UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FORM 10-K
For Fiscal Year Ended: December 31, 1994 Commission File No.17533
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FEDERAL REALTY INVESTMENT TRUST
--------------------------------
(Exact name of registrant as specified in its charter)
District of Columbia 52-0782497
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification No.)
4800 Hampden Lane, Suite 500, Bethesda, Maryland 20814
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(Address of principal executive offices) (Zip Code)
(301) 652-3360
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(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange
Title of Each Class on Which Registered
Common Shares of Beneficial Interest New York Stock Exchange
Common Stock Purchase Rights New York Stock Exchange
Preferred Shares of Beneficial Interest*
8 7/8% Senior Notes
Subordinated Debt Securities *
* None issued, registered pursuant to a shelf registration
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that
the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes x No .
- -
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and will
not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of
this Form 10-K or any amendment to this Form 10-K.
[x]
At March 9, 1995, the aggregate market value of Common Shares of
Beneficial Interest of Federal Realty Investment Trust held by
nonaffiliates was $665 million based upon the closing price of such Shares
on the New York Stock Exchange.
Indicate the number of shares outstanding of each of the issuer's
classes of common stock.
Class Outstanding at March 9, 1995
----- ----------------------------
Common Shares of Beneficial Interest 31,660,481
DOCUMENTS INCORPORATED BY REFERENCE
-----------------------------------
PART III
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Portions of the Trust's Proxy Statement in connection with its
Annual Meeting to be held on May 10, 1995 (hereinafter called
"1995 Proxy Statement").
The Exhibit Index for this report is found on page 24.
This report, including Exhibits, contains 148 pages.
PART I & II
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Item 1. Business
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Federal Realty Investment Trust is an owner, operator and
redeveloper of community and neighborhood shopping centers. The Trust is
a self-administered real estate investment trust, founded in 1962, that
manages, leases and supervises renovation of its properties. The Trust
consolidates the financial statements of one wholly owned subsidiary, nine
partnerships, and a joint venture. At December 31, 1994 the Trust owned
53 retail properties, primarily community and neighborhood centers, and
one apartment complex. The Trust's properties are located primarily on
the east coast between the New York metropolitan area and Richmond,
Virginia.
The Trust operates in a manner intended to enable it to qualify
as a real estate investment trust (REIT) under Sections 856-860 of the
Internal Revenue Code. Under those sections, a REIT which distributes at
least 95% of its real estate investment trust taxable income to its
shareholders each year and which meets certain other conditions will not
be taxed on that portion of its taxable income which is distributed to its
shareholders. The Trust intends to continue to qualify and to distribute
substantially all of its taxable income to its shareholders. Therefore,
no provision for Federal income taxes is required.
An important part of the Trust's strategy is to acquire older,
well-located centers and to enhance their operating performance through a
program of renovation, expansion, re-configuration, re-leasing and re-
merchandising. The Trust has focused primarily on community and
neighborhood shopping centers that are anchored by supermarkets, drug
stores or high volume, value oriented retailers that provide consumer
necessities. The Trust's shopping center leases typically are structured
to include minimum rents and percentage rents based on tenants' sales
volumes and reimbursement of operating and real estate tax expenses.
3
The Trust's real estate portfolio has increased from 43
properties as of January 1990 to 54 properties as of December 31, 1994.
During this five year period the Trust acquired 13 shopping centers and
one retail building, containing approximately 2.5 million square feet, at
a cost of $191.5 million and sold three shopping centers containing
460,000 square feet. Three of these acquisitions were in the Chicago,
Illinois area and two were in the Boston, Massachusetts area, both of
which are new markets for the Trust. During this same period the Trust
spent over $150 million to renovate, expand and improve its properties.
One of the shopping centers acquired during the last five years was
acquired by means of capital and ground leases, while the remainder were
acquired primarily with cash. This growth was financed through borrowing
and equity offerings, since each year the Trust has distributed all or the
majority of its cash provided by operating activities to its shareholders.
At December 31, 1994, the Trust's 53 retail properties contain
approximately 11.2 million net rentable square feet, with approximately
1,500 tenants who provide a wide range of retail products and services.
These tenants range from sole proprietorships to national retailers.
Fifteen of the shopping centers are located in the Maryland and Virginia
suburbs of Washington, D.C., eleven are in Pennsylvania, nine are in New
Jersey, three are in Virginia, two are in the Baltimore, Maryland suburbs,
four are in Illinois, two are in Massachusetts, and there is one in each
of the following, North Carolina, Michigan, Georgia, New York, Tennessee,
and Louisiana. In addition, the Trust owns one retail building in
Westport, Connecticut and one 282 unit apartment development located in
Silver Spring, Maryland. No single property or tenant accounted for more
than 10% or 5%, respectively, of the Trust's revenues.
An important part of the Trust's investment strategy has been and
will continue to be to acquire older, well-located shopping centers in its
core major metropolitan markets of New York/New Jersey, Philadelphia and
Baltimore/Washington, D.C. as well as its newer Chicago and Boston markets
and to enhance their revenue potential through a program of renovation,
re-leasing and re-merchandising. In addition the Trust is planning to
acquire retail buildings in densely developed urban and suburban areas
(main street retail), in order to capitalize on the demand by retailers
for space in these areas. In December 1994 the Trust formed Street
Retail, Inc., a wholly owned subsidiary organized as a Maryland
corporation, to own and operate these types of properties. The Trust is
also looking for sites in its core markets, which are suitable for the
development of new shopping centers. During the years ended December 31,
1994, 1993, and 1992, shopping centers have contributed 95%, 94% and 92%,
respectively, of the Trust's total revenue.
The Trust is currently limited to investing east of the
Mississippi River; to change this limitation requires Trustee approval.
Investments are not required to be based on specific allocation by type of
property. The extent to which the Trust may mortgage or otherwise finance
investments varies with the investment involved and the economic climate.
4
The success of the Trust depends upon, among other factors, the
trends of the economy,including interest rates, construction costs,
retailing trends, income tax laws, increases or decreases in operating
expenses and, governmental regulations, population trends, zoning laws,
legislation and the ability of the Trust to keep its properties leased at
profitable levels. The Trust competes for tenants with other real estate
owners and the Trust's properties account for only a small fraction of the
shopping centers available for lease. The Trust competes for investment
opportunities and mortgage financing with individuals, partnerships,
corporations, financial institutions, life insurance companies, pension
funds and trust funds. The Trust regularly reviews its portfolio and from
time to time considers the sale of certain of its properties.
Investments in real property create a potential for environmental
liability on the part of the current and previous owners of, or any
mortgage lender on, such real property. If hazardous substances are
discovered on or emanating from any properties, the owner or operator of
the property may be held liable for costs and liabilities relating to such
hazardous substances. The Trust's current policy is to obtain an
environmental study on each property it seeks to acquire. On recent
acquisitions, any substances identified prior to closing which present an
immediate environmental hazard have been or are in the process of
remediation. Costs related to the abatement of asbestos which increase
the value of Trust properties are capitalized. Other costs are expensed.
In 1994 approximately $1.4 million, of which $1.0 million was capitalized
abatement costs, was spent on environmental matters. The Trust has
budgeted approximately $1.5 million for 1995 for environmental matters, a
majority of which is projected for asbestos abatement. (See Note 6 of
Notes to Consolidated Financial Statements.)
Current Developments
--------------------
During 1994, the Trust purchased four shopping centers totaling
469,000 square feet. The shopping centers are Idylwood Plaza in Falls
Church, Virginia, North Lake Commons in Lake Zurich, Illinois, Garden
Market Shopping Center in Western Springs, Illinois and Queen Anne Plaza
in Norwell, Massachusetts. In addition, in April 1994 the Trust purchased
a 3.9 acre parcel of land, underlying an Acme supermarket, which adjoins
its Bala Cynwyd Shopping Center in Bala Cynwyd, Pennsylvania. In December
1994 the Trust purchased a 16,000 square foot retail building in Westport,
Connecticut. These properties were acquired for a total price of $49.4
million.
In February 1995, the Trust purchased a 6,800 square foot retail
building in downtown Greenwich, Connecticut for $2.0 million. This is the
Trust's second main street retail property.
The Trust continued its strategy of renovating, expanding and
reconfiguring its centers in 1994, spending approximately $42.3 million.
These improvements included $15.5 million on the renovation and expansion
of Congressional Plaza in Rockville, Maryland, $4.1 million to complete
5
the redevelopment of Ellisburg Circle Shopping Center in Cherry Hill, New
Jersey, and $3.9 million to begin the redevelopment and retenanting of
Gaithersburg Square Shopping Center in Gaithersburg, Maryland.
The Trust funded its 1994 acquisition, redevelopment projects and
major debt repayment requirements through a variety of equity and debt
issues. In April 1994 the Trust raised net proceeds of $61.3 million from
a public offering of 2.5 million shares. In a concurrent offering of
840,000 shares to an institutional investor, the Trust raised net proceeds
of $21.7 million. In January 1994 the Trust placed a $22.5 million one
year mortgage on Northeast Plaza in Atlanta, Georgia.
In October 1994, the Trust modified its unsecured medium-term
revolving credit facilities with four banks, increasing the Trust's access
to funds from $85.0 million to $130.0 million. The Trust had $54.7
million drawn under these facilities at December 31, 1994. The facilities
have covenants requiring a minimum shareholders' equity and a maximum
ratio of debt to net worth.
In April 1994, $39.8 million of the Trust's 5 1/4% convertible
subordinated debentures due 2002 were redeemed at a price equal to 120% of
their principal amount or $47.8 million.
In January 1995 the Trust issued $100.0 million of 8 7/8% Senior
Notes. The senior notes, which pay interest semi-annually on January 15
and July 15, mature January 15, 2000. Proceeds from this borrowing were
used to repay amounts drawn on the Trust's revolving credit facilities and
to repay the $22.5 million mortgage on Northeast Plaza.
At December 31, 1994 the Trust had 204 full-time employees.
6
Item 2. Properties
Shopping Centers
The following table sets forth information concerning each retail property in which the Trust owns an equity
interest or has a leasehold interest as of December 31, 1994.
Except as otherwise noted, shopping centers are 100% owned in fee by the Trust.
