvement of
Paragon's senior management in the senior management of Camden following the
Merger.
SECTION 1.9 Purchase of Common Stock by the Operating Partnership.
Immediately prior to the Effective Time, in satisfaction of certain
obligations of Residential Management Corporation to the Operating
Partnership, including outstanding indebtedness of Residential Management
Corporation held by the Operating Partnership, Residential Management
Corporation will sell to the Operating Partnership 79,500 shares of Common
Stock owned by Residential Management Corporation.
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 Common Stock or the
holder of any shares of capital stock of Camden:
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(a) Cancellation of Treasury Stock. As of the Effective Time, any shares
of capital stock of the Company that are owned by the Company or any Company
Subsidiary (as defined below) (other than the 84,486 shares of Common Stock
currently owned by the Residential Management Corporation, 79,500 of which
will be purchased by the Operating Partnership pursuant to Section 1.9
hereof, all of which shares shall be treated in the manner described in
Section 2.1(b) hereof) shall automatically be canceled and retired and all
rights with respect thereto shall cease to exist, and no consideration shall
be delivered in exchange therefor.
(b) Conversion of Common Stock. Upon the Effective Time, each issued and
outstanding share of Common Stock (other than any shares to be canceled in
accordance with Section 2.1(a)) shall be converted into the right to receive
from Camden sixty-four one hundredths (.64) of a fully paid and nonassessable
share of Camden Common Stock (the "EXCHANGE RATIO"); provided, however, that
the Exchange Ratio may be adjusted as set forth in Section 8.1(k) hereof. As
of the Effective Time, all shares of Common Stock shall no longer be
outstanding and shall automatically be canceled and retired and all rights
with respect thereto shall cease to exist, and each holder of a certificate
representing any such shares of Common Stock shall cease to have any rights
with respect thereto, except the right to receive, upon surrender of such
certificate in accordance with Section 2.2(c), certificates representing the
shares of Camden Common Stock required to be delivered under this Section
2.1(b) and any cash in lieu of fractional shares of Camden Common Stock to be
issued or paid in consideration therefor upon surrender of such certificate
(the "MERGER CONSIDERATION") as set forth in Section 2.2(g), and any
dividends or other distributions to which such holder is entitled pursuant to
Section 2.2(d), in each case without interest and less any required
withholding taxes.
(c) Shares of Camden Common Stock. Upon the Effective Time, each share of
Camden Common Stock outstanding immediately prior to the Effective Time shall
remain outstanding and shall represent one share of validly issued, fully
paid and nonassessable Camden Common Stock.
SECTION 2.2 Exchange of Certificates.
(a) Exchange Agent. Prior to the Effective Time, Camden Sub shall appoint
American Stock Transfer & Trust Company or another bank or trust company
reasonably acceptable to the Company to act as exchange agent (the "EXCHANGE
AGENT") for the exchange of the Merger Consideration upon surrender of
certificates representing issued and outstanding Common Stock.
(b) Camden To Provide Merger Consideration. Camden Sub shall provide to
the Exchange Agent on or before the Effective Time, for the benefit of the
holders of Common Stock, shares of Camden Common Stock issuable (the
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"EXCHANGE FUND") in exchange for the issued and outstanding shares of Common
Stock pursuant to Section 2.1. The Company shall provide to the Exchange
Agent on or before the Effective Time, for the benefit of the holders of
Common Stock, 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, the Exchange Agent shall mail to each holder of record of a
certificate or certificates which immediately prior to the Effective Time
represented outstanding shares of Common Stock (the "CERTIFICATES") whose
shares were converted into the right to receive the Merger Consideration
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 the Merger Consideration. 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 the Merger Consideration into which
the shares of Common Stock theretofore represented by such Certificate shall
have been converted pursuant to Section 2.1 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 Common Stock which 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 the Merger Consideration,
without interest, into which the shares of Common Stock theretofore
represented by such Certificate shall have been converted pursuant to Section
2.1, 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 Merger Consideration 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
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Effective Time, the Company shall declare a dividend (the "FINAL COMPANY
DIVIDEND") to holders of Common Stock, 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 (10) days
prior to the date for the Company Shareholders Meeting, 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 dividends payable hereunder to
holders of Common Stock shall be paid upon presentation of the certificates
of Common Stock for exchange in accordance with this Article II.
(ii) No dividends or other distributions with respect to Camden Common
Stock with a record date after the Effective Time shall be paid to the holder
of any unsurrendered Certificate with respect to the shares of Camden Common
Stock 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, 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 share of Camden Common Stock to which such
holder is entitled pursuant to Section 2.2(g) and (ii) if such Certificate is
exchangeable for one or more whole shares of Camden Common Stock, (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 shares of Camden Common Stock 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 shares of Camden Common
Stock.
(e) No Further Ownership Rights in Common Stock. All Merger Consideration
paid upon the surrender of Certificates in accordance with the terms of this
Article II (and any cash paid pursuant to Section 2.2(g)) shall be deemed to
have been paid in full satisfaction of all rights pertaining to the shares of
Common Stock theretofore represented by such Certificates; 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 of Common Stock in accordance with the terms of this Agreement or
prior to the date of this Agreement and which 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
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the stock transfer books of the Company of the shares of Common Stock which
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 Merger Consideration or
dividends delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law. Any portion of the Exchange Fund delivered
to the Exchange Agent pursuant to this Agreement that remains 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 the Merger Consideration and any unpaid dividends, subject to
applicable escheat and other similar laws.
(g) No Fractional Shares.
(i) No certificates or scrip representing fractional shares of Camden
Common Stock shall be issued upon the surrender for exchange of Certificates,
and such fractional share interests will not entitle the owner thereof to
vote, to receive dividends or to any other rights of a stockholder of Camden.
(ii) Notwithstanding any other provision of this Agreement, each
holder of shares of Common Stock exchanged pursuant to the Merger who would
otherwise have been entitled to receive a fraction of a share of Camden
Common Stock (after taking into account all Certificates delivered by such
holder) shall receive, from the Exchange Agent in accordance with the
provisions of this Section 2.2(g), a cash payment in lieu of such fractional
shares of Camden Common Stock, as applicable, representing such holder's
proportionate interest, if any, in the net proceeds from the sale by the
Exchange Agent in one or more transactions (which sale transactions shall be
made at such times, in such manner and on such terms as the Exchange Agent
shall determine in its reasonable discretion) on behalf of all such holders
of the aggregate of the fractional shares of Camden Common Stock, as
applicable, which would otherwise have been issued (the "EXCESS CAMDEN
SHARES"). The sale of the Excess Camden Shares by the Exchange Agent shall be
executed on the New York Stock Exchange (the "NYSE") through one or more
member firms of the NYSE and shall be executed in round lots to the extent
practicable. Until the net proceeds of such sale or sales have been
distributed to the holders of Certificates, the Exchange Agent will hold such
proceeds in trust (the "EXCHANGE TRUST") for the holders of Certificates.
Camden shall pay all commissions, transfer taxes and other out-of-pocket
transaction costs, including the expenses and compensation of the Exchange
Agent, incurred in connection with this sale of the Excess Camden Shares
(other than transfer taxes that, under applicable state law, are solely the
liability of the holders of Common Stock exchanging such
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shares in the Merger (which taxes shall be paid by such holders). As soon as
practicable after the determination of the amount of cash, if any, to be paid
to holders of Certificates in lieu of any fractional shares of Camden Common
Stock, the Exchange Agent shall make available such amounts to such holders
of Certificates without interest.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 Representations and Warranties of the CompanySECTION3.1
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 Maryland 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 (as defined below) taken as a whole
(a "MATERIAL ADVERSE EFFECT"). The Company has delivered to Camden complete
and correct copies of its Articles of Amendment and Restatement of Articles
of Incorporation and Amended and Restated Bylaws, as amended to the date of
this Agreement.
