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
Partnership . . . . . . . . . . . . . . . . . . . . . . . .4
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 . . . . . . . . . . . . . . . . .9
(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
(j) Related Party Transaction.s . . . . . . . . . . . . .16
(k) Absence of Changes in Benefit Plans; ERISA
Compliance. . . . . . . . . . . . . . . . . . . . . .17
(l) Taxes . . . . . . . . . . . . . . . . . . . . . . . .17
(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 . . . . . . . . . . . . .19
(q) Opinion of Financial Advisor. . . . . . . . . . . . .20
(r) State Takeover Statutes . . . . . . . . . . . . . . .20
(s) Registration Statement. . . . . . . . . . . . . . . .20
(t) Investment Company Act of 1940. . . . . . . . . . . .20
(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 . . . . . . . . . . . . . . . . .21
(c) Capital Structure . . . . . . . . . . . . . . . . . .22
(d) Authority; Noncontravention; Consents . . . . . . . .23
(e) SEC Documents; Financial Statements; Undisclosed
Liabilities . . . . . . . . . . . . . . . . . . . . .24
(f) Absence of Certain Changes or Events. . . . . . . . .25
(g) Litigation. . . . . . . . . . . . . . . . . . . . . .26
(h) Properties. . . . . . . . . . . . . . . . . . . . . .26
(i) Environmental Matters . . . . . . . . . . . . . . . .27
(j) Related Party Transaction.. . . . . . . . . . . . . .28
(k) Absence of Changes in Benefit Plans;
ERISA Compliance. . . . . . . . . . . . . . . . . . .28
(l) Taxes . . . . . . . . . . . . . . . . . . . . . . . .29
(m) No Payments to Employees, Officers or Directors . . .30
(n) Brokers; Schedule of Fees and Expenses. . . . . . . .30
(o) Compliance with Laws. . . . . . . . . . . . . . . . .30
(p) Contracts; Debt Instruments . . . . . . . . . . . . .30
(q) Interim Operations of Camden Sub. . . . . . . . . . .31
(r) Opinion of Financial Advisor. . . . . . . . . . . . .31
(s) State Statutes. . . . . . . . . . . . . . . . . . . .31
(t) Registration Statement. . . . . . . . . . . . . . . .31
(u) Vote Required . . . . . . . . . . . . . . . . . . . .31
(v) Investment Company Act of 1940. . . . . . . . . . . .32
ARTICLE IV COVENANTS. . . . . . . . . . . . . . . . . . . . .32
SECTION 4.1 Conduct of Business by the Company . . . . . . .32
SECTION 4.2 Conduct of Business by Camden. . . . . . . . . .35
SECTION 4.3 Other Actions. . . . . . . . . . . . . . . . . .37
ARTICLE V ADDITIONAL COVENANTS. . . . . . . . . . . . . . . .37
SECTION 5.1 Preparation of the Registration Statement
and the Proxy Statement; Shareholders Meeting and
Camden Shareholders Meeting. . . . . . . . . . . . . . . .37
SECTION 5.2 Access to Information; Confidentiality . . . . .39
SECTION 5.3 Commercially Reasonable Efforts;
Notification . . . . . . . . . . . . . . . . . . . . . . .40
SECTION 5.4 Affiliates . . . . . . . . . . . . . . . . . . .41
SECTION 5.5 Tax Treatment. . . . . . . . . . . . . . . . . .41
SECTION 5.6 Camden Board of Trust Managers . . . . . . . . .41
SECTION 5.7 No Solicitation of Transactions by
the Company. . . . . . . . . . . . . . . . . . . . . . . .41
SECTION 5.8 Public Announcements . . . . . . . . . . . . . .42
SECTION 5.9 Listing. . . . . . . . . . . . . . . . . . . . .42
SECTION 5.10 Letters of Accountants. . . . . . . . . . . . .42
SECTION 5.11 Transfer and Gains Taxes. . . . . . . . . . . .43
SECTION 5.12 Benefit Plans and Other Employee
Arrangements . . . . . . . . . . . . . . . . . . . . . . .43
SECTION 5.13 Indemnification; Directors' and Officers'
Insurance. . . . . . . . . . . . . . . . . . . . . . . . .44
SECTION 5.14 REIT Qualification of Paradim . . . . . . . . .46
SECTION 5.15 Termination of Certain Employment Agreements. .46
ARTICLE VI CONDITIONS PRECEDENT . . . . . . . . . . . . . . .46
SECTION 6.1 Conditions to Each Party's Obligation To
Effect the Merger. . . . . . . . . . . . . . . . . . . . .46
(a) Shareholder Approvals . . . . . . . . . . . . . . . .47
(b) HSR Act . . . . . . . . . . . . . . . . . . . . . . .47
(c) Listing of Shares . . . . . . . . . . . . . . . . . .47
(d) Registration Statement. . . . . . . . . . . . . . . .47
(e) No Injunctions or Restraints. . . . . . . . . . . . .47
(f) Blue Sky Laws . . . . . . . . . . . . . . . . . . . .47
(g) Related Transactions. . . . . . . . . . . . . . . . .47
(h) Certain Actions and Consents. . . . . . . . . . . . .47
SECTION 6.2 Conditions to Obligations of Camden . . . . . .48
(a) Representations and Warranties. . . . . . . . . . . .48
(b) Performance of Obligations of the Company . . . . . .48
(c) Material Adverse Change . . . . . . . . . . . . . . .48
(d) Opinions Relating to REIT and Partnership Status. . .48
(e) Other Tax Opinion . . . . . . . . . . . . . . . . . .49
(f) Consents . .. . . . . . . . . . . . . . . . . . . . .49
SECTION 6.3 Conditions to Obligations of the Company. . . .49
(a) Representations and Warranties. . . . . . . . . . . .49
(b) Performance of Obligations of Camden. . . . . . . . .49
(c) Material Adverse Change . . . . . . . . . . . . . . .50
(d) Opinion Relating to REIT Status . . . . . . . . . . .50
(e) Other Tax Opinion . . . . . . . . . . . . . . . . . .50
(f) Consents. . . . . . . . . . . . . . . . . . . . . . .50
(g) The Investment Company Act Opinion. . . . . . . . . .50
ARTICLE VII BOARD ACTIONS . . . . . . . . . . . . . . . . . .50
SECTION 7.1 Board Actions. . . . . . . . . . . . . . . . . .50
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER. . . . . . . .51
SECTION 8.1 Termination. . . . . . . . . . . . . . . . . . .51
SECTION 8.2 Expenses . . . . . . . . . . . . . . . . . . . .53
SECTION 8.3 Effect of Termination. . . . . . . . . . . . . .56