Number
Year Year Square of Occupancy (1) Principal
Completed Acquired Feet(1) Tenants Acres Overall/Economic Tenants
Allwood 1958 1988 52,000 9 5 100% / 100% Grand Union
Clifton, N.J. 07013 (2) Mandee Shop
Andorra 1953 1988 252,000 45 23 93% / 93% Acme Markets
Philadelphia, PA 19128 (3) Andorra Theater
Clover
Bala Cynwyd 1955 1993 266,000 26 22 97% / 90% Lord & Taylor
Bala Cynwyd, PA 19004 Acme Markets
Barracks Road 1958 1985 478,000 85 39 98% / 98% Rose's
Charlottesville, VA 22905 (3) Safeway
Superfresh
Bethesda Row 1991 1993 225,000 66 8 93% / 91% Giant Food
Bethesda, MD 20814 (2)(6) Giant Pharmacy
Blue Star 1959 1988 392,000 30 55 98% / 98% Caldor
Watchung, N.J. 07060 (2) Shop Rite
Toys R Us
Brainerd Village 1960 1987 216,000 27 20 90% / 69% Office Town
Chattanooga, TN 37411 50 Off
Petstuff
Brick Plaza 1958 1989 314,000 31 42 86% / 65% A&P Supermarket
Brick Township, N.J. 08723 (2) Steinbach's
H.L.Green
Brunswick 1957 1988 261,000 23 22 99% / 99% Caldor
North Brunswick, N.J. 08902 (2) Grand Union
Schwartz Furniture
Clifton 1959 1988 80,000 14 8 100% / 100% Acme Markets
Clifton, N.J. 07013 (2) Channel Home
Congressional Plaza 1965 1965 297,000 33 22 81% / 52% Fresh Fields
Rockville, MD 20852 (4) Tower Records
Container Store
7
Crossroads 1959 1993 194,000 27 15 81% / 81% Gold Standard
Highland Park, IL 60035 Liquors
TJ Maxx
Dedham 1959 1993 252,000 38 18 99% / 99% Ames
Dedham, MA 02026 Workout Plus
Eastgate 1963 1986 159,000 33 17 98% / 98% Food Lion
Chapel Hill, N.C. 27514 Southern Season
Ellisburg Circle 1959 1992 258,000 35 27 98%/ 94% Shop Rite
Cherry Hill, N.J. 08034 Bed, Bath & Beyond
Falls Plaza 1962 1967 60,000 10 6 100% / 100% Giant Food
Falls Church, VA 22046 CVS Pharmacy
Feasterville 1958 1980 98,000 16 12 91% / 91% Eric Theater
Feasterville, PA 19047 (2) Genuardi Markets
Office Max
Federal Plaza 1970 1989 243,000 40 18 97% / 96% Bed, Bath & Beyond
Rockville, MD 20852 Comp USA
T.J. Maxx
Flourtown 1957 1980 97,000 18 15 98% / 88% Channel Home
Flourtown, PA 19031 Genuardi Markets
Gaithersburg Square 1966 1993 211,000 31 17 97% / 63% CVS Pharmacy
Gaithersburg, MD 20878 Fresh Fields
Garden Market 1958 1994 134,000 20 12 93% / 93% Dominick's
Western Springs, IL 60558
Governor Plaza 1963 1985 269,000 24 26 100% / 100% Frank's Nursery
Glen Burnie, MD 21961 (3) Office Depot
Syms
Hamilton 1961 1988 180,000 12 18 91% / 90% Shop Rite
Hamilton, N.J. 08690 (2) Steven's Furniture
A.C.Moore
Huntington 1962 1988 275,000 11 21 97% / 97% Bed, Bath and Beyond
Huntington, N.Y. 11746 (2) Service Merchandise
Toys R Us
Idylwood Plaza 1991 1994 73,000 18 6 100% / 79% Annie Sez
Falls Church, VA 22030 Fresh Fields
Lancaster 1958 1980 107,000 17 11 100% / 100% Giant Eagle
Lancaster, PA 17601 (2) A.C.Moore
Langhorne Square 1966 1985 208,000 33 21 100% / 100% Luxury Linens
Levittown, PA 19056 Marshalls
8
Laurel Centre 1956 1986 380,000 57 26 90% / 89% Giant Food
Laurel, MD 20707 Marshalls
Toys R US
Lawrence Park 1972 1980 340,000 41 28 99% / 99% Acme Markets
Broomall, PA 19008 (2) Best Products
Rickel Home Center
Loehmann's Plaza 1971 1983 245,000 47 18 97% / 97% Holiday Spa
Fairfax , VA 22042 (7) Linens N Things
Mid-Pike Plaza 1963 1982 302,000 23 20 100% / 100% Syms
Rockville, MD 20852 (2) Toys R Us
G Street Fabrics
North City Plaza 1972 1987 111,000 12 26 75% / 75% K Mart
New Castle, PA 16105 (5)
Northeast 1959 1983 303,000 41 19 97% / 97% Burlington Coat
Philadelphia, PA 19114 Factory
Marshalls
Northeast Plaza 1952 1986 446,000 46 44 88% /87% Publix
Atlanta, GA 30329 Levitz Furniture
North Lake Commons 1989 1994 123,000 21 13 98% / 98% Dominick's
Lake Zurich, IL 60047
Old Keene Mill 1968 1976 92,000 20 11 92% / 92% Fresh Fields
Springfield, VA 22152 Sassafras
Pan Am 1979 1993 218,000 28 25 96% / 96% Micro Center
Fairfax, VA 22031 Safeway
MJ Designs
Perring Plaza 1963 1985 413,000 16 27 96% / 96% Home Depot
Baltimore, MD 21134 (3) Metro Foods
Burlington Coat
Factory
Queen Anne Plaza 1967 1994 149,000 10 18 100% / 100% Caldor
Norwell, MA 02061 Star Markets
Quince Orchard 1975 1993 241,000 31 16 100% / 97% Circuit City
Gaithersburg, MD 20877 (6) M J Design
U.S. Department of
Energy
Roseville 1964 1973 143,000 3 20 100% / 100% F & M Distributors
Roseville, MI 48066 Handy Andy
Rutgers 1973 1988 216,000 19 27 99% / 99% Foodtown
Franklin, N.J. 08873 (2) K Mart
9
Shillington 1956 1980 74,000 19 8 81% / 78% Stacey's Buffet
Shillington, PA 19607 (2) Rite Aid
Ship's Building 1900 1994 16,000 3 100% / 100% Eddie Bauer
Westport, CT 66880
Town & Country 1968 1973 236,000 23 19 95% / 95% Burlington Coat
Springfield, IL 62704 Factory
National Super
Market
Town & Country 1974 1990 216,000 35 26 89% / 89% Weiner's Department
Hammond, LA 70401 (6) Store
Winn-Dixie
Troy 1966 1980 205,000 19 19 100% / 96% Comp USA
Parsippany-Troy, N.J. 07054 (2) K Mart
Pathmark
Tysons Station 1954 1978 50,000 15 4 100% /100% Linens N Things
Falls Church, VA 22043 Sassafras
West Falls 1960 1972 60,000 18 5 100% / 100% Staples
Falls Church, VA 22046
Wildwood 1958 1969 84,000 30 13 97% / 95% CVS Pharmacy
Bethesda, MD 20814 Sutton Place Gourmet
Williamsburg 1961 1986 240,000 34 21 93% / 91% Food Lion
Williamsburg, VA 23187 Peebles
Rose's
Willow Grove Shopping 1953 1984 219,000 30 14 93% / 93% Marshalls
Center Toys R Us
Willow Grove, PA 19090
The Shops at Willow 1957 1983 490,000 103 37 91% / 89% Leggett Stores
Lawn J.C. Penney
Richmond, VA 23230 (6) The Limited
(1) Overall occupancy is expressed as a percentage of rentable square feet and includes square feet covered by
leases for stores not yet opened. Economic occupancy is expressed as a percentage of rentable square feet , but only
includes leases currently generating rental income.
(2) The Trust has a leasehold interest in this property.
(3) The Trust owns a 99.9% partnership interest in this center.
(4) The Trust owns a 49% equity interest in this center.
(5) The Trust owns an 88% partnership interest in this center.
(6) The Trust owns this property subject to a ground lease.
(7) The Trust has a 1% general partnership interest and manages the partnership. A 99% interest was sold to a
limited partner.
10
Apartments
The following table sets forth information concerning the Trust's apartment development as of December 31, 1994 which
is 100% owned by the Trust in fee. This development is not subject to rent control.
Property Year Year Eff. and
Completed Acquired Acres 1-BR 2-BR 3-BR Total Occupancy
Rollingwood 1960 1971 14 58 163 61 282 99%
Silver Spring, MD
9 three-story buildings
11
Item 3. Legal Proceedings.
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None
Item 4. Submission of Matters to a Vote of Security Holders
------ ---------------------------------------------------
None
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters.
------ -------------------------------------------------------------
Market Quotations
Dividends
Quarter ended High Low Paid
------------- ---- --- ---------
December 31, 1994 $23 3/4 $19 5/8 $.395
September 30, 1994 26 1/8 21 .39
June 30, 1994 25 7/8 23 1/2 .39
March 31, 1994 29 1/2 23 .39
December 31, 1993 $29 7/8 $24 1/8 $.39
September 30, 1993 30 1/4 25 1/2 .385
June 30, 1993 28 7/8 24 3/4 .385
March 31, 1993 29 23 7/8 .385
The number of holders of record for Federal Realty's common
shares of beneficial interest at December 31, 1994 was 4,549.
Dividends declared per quarter during the last two fiscal years
were as follows:
Quarter Ended 1994 1993
------------- ----- -----
March 31 $.39 $.385
June 30 .39 .385
September 30 .395 .39
December 31 .395 .39
The Trust's common shares of beneficial interest are listed on
the New York Stock Exchange.
12
Item 6. Selected Financial Data.
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In thousands, except per share data
Year ended December 31,
Operating Data 1994 1993 1992 1991 1990
Rental Income $128,133 $105,948 $89,971 $88,350 $ 80,698
Income before gain
on sale of real estate
and extraordinary item 20,466 16,114 6,987 4,324 4,894
Gain on sale of
real estate --- --- 2,501 61 947
Extraordinary item -
gain (loss) on early
extinguishment of
debt --- 2,016 <58> 415 ---
Net income 20,466 18,130 9,430 4,800 5,841
Funds from
Operations 50,267 41,489 30,020 26,246 23,985
Dividends declared 48,196 42,021 36,306 25,771 24,048
Weighted average
number of shares
outstanding 30,679 27,009 22,767 17,304 16,695
Per share:
Net income .67 .67 .41 .28 .35
Dividends declared 1.57 1.55 1.53 1.50 1.44
Balance Sheet Data
Real estate at cost $852,722 $758,088 $598,867 $566,056 $555,879
Total assets 753,737 690,943 603,811 566,062 553,396
Mortgage
and capital lease
obligations 235,705 218,545 245,694 225,859 203,287
Notes payable 61,883 30,519 6,117 11,665 31,222
Senior notes --- --- 50,000 50,000 50,000
13
8- 3/4% convertible
subordinated
debentures --- --- 2,371 4,338 4,576
5-1/4% convertible
subordinated
debentures due 2002 289 40,167 43,847 87,665 100,000
5-1/4% convertible
subordinated
debentures due 2003 75,000 75,000 --- --- ---
Shareholders' equity 345,155 284,199 222,878 151,480 129,346
Number of shares
outstanding 31,609 28,018 24,718 19,687 16,716
14
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Liquidity and Capital Resources
-------------------------------
Federal Realty meets its liquidity requirements through net cash
provided by operating activities, long term borrowing through debt
offerings and mortgages, medium and short term borrowing under revolving
credit facilities, and equity offerings. Because all or a significant
portion of the Trust's net cash provided by operating activities is
distributed to shareholders, capital outlays for property acquisitions,
renovation projects and debt repayments require funding from borrowing or
equity offerings.
During the period 1992 through 1994 the Trust acquired twelve
shopping centers, one retail building, the land underlying one of its
existing shopping centers and a parcel of land adjoining another of its
centers. In addition, several centers underwent major renovation while
general improvements and tenant work were done at many of the others.
During 1994 the Trust purchased four shopping centers and one
retail building, Idylwood Plaza in Falls Church, Virginia, North Lake
Commons in Lake Zurich, Illinois, Garden Market Shopping Center in Western
Springs, Illinois, Queen Anne Plaza in Norwell, Massachusetts and the
Ship's Building in Westport, Connecticut. In addition, the Trust purchased
a 3.9 acre parcel of land, on which there is an Acme supermarket, which
adjoins its Bala Cynwyd Shopping Center. These properties were acquired
for a total cash investment of $49.4 million.