(b) Company Subsidiaries. SCHEDULE 3.1(b) to the Company Disclosure
Letter (as defined below) sets forth each Company Subsidiary 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 by another 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, by another Company Subsidiary, or
by the Company and another Company Subsidiary, or by two 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
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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. Except as set forth on SCHEDULE 3.1(B) to the Company Disclosure
Letter, 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 Articles of
Incorporation, Bylaws, organization documents and partnership and joint
venture agreements of each Company Subsidiary, as amended to the date of this
Agreement, have been previously delivered or made available to Camden.
(c) Capital Structure. The authorized capital stock of the Company
consists of 100,000,000 shares of Common Stock; 50,000,000 shares of
preferred stock, par value $.01 per share (the "PREFERRED STOCK"); and
50,000,000 shares of excess common stock, par value $.01 per share ("EXCESS
COMMON STOCK"). On the date hereof (i) 14,791,165 shares of Common Stock
(including 84,486 shares held by the Residential Management Corporation, a
portion of which shall be sold pursuant to Section 1.9 hereof) and no shares
of Preferred Stock or Excess Stock were issued and outstanding, (ii) no
shares of Common Stock, Preferred Stock or Excess Stock were held by the
Company in its treasury, (iii) no shares of Common Stock were available for
issuance under the Company's employee benefit or incentive plans pursuant to
awards granted by the Company (the "COMPANY EMPLOYEE STOCK PLANS"), (iv)
279,000 shares of Common Stock were issuable upon exercise of outstanding
options (the "COMPANY OPTIONS") to purchase Common Stock, (v) 3,675,258
shares of Common Stock were reserved for issuance upon the redemption of
units of partnership interest in the Operating Partnership (the "UNITS") for
shares of Common Stock pursuant to the Operating Partnership Agreement and
(vi) 50,000 shares of Common Stock are reserved for issuance upon exercise of
the warrants set forth on SCHEDULE 3.1(c) to the Company Disclosure Letter.
On the date of this Agreement, except as set forth above in this Section
3.1(c) or as required pursuant to the Operating Partnership Agreement, 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. 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 shareholders of
the Company may vote. Except (A) for the Company Options, (B) for the Units
(which, under the Operating Partnership Agreement, may be
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redeemed by limited partners of the Operating Partnership (other than Units
held by GP Holdings or LP Holdings) for one share of Common Stock per Unit or
the cash equivalent thereof, at the Company's election), (C) as set forth in
SCHEDULE 3.1(c) to the Company Disclosure Letter, or (D) as otherwise
permitted under Section 4.1, as of the date of this Agreement 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 (other than to the Company
or a Company Subsidiary). Except as set forth on SCHEDULE 3.1(c) to the
Company Disclosure Letter or as required under the Operating Partnership
Agreement, 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) in any
person (other than a Company Subsidiary).
(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 Common Stock
required to approve this Agreement and the transactions contemplated hereby
(the "COMPANY SHAREHOLDER APPROVALS"), to consummate the transactions
contemplated by this Agreement 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 contemplated by this Agreement 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 Shareholder Approvals. This Agreement has been duly
executed and delivered by the Company and constitutes a valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms. Except for approval of the amendments to the Operating
Partnership Agreement or approval of the Operating Partnership Transaction,
as the case may be, contemplated under Section 1.4 or as set forth in
SCHEDULE 3.1(d) to the Company Disclosure Letter, the execution and delivery
of this Agreement by the Company do not, and the consummation of the
transactions contemplated by this Agreement 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
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assets of the Company or any Company Subsidiary under, (i) the Articles of
Amendment and Restatement of Articles of Incorporation or the Amended and
Restated 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, (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
contemplated by this Agreement, 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 Xxxx-Xxxxx-Xxxxxx 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 SDAT 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 contemplated by this Agreement 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
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documents with the SEC since the July 27, 1994 (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
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, 1996), 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
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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 (x) dividends (in the case of the Company) not
in excess of $.465 per share of Common Stock and (y) distributions (in the
case of the Operating Partnership) not in excess of $.465 per Unit, 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 or any Units,
other than any dividend required to be paid pursuant to Section 2.2 (and any
corresponding Operating Partnership distribution), (iii) any split,
combination or reclassification of any of the Company'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 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
-14-
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 and
listed in the Company Disclosure Letter, provided, however, platting of
development land will not be shown on existing title reports) and (iv)
mechanics', carriers', workmen's, repairmen's liens and other Encumbrances,
Property Restrictions and other limitations of any kind, if any, which,
individually or in the aggregate, are not substantial in amount, do not
materially detract from the value of or materially interfere with the present
use of any of the Company Properties subject thereto or affected thereby, and
do not otherwise have a Material Adverse Effect and which have arisen or been
incurred only in the ordinary course of business. Except as provided in
SCHEDULE 3.1(h), valid policies of title insurance have been issued insuring
the Company's or the applicable Company Subsidiaries' fee simple title to the
Company Properties in amounts at least equal to the purchase price thereof,
subject only to the matters disclosed above and on the Company Disclosure
Letter, and such policies are, at the date hereof, in full force and effect
and no material claim has been made against any such policy. Except as
provided in SCHEDULE 3.1(h) of the Company Disclosure Letter, (i) the Company
has no Knowledge that any certificate, permit or license from any
governmental authority having jurisdiction over any of the Company Properties
or any agreement, easement or other right which is necessary to permit the
lawful use and operation of the buildings and improvements on any of the
Company Properties or which is necessary to permit the lawful use and
operation of all driveways, roads and other means of egress and ingress to
and from any of the Company Properties has not been obtained and is not in
full force and effect, or of any pending threat of modification or
cancellation of any of same; (ii) the Company has not received written notice
of any violation of any federal, state or municipal law, ordinance, order,
regulation or requirement affecting any portion of any of the Company
Properties issued by any governmental authority; (iii) there are no material
structural defects relating to the Company Properties; (iv) there are no
Company Properties whose building systems are not in working order in any
material respect; (v) there is no physical damage to any Company Property in
excess of $100,000 for which there is no insurance in effect covering the
cost of the restoration; or (vi) there is no current renovation or
restoration to any Company Property the remaining cost of which exceeds
$100,000. Neither the Company nor any of the Company Subsidiaries has
received any notice to the effect that (A) any condemnation or rezoning
proceedings are pending or threatened with respect to any of the Company
Properties or (B) any zoning, building or similar law, code, ordinance, order
or regulation is or will be violated by the continued maintenance, operation
or use of any buildings or other improvements on any of the Company
Properties or by the continued maintenance, operation or use of the parking
areas. All work to be performed, payments to be made and actions to be taken
by the
-15-
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 in any material respect 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.
(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 Common Stock in a private placement. Such documents, copies of all
of which have previously been delivered or made available to Camden, are
listed in SCHEDULE 3.1(j) of the Company Disclosure Letter.
(k) Absence of Changes in Benefit Plans; ERISA Compliance.
(i) Except as disclosed in the Company SEC Documents or in SCHEDULE
3.1(k) (i) to the Company Disclosure Letter and except as permitted by
Section 4.1 (for the purpose of this sentence, as if Section 4.1 had been in
effect since December 31, 1995), 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
-16-
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, and performance of
the transactions contemplated in, this Agreement 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 agreement and policies specifically referred
to in SCHEDULE 3.1(k) (ii) to the Company Disclosure Letter and the severance
program referred to in Section 5.12(c).
(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 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
-17-
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) 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.
(ii) The Company (A) for all taxable years commencing with 1994 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 December 31, 1996, 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 during and since 1994 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 and
with respect to which all of the outstanding capital stock is owned solely by
the Company (or solely by a Company Subsidiary that is a corporation wholly
owned by the Company) is a "qualified REIT subsidiary" as defined in Section
856(i) of the Code. 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.