SECTION 8.4 Amendment. . . . . . . . . . . . . . . . . . . .56
SECTION 8.5 Extension; Waiver. . . . . . . . . . . . . . . .56
ARTICLE IX GENERAL PROVISIONS . . . . . . . . . . . . . . . .57
SECTION 9.1 Nonsurvival of Representations and Warranties. .57
SECTION 9.2 Notices. . . . . . . . . . . . . . . . . . . . .57
SECTION 9.3 Certain Definitions. . . . . . . . . . . . . . .58
SECTION 9.4 Interpretation . . . . . . . . . . . . . . . . .60
SECTION 9.5 Counterparts . . . . . . . . . . . . . . . . . .60
SECTION 9.6 Entire Agreement; No Third-Party Beneficiaries .60
SECTION 9.7 Governing Law. . . . . . . . . . . . . . . . . .60
SECTION 9.8 Assignment . . . . . . . . . . . . . . . . . . .60
SECTION 9.9 Enforcement. . . . . . . . . . . . . . . . . . .60
SECTION 9.10 Severability. . . . . . . . . . . . . . . . . .61
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 Stock Option 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
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.
PAGE
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)
"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)
"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)
PAGE
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 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.
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:
(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 "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 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 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 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 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 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 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 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 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 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 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 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 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
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 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) (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 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 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).
(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 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
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
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 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
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 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 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.
(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").
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 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;
(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 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, 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
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 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.
(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
(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, "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 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, 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).
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 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 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 Party's Obligation To Effect
the Merger. The respective obligation of each party to effect
the Merger and to consummate the other Transactions contemplated
to occur on the Closing Date is subject to the satisfaction or
waiver on or prior to the Effective Time of the following
conditions:
(a) Shareholder Approvals. This Agreement shall have been
approved and adopted by the Shareholder Approvals.
(b) HSR Act. The waiting period (and any extension
thereof) applicable to the Merger under the HSR Act shall have
been terminated or shall have expired.
(c) Listing of Shares. The NYSE shall have approved for
listing the Camden Common Stock to be issued in the Merger.
(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 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.
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).
(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
(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 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 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 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 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 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):
(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.
"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.
"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.
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.
PAGE
IN WITNESS WHEREOF, Camden, Camden Sub and the Company have
caused this Agreement to be signed by their respective officers
thereunto duly authorized, all as of the date first written
above.
CAMDEN:
Camden Property Trust
By:/S/ Xxxxxxx X. Xxxxx
Name: Xxxxxxx X. Xxxxx
Title: Chairman of the Board
CAMDEN SUB:
Camden Subsidiary, Inc.
By:/S/ Xxxxxxx X. Xxxxx
Name: Xxxxxxx X. Xxxxx
Title: Chairman of the Board
COMPANY:
Paragon Group, Inc.
By: /S/ Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Title: Chairman of the Board