During 1994, $42.3 million was expended on improvements to Trust
properties. These improvements included $15.5 million on the renovation
and expansion of Congressional Plaza in Rockville, Maryland, $4.1 million
to complete the redevelopment of Ellisburg Circle Shopping Center in
Cherry Hill, New Jersey, and $3.9 million to begin the redevelopment and
retenanting of Gaithersburg Square Shopping Center in Gaithersburg,
Maryland.
In 1993 the Trust spent $101.8 million to acquire six shopping
centers (Gaithersburg Square and Quince Orchard Shopping Centers in
Gaithersburg, Maryland, Pan Am Shopping Center in Fairfax, Virginia,
Crossroads Shopping Center in Highland Park, Illinois, Bala Cynwyd
Shopping Center in suburban Philadelphia, Pennsylvania, and Dedham Plaza
in Dedham, Massachusetts), $6.2 million in connection with the long term
lease of Bethesda Row in Bethesda, Maryland, and $34.3 million in
improvements to its properties. In 1992 the Trust acquired the Ellisburg
Circle Shopping Center in Cherry Hill, New Jersey for $15.3 million and
the land underlying Wildwood Shopping Center, which had been subject to a
ground lease, for $9.1 million. Improvements to Trust properties totalled
$15.2 million in 1992.
These acquisitions and improvements, as well as debt repayment
requirements, were funded through a variety of equity and debt issues. In
15
April 1994 the Trust raised net proceeds of $61.3 million from a public
offering of 2.5 million common shares of beneficial interest ("shares").
In a concurrent offering of 840,000 shares to an institutional investor,
the Trust raised net proceeds of $21.7 million. In April 1993, 2.8
million shares were issued in a public offering, netting proceeds of $72.8
million. In December 1993 another 220,000 shares were issued for $5.4
million in a private placement in connection with the long term lease of
Bethesda Row. In June 1992, 3.4 million shares were sold in a public
offfering, raising net proceeds of $66.5 million.
In March 1992 the Trust exchanged $22.6 million principal amount
of its 5 1/4% convertible subordinated debentures due 2002 for 1.3 million
shares. Another $21.2 million principal amount of these debentures was
retired in 1992 when they were repurchased by the Trust. The Trust
purchased an additional $3.7 million of these debentures in 1993 and in
April 1994, $39.8 million of the debentures were redeemed at a price equal
to 120% of their principal amount or $47.8 million.
The Trust called its 8 3/4% convertible subordinated debentures
and its 8.65% Senior Notes for redemption in 1993. The Trust redeemed
$173,000 principal amount of the 8 3/4% debentures at a price of $1017.50
per debenture on March 15; the balance of the debentures that had been
outstanding or $2.2 million were converted into shares. The senior notes
were redeemed on May 14, at a price of $1010 for a total redemption price
of $50.5 million.
In October 1993 the Trust issued $75.0 million of 5 1/4%
convertible subordinated debentures, realizing cash proceeds of
approximately $73.0 million. The debentures, which mature in 2003, are
convertible into shares at $36 per share.
In 1992 the Trust placed a $30.0 million mortgage, initially bearing
interest at 8 1/4%, on Federal Plaza. In November 1994 the Trust spent
$4.2 million to exercise the option to purchase the land at Northeast
Shopping Center, $3.4 million of which had been recorded as a capital
lease obligation. During 1992 and 1993, respectively, $6.3 million and
$34.9 million of mortgage obligations were prepaid. In January 1994 a
$22.5 million one year mortgage was placed on Northeast Plaza in Atlanta,
Georgia. The mortgage was repaid in January 1995.
At December 31, 1994 the Trust had $130 million of unsecured
medium term revolving credit facilities with four banks. The facilities
require fees and have covenants requiring a minimum shareholders' equity
and a maximum ratio of debt to net worth. The Trust uses these facilities
to fund acquisitions and other cash requirements until conditions are
favorable for issuing equity or long term debt. At December 31, 1994
there was $54.7 million drawn under these facilities, which was the
maximum drawn during 1994. Borrowings under these facilities bear
interest at LIBOR (London Interbank Offered Rate) plus 85 to 100 basis
points; the weighted average interest rate on borrowings during 1994 was
5.6%.
16
At December 1993 the Trust had $70.0 million of unsecured medium
term revolving credit facilities with three banks. The maximum drawn
under these facilities in 1993 was $64.1 million and at December 31, 1993,
there was $24.4 million outstanding. The weighted average interest rate
on borrowing during 1993 was 4.2%. At December 31, 1992 the Trust had a
$20.0 million unsecured line of credit available. Interest on borrowings
in 1995 are expected to be higher than in 1994 and 1993 as interest rates
have risen.
The Trust has budgeted $47.0 million for capital improvements to
its properties in 1995. These improvements include: (1) $14.5 million to
complete the renovation and expansion of Congressional Plaza; (2) $5.0
million to renovate Brick Plaza, which was deferred from 1994; and (3)
$5.2 million to complete the renovation at Gaithersburg Square.
The Trust's long term debt has varying maturity dates and in a
number of instances includes balloon payments or other contractual
provisions that could require significant repayments during a particular
period. The next significant maturity is approximately $41.3 million of
mortgage obligations which are due in 1998.
The Trust intends to continue to acquire shopping centers in
1995. Acquisitions are targeted for the Trust's core major metropolitan
markets of New York/New Jersey, Philadelphia and Baltimore/Washington,
D.C. as well as the Chicago, Illinois and Boston, Massachusetts markets.
In addition, the Trust plans to acquire additional retail buildings in
densely developed urban and suburban areas, such as the Ship's Building
acquired in December 1994. In February 1995 a 6,800 square foot retail
building in downtown Greenwich, Connecticut was purchased for $2.0
million. The Trust is also continuing to study site acquisitions in its
core markets to permit the Trust to develop shopping centers.
In January 1995 the Trust issued $100 million of 8 7/8% Senior
Notes, netting $99.2 million. The notes require interest payments semi-
annually on January 15 and July 15 and are due January 15, 2000. Proceeds
from the notes were used, in part, to repay the $22.5 million mortgage on
Northeast Plaza and to repay amounts outstanding on the credit facilities.
In order to protect itself against the risk that the general level of
interest rates for such securities would rise before the senior notes were
priced, in December 1994 the Trust entered into two interest rate hedge
agreements on a total principal amount of $75.0 million. The cost of the
agreements, which terminated on January 20, 1995, was $21,000 which will
be amortized into interest expense over the life of the notes. In January
1995 the Trust executed an interest rate swap on $25.0 million, whereby
the Trust swapped fixed interest payment obligations of 8.136% for a
floating rate interest payment of three month LIBOR. Consequently, the
Trust will have a floating rate of interest on $25.0 million of the senior
notes.
The Trust believes that the combination of the remaining proceeds
from the January 1995 senior note offering and the $130 million available
under its revolving credit facilities provide it with the liquidity needed
17
for its 1995 renovation and acquisition plans. The Trust will need to
raise equity or issue additional long term debt to meet its longer term
capital and debt repayment needs. The Trust believes that the
unencumbered value of its properties and its access to the capital
markets, as demonstrated by its past success in raising capital, give it
the ability to raise the capital, both debt and equity, needed to fund
these longer term needs.
Contingencies
-------------
The State of New Jersey Division of Taxation has assessed the
Trust $364,000 in taxes, penalty and interest for the years 1985 through
1990, since the State has disallowed the dividends paid deduction in
computing New Jersey taxable income. The Trust is protesting this
assessment since the Trust believes that it is entitled to the deduction.
At this time, the outcome of this matter is unknown; however, in a case
involving another real estate investment trust, the New Jersey tax court
recently ruled that the dividends paid deduction was allowable. However,
the State of New Jersey has appealed this ruling.
Included in the Trust's investments is $3.1 million of Olympia
and York Senior First Mortgage Notes. The Olympia and York notes were
written down during 1992 to management's best estimate of their net
realizable value. Interest income on these notes is not being recorded as
revenue, but is being treated as a reduction of principal.
As previously reported, certain of the Trust's shopping centers
have some environmental contamination. The North Carolina Department of
the Environment, Health and Natural Resources ("DEHNR") issued a Notice of
Violation ("NOV") against a former dry cleaner tenant at Eastgate Shopping
Center in Chapel Hill, North Carolina concerning a spill at the shopping
center. As owner of the shopping center, the Trust was named in and
received a copy of the NOV. Estimates to remediate the spill range from
$300,000 to $500,000. The Trust has entered into an agreement with two
previous owners of the shopping center to share the costs to assess and
remediate. In 1993 the Trust recorded a liability of $120,000 as its
estimated share of the clean up costs.
In 1992 contaminants at levels in excess of New Jersey cleanup
standards were identified at a shopping center in New Jersey. The Trust
has retained an environmental consultant to investigate the contamination.
The Trust is also evaluating whether it has insurance coverage for this
matter. At this time, the Trust is unable to determine what the range of
remediation costs might be. The Trust has also identified chlorinated
solvent contamination at two other properties. In each case, the
contamination appears to be linked to the current and/or previous dry
cleaner. The Trust intends to look to the responsible parties for any
remediation effort. Evaluation of these situations is preliminary and it
is impossible, at this time, to estimate the range of remediation costs,
if any.
18
The Trust reserved $2.25 million at closing in 1993 for
environmental issues principally associated with Gaithersburg Square
Shopping Center. Pursuant to an indemnity agreement entered into with the
seller at closing, the Trust agreed to take certain actions with respect
to identified chlorinated solvent contamination. The seller indemnified
the Trust for certain third party claims and government requirements
related to contamination at adjacent properties.
Results of Operations
---------------------
The effect of the Trust's recent acquisition, redevelopment and
financing transactions is reflected in the Trust's operations. Funds from
operations, which is defined as income before depreciation and
amortization and extraordinary items less gains on sale of real estate,
increased 38% from $30.0 million in 1992 to $41.5 million in 1993 and
increased 21% in 1994 to $50.3 million. If funds from operations are
adjusted to remove the effect of nonrecurring charges of $1.1 million,
funds from operations would have increased 24% in 1994 to $51.3 million.
Management believes that funds from operations is an appropriate
supplemental measure of the Trust's operating performance because it
believes that reductions for depreciation and amortization charges are
usually not meaningful in evaluating income producing real estate, which
have historically been appreciating assets. The Trust acquires, evaluates
and sells income producing properties based upon operating income without
taking into account property depreciation and amortization charges. Gains
on sale of real estate and extraordinary items are also excluded from this
supplemental measure of performance because such amounts are not part of
the ongoing operations of the Trust's portfolio. Funds from operations
does not replace net income as a measure of performance or net cash
provided by operating activities as a measure of liquidity.
The Trust's shopping center leases generally provide for minimum
rents, with periodic increases. Most shopping center tenants pay a
majority of onsite operating expenses. Many leases also contain a
percentage rent clause which calls for additional rents based on tenant
sales, so that at a given sales volume, if prices increase, so does rental
income. These features in the Trust leases reduce the Trust's exposure to
higher costs caused by inflation, although inflation has not been
significant in recent years.