(iii) Paradim is organized in conformity
with the requirements for qualification as a REIT under the Code, and the
method of operation of Paradim will permit Paradim to meet the requirements
for taxation as a REIT under the Code beginning with its taxable year ending
December 31, 1996 and continuing for its subsequent taxable years (assuming
that Paradim has at least 100 shareholders not later than January 30, 1997).
(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
-18-
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 xxxx Xxxxxxx Xxxxx & Co. ("XXXXXXX
XXXXX"), 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, 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.
(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 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 December 16, 1996. For purposes of this
Section 3.1(p)
-19-
(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
Xxxxxxx Xxxxx & Co., satisfactory to the Company, a copy of which has been
provided to Camden, to the effect that the Exchange Ratio provided for in
this Agreement in connection with the exchange of the Merger Consideration
for Common Stock 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. The information furnished to Camden by the
Company for inclusion in the Registration Statement will not, as of the
effective date of the Registration Statement (as defined in Section 3.2(d)),
contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(t) Investment Company Act of 1940. Neither the Company nor any of the
Company Subsidiaries is, or at the Effective Time will be, required to be
registered under the Investment Company Act of 1940, as amended (the "1940
ACT").
(u) Vote Required. The affirmative vote of at least two-thirds 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. The
affirmative consent of the holders of all of the issued and outstanding Units
of the Operating Partnership, in the case of an amendment to the Operating
Partnership Agreement as described in Section 5.1(c), or the affirmative
consent of two-thirds of the holders of all of the issued and outstanding
Units of the Operating Partnership (including Units held by GP Holdings or LP
Holdings), in the case of a merger of the Operating Partnership pursuant to
Section 5.1(d)(i) or 5.1(d)(ii), is the only vote of the holders of any
equity
-20-
securities of any Company Subsidiary necessary (under applicable law or
otherwise) to approve any of 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.
Each of Camden and Camden Sub is a corporation duly organized 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. 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), as amended or supplemented to
the date of this Agreement.
(b) Camden Subsidiaries. SCHEDULE 3.2(b) to the Camden Disclosure Letter
sets forth each Camden Subsidiary (as defined below) (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, by another Camden Subsidiary or by Camden and another 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, by another Camden Subsidiary or by
Camden and another Camden Subsidiary 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
-21-
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 Articles of Incorporation,
Bylaws, organization documents and partnership and joint venture agreements
of each Camden Subsidiary, 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 STOCK").
On the date hereof, (i) 16,308,185 shares of Camden Common Stock and no
shares of Camden Preferred Stock were issued and outstanding, (ii) no shares
of Camden Stock or Camden Preferred Stock were held by Camden in its
treasury, (iii) 530,261 shares of Camden Common Stock were available for
issuance under Camden's employee benefit or incentive plans ("CAMDEN EMPLOYEE
STOCK PLANS"), and (iv) 534,601 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 shares which 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 stockholders 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 or (D) as contemplated under Camden's
dividend reinvestment plan, as of the date of 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 (other than to Camden or an Camden
Subsidiary). 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 (other than an Camden Subsidiary).
-22-
(d) Authority; Noncontravention; Consents. Each of Camden and Camden
Sub has the requisite corporate power and authority to enter into this
Agreement, and subject to approval of this Agreement by the vote of the
holders of the Camden Stock required to approve this Agreement and the
transactions contemplated hereby (including, without limitation, the issuance
of Camden Common Stock in connection with the Merger (the "CAMDEN SHAREHOLDER
APPROVALS" and, together with the Company Shareholder Approvals, the
"SHAREHOLDER APPROVALS") to consummate the transactions contemplated by this
Agreement 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
contemplated by this Agreement 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 Approvals. This Agreement has
been duly executed and delivered by each of Camden and Camden Sub and
constitutes a valid and binding obligation of each of Camden and Camden Sub,
enforceable against each of Camden and Camden Sub in accordance with its
terms. 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 contemplated by
this Agreement 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, Articles of Incorporation or
By-laws (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 contemplated by this
-23-
Agreement, 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 Common Stock
constituting the Merger Consideration (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 SDAT 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 contemplated by this Agreement 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 July 29, 1993 (the "CAMDEN SEC DOCUMENTS"). All
of the Camden SEC Documents (other than preliminary material), as of their
respective filing dates, complied in all material respects with all
applicable requirements of the Securities Act and the Exchange Act and, in
each case, the rules and regulations promulgated thereunder. None of the
Camden SEC Documents at the time of filing and effectiveness contained any
untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except to the extent such statements have been modified or
superseded by later Camden SEC Documents. The consolidated financial
statements of Camden included in the Camden SEC Documents complied as to form
in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with GAAP (except, in the case of unaudited
statements, as permitted by Form 10-Q of the SEC) applied on a consistent
basis during the periods involved (except as may be indicated in the notes
thereto) and fairly presented, in accordance with the applicable requirements
of GAAP, the consolidated financial position of Camden and the Camden
Subsidiaries, taken as a whole, as of the dates thereof and the consolidated
results of operations and cash flows for the periods then ended (subject, in
the case of unaudited statements, to normal year-end audit adjustments). The
audited financial statements of the unconsolidated Camden Subsidiaries
previously
-24-
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, 1996), 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 not in excess of $.475
per share of Camden Common Stock 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
-25-
pending or threatened in writing against or affecting Camden or any Camden
Subsidiary that, individually or in the aggregate, could reasonably be
expected to (A) have a Camden Material Adverse Effect or (B) prevent the
consummation of any of the Transactions, nor is there any judgment, decree,
injunction, rule or order of any Governmental Entity or arbitrator
outstanding against Camden or any Camden Subsidiary or having, or which,
insofar as reasonably can be foreseen, in the future would have any such
effect.
(h) Properties. Except as provided in SCHEDULE 3.2(h) of the Camden
Disclosure Letter, Camden or one of the Camden Subsidiaries own fee simple
title 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 and listed in the Camden Disclosure Letter
(as such list may be updated within five (5) days of the date hereof),
Provided, However, 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
-26-
any of same; (ii) Camden has not received written notice of any violation of
any federal, state or municipal law, ordinance, order, regulation or
requirement affecting any portion of any of the Camden Properties issued by
any governmental authority; (iii) there are no material structural defects
relating to the Camden Properties; (iv) there are no Camden Properties whose
building systems are not in working order in any material respect; (v) there
is no physical damage to any Camden Property in excess of $100,000 for which
there is no insurance in effect covering the cost of the restoration; or (vi)
there is no current renovation or restoration to any Camden Property the
remaining cost of which exceeds $100,000. Neither Camden nor any of the
Camden Subsidiaries has received any notice to the effect that (A) any
condemnation or rezoning proceedings are pending or threatened with respect
to any of the Camden Properties or (B) any zoning, building or similar law,
code, ordinance, order or regulation is or will be violated by the continued
maintenance, operation or use of any buildings or other improvements on any
of the Camden Properties or by the continued maintenance, operation or use of
the parking areas. All work to be performed, payments to be made and actions
to be taken by Camden or Camden Subsidiaries prior to the date hereof
pursuant to any agreement entered into with a governmental body or authority
in connection with a site approval, zoning reclassification or other similar
action relating to the Camden Properties (e.g., Local Improvement District,
Road Improvement District, Environmental Mitigation) has been performed, paid
or taken, as the case may be, and Camden has no Knowledge of any planned or
proposed work, payments or actions that may be required after the date hereof
pursuant to such agreements.