Rental income, which consists of minimum rent, percentage rent,
and cost recoveries, increased 17.8% from $90.0 million in 1992 to $105.9
million in 1993 and 20.9% in 1994 to $128.1 million. If centers acquired
and sold in 1992, 1993 and 1994 are excluded, rental income increased 8.7%
from 1992 to 1993 and 6.1% from 1993 to 1994. The components of rental
income with the greatest change are minimum rent and common area
maintenance recovery (CAM recovery).
Minimum rents increased 17.9% from $70.9 million in 1992 to $83.6
million in 1993 and 19.4% in 1994 to $99.9 million. If centers acquired
and sold during these years are excluded, minimum rents increased 8.6%
from 1992 to 1993. Minimum rents increased 4% from 1993 to 1994, despite
19
a $350,000 decrease in minimum rents at Congressional Plaza whose
occupancy was reduced during its redevelopment in 1994.
CAM recovery on the portfolio, adjusted to remove the effect of
properties purchased in 1992, 1993 and 1994, increased from $7.6 million
in 1992 to $8.2 million in 1993 to $11.5 million in 1994. These increases
correspond to increases in CAM expenses, primarily snow removal,
landscaping and security. Real estate tax recovery, after removing the
effect of properties purchased during the past three years, showed a
slight decline; a major component of this decline was due to lower
occupancy and refunds due at Congressional Plaza, which has been under
redevelopment.
Other property income, which includes items which tend to
fluctuate from period to period, such as utility reimbursements, telephone
income, merchant association dues, lease termination fees, late fees and
temporary tenant income, increased from $4.7 million in 1992 to $5.5
million in 1993 and to $5.7 million in 1994. Part of the increase was due
to the addition of new properties and part was due to the fluctuating
nature of the income.
Rental expenses increased from $20.9 million in 1992 to $26.5
million in 1993 to $35.8 million in 1994, which represents 22.1% of
property income (rental income plus other income) in 1992, 23.8% in 1993
and 26.8% in 1994. The components of rental expense with the greatest
percentage increase in both 1993 and 1994 are repairs and maintenance and
other operating expenses and in 1994 ground rent. Snow removal expense, a
component of repairs and maintenance, increased from approximately
$270,000 in 1992 to approximately $910,000 in 1993 to over $2.4 million in
1994, because of the new properties and because of increased expense on
the core portfolio resulting from the harsh weather conditions during the
past two winters. Other operating expenses have increased from 4.7% of
property income in 1992 to 5.2% in 1993 to 5.8% in 1994 because of
increases in bad debt, environmental, marketing and grand opening
expenses. Ground rent increased $2.1 million in 1994 over 1993 because of
the acquisition of Bethesda Row on December 31, 1993, a large part of
which is under ground lease. If rental expenses are adjusted to remove
the effect of properties purchased and sold in 1992, 1993 and 1994, rental
expenses increased from $20.6 million in 1992 to $24.4 million in 1993 to
$26.8 million in 1994. Real estate taxes have declined slightly as a
percentage of property income, from 9.4% in 1992 to 9.3% in 1993 to 9.0%
in 1994.
Depreciation and amortization charges increased because of the
new acquisitions, but also because of depreciation on recent tenant work
and property improvements.
Interest income and expense have been affected by the Trust's
financing transactions of the past three years. Interest income was $5.5
million in 1992 as compared to $3.9 million in 1993 and $3.9 million in
1994. In 1992 the Trust had higher average cash balances than in 1993 and
1994, since in 1992 the Trust did not have immediate uses for all the
20
proceeds from public offerings and temporarily invested the proceeds until
they were used for acquisitions, renovations and debt repayments. In 1993
and 1994, proceeds from debt and equity offerings were used almost
immediately to retire debt and to fund acquisitions and renovations.
While total interest expense remained relatively constant in 1993
and 1994, the components have changed. Decreases in interest expense,
resulting from the repayment of several mortgages and the senior notes in
1993 and the redemption on April 30, 1994 of the 5 1/4% convertible
subordinated debentures due 2002, were offset by increases in interest
expense because of the issuance of the 5 1/4% convertible subordinated
debentures due 2003, the interest portion of the capital lease payment on
Bethesda Row, and interest on increased usage of the revolving credit
facilities. The ratio of earnings to fixed charges was 1.50x in 1993 and
1.61x in 1994. The ratio of funds from operations to fixed charges was
2.29x in 1993 and 2.52x in 1994.
Interest expense decreased from $35.2 million in 1992 to $31.6
million in 1993, reflecting the redemption in 1993 of the senior notes and
8 3/4% convertible subordinated debentures, the reduction in the 5 1/4%
convertible subordinated debentures due 2002 and the prepayment of various
mortgages, partially offset by the interest expense on the revolving
credit facilities and interest on the 5 1/4% convertible subordinated
debentures due 2003.
Administrative expenses are increasing as the Trust grows and as
it seeks new acquisition and development opportunities. Administrative
expenses as a percentage of property income have gone from 4.3% in 1992 to
4.2% in 1993 to 5.0% in 1994. A major component of the increase in 1994
over 1993 was an increase in costs connected with the review and analysis
of potential property acquisitions which were not purchased.
Other charges consists of three nonrecurring items in 1994.
During the third quarter of 1994 the Trust wrote down a mortgage note
receivable and accrued interest thereon, totalling $758,000. The mortgage
note was issued in 1982 in connection with the sale by the Trust of a
shopping center in Delaware. Although the Trust will continue to pursue
payment of the mortgage note, due to the current cash flow of the
collateral property, collectibility is uncertain. During the fourth
quarter of 1994, the Trust recognized an unrealized loss of $449,000 on an
investment in common shares of another real estate investment trust that
it has held since 1989, since it appears that its decline in value is
permanent. These two losses were partially offset by a $152,000 recovery
of a legal settlement paid in 1987. In 1992 other charges consisted of a
$960,000 writedown of an investment in Olympia and York notes, partially
offset by the recovery of another portion of the legal settlement paid in
1987.
Income before gain on sale of real estate and extraordinary item
increased from $7.0 million in 1992 to $16.1 million in 1993 to $20.5
million in 1994 reflecting increased revenues from the Trust's
21
acquisitions, decreased interest expense resulting from its financing
activities and growth in the core portfolio.
Gain on sale of real estate is dependent on the extent and timing
of sales. The 1992 gain was primarily due to the sale of two shopping
centers.
In 1993 the Trust had a net gain of $2.0 million on the early
extinguishment of debt, resulting from a $3.1 million gain on the
extinguishment of one mortgage, offset by losses on the redemption of the
senior notes, convertible subordinated debentures and two other mortgages.
In 1992 the Trust had a net loss of $58,000 on the early extinguishment of
debt, resulting from the prepayment of two mortgages and the exchange and
repurchase of some of its 5 1/4% convertible subordinated debentures due
2002.
As a result of the foregoing items, net income rose from $9.4
million in 1992 to $18.1 million in 1993 to $20.5 million in 1994.
Item 8. Financial Statements and Supplementary Data.
-------------------------------------------
Included in Item 14.
Item 9. Disagreements on Accounting and Financial Disclosure.
-----------------------------------------------------
None
22
Part III
--------
Item 10. Directors and Executive Officers of the Registrant.
--------------------------------------------------
Executive Officers of the Registrant
------------------------------------
The Executive Officers are:
Name Age Position with Trust
---- --- -------------------
Steven J. Guttman 48 President and Chief Executive
Officer and Trustee
Ron D. Kaplan 32 Vice President-Capital Markets
Catherine R. Mack 50 Vice President-General Counsel
and Secretary
Mary Jane Morrow 42 Senior Vice President-Finance
and Treasurer
Hal A. Vasvari 51 Executive Vice President and
Chief Operating Officer
Cecily A. Ward 48 Vice President-Controller
Robert S. Wennett 34 Senior Vice President-
Acquisitions
Steven J. Guttman has been the Trust's President and Chief
Executive Officer since April 1980. Mr. Guttman has been associated
with the Trust since 1972, became Chief Operating Officer in 1975 and
became a Managing Trustee in 1979.
Ron D. Kaplan joined the Trust in November 1992 as Vice
President-Capital Markets. Mr. Kaplan was formerly a Vice President of
Salomon Brothers Inc where he was responsible for capital raising and
financial advisory services for public and private real estate companies.
While at Salomon Brothers, he participated in two of the Trust's debt
offerings.
Catherine R. Mack came to the Trust in January 1985 as General
Counsel and became a Vice President in February 1986. Before joining the
Trust, Ms. Mack was an Assistant United States Attorney for the District
of Columbia and, prior to that, an attorney with Fried, Frank, Harris,
Shriver and Jacobson in Washington, D.C. where she represented several
local real estate entities. She has practiced law since 1974.
23
Mary Jane Morrow joined the Trust in January 1987 as Vice
President-Finance and Treasurer. Before joining Federal Realty, Ms.
Morrow was a Partner with Grant Thornton LLP, the Trust's independent
accountants. She was with Grant Thornton LLP for over 10 years and has
extensive experience in real estate and accounting.
Hal A. Vasvari joined Federal Realty Management, Inc., the
Trust's former managing agent, in August 1985 as Executive Vice
President. In January 1989, Mr. Vasvari became Executive Vice President-
Management of the Trust. In December 1994, Mr. Vasvari was appointed
Chief Operating Officer. Prior to August 1985, he was director of leasing
for Kravco Co., a developer of shopping malls and shopping centers.
Cecily A. Ward joined the Trust in April 1987 as Controller.
Prior to joining the Trust, Ms. Ward, a certified public accountant, was
with Grant Thornton LLP, the Trust's independent accountants.
Robert S. Wennett joined the Trust's acquisitions department in
April 1986. Prior to joining the Trust, Mr. Wennett was an associate with
Chemical Realty Corporation in New York where he was involved in real
estate financing for corporate clients.
The schedule identifying Trustees under the caption "Election of
Trustees" of the 1995 Proxy Statement is incorporated herein by reference
thereto.
Item 11. Executive Compensation.
-----------------------
The sections entitled "Summary Compensation Table" and
"Aggregated Option Exercises in 1994 and December 31, 1994 Option
Values" of the 1995 Proxy Statement are incorporated herein by
reference thereto.
Item 12. Security Ownership of Certain Beneficial Owners and
Management.
---------------------------------------------------
The section entitled "Ownership of Shares by Trustees and
Officers" of the 1995 Proxy Statement is incorporated herein by reference
thereto.
Item 13. Certain Relationships and Related Transactions.
----------------------------------------------
The section entitled "Certain Transactions" of the 1995 Proxy
Statement is incorporated herein by reference thereto.
24
Part IV
--------
Item 14.Exhibits, Financial Statement Page No.
Schedules, and Reports on --------
Form 8-K
------------------------------
(a) 1. Financial Statements
--------------------
Report of Independent Certified
Public Accountants F-2
Consolidated Balance Sheets-
December 31, 1994 and 1993 F-3
Consolidated Statements of
Operations - years ended
December 31, 1994, 1993
and 1992 F-4
Consolidated Statements of
Shareholders' Equity - years
ended December 31, 1994, 1993
and 1992 F-5
Consolidated Statements of
Cash Flows - years ended
December 31, 1994, 1993 and
1992 F-6
Notes to Consolidated
Financial Statements
(Including Selected Quarterly
Data) F-7 - F-18
(a) 2. Financial Statement Schedules
------------------------------
Schedule III - Summary of Real Estate
and Accumulated Depreciation.............. F19 - F21
Schedule IV - Mortgage Loans on Real
Estate ................................... F22 - F23
Report of Independent Certified
Public Accountants...................... F24
25
(a) 3. Exhibits
--------
(3) (i) The Trust's Third Amended and Restated Declaration
of Trust dated May 24, 1984, filed with the Commission on
July 5, 1984 as Exhibit 4 to the Trust's Registration
Statement on Form S-2 (file No. 2-92057) is incorporated
herein by reference thereto.
(ii) Bylaws of the Trust, filed with the Commission as
an exhibit to the Trust's Current Report on Form 8-K
dated February 20, 1985, as most recently amended and
filed with the Commission as an exhibit to the Trust's
Current Report on Form 8-K dated November 30, 1994, is
incorporated herein by reference thereto.
(4) (i) Specimen Share of Beneficial Interest, filed with
the Commission on November 23, 1982 as Exhibit 4 to the
Trust's Registration Statement on Form S-2 (file No. 2-
80524), is incorporated herein by reference thereto.
(ii) Indenture dated March 15, 1985, relating to the
Trust's 8 3/4 % Convertible Subordinated Debentures Due
2010, filed with the Commission on March 1, 1985 as
Exhibit 4 (a) (2) to the Trust's Registration Statement
on Form S-2 (File No. 2-96136) is incorporated herein by
reference thereto.
(iii) Indenture dated April 1, 1986, relating to the
Trust's 8.65% Senior Notes due 1996, filed with the
commission on March 27, 1986 as exhibit 4 (a) 1 to the
Trust's Registration Statement on Form S-3, (File No. 33-
3934) is incorporated herein by reference thereto.
(iv) The 5 1/4% Convertible Subordinated Debenture due
2002 as described in Amendment No. 1 to Form S-3 (File
No. 33-15264), filed with the Commission on August 4,
1987 is incorporated herein by reference thereto.
(v) Shareholder Rights Plan, dated April 13, 1989, filed
with the Commission as an exhibit to the Trust's Current
Report on Form 8-K, dated April 13, 1989, is incorporated
herein by reference thereto.
(vi) Indenture dated December 13, 1993, related to the
Trust's 8 7/8% Senior Notes, filed with the commission on
December 13, 1993 as exhibit 4 (a) to the Trust's
Registration Statement on Form S-3, (File No. 33-51029)
is incorporated herein by reference thereto.
(9) Voting Trust Agreement............................*
26
(10) (i) Consultancy Agreement with Samuel J. Gorlitz, as
amended, filed with the Commission as Exhibit 10 (v) to
the Trust's Annual Report on Form 10-K for the year ended
December 31, 1983, is incorporated herein by reference
thereto.
(ii) The Trust's 1983 Stock Option Plan adopted May 12,
1983, filed with the Commission as Exhibit 10 (vi) to the
Trust's Annual Report on Form 10-K for the year ended
December 31, 1983, is incorporated herein by reference.
(iii) Deferred Compensation Agreement with Steven J.
Guttman dated December 13, 1978, filed with the
Commission as Exhibit 10 (iv) to the Trust's Annual
Report on Form 10-K for the year ended December 31, 1980
is incorporated herein by reference thereto.
The following documents, filed with the Commission as portions of
Exhibit 10 to the Trust's Annual Report on Form 10-K for the year ended
December 31, 1985, are incorporated herein by reference thereto.
(iv) The Trust's 1985 Non-Qualified Stock Option Plan,
adopted on September 13, 1985
The following documents, filed with the Commission as portions
of Exhibit 10, to the Trust's Annual Report on Form 10-K for the year
ended December 31, 1980, have been modified as noted below, and are
incorporated herein by reference thereto.
(v) Consultancy Agreement with Daniel M. Lyons dated
February 22, 1980, as amended (modified as of December l,
1983, to provide for an annual cost of living increase,
not to exceed 10%).
The following documents filed as portions of Exhibit 10 to the
Trust's Annual Report on Form 10-K for the year ended December 31, 1988
are incorporated herein by reference thereto:
(vi) The 1988 Share Bonus Plan.
(vii) Amendment No. 3 to Consultancy Agreement with
Samuel J. Gorlitz.
The following documents filed with the Commission as portions of
Item 6 to the Trust's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1989 are incorporated herein by reference thereto;
(viii) Executive Agreement between the Trust and Steven
J. Guttman, dated April 13, 1989.
(ix) Executive Agreement between the Trust and Catherine
R. Mack, dated April 13, 1989.
27
(x) Executive Agreement between the Trust and Mary Jane
Morrow, dated April 13, 1989.
(xi) Executive Agreement between the Trust and Hal A.
Vasvari, dated April 13, 1989.
(xii) Employment Agreement between the Trust and Steven
J. Guttman, dated April 13, 1989.
(xiii) Employment Agreement between the Trust and
Catherine R. Mack, dated April 13, 1989.
(xiv) Employment Agreement between the Trust and Mary
Jane Morrow, dated April 13, 1989.
(xv) Employment Agreement between the Trust and Hal A.
Vasvari, dated April 13, 1989.
(xvi) Executive Agreement between the Trust and Robert
S. Wennett, dated April 13 ,1989, modified January 1,
1990, filed with the Commission as a portion of Exhibit
10 to the Trust's Annual Report on Form 10-K for the year
ended December 31, 1989 is incorporated herein by
reference thereto.
(xvii) The 1991 Share Purchase Plan, dated January 31,
1991, filed with the Commission as a portion of Exhibit
10 to the Trust's Annual Report on Form 10-K for the year
ended December 31, 1990 is incorporated herein by
reference thereto.
(xviii) Employment Agreement between the Trust and
Robert S. Wennett, dated January 1, 1992, filed with the
Commission as an exhibit to the Trust's Annual Report on
Form 10-K for the year ended December 31, 1991 is
incorporated herein by reference thereto.
(xix) Amendment No. 4 to Consultancy Agreement with
Samuel J. Gorlitz, filed with the Commission as an
exhibit to the Trust's Annual Report on Form 10-K for the
year ended December 31, 1992 is incorporated herein by
reference thereto.
(xx) Employment and Relocation Agreement between the
Trust and Ron D. Kaplan, dated September 30, 1992, filed
as an exhibit to the Trust's Annual Report on Form 10-K
for the year ended December 31, 1992 is incorporated
herein by reference thereto.
(xxi) Employment Agreement between the Trust and Cecily
A. Ward, dated January 1, 1993, filed as an exhibit to
the Trust's Annual Report on Form 10-K for the year ended
28
December 31, 1992 is incorporated herein by reference
thereto.
(xxii) Amendment dated October 1, 1992, to Voting Trust
Agreement dated as of March 3, 1989 by and between I.
Wolford Berman and Dennis L. Berman filed as an exhibit
to the Trust's Annual Report on Form 10-K for the year
ended December 31, 1992 is incorporated herein by
reference thereto.
(xxiii) 1993 Long-Term Incentive Plan and Certified
Resolution Re: Amendment to 1993 Long-Term Incentive
Plan, filed with the Commission as portions of Item 6 to
the Trust's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1993, are incorporated herein by reference
thereto.
The following documents, filed with the Commission as portions of Item 6
to the Trust's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1993 are incorporated herein by reference thereto:
(xxiv) Revolving Credit Agreement dated as of September
1, 1993 among Federal Realty Investment Trust and
Corestates Bank.
(xxv) Credit Agreement dated as of August 25, 1993
between Federal Realty Investment Trust and First Union
National Bank of Virginia.
(xxvi) Revolving Credit Agreement dated as of June 22,
1993 between Federal Realty Investment Trust and Signet
Bank/Maryland.
(xxvii) Consulting Agreement between Misner Development
and Federal Realty Investment Trust.
(xxviii) Fiscal Agency Agreement dated as of
October 28, 1993 between Federal Realty Investment Trust
and Citibank, N.A.
(xxix) Credit Agreement dated as of February 11, 1994
between Federal Realty Investment Trust and Mellon Bank
as filed as an exhibit to the Trust's Annual Report on
Form 10-K for the year ended December 31, 1993 is
incorporated herein by reference thereto.
(xxx) Other Share Award and Purchase Note between
Federal Realty Investment Trust and Ron D. Kaplan, dated
January 1, 1994, filed with the Commission as a portion
to Item 6 to the Trust's Quarterly Report on Form 10-Q
for the quarter ended March 31, 1994 is incorporated
herein by reference thereto.
29
(xxxi) Amended and Restated 1983 Stock Option Plan of
Federal Realty Investment Trust and 1985 Non-Qualified
Stock Option Plan of Federal Realty Investment Trust,
filed with the Commission on August 17, 1994 on Form S-8,
(File No. 33-55111) is incorporated herein by reference
thereto.
The following are filed as exhibits hereto:
(xxxii) Form of Severance Agreement between Federal
Realty Investment Trust and Certain of its Officers dated
December 31, 1994 is filed herewith as an exhibit.
(xxxiii) Credit Agreement dated as of September 30, 1994
between Federal Realty Investment Trust and First Union
National Bank of Virginia is filed herewith as an
exhibit.
(xxxiv) Second Amendment to Revolving Credit Agreement
dated as of September 30, 1994 between Federal Realty
Investment Trust and Corestates Bank is filed herewith as
an exhibit.
(xxxv) First Amendment to Credit Agreement dated
September 30, 1994 between Federal Realty Investment
Trust and Mellon Bank is filed herewith as an exhibit.
(xxxvi) First Amendment to Revolving Credit Agreement
dated September 30, 1994 between Federal Realty
Investment Trust and Signet Bank/Maryland is filed
herewith as an exhibit.
(11) Statement regarding computation of per share
earnings.........................................*
(12) Statements regarding computation of ratios.......*
(13) Annual Report to Shareholders, Form 10Q or quarterly
report to shareholders...........................*
(18) Letter regarding change in accounting
principles.......................................*
(19) Report furnished to security holders.............*
(21) Subsidiaries of the registrant....................
(xxxvii) Articles of Incorporation of Street Retail, Inc.
are filed herewith as an exhibit.
30
(xxxviii) By-Laws of Street Retail, Inc. are filed
herewith as an exhibit.
(22) Published report regarding matters submitted to
vote of security holders.........................*
(23) Consent of Grant Thornton LLP.....................
(24) Power of attorney................................*
(27) Financial Data Schedule..........................+
(99) Additional exhibits..............................*
(b) Reports on Form 8-K Filed during the Last Quarter
-------------------------------------------------
A Form 8-K, dated November 30, 1994, was filed in
response to Item 7.(c)3.(ii).
___________
* Not applicable.
+ For Edgar filing only.
31
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
FEDERAL REALTY INVESTMENT TRUST
Date: March 21, 1995 By: Steven J. Guttman
-----------------
Steven J. Guttman
President
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf
of the registrant and in the capacities and on the dates indicated.