(i) Environmental Matters. None of Camden, any of the Camden
Subsidiaries or, to the Knowledge of Camden, any other person has caused or
permitted (a) the unlawful presence of any Hazardous Materials on any of the
Camden Properties, or (b) any unlawful spills, releases, discharges or
disposal of Hazardous Materials to have occurred or be presently occurring on
or from the Camden Properties as a result of any construction on or operation
and use of such properties, which presence or occurrence would, individually
or in the aggregate, have a Camden Material Adverse Effect; and in
connection with the construction on or operation and use of the Camden
Properties, Camden and the Camden Subsidiaries have not failed to comply in
any material respect 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.
(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
-27-
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, 1995), 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, and performance of the transactions contemplated in, this Agreement 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 and the severance program referred
to in Section 5.12 (c).
(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
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filing extension properly granted by a Governmental Entity having authority
to do so) and all such returns and reports are accurate and complete in all
material respects; and (B) paid (or Camden has paid on its behalf) all Taxes
shown on such returns and reports as required to be paid by it, and 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. 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, 1996, 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
during and since 1993 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 an Camden Subsidiary
that is a corporation wholly owned by Camden) is a "qualified REIT
subsidiary" as defined in Section 856(i) 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
-29-
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 PaineWebber
Incorporated ("PAINEWEBBER"), the fees and expenses of which have previously
been disclosed to the Company and will be paid by Camden, is entitled to any
broker's, finder's, financial advisor's or other similar fee or commission in
connection with the Transactions based upon arrangements made by or on behalf
of Camden or any other Camden Subsidiary.
(o) Compliance With Laws. To the Knowledge of Camden, except as
disclosed in the Camden SEC Documents, neither Camden nor any of the Camden
Subsidiaries has violated or failed to comply with any statute, law,
ordinance, regulation, rule, judgment, decree or order of any Governmental
Entity applicable to its business, properties or operations, except for
violations and failures to comply that would not, individually or in the
aggregate, reasonably be expected to result in a Camden Material Adverse
Effect.
(p) Contracts; Debt Instruments.
(i) To the Knowledge of Camden, neither Camden nor any Camden
Subsidiary is in violation of or in default under (nor does there exist any
condition which upon the passage of time or the giving of notice or both
would cause such a violation of or default under) any material loan or credit
agreement, note, bond, mortgage, indenture, lease, permit, concession,
franchise, license or any other material contract, agreement, arrangement or
understanding, 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.
(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 December 16,
1996.
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+
(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
PaineWebber, satisfactory to Camden, a copy of which has been provided to the
Company, to the effect that the Exchange Ratio provided for in this Agreement
in connection with the exchange of the Merger Consideration for Common Stock
is fair to Camden and the stockholders 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. The Registration Statement will conform in
all material respects to the requirements of the Securities Act and the rules
and regulations of the SEC thereunder and will not, as of the effective date
of the Registration Statement, contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading; and the prospectus included
therein will not, as of the date thereof or as of the Effective Time, contain
an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading;
provided, however, that this representation and warranty shall not apply to
any statements or omissions made in reliance upon and in conformity with
information furnished to Camden by the Company in writing for inclusion in
the Registration Statement.
(u) Vote Required. The affirmative vote of a majority of the shares
present in person or by proxy at the Camden Shareholders 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 contemplated hereby.
(v) Investment Company Act of 1940. None of Camden, Camden Sub or any of
the Camden Subsidiaries is, or at the Effective Time will be, required to be
registered under the Investment Company Act of 1940, as amended (the "1940
Act").
-31-
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: 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 for (x) its regular quarterly dividends (in the case
of the Company) not in excess of $.465 per share of Common Stock for the
fourth quarterly dividend payable during the first calendar quarter of 1997
and $.304 per share of Common Stock for the first quarterly dividend payable
during the second calendar quarter of 1997 and (y) distributions (in the case
of the Operating Partnership) not in excess of $.465 per Unit for the fourth
quarterly distribution payable during the first calendar quarter of 1997 and
$.304 per Unit for the first quarterly distribution payable during the second
calendar quarter of 1997, as the case may be, in each case with the same
record and payment dates as the record and payment dates relating to
dividends payable on the Camden Common Stock during such calendar quarters
(as previously disclosed by Camden), declare, set aside or pay any dividends
on, or make any other distributions in respect of any of the Company's
capital stock or any Units other than the dividend required to be paid
pursuant to Section 2.2(d)(i) (and the corresponding Operating Partnership
distribution), (ii) except in connection with the Transactions as required
under the Operating Partnership Agreement, split, combine or reclassify any
capital stock, Units 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) except as
required under the Operating Partnership Agreement, purchase, redeem or
otherwise acquire any shares of capital stock of the Company or any Units or
any options, warrants or rights to acquire, or security convertible into,
shares of such capital stock or such Units or partnership interests;
(b) except as contemplated under or required pursuant to the Operating
Partnership Agreement, Section 1.9, Section 4.1(e) and the exercise of stock
options or issuance of shares pursuant to stock rights or warrants
outstanding
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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 Units or other 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, the Operating Partnership
or any other 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; (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, 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, 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;
(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;
-33-
(g) make any tax election (except as provided in Section 5.14 or unless
required by law or necessary to preserve the Company's status as a REIT or
the status of the Operating Partnership or of any other Company Subsidiary as
a partnership for federal income tax purposes);
(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;
(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
-34-
organization, goodwill and ongoing businesses. Without limiting the
generality of the foregoing, the following additional restrictions shall
apply: During the period from the date of this Agreement to the Effective
Time, except as set forth in SCHEDULE 4.2 to the Camden Disclosure Letter,
Camden shall not and shall cause (or, in the case of Camden Subsidiaries
which Camden does not control, shall use commercially reasonable efforts to
cause) the Camden Subsidiaries not to (and not to authorize or commit or
agree to):
(a) (i) except for regular quarterly dividends not in excess of $.475 per
share of Camden Common Stock, with customary record and payment dates,
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 in connection with the Transactions, 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 contemplated under or required pursuant to this Agreement,
Camden's dividend reinvestment plan and Camden Employee Stock Plans, and the
exercise of stock options or warrants outstanding on the date hereof, Section
4.2(e), 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,
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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, 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;
(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;
(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);
(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
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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 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; Shareholders Meeting and Camden Shareholders 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 its best 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 its best
efforts to cause the Proxy Statement to be mailed to the Company's
shareholders or Camden's shareholders, respectively, as promptly as
practicable
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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. The
Registration Statement and the Proxy Statement shall comply in all material
respects with all applicable requirements of law. 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 Directors of
Camden in favor of the issuance of Camden Common Stock 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 has accepted a
proposal for a Superior Competing Transaction (as defined below) in
accordance with the terms of Section 7.1. 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 Camden Stock 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 contemplated by this Agreement 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 shareholders of the Company), duly call, give
notice of, convene and hold a meeting of its shareholders (the "COMPANY
SHAREHOLDERS MEETING") for the purpose of obtaining the Company Shareholder
Approvals. The Company will, through its Board of Directors, recommend to
its shareholders approval of this Agreement and the transactions contemplated
by this Agreement; provided that the recommendation of the Board of Directors
of the Company may be withdrawn if the Board of Directors of the Company has
accepted a proposal for a Superior Competing Transaction (as defined below)
in accordance with the terms of Section 7.1(d).
(c) As contemplated by Section 1.4, as soon as practicable following the
date of this Agreement, the Company will cause GP Holdings, as the general
partner of the Operating Partnership, to solicit the Required Partnership
Vote.
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(d) In the event that the Required Partnership Vote is not received, as
soon thereafter as practicable the Company will cause GP Holdings, as the
general partner of the Operating Partnership, to solicit the written consent
of the Unit holders holding two-thirds of the outstanding Units to approve
the Operating Partnership Transaction, which may be either of the following
transactions, which determination shall be at the sole discretion of the
Company:
(i) the merger of the Operating Partnership with and into the New
Partnership in which Camden Sub initially will be the 99% limited partner and
Camden initially will be the 1% general partner (the "NEW PARTNERSHIP"), in
which case articles of merger in the form mutually agreed by the Company and
Camden shall be filed and the New Partnership shall have a partnership
agreement substantially in the form attached hereto as EXHIBIT A; or
(ii) the merger of the Operating Partnership with and into Camden
Sub, in which case articles of merger in the form mutually agreed by the
Company and Camden shall be filed. (e) 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 SHAREHOLDERS MEETING") for the purpose of obtaining
the Camden Shareholder Approvals. Camden will, through its Board of
Directors, recommend to its stockholders approval of this Agreement and the
transactions contemplated by this Agreement, including, but not limited to
the requisite vote of such shareholders approving the issuance of the Camden
Common Stock 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
(including all Company Subsidiaries and all Camden 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 (including all Company Subsidiaries and all Camden Subsidiaries)
to, furnish promptly to the other party (a) a copy of each report, schedule,
registration statement and other document filed by it during such period
pursuant to the requirements of federal or state securities laws and (b) all
other information concerning its business, properties and personnel as such
other party may reasonably request. Each of the Company and Camden will
hold, and will use commercially reasonable efforts to cause its and its
respective subsidiaries
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(including all Company Subsidiaries and all Camden 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 dated as of September 26, 1996
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 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,
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"affiliates" of the Company (as the case may be) 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 B 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 5 trust
managers to 7 trust managers effective as of the Effective Time and to fill
vacancies in accordance with Section 1.8.
SECTION 5.7 No Solicitation of Transactions by the Company. Subject to
Section 7.1, (a), the Company shall not directly or indirectly, through any
officer, director, employee, agent, investment banker, financial advisor,
attorney, accountant, broker, finder or other representative retained by the
Company, initiate, solicit or encourage (including by way of furnishing
non-public information or assistance) any inquiries or the making of any
proposal that constitutes, or may reasonably be expected to lead to, any
Competing Transaction (as defined below), or authorize or permit any of the
officers, directors, employees or agents of the Company or any attorney,
investment banker, financial advisor, attorney, accountant, broker, finder or
other representative retained by the Company to take any such action, (b) the
Company shall immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any parties conducted heretofore
with respect to any Competing Transaction and will take the steps necessary
to inform such parties of the obligations undertaken in this Section 5.7 and
(c) the Company shall notify Camden in writing (as promptly as practicable)
if it receives any inquiries, proposals or requests for information relating
to such matters. For purposes of this Agreement, "COMPETING TRANSACTION"
shall mean any of the following with respect to the Company or any Company
Subsidiaries (other than the transactions contemplated by this Agreement or a
transaction with Camden or a Camden Subsidiary): (i) with respect only to
the Company, the Operating Partnership or any group of Company Subsidiaries
(acting in a single transaction or series of related transactions) holding
20% or more of the assets of the Company and the Company Subsidiaries taken
as a whole, any merger, consolidation, share exchange, business combination,
or similar transaction; (ii) any sale, lease, exchange, mortgage, pledge,
transfer or other disposition of 20% or more of the assets or equity
securities (including, without limitation, partnership interests and Units)
of the Company and the Company Subsidiaries taken as a whole, in a single
transaction or series of related transactions, excluding any bona fide
financing transactions which do not, individually or in the aggregate, have
as a purpose or effect the sale or transfer of control of such assets; (iii)
any tender offer
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or exchange offer for 20% or more of the outstanding shares of capital stock
of the Company; (iv) any transaction resulting in the issuance of share
representing 20% or more of the outstanding capital stock of the Company, or
the filing of a registration statement under the Securities Act in connection
therewith; or (v) any public announcements of a proposal, plan or intention
to do any of the foregoing or any agreement to engage in any of the
foregoing.
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 Camden Common Stock 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 Common Stock 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 Ernst & Young L.L.P., the Company's
independent public accountants, dated and delivered the date on which the
Registration Statement shall become effective and as of the Effective Time,
and addressed to Camden, in form and substance reasonably satisfactory to
Camden and reasonably customary in scope and substance for letters delivered
by independent public accountants in connection with transactions such as
those contemplated by this Agreement.
(b) Camden shall use its reasonable best efforts to cause to be delivered
to the Company "comfort" letters of Deloitte & Touche, LLP, Camden's
independent public accountants, dated the date on which the Registration
Statement shall become effective and as of the Effective Time, and addressed
to the Company, in form and substance reasonably satisfactory to the Company
and reasonably customary in scope and substance for letters delivered by
independent public accountants in connection with transactions such as those
contemplated by this Agreement.
SECTION 5.11 Transfer and Gains Taxes. Camden and the Company
shall cooperate in the preparation, execution and filing of all returns,
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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 cause the Operating
Partnership to pay, without deduction or withholding from any amounts payable
to the holders of the Common Stock, all Transfer and Gains Taxes (other than
any such taxes that are solely the liability of the holders of the Common
Stock under applicable state law).
SECTION 5.12 Benefit Plans and Other Employee Arrangements.
(a) Benefit Plans. 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.
(b) Stock Incentive Plan. Prior to or as of the Effective Time and
solely with respect to individuals employed by the Company immediately prior
to that date, the Company shall accelerate the vesting of up to 110,400
shares of Common Stock subject to restricted stock awards and up to 279,000
shares of Common Stock subject to Stock Options granted under the Company's
Stock Incentive Plan (the "STOCK INCENTIVE PLAN") so as to permit exercise of
the Stock Options prior to or as of the Effective Time.
(c) Severance Program. As of the Effective Time, Camden shall adopt a
severance program with respect to certain employees of the Company and the
Company Subsidiaries employed by the Company containing terms substantially
the same as set forth on the form attached hereto as EXHIBIT C, and Camden
shall maintain such severance program in accordance with the terms thereof.
(d) Cooperation. The Company and Camden shall cooperate in good faith
with respect to the effectuation of the covenants described in subsections
(b) and (c).
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SECTION 5.13 Indemnification; Directors and Officers Insurance.
(a) The Company shall, and from and after the Effective Time, 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, whether asserted or claimed prior to, or at or after, the
Effective Time ("INDEMNIFIED LIABILITIES"), including all Indemnified
Liabilities based on, or arising out of, or pertaining to this Agreement or
the Transactions, in each case to the full extent a corporation is permitted
under the Corporation Law to indemnify its own directors or officers as the
case may be (and Camden shall pay expenses in advance of the final
disposition of any such action or proceeding to each Indemnified Party to the
full extent permitted by law subject to the limitations set forth in the
fourth sentence of this Section 5.13 (a)). Any Indemnified Parties proposing
to assert the right to be indemnified under this Section 5.13 shall, promptly
after receipt of notice of commencement of any action against such
Indemnified Parties in respect of which a claim is to be made under this
Section 5.13 against the Company, and from and after the Effective Time,
Camden (collectively, the "INDEMNIFYING PARTIES"), notify the Indemnifying
Parties 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 the Indemnifying Parties of its
commencement, the Indemnifying Parties will be entitled to participate in
and, to the extent that they elect 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 the Indemnifying Parties to the Indemnified Parties of
their election to assume the defense, the Indemnifying Parties will not be
liable to the Indemnified Parties for any legal or other expenses except as
provided below. If the Indemnifying Parties assume the defense, the
Indemnifying Parties shall have the right to settle such action without the
consent of the Indemnified Parties; provided, however, that the Indemnifying
Parties shall be required to obtain such consent (which consent shall not be
unreasonably withheld) if the settlement includes any admission or wrongdoing
on the part of the Indemnified Parties or any decree or restriction on the
Indemnified Parties or their officers or directors; provided, further, that
no Indemnifying Parties, in the defense of any such action shall, 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
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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 the Indemnifying Parties, (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 the Indemnifying Parties, (iii) a conflict or potential
conflict exists (based on written advice of counsel to the Indemnified
Parties) between the Indemnified Parties and the Indemnifying Parties (in
which case the Indemnifying Parties will not have the right to direct the
defense of such action on behalf of the Indemnified Parties) or (iv) the
Indemnifying Parties have 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 the
Indemnifying Parties. It is understood that the Indemnifying Parties 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 the
Indemnifying Parties, (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
the Indemnifying Parties shall be obligated to pay the reasonable and
appropriate fees and expenses of such additional counsel or counsels. The
Indemnifying Parties will not be liable for any settlement of any action or
claim effected without their written consent (which consent shall not be
unreasonably withheld).