Signatures Title Date
---------- ----- -----
President and
Trustee (Chief
Steven J. Guttman Executive Officer) March 21, 1995
-----------------
Steven J. Guttman
Senior Vice-President
and Treasurer (Chief
Mary Jane Morrow Financial Officer) March 21, 1995
-----------------
Mary Jane Morrow
Vice-President and
Controller (Principal
Cecily A. Ward Accounting Officer) March 21, 1995
-----------------
Cecily A. Ward
Dennis L. Berman Trustee March 21, 1995
-----------------
Dennis L. Berman
A. Cornet de Ways Ruart Trustee March 21, 1995
-----------------------
A. Cornet de Ways Ruart
Samuel J. Gorlitz Trustee March 21, 1995
-----------------------
Samuel J. Gorlitz
Arnold M. Kronstadt Trustee March 21, 1995
-----------------------
Arnold M. Kronstadt
32
Morton S. Lerner Trustee March 21, 1995
-----------------------
Morton S. Lerner
Walter F. Loeb Trustee March 21, 1995
-----------------------
Walter F. Loeb
Donald H. Misner Trustee March 21, 1995
-----------------------
Donald H. Misner
George L. Perry Trustee March 21, 1995
-----------------------
George L. Perry
33
SCHEDULES
REPORT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
Trustees and Shareholders
Federal Realty Investment Trust
We have audited the accompanying consolidated balance sheets of Federal
Realty Investment Trust as of December 31, 1994 and 1993, and the related
consolidated statements of operations, shareholders' equity, and cash
flows for each of the three years in the period ended December 31, 1994.
These financial statements are the responsibility of the Trust's
management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Federal
Realty Investment Trust as of December 31, 1994 and 1993 and the
consolidated results of its operations and its consolidated cash flows for
each of the three years in the period ended December 31, 1994 in
conformity with generally accepted accounting principles.
Grant Thornton LLP
Washington, D.C.
February 10, 1995
F1
Federal Realty Investment Trust
CONSOLIDATED BALANCE SHEETS
December 31, December 31,
1994 1993
------------ ------------
ASSETS (in (in
thousands) thousands)
Investments
Real estate, at cost $852,722 $758,088
Less accumulated depreciation and amortization (160,636) (135,045)
------------- -------------
692,086 623,043
Mortgage notes receivable 13,178 13,871
------------ ------------
705,264 636,914
Other Assets
Cash 3,995 9,635
Investments 3,588 4,008
Notes receivable - officers 2,778 1,890
Accounts receivable 16,023 15,681
Prepaid expenses and other assets, principally
property taxes, insurance, and lease commissions 19,158 19,499
Debt issue costs (net of accumulated amortization
of $3,206,000 and $2,681,000, respectively) 2,931 3,316
------------ ------------
$753,737 $690,943
========= ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Obligations under capital leases $132,924 $137,308
Mortgages payable 102,781 81,237
Notes payable 61,883 30,519
Accrued expenses 10,675 19,104
Accounts payable 6,566 5,785
Dividends payable 12,486 10,927
Security deposits 2,687 2,430
Prepaid rents 1,017 1,783
5 1/4% Convertible subordinated debentures, due 2003 75,000 75,000
5 1/4% Convertible subordinated debentures, due 2002 289 40,167
Investors' interest in consolidated assets 2,274 2,484
Commitments and contingencies - -
Shareholders' equity
Common shares of beneficial interest, no par 496,958 408,005
or stated value, unlimited authorization,
issued 31,669,434 and 28,077,999 shares,
respectively
Accumulated dividends in excess of Trust net income (144,553) (116,823)
Allowance for unrealized loss on marketable securities (53) (364)
------------ ------------
352,352 290,818
Less 60,200 common shares in treasury - at cost, deferred
F2
compensation and subscriptions receivable (7,197) (6,619)
------------- ------------
345,155 284,199
------------- ------------
$753,737 $690,943
========= ========
The accompanying notes are an integral part of these
statements.
F3
Federal Realty Investment Trust
CONSOLIDATED STATEMENTS OF OPERATIONS
Year ended December 31,
1994 1993 1992
------------ ------------- ------------
(In thousands, except per share data)
Revenue
Rental income $128,133 $105,948 $89,971
Interest 3,933 3,894 5,514
Other property income 5,698 5,495 4,712
------- ------- -------
137,764 115,337 100,197
Expenses
Rental 35,830 26,519 20,919
Real estate taxes 12,097 10,324 8,876
Interest 31,462 31,550 35,201
Administrative 6,661 4,675 4,062
Other charges 1,055 - 682
Depreciation and amortization 29,801 25,375 23,033
----------- ----------- -----------
116,906 98,443 92,773
----------- ----------- -----------
Operating income before investors' 20,858 16,894 7,424
share of operations, gain on sale of
real estate and extraordinary item
Investors' share of operations (392) (780) (437)
----------- ----------- -----------
Income before gain on sale of real 20,466 16,114 6,987
estate and extraordinary item
Gain on sale of real estate - - 2,501
--------- ------------- ---------
Income before extraordinary item 20,466 16,114 9,488
Extraordinary item
Net gain (loss) on early 2,016 (58)
extinguishment of debt
----------- ----------- -----------
Net Income $20,466 $18,130 $9,430
======= ======= =======
Weighted Average Number of Common 30,679 27,009 22,767
Shares ======= ======= =======
Earnings per share
Income before gain on sale of real $0.67 $0.60 $0.30
estate and extraordinary item
Gain on sale of real estate - - 0.11
Extraordinary item - 0.07 -
------- ------ ------
$0.67 $0.67 $0.41
======== ======== ========
The accompanying notes are an integral
part of these statements.
F4
Federal Realty Investment Trust
CONSOLIDATED STATEMENTS OF
SHAREHOLDERS' EQUITY
Year ended December 31,
1994 1993 1992
(In thousands, except share amounts) ----------- ---------- ---------- -------- ---------- ----------
Shares Amount Shares Amount Shares Amount
Common Shares of Beneficial Interest
Balance, beginning of year 28,077,999 $408,005 24,777,831 $322,903 19,747,134 $226,027
Exercise of stock options 47,240 1,035 53,384 1,053 8,055 143
Shares issued under dividend 162,466 3,891 131,620 3,588 132,189 2,903
reinvestment plan
Conversion of 8 3/4% subordinated 137,364 2,209 122,934 1,924
debentures
Conversion of 5 1/4% subordinated 1,729 64
debentures due 2002
Shares purchased under share 40,000 1,000 -
purchase plan - - -
Shares issued in exchange for 5 1/4%
convertible subordinated debentures
due 2002 - - - - 1,317,519 25,362
Net proceeds from sale of shares 3,340,000 82,963 2,977,800 78,252 3,450,000 66,544
---------- --------- --------- -------- ------------- -----------
Balance, end of year 31,669,434 $496,958 28,077,999 $408,005 24,777,831 $322,903
======== ====== ======= ====== ======== ========
Common Shares of Beneficial Interest
in Treasury, Deferred Compensation
and Subscriptions Receivable
Balance, beginning of year (422,575) $(6,619) (426,575) $(6,708) (504,825) $(8,026)
Amortization of deferred 27,875 422 4,000 89 78,250 1,318
compensation
Subscription of shares under share (40,000) (1,000) -- -- -- --
purchase plan ------- ------- -------- ------- ------- -------
Balance, end of year (434,700) $(7,197) (422,575) $(6,619) (426,575) $(6,708)
======= ======== ======== ======= ======= =========
Allowance for Unrealized Loss on
Marketable Securities
Balance, beginning of year $(364) $(385) $(465)
Change due to recognizing loss on
securities 334 - -
Net unrealized (loss) gain (23) 21 80
----- ----- -----
Balance, end of year $(53) $(364) $(385)
===== ====== ======
Accumulated Dividends in Excess of
Trust Net Income
Balance, beginning of year $(116,823) $(92,932) $(66,056)
Net income 20,466 18,130 9,430
F5
Dividends declared to shareholders (48,196) (42,021) (36,306)
------ ------ ------
Balance, end of year $(144,553) $(116,823) $(92,932)
======= ======= =======
The accompanying notes are an integral part of these statements.
F6
Federal Realty Investment Trust
CONSOLIDATED STATEMENTS OF CASH FLOWS
Twelve months ended
December 31,
(In thousands) 1994 1993 1992
-------- --------- ----------
-- -
OPERATING ACTIVITIES
Net income $20,466 $18,130 $9,430
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 29,801 25,375 23,033
Rent abatements in lieu of leasehold improvements,
net of tenant improvements retired (812) (1,185) (734)
Imputed interest and amortization of debt cost 547 520 718
Amortization of deferred compensation and
forgiveness of officers' notes 621 591 956
Write-down of investments 1,207 - 960
Gain on sale of real estate - - (2,501)
Payment of trustees' fees in shares 132 185 157
Net (gain) loss on early extinguishment of debt - (2,016) 58
Changes in assets and liabilities
Increase in accounts receivable (400) (5,345) (525)
Increase in prepaid expenses and other
assets before depreciation and amortization (4,674) (6,484) (4,454)
Increase (decrease) in operating accounts payable,
security deposits and prepaid rent (1,161) 3,221 (61)
Increase (decrease) in accrued expenses, net of the premium
put on the 5 1/4% convertible subordinated debentures in 1994 (528) 2,191 1,199
-------- -------- ------
Net cash provided by operating activities 45,199 35,183 28,236
INVESTING ACTIVITIES
Acquisition of real estate (48,337) (108,007) (24,577)
Capital expenditures (42,286) (34,267) (15,201)
(Issuance) payments of mortgage notes receivable, net (7) 21 56
Issuance of notes receivable - officers, net (116) (48) (330)
Proceeds from sale of real estate - - 10,057
Net decrease (increase) in temporary investments 281 31,607 (28,230)
-------- -------- -------
Net cash used in investing activities (90,465) (110,694) (58,225)
FINANCING ACTIVITIES
Proceeds of mortgage financings, net of costs 22,500 - 29,449
Regular payments on mortgages, capital leases and notes payable (2,080) (2,225) (2,230)
Balloon payments on mortgages and capital leases,
including prepayment fees (3,400) (32,547) (7,962)
Borrowing (repayment) of short-term debt, net 30,332 24,413 (8,500)
Early retirement of 5 1/4% convertible debentures due 2002 - (4,416) (23,623)
Redemption of 5 1/4% convertible debentures due 2002, including
premium put (47,790) - -
Redemption of 8 3/4% convertible debentures - (176) -
Redemption of senior notes - (50,505) -
F7
Issuance of 5 1/4% convertible debentures due 2003, net of costs - 73,025 -
Dividends paid (43,973) (38,087) (31,088)
Issuance of shares 84,247 79,489 67,102
Decrease in minority interest (210) (141) (230)
------- ------- --------
Net cash provided by financing activities 39,626 48,830 22,918
------- ------- ---------
Decrease in cash (5,640) (26,681) (7,071)
Cash at beginning of year 9,635 36,316 43,387
------- ------- ---------
Cash at end of year $3,995 $9,635 $36,316
======== ======== ========
The accompanying notes are an integral part of these statements.
F8
Federal Realty Investment Trust
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1994, 1993, and 1992
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Federal Realty Investment Trust invests predominantly in income-
producing real estate properties, primarily community and neighborhood
shopping centers.
The Trust uses the straight-line method in providing for
depreciation. Estimated useful lives range from three to 25 years on
apartment buildings and improvements, and from three to 35 years on retail
properties and improvements. Maintenance and repair costs are charged to
operations as incurred. Major improvements are capitalized. The gain or
loss resulting from the sale of properties is included in net income.
The Trust capitalizes certain costs directly related to the
acquisition, improvement and leasing of real estate including applicable
salaries and other related costs. The capitalized costs associated with
unsuccessful acquisitions are charged to operations when that
determination is made. The capitalized costs associated with improvements
and leasing are depreciated or amortized over the life of the improvement
and lease, respectively.