(b) 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 and the Company.
(c) Camden shall either (i) extend the Company's existing directors' and
officers' liability insurance policy as of the date hereof (or a policy
providing coverage on the same or better terms and conditions) for acts or
omissions occurring prior to the Effective Time by persons who are currently
covered by such insurance policy maintained by the Company for a period of
six (6) years following the Effective Time, or (ii) add such persons to the
existing directors and officers liability insurance policy of Camden,
provided, however, that such insurance shall provide directors and officers
of the Company the same coverage as similarly situated
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officers and directors of Camden and such insurance shall be maintained by
Camden for a period of six (6) years following the Effective Time.
(d) 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 director and officer covered hereby.
SECTION 5.14 REIT Qualification of Paradim. The Company will use its
best efforts to cause Paradim to meet the requirements to qualify, beginning
with its taxable year ending December 31, 1996, as a REIT under the Code. In
the event that Paradim files its federal income tax return for the taxable
year ended December 31, 1996 prior to the Effective Time, the Company will
cause Paradim to elect to be treated for such taxable year as a REIT under
the Code.
SECTION 5.15 Termination of Certain Employment Agreements The Company
shall take such actions as may be necessary to terminate the employment
agreements of Messrs. Xxxxxx and Xxxxx set forth on SCHEDULE 5.15 to the
Company Disclosure Schedule effective as of the Effective Time. No such
termination shall have any effect on the non-solicitation and right of first
opportunity agreements to which each of Messrs. Xxxxxx and Xxxxx is a party.
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.1 Conditions to Each Partys 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 Common Stock to be issued in the Merger.
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(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 shares of
Camden Common Stock comprising the Merger Consideration.
(g) Related Transactions. The Stock Purchase Agreement, 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. An Amended and Restated Operating Partnership Agreement
substantially in the form appended hereto as EXHIBIT A (or a merger of the
Operating Partnership in the Operating Partnership Transaction, as
applicable), a Lock-Up Agreement substantially in the form appended hereto as
EXHIBIT G, and a Registration Rights Agreement substantially in the form
appended hereto as EXHIBIT D shall each have been duly executed and delivered
by the parties thereto and shall remain in full force and effect.
(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 and the requisite consents
of the partners of the Operating Partnership described in Sections 1.4 and
3.1(u) shall have been obtained for either the amendment and restatement of
the Operating Partnership Agreement or the Operating Partnership Transaction.
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 both Camden:
(a) Representations and Warranties. The representations and warranties
of the Company set forth in this Agreement shall be true and correct as of
the Closing Date, as though made on and as of the Closing Date, except to the
extent the representation or warranty is expressly limited by its terms to
another date, and Camden shall have received a certificate (which certificate
may be qualified by Knowledge to the same extent as such representations and
warranties are so qualified) signed on behalf of the Company by the chief
executive officer or the chief financial officer of the Company to such
effect. This condition shall be
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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) Opinions Relating to REIT and Partnership Status. Camden shall have
received (i) an opinion of Counsel to the Company, dated as of the Closing
Date, reasonably satisfactory to Camden that, (A) commencing with its taxable
year ended December 31, 1994, the Company was organized and has operated in
conformity with the requirements for qualification as a REIT under the Code
and (B) the Operating Partnership has been during and since 1994, 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 (with
customary exceptions, assumptions and qualifications and based upon customary
representations) and (ii) an opinion of Counsel to Camden, dated as of the
Closing Date, reasonably satisfactory to Camden, that, commencing with its
taxable year ended December 31, 1993, Camden was organized and has operated
in conformity with the requirements for qualification as a REIT under the
Code 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. Camden shall have received an opinion dated as
of the Closing Date from Counsel to Camden, based upon certificates and
letters, which letters and certificates are substantially in the form set
forth in EXHIBIT E hereto and dated the Closing Date, 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.
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Notwithstanding the foregoing, Camden shall not be obligated to
effect the Merger if the failure of one or more of the conditions set forth
in Sections 6.2(a), 6.2(c) and 6.2(f) to be satisfied, in the aggregate,
causes a Camden Material Adverse Effect.
SECTION 6.3 Conditions to Obligations of the Company.
The obligation of the Company to effect the Merger and to consummate the
other Transactions contemplated to occur on the Closing Date is further
subject to the following conditions, any one or more of which may be waived
by the Company:
(a) Representations and Warranties. The representations and warranties
of Camden set forth in this Agreement shall be true and correct as of the
date of this Agreement and as of the Closing Date, as though made on and as
of the Closing Date, except to the extent the representation or warranty is
expressly limited by its terms to another date, and the Company shall have
received a certificate (which certificate may be qualified by Knowledge to
the same extent as the representations and warranties of Camden contained
herein are so qualified) signed on behalf of Camden by the chief executive
officer and the chief financial officer of such party to such effect. This
condition shall be deemed satisfied unless any or all breaches of Camden's
representations and warranties in this Agreement (without giving effect to
any materiality qualification or limitation) is reasonably expected to have a
Camden Material Adverse Effect.
(b) Performance of Obligations of Camden. Camden shall have performed
in all material respects all obligations required to be performed by it under
this Agreement at or prior to the Effective Time, and the Company shall have
received a certificate of Camden signed on behalf of such party by the chief
executive officer or the chief financial officer of such party to such
effect.
(c) Material Adverse Change. Since the date of this
Agreement, there shall have been no Camden Material Adverse Change and the
Company shall have received a certificate of the chief executive officer or
chief financial officer of Camden certifying to such effect.
(d) Opinion Relating to REIT Status. The Company shall
have received an opinion of Counsel to Camden dated as of the Closing Date,
reasonably satisfactory to the Company, that, commencing with its taxable
year ended December 31, 1993, Camden was organized and has operated in
conformity with the requirements for qualification as a REIT under the Code
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).
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(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, which letters and certificates are substantially in the form set
forth in EXHIBIT F hereto and dated the Closing Date, 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) The Investment Company Act Opinion. The Company shall have received
a favorable opinion dated as of the Closing Date from Counsel to Camden, that
neither Camden or any Camden Subsidiary is required to be registered under
the Investment Company Act of 1940.