Costs related to the issuance of debt instruments are capitalized
and are amortized as interest expense over the life of the related issue
using the interest method. Upon conversion or in the event of redemption,
applicable unamortized costs are charged to shareholders' equity or to
operations, respectively.
The Trust operates in a manner intended to enable it to qualify
as a real estate investment trust under Sections 856-860 of the Internal
Revenue Code (the "Code"). Under those sections, a trust which
distributes at least 95% of its real estate trust taxable income to its
shareholders each year and which meets certain other conditions will not
be taxed on that portion of its taxable income which is distributed to its
shareholders. Therefore, no provision for Federal income taxes is
required.
The Trust consolidates the financial statements of one wholly
owned subsidiary, nine partnerships, and a joint venture which are
controlled by the Trust. The equity interests of other investors are
reflected as investors' interest in consolidated assets. All significant
intercompany transactions and balances are eliminated.
The Trust defines cash as cash on hand, demand deposits with
financial institutions and short term liquid investments with an initial
maturity under three months. Cash balances may exceed insurable amounts.
F9
Earnings per share are computed using the weighted average number
of shares outstanding during the respective periods, including options.
NOTE 1: REAL ESTATE AND ENCUMBRANCES
A summary of the Trust's properties at December 31, 1994 is as
follows:
Accumulated
depreciation
Cost and amortization Encumbrances
---- --------------- ------------
(In thousands)
Shopping centers $654,936 $112,239 $102,781
Shopping centers
under capital leases 191,780 44,702 132,924
Apartments 6,006 3,695 -
------- ------- --------
$852,722 $160,636 $235,705
======= ======== =========
The Trust's 52 shopping centers are located in twelve
states, primarily along the East Coast between the Boston metropolitan
area and Richmond, Virginia. There are approximately 1,500 tenants
providing a wide range of retail products and services. These tenants
range from sole proprietorships to national retailers; no one tenant or
corporate group of tenants accounts for 5% or more of revenue.
The Trust purchased four shopping centers in 1994. Idylwood Plaza
in Falls Church, Virginia was purchased for $14.3 million in cash; North
Lake Commons in Lake Zurich, Illinois was purchased for $10.9 million in
cash; Garden Market Shopping Center in Western Springs, Illinois was
purchased for $7.6 million in cash; and Queen Anne Plaza in Norwell,
Massachusetts was purchased for $10.7 million in cash and a $1.1 million
note which was paid in January 1995. In addition the Trust purchased a
3.9 acre parcel of land underlying an Acme supermarket which adjoins its
Bala Cynwyd Shopping Center for cash of $1.1 million and a retail building
in Westport, Connecticut for cash of $3.8 million.
During 1993 the Trust acquired seven shopping centers. Pan Am
Shopping Center in Fairfax, Virginia was acquired for $21.6 million in
cash; Gaithersburg Square in Gaithersburg, Maryland was purchased for
$11.0 million in cash and the assumption of a $2.0 million liability which
is the estimated cost to remediate certain preexisting environmental
issues; Quince Orchard Plaza in Gaithersburg, Maryland and its adjoining
office building were purchased for $10.9 million in cash and the
assumption of a liability of approximately $250,000 to remediate
preexisting environmental issues; Crossroads Shopping Center in Highland
Park, Illinois was purchased for $16.2 million in cash; Bala Cynwyd
Shopping Center in suburban Philadelphia, Pennsylvania was purchased for
$17.0 million in cash; Dedham Plaza in Dedham, Massachusetts was
purchased for $25.0 million in cash and the assumption of a $250,000
liability to remediate existing environmental issues; and the leasehold
F10
interest in Bethesda Row in Bethesda, Maryland was acquired with $6.2
million in cash.
Mortgage notes receivable consist of three notes collateralized by
shopping centers. All three notes were issued in connection with either
the acquisition or sale of Trust properties. In 1994 a note for $700,000
with accrued interest thereon was deemed uncollectible and therefore was
written off.
In January 1994 a $22.5 million one year mortgage was placed on
Northeast Plaza in Atlanta, Georgia. The mortgage, which bore interest at
LIBOR (London Interbank Offered Rate), plus 100 to 150 basis points was
repaid in January 1995. In 1993 the Trust prepaid mortgages on Laurel,
Northeast and Northeast Plaza shopping centers, resulting in a net gain of
$2.9 million which was recorded as a component of the net gain on early
extinguishment of debt.
In November 1994 the Trust exercised an option to purchase the ground
underlying the Northeast Shopping Center in Philadelphia, Pennsylvania for
$4.2 million, $3.4 million of which had been recorded as a capital lease
obligation.
Mortgages payable and capital lease obligations are due in
installments over various terms extending to 2060 with actual or imputed
interest rates ranging from 7.9% to 11.25%. Certain of the mortgage and
capital lease obligations require additional interest payments based upon
property performance.
Aggregate mortgage principal payments due during the next five years
are $23.5 million, which includes the $22.5 million on Northeast Plaza
referred to above, $1.1 million, $1.3 million, $43.7 million, and
$574,000, respectively.
Future minimum lease payments and their present value for property
under capital leases as of December 31, 1994 are as follows:
Year ending December 31, (in thousands)
1995 $13,651
1996 13,651
1997 13,666
1998 13,699
1999 13,702
Thereafter 589,363
--------
657,732
Less amount representing interest (524,808)
========
Present value $132,924
========
F11
Leasing Arrangements
--------------------
The Trust's leases with shopping center and apartment tenants are
classified as operating leases. Leases on apartments are generally for a
period of one year, whereas shopping center leases generally range from
three to 10 years and usually provide for contingent rentals based on
sales and sharing of certain operating costs.
The components of rental income are as follows:
(in thousands) Year ended December 31,
1994 1993 1992
---- ---- ----
Shopping centers
Minimum rents $97,503 $81,291 $68,784
Cost reimbursements 23,774 18,171 14,878
Percentage rent 4,478 4,147 4,171
Apartments - rents 2,378 2,339 2,138
-------- -------- -------
$128,133 $105,948 $89,971
======== ======== =======
The components of rental expense are as follows:
(in thousands) Year ended December 31,
1994 1993 1992
---- ---- ----
Management fees and costs $5,316 $5,213 $3,957
Repairs and maintenance 9,238 6,452 4,595
Utilities 4,981 3,944 3,595
Payroll - properties 4,094 3,205 2,567
Ground rent 2,510 375 362
Insurance 1,879 1,585 1,430
Other operating 7,812 5,745 4,413
------- ------- -------
$35,830 $26,519 $20,919
======= ======= =======
Minimum future shopping center rentals on noncancelable operating
leases as of December 31, 1994 are as follows:
Year ending December 31, (in thousands)
1995 $100,581
1996 93,097
1997 83,468
1998 72,376
1999 61,728
Thereafter 265,746
---------
$676,996
=========
F12
NOTE 2. INVESTMENTS
-------------------
At December 31, 1994 the Trust had investments of $3.6
million. Included in these investments is $4.7 million of Olympia and York
Senior First Mortgage Notes due March 20, 1999, which are carried at $3.1
million. The Trust intends to hold these notes until maturity. In 1992
these notes were written down to management's best estimate of their net
realizable value. The other $500,000 of investments consists of
marketable equity securities and mutual funds which are available for sale
and which are stated at market. In 1994 the Trust recognized an
unrealized loss of $449,000 on equity securities, since the loss appears
to be permanent.
NOTE 3. FAIR VALUE OF FINANCIAL INSTRUMENTS
-------------------------------------------
The following disclosure of estimated fair value was determined by the
Trust, using available market information and appropriate valuation
methods. Considerable judgment is necessary to develop estimates of fair
value. The estimates presented herein are not necessarily indicative of
the amounts that could be realized upon disposition of the financial
instruments.
The Trust estimates the fair value of its financial instruments using
the following methods and assumptions: (1) quoted market prices, when
available, are used to estimate the fair value of investments in
marketable debt and equity securities; (2) quoted market prices are used
to estimate the fair value of the Trust's marketable convertible
subordinated debentures; (3) discounted cash flow analyses are used to
estimate the fair value of long term notes receivable and payable, using
the Trust's estimate of current interest rates for similar notes; (4)
carrying amounts in the balace sheet approximate fair value for cash and
short term borrowings. Notes receivable from officers are excluded from
fair value estimation since they have been issued in connection with
employee stock ownership programs.
December 31, 1994 December 31, 1993
(in thousands) Carrying Fair Carrying Fair
Value Value Value Value
-------- ------- -------- --------
Cash & equivalents $3,995 $3,995 $9,635 $9,635
Investments 3,588 3,588 4,008 4,008
Mortgage notes
receivable 13,178 13,459 13,871 14,631
Mortgages and
notes payable 164,664 165,700 111,756 117,983
Convertible
debentures 75,289 54,585 122,730** 119,581
F13
**At December 31, 1993 the carrying value is the sum of the principal
amount of $115.2 million plus the accrued premium on the convertible
debentures due 2002.
NOTE 4. NOTES PAYABLE
---------------------
At December 31, 1994 the Trust had notes payable of $61.9 million. Of
this balance, $54.7 million was issued under the Trust's revolving credit
facilities and the balance of $7.2 million was issued in connection with
the acquisition or renovation of Trust properties. In December 1994 the
Trust issued a one month note payable for $1.1 million in connection with
the purchase of Queen Anne Plaza. The note which bore interest at 4% was
paid in January 1995. In 1993 the Trust issued a note for $3.0 million at
an interest rate of 10%, payable in equal monthly installments with a
final maturity in 2013 in connection with the renovation at Perring Plaza.
The balance of the $7.2 million relates primarily to a note issued in
connection with the acquisition and renovation of Federal Plaza. The note
bears interest at 11% and matures in 1996.
At December 31, 1994 the Trust had $130 million of unsecured medium
term revolving credit facilities with four banks. The facilities, which
bear interest at LIBOR plus 85 to 100 basis points, require fees and have
covenants requiring a minimum shareholders's equity and a maximum ratio of
debt to net worth. The maximum drawn under these facilities during 1994
was $54.7 million, which was outstanding at December 31. The weighted
average interest rate on borrowings during 1994 was 5.6% and the average
amount outstanding was $26.3 million.
At December 31, 1993 the Trust had $70.0 million of unsecured medium
term revolving credit facilities with three banks. All three facilities
required fees and had covenants requiring a minimum shareholders' equity
and a maximum ratio of debt to net worth. The maximum drawn under these
facilities during 1993 was $64.1 million and at December 31, 1993 there
was $24.4 million outstanding. The weighted average interest rate on
borrowings during 1993 was 4.2% and the average amount outstanding was
$6.6 million.
NOTE 5. DIVIDENDS
-----------------
On November 10, 1994 the Trustees declared a quarterly cash dividend
of $.395 per share, payable January 13, 1995 to shareholders of record
January 3, 1995. For the years ended December 31, 1994, 1993 and 1992,
$.75, $.45 and $.915 of dividends paid per share, respectively,
represented a return of capital.
NOTE 6. COMMITMENTS AND CONTINGENCIES
-------------------------------------
Pursuant to the provisions of the Loehmann's Plaza Limited Partnership
Agreement, on or after September 1, 1995 the limited partner may require
the Trust to purchase his interest in the Partnership at its then fair
market value.