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
BOARD ACTIONS
SECTION 7.1 Board Actions. Notwithstanding Section 5.7 or any other
provision of this Agreement to the contrary, to the extent required by the
fiduciary obligations of the Board of Directors of the Company, as determined
in good faith after consultation with outside legal counsel, the Company may:
(a) disclose to the shareholders of the Company any information that, in
the opinion of the Board of Directors of the Company after consultation with
outside legal counsel, is required to be disclosed under applicable law;
(b) to the extent applicable, comply with Rule 14e-2(a) promulgated
under the Exchange Act with respect to a Competing Transaction;
(c) in response to an unsolicited request therefor, participate in
discussions or negotiations with, or furnish information with respect to the
Company pursuant to a confidentiality agreement not materially less favorable
to the Company than the Confidentiality Agreement (as determined by the
Company's outside counsel), or otherwise respond to or deal with any person
in connection with a Competing Transaction proposed by such person; and
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(d) approve or recommend (and in connection therewith withdraw or modify
its approval or recommendation of this Agreement or the Merger) a Superior
Competing Transaction (as defined below) and enter into an agreement with
respect to such Superior Competing Transaction (for purposes of this
Agreement, "SUPERIOR COMPETING TRANSACTION" means a bona fide proposal of a
Competing Transaction made by a third party which has not been solicited or
initiated by the Company in violation of Section 5.7 and which a majority of
the members of Board of Directors of the Company determines in good faith (A)
to be more favorable to the Company's shareholders than the Merger, and (B)
is reasonably capable of being consummated.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.1 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
SDAT, 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 representation, warranty, covenant
or agreement on the part of the Company set forth in this Agreement, or if
any representation or warranty of the Company shall have become untrue, in
either case such that the conditions set forth in Section 6.2(a) or Section
6.2(b), as the case may be, would be incapable of being satisfied by June 30,
1997 (or as otherwise extended);
(c) by the Company, upon a breach of any representation, warranty,
covenant or agreement on the part of Camden set forth in this Agreement, or
if any representation or warranty of Camden shall have become untrue, in
either case such that the conditions set forth in Section 6.3(a) or Section
6.3(b), as the case may be, would be incapable of being satisfied by June 30,
1997 (or as otherwise extended);
(d) 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;
(e) by either Camden or the Company, if the Merger shall
not have been consummated before June 30, 1997; provided, however, that a
party that has willfully and materially breached a representation, warranty
or covenant of such
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party set forth in this Agreement shall not be entitled
to exercise its right to terminate under this Section 8.1(e);
(f) 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
Shareholders Meeting or any adjournment thereof, the Company Shareholder
Approvals shall not have been obtained as contemplated by Section 5.1;
(g) 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
Shareholders Meeting or any adjournment thereof, the Camden Shareholder
Approvals shall not have been obtained as contemplated by Section 5.1;
(h) by either Camden or the Company if the consent of the partners of
the Operating Partnership as contemplated by Section 6.1(h) shall not have
been obtained by March 31, 1997;
(i) by the Company, if prior to the Company Shareholders 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 in connection with, or approved or recommended, a Superior
Competing Transaction; provided, however, that such termination shall not be
effective prior to the payment of the Break-Up Fee to the extent required by
Section 8.2(b) hereof;
(j) by Camden, if (i) prior to the Company Shareholders 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 in connection with, or approved or recommended, any Superior
Competing Transaction or (ii) the Company shall have entered into a
definitive agreement with respect to any Competing Transaction;
(k) by the Company at any time during the seven (7) trading day period
following the Pricing Period (as defined below) if the Average Closing Price
(as defined below) shall be less than Twenty-Five Dollars and Sixty-Seven
Cents ($25.67), subject, however, to the following three sentences. If the
Company elects to exercise its termination right pursuant to this Section
8.1(k), it shall give written notice to Camden (provided that such notice of
election to terminate may be withdrawn at any time within the aforementioned
seven (7) trading day period). During the three (3) trading day period
commencing with its receipt of such notice, Camden shall have the option to
increase the Merger Consideration by adjusting the Exchange Ratio to equal a
number (calculated to the nearest one thousandth (1,000th)) obtained by
dividing (a) Sixteen Dollars and Forty-Three Cents ($16.43) by (b) the
Average Closing Price. If Camden so elects within such three (3) trading day
period, it shall give prompt written notice to the Company of such election
and the revised Exchange Ratio, whereupon no termination shall have occurred
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pursuant to this Section 8.1(k) and this Agreement shall remain in effect in
accordance with its terms (except as the Exchange Ratio shall have been so
modified). For purposes of this Section 8.1(k), (i) the term "Average
Closing Price" means the average of the closing prices of Camden Common
Stock, on the New York Stock Exchange for all trading days during the Pricing
Period, and (ii) "Pricing Period" means the period of fifteen (15)
consecutive trading days commencing on the twenty-second (22nd) trading day
prior to the date of the Company Shareholders Meeting.
SECTION 8.2 Expenses.
(a) Except as otherwise specified in this Section 8.2 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.
(b) The Company agrees that if this Agreement shall be terminated (i)
pursuant to (x) Section 8.1(b), (f), (i) or (j) and the Company shall have
entered into an agreement to consummate a Competing Transaction described in
Section 5.7(i), (ii), (iv) or (v) hereof or (y) pursuant to Section 8.1(b),
(e) or (f) and within one year from the date of such termination, the Company
consummates such a Competing Transaction or enters into an agreement to
consummate such a Competing Transaction which is subsequently consummated or
(z) pursuant to Section 8.1(h), then the Company will pay (provided that
Camden was not in material breach of any of its representations, warranties,
covenants or agreements hereunder at the time of termination) as directed by
Camden a fee in an amount equal to the Break-Up Fee (as defined below) and
(ii) pursuant to Section 8.1(b) or (f) and no agreement for such a Competing
Transaction shall have been entered into, then the Company will pay, as
directed by Camden an amount equal to the Break-Up Expenses (as defined
below). Payment of any of such amounts shall be made, as directed by Camden,
by wire transfer of immediately available funds promptly, but in no event
later than two business days after such termination. For purposes of
subsection 8.2(b)(i)(y) above, a "Competing Transaction" shall be limited to
a Competing Transaction described in Section 5.7(i), (ii), (iv) or (v) hereof
with respect to which the Company had negotiations prior to termination of
this Agreement (other than any such Competing Transaction described on
SCHEDULE 8.2(b)). The "BREAK-UP FEE" shall be an amount equal to the lesser
of (i) $10,000,000 (the "BASE AMOUNT") and (ii) the sum of (A) the maximum
amount that can be paid to Camden 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 and (B) in the event Camden
receives a letter from outside counsel (the "BREAK-UP FEE TAX OPINION")
indicating that Camden has received a ruling from the IRS holding that
Camden's receipt of the Base Amount would either constitute
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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 by Camden 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. The Break-Up Fee shall be reduced by any amounts previously paid
in respect of Break-Up Expenses (as defined below). The Company'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 is not able to
receive the full Base Amount, the Company shall place the unpaid amount in
escrow and shall not release any portion thereof to Camden unless and until
the Company receives any one or combination of the following: (i) a letter
from Camden independent accountants indicating the maximum amount that can be
paid at that time to Camden without causing Camden to fail to meet the REIT
Requirements or (ii) a Break-Up Fee Tax Opinion, in which event the Company
shall pay to Camden the lesser of the unpaid Base Amount or the maximum
amount stated in the letter referred to in (i) above. The "BREAK-UP
EXPENSES" shall be an amount equal to the lesser of (i) Camden out-of-pocket
expenses incurred in connection with this Agreement and the Transactions
(including, without limitation, all attorneys', accountants' and investment
bankers' fees and expenses) but in no event in an amount greater than
$1,500,000 (the "EXPENSE FEE BASE AMOUNT") and (ii) the sum of (A) the
maximum amount that can be paid to Camden 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 and (B) in the event Camden
receives a Break-Up Fee Tax Opinion indicating that Camden has received a
ruling from the IRS holding that Camden's receipt of the Expense 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 by
Camden of the remaining balance of the Expense Fee Base Amount following the
receipt of and pursuant to such ruling would not be deemed constructively
received prior thereto, the Expense Fee Base Amount less the amount payable
under clause (A) above. The Company'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 is not able to receive the full Expense
Fee Base Amount, the Company shall place the unpaid amount in escrow and
shall not release any portion thereof to Camden unless and until the Company
receives any one or combination of the following: (i) a letter from Camden's
independent accountants indicating the maximum amount that can be paid at
that time to Camden without causing Camden to fail to meet the REIT
Requirements or (ii) a Break-Up Fee Tax Opinion, in which event the Company
shall pay to Camden the lesser of the unpaid Expense Fee Base Amount or the
maximum amount stated in the letter referred to in (i) above.
(c) Camden agrees that if this Agreement shall be terminated pursuant to
Section 8.1(c) or (g), then Camden will pay, as directed by the
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Operating Partnership, an amount equal to the Termination Expenses (as
defined below). Payment of any of such amounts shall be made, as directed by
the Operating Partnership, by wire transfer of immediately available funds
promptly, but in no event later than two business days after such
termination. The "TERMINATION EXPENSES" shall be an amount equal to the
lesser of (i) the Company's and the Operating Partnership's out-of-pocket
expenses incurred in connection with this Agreement and the Transactions
(including, without limitation, all attorneys', accountants' and investment
bankers' fees and expenses) but in no event in an amount greater than
$1,500,000 (the "TERMINATION EXPENSE BASE AMOUNT") and (ii) the sum of (A)
the maximum amount that can be paid to the Operating Partnership without
causing the Company 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 the
Company and (B) in the event the Company receives a letter from outside
counsel (the "TERMINATION EXPENSE TAX OPINION") indicating that the Company
has received a ruling from the IRS holding that the Operating Partnership's
receipt of the Termination 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 by the Operating Partnership of the
remaining balance of the Termination Expense Base Amount following the
receipt of and pursuant to such ruling would not be deemed constructively
received prior thereto, the Termination Expense Base Amount less the amount
payable under clause (A) above. Camden's obligation to pay any unpaid
portion of the Termination Expenses shall terminate three years from the date
of this Agreement. In the event that the Operating Partnership is not able
to receive the full Termination Expense Base Amount, Camden shall place the
unpaid amount in escrow and shall not release any portion thereof to the
Operating Partnership unless and until Camden receives any one or combination
of the following: (i) a letter from the Company's independent accountants
indicating the maximum amount that can be paid at that time to the Operating
Partnership without causing the Company to fail to meet the REIT Requirements
or (ii) a Termination Expense Tax Opinion, in which event Camden shall pay to
the Operating Partnership the lesser of the unpaid Termination Expense Base
Amount or the maximum amount stated in the letter referred to in (i) above.
SECTION 8.3 Effect of Termination. In the event of termination of this
Agreement by either the Company or Camden as provided in Section 8.1, 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 8.2, this Section 8.3 and Article IX
and except to the extent that such termination results from a material breach
by a party of any of its representations, warranties, covenants or agreements
set forth in this Agreement.
SECTION 8.4 Amendment. This Agreement may be amended by the parties in
writing by action of their respective Boards of Directors at any time
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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 SDAT; PROVIDED, HOWEVER, that,
after the Shareholder Approvals are obtained, no such amendment, modification
or supplement shall alter the amount or change the form of the consideration
to be delivered to the Company's shareholders or alter or change any of the
terms or conditions of this Agreement if such alteration or change would
adversely affect the Company's shareholders or Camden's shareholders.
SECTION 8.5 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 8.4, 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. Any waivers pursuant to clause (c) of the second preceding sentence
(i) of the provisions of Section 4.1(e) may be given in writing on behalf of
Camden by the Chief Executive Officer of Camden and (ii) of the provisions of
Section 4.2(e) may be given in writing by or on behalf of the Company by the
Chief Executive Officer of the Company. 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 IX
GENERAL PROVISIONS
SECTION 9.1 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 9.1 shall not limit any covenant or agreement of the parties which by
its terms contemplates performance after the Effective Time.
SECTION 9.2 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):
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(a) if to Camden, to
Xxxxxxx X. Xxxxx
Chairman and Chief Executive Officer
Camden Property Trust
0000 Xxxxxxxxx Xxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Telecopy: (000) 000-0000
with a copy to:
Liddell, Sapp, Zivley, Hill & XxXxxx, L.L.P.
0000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxxx
Telecopy: (000) 000-0000
(b) if to the Company, to
Paragon Group, Inc.
0000 Xxxxxxx Xxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxx
Telecopy: (000) 000-0000
with a copy to:
Xxxxx & Xxxxxxx L.L.P.
000 00xx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000-0000
Attention: J. Xxxxxx Xxxxxxx, Xx.
Telecopy: (000) 000-0000
SECTION 9.3 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.
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"CAMDEN DISCLOSURE LETTER" means the letter previously delivered to the
Company by Camden disclosing certain information in connection with this
Agreement.
"CAMDEN INTERESTS" means, collectively, the Camden Subsidiaries
and all direct or indirect interests of Camden or any Camden Subsidiary.
"CAMDEN MANAGEMENT COMPANY" means Apartment Connection, Inc., a Delaware
corporation.
"CAMDEN SUBSIDIARY" means Camden Sub, any Subsidiary of the
aforementioned entities and any other entity of which Camden is the direct or
indirect general partner or as to which the Company has the right or power to
elect a majority of the board of directors or other governing body.
"COMPANY DISCLOSURE LETTER" means the letter previously delivered to
each of Camden by the Company disclosing certain information in connection
with this Agreement.
"COMPANY INTERESTS" means, collectively, the Company Subsidiaries and all
direct or indirect interests of the Company or any Company Subsidiary.
"COMPANY SUBSIDIARIES" means, collectively, GP Holdings, LP Holdings, and
Residential Management Corporation, any Subsidiary of any of the
aforementioned entities and any other entity of which the Company is the
direct or indirect general partner or as to which the Company has the right
or power to elect a majority of the board of directors or other governing
body.
"GP HOLDINGS" means Paragon Group GP Holdings, Inc., a Delaware
corporation and the general partner of the Operating Partnership.
"LP HOLDINGS" means Paragon Group LP Holdings, Inc., a Delaware
corporation and a limited partner of the Operating Partnership.
"KNOWLEDGE" where used herein with respect to the Company shall mean the
actual knowledge of the persons named in SCHEDULE 9.3 to the Company
Disclosure Letter and where used with respect to Camden shall mean the actual
knowledge of the persons named in SCHEDULE 9.3 to the Camden Disclosure
Letter.
"OPERATING PARTNERSHIP" means Paragon Group L.P., Inc. a Delaware
limited partnership.
"PERSON" means an individual, corporation, partnership, limited
liability company, joint venture, association, trust, unincorporated
organization or other entity.
"PARADIM" means Paradim, Inc., a Delaware corporation.
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"REQUIRED PARTNERSHIP VOTE" means the unanimous vote of limited partners
of the Operating Partnership required in order to approve the amendments to
the Operating Partnership Agreement substantially in the form attached hereto
as EXHIBIT A.
"RESIDENTIAL MANAGEMENT CORPORATION" means Paragon Residential Services,
Inc., a Delaware corporation.
"SUBSIDIARY" of any person means any corporation, partnership, limited
liability company, joint venture or other legal entity of which such person
(either directly or through or together with another Subsidiary of such
person) owns 20% or more of the capital stock or other equity interests of
such corporation, partnership, limited liability company, joint venture or
other legal entity.
"TPMP" means Texas Paragon Management Partners L.P., a Texas limited
partnership.
SECTION 9.4 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 9.5 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 9.6 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(b)
and (c) and Section 5.13, are not intended to confer upon any person other
than the parties hereto any rights or remedies.
SECTION 9.7 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, EXCEPT TO THE EXTENT THAT THE MERGER OR OTHER TRANSACTIONS
CONTEMPLATED HEREBY ARE REQUIRED TO BE GOVERNED BY THE TEXAS STATUTE.
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SECTION 9.8 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 9.9 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 9.10 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 9.10.
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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:
Camden Property Trust
By: /s/
----------------
Name:
Title:
CAMDEN SUB:
CAMDEN SUBSIDIARY, INC.
By: /s/
--------------
Name:
Title:
COMPANY:
Paragon Group, Inc.
By: /s/
--------------
Name:
Title:
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