F14
The Congressional Plaza Shopping Center Joint Venture Agreement
provides that the Trust may be required to purchase its pro rata share of
one venturer's 22.5% or greater joint venture interest for a purchase
price based on the appraised fair market value of the shopping center, but
no less than the percentage of joint venture interest being sold
multiplied by the difference between $17.5 million and the remaining
principal balance of any liabilities of the Joint Venture.
The State of New Jersey Division of Taxation has assessed the Trust
$364,000 in taxes, penalty and interest for the years 1985 through 1990,
since the State has disallowed the dividends paid deduction in computing
New Jersey taxable income. The Trust is protesting this assessment since
the Trust believes that it is entitled to the deduction. At this time,
the outcome of this matter is unknown; however, in a case involving
another real estate investment trust, the New Jersey tax court recently
ruled that the dividends paid deduction was allowable. However, the State
of New Jersey has appealed this ruling.
Certain of the Trust's shopping centers have some environmental
contamination. The North Carolina Department of the Environment, Health
and Natural Resources ("DEHNR") issued a Notice of Violation ("NOV")
against a former dry cleaner tenant at Eastgate Shopping Center in Chapel
Hill, North Carolina concerning a spill at the shopping center. As owner
of the shopping center, the Trust was named in and received a copy of the
NOV. Estimates to remediate the spill range from $300,000 to $500,000.
The Trust has entered into an agreement with two previous owners of the
shopping center to share the costs to assess and remediate. In 1993 the
Trust recorded a liability of $120,000 as its estimated share of the clean
up costs.
In 1992 contaminants at levels in excess of New Jersey cleanup
standards were identified at a shopping center in New Jersey. The Trust
has retained an environmental consultant to investigate the contamination.
The Trust is also evaluating whether it has insurance coverage for this
matter. At this time, the Trust is unable to determine what the range of
remediation costs might be. The Trust has also identified chlorinated
solvent contamination at two other properties. In each case, the
contamination appears to be linked to the current and/or previous dry
cleaner. The Trust intends to look to the responsible parties for any
remediation effort. Evaluation of these situations is preliminary and it
is impossible, at this time, to estimate the range of remediation costs,
if any.
The Trust reserved $2.25 million at closing in 1993 for environmental
issues, principally associated with Gaithersburg Square Shopping Center.
Pursuant to an indemnity agreement entered into with the seller at
closing, the Trust agreed to take certain actions with respect to
identified chlorinated solvent contamination. The seller indemnified the
Trust for certain third party claims and government requirements related
to contamination at adjacent properties.
F15
A non qualified deferred compensation plan for Trust officers was
established in 1994. The plan allows the officers to defer future income
until the earlier of age 65 or termination of employment with the Trust.
As of December 31, 1994, approximately $99,000 of compensation had been
deferred under this plan. Although this is an unfunded plan, the Trust
has purchased certain investments with which to match this obligation.
The Trust has entered into agreements with certain key employees
whereby if these employees voluntarily or involuntarily leave the
employment of the Trust within six months after a "change of control"
(defined as control of 35% or more of outstanding shares) of the Trust,
they will be entitled to a lump sum cash payment equal to one to three
times their annual salary as of the date of termination and have their
health and welfare benefits and executive privileges continued for a
period of one to three years. In the event of a change of control, the
Trust also agreed that all restrictions on the exercise or receipt of any
stock options and stock grants shall lapse upon termination of employment
and that all shares owned at termination shall be redeemed by the Trust at
a formula price.
The Trust had previously entered into employment agreements with its
President and certain other key employees for terms of up to three years,
which automatically renewed at the end of each month unless either party
notified the other that it elected not to extend the term. During 1994
the Trust offered certain of the employees covered under these agree-
ments, other than the President, a severance agreement in lieu of the
employment agreement. Two employees retained their employment agreements,
which agreements now have a fixed term. The severance agreement prescribes
that, among other things, if the employee is terminated without cause,
he/she is entitled to salary for up to 18 months and benefits for up to
nine months.
As of December 31, 1994 in connection with the renovation of certain
shopping centers, the Trust has contractual obligations of $3.1 million.
In addition the Trust is contractually obligated to provide up to $10.1
million for tenant improvements and $2.6 million to buy out tenant leases.
The Trust is obligated under ground lease agreements on several
shopping centers requiring minimum annual payments as follows:
(in thousands)
1995 $2,851
1996 2,851
1997 2,851
1998 2,851
1999 2,859
Thereafter 160,654
-------
$174,917
========
NOTE 7. 5 1/4% CONVERTIBLE SUBORDINATED DEBENTURES DUE 2003
-----------------------------------------------------------
F16
In October 1993 the Trust issued $75.0 million of 5 1/4% convertible
subordinated debentures, realizing cash proceeds of approximately $73.0
million. The debentures were not registered under the Securities Act of
1933, and were not publicly distributed within the United States. The
debentures, which mature in 2003, are convertible into shares of
beneficial interest at $36 per share. The debentures are redeemable by
the Trust, in whole, at any time after October 28, 1998 at 100% of the
principal amount plus accrued interest.
NOTE 8. 5 1/4% CONVERTIBLE SUBORDINATED DEBENTURES DUE 2002
-----------------------------------------------------------
At December 31, 1994 and 1993 the Trust had outstanding $289,000 and
$40.2 million, respectively, of 5 1/4% convertible subordinated debentures
due 2002. The debentures which are convertible into shares of beneficial
interest at $30.625 were not registered under the Securities Act of 1933
and were not publicly distributed within the United States.
In April 1994, $39.8 million of the debentures were redeemed at a
price equal to 120% of their principal amount or $47.8 million, in
accordance with a premium put. A principal amount of $53,000 of these
debentures was converted into 1,729 shares in 1994. During 1993 the Trust
purchased $3.7 million of these debentures, resulting in a loss of $74,000
which was recorded as a component of the net gain on early extinguishment
of debt.
NOTE 9. SHAREHOLDERS' EQUITY
----------------------------
In April 1994 the Trust raised net proceeds of $61.3 million from a
public offering of 2.5 million shares of beneficial interest ("shares").
In a concurrent offering of 840,000 shares to an institutional investor,
the Trust raised net proceeds of $21.7 million. In April 1993 the Trust
sold 2.8 million shares in a public offering, raising net proceeds of
$72.8 million. In December 1993 the Trust sold 220,000 shares for $5.4
million in a private placement in connection with the long term lease of a
property. In June 1992 the Trust sold 3.4 million shares in a public
offering, raising net proceeds of $66.5 million.
The Trust has a Dividend Reinvestment Plan, whereby shareholders may
use their dividends to purchase shares. In March 1993 the Trust
registered an additional 500,000 shares with the Securities and Exchange
Commission in connection with the plan. In 1994, 1993, and 1992, 162,466
shares, 131,620 shares and 132,189 shares, respectively, were issued under
the Plan.
On January 1, 1994 under the terms of the 1993 Long Term Incentive
Plan, an officer of the Trust purchased 40,000 common shares at $25 per
share with the assistance of a $1.0 million loan from the Trust. The
loan, which has a term of 12 years, bears interest at 6.24%. One-
sixteenth of the loan will be forgiven on January 31, 1995. Forgiveness
of up to 75% of the loan is subject to the future performance of the Trust.
F17
In January 1991 the Trustees adopted the Federal Realty Investment
Trust Share Purchase Plan. Under the terms of this plan, officers and
certain employees of the Trust purchased 446,000 common shares at $15.125
per share with the assistance of loans of $6.7 million from the Trust.
Originally, the Plan called for one-sixteenth of the loan to be forgiven
each year for eight years, as long as the participant was still employed
by the Trust. The loans for all participants, but two, were modified in
1994 to extend the term an additional four years and to tie forgiveness in
1995 and thereafter to certain performance criteria of the Trust. The
Trust has loaned participants $675,000 to pay the taxes due in connection
with the plan. The purchase loans and the tax loans bear interest at
9.39%. The shares purchased under the plan may not be sold, pledged or
assigned until both the purchase and tax loans are satisfied and the term
has expired.
Under the terms of the 1988 Share Bonus Plan, 108,000 shares were
granted to officers and key employees. During the years ended December
31, 1993 and 1992 the last 4,000 shares and 22,500 shares, respectively,
were vested and charged to operations. In connection with these shares,
the Trust has made loans to the participants to pay the taxes due in
connection with the plan. The notes bear interest at the lesser of (i)
the Trust's borrowing rate or (ii) the Trust's current indicated annual
dividend rate divided by the purchase price of such shares. Notes issued
under this plan are being forgiven over three years from issuance if the
officer is still employed by the Trust. During the years ended December
31, 1994, 1993 and 1992, $74,000, $80,000 and $60,000, respectively, was
forgiven.
In connection with a restricted share grant, the Trust accepted from
the President a noninterest bearing note for $210,000. One installment of
$105,000 was paid on the note in 1992 and the second installment is due
April 15, 1996.
The Trust owns shares of other real estate investment trusts ("REITs")
as a long term investment. The Trust's cost of these shares was $887,000.
In 1994 the Trust recognized an unrealized loss of $449,000 on these
shares, since it appears that the decline in value of one investment is
permanent. Due to temporary price declines in the other REITs, the Trust
had an allowance for unrealized losses of $53,000 as of December 31, 1994.
At December 31, 1994, 1993, and 1992 the Trust had 60,200 shares in
treasury at a cost of $1.1 million.
On April 13, 1989, the Trustees adopted a Shareholder Rights Plan (the
Plan). Under the Plan, one right was issued for each outstanding share of
common stock held as of April 24, 1989, and a right will be attached to
each share issued in the future. The rights are exercisable into common
shares upon the occurrence of certain events, including acquisition by a
person or group of certain levels of beneficial ownership or a tender
offer by such a person or group. The rights are redeemable by the Trust
for $.01 and expire on April 24, 1999.
F18
NOTE 10. STOCK OPTION PLAN
--------------------------
The 1993 Long-Term Incentive Plan ("Plan") was approved by
shareholders in May 1993. On the date of approval, 472,500 options were
awarded to officers, employees and nonemployee Trustees. On December 16,
1993, 69,000 options were awarded to employees. Under the Plan, on each
annual meeting date during the term of the plan, each non employee Trustee
will be awarded 2,500 options. Accordingly on May 4, 1994, 20,000 options
were awarded to non employee Trustees.
The option price to acquire shares under the 1993 Plan and previous
plans is required to be at least the fair market value at the date of
grant. As a result of the exercise of options, the Trust has outstanding
from its officers and employees notes for $2.0 million. The notes issued
under the 1993 plan bear interest at the dividend rate on the date of
exercise divided by the purchase price of such shares. The notes issued
under the previous plans bear interest at the lesser of (i) the Trust's
borrowing rate or (ii) the current indicated annual dividend rate on the
shares acquired pursuant to the option, divided by the purchase price of
such shares. The notes are collateralized by the shares and are with
recourse.
Shares available Outstanding
for future Options Price
option grants Shares per share
--------------- ------- ----------
December 31,1991 373,037 179,805
Options granted (202,500) 202,500 $20.50-$22.625
Options exercised --- (8,055) $17.25-$18.00
Options expired 1,000 (1,000) $22.625
--------- --------
December 31, 1992 171,537 373,250
Expiration of 1989 plan (171,537) ---
Adoption of 1993 plan 6,000,000 ---
Options granted (541,500) 541,500 $25.75-$26.00
Options exercised --- (53,384) $15.00-$24.125
Options expired 2,500 (8,250) $20.875-$26.00
--------- --------
December 31, 1993 5,461,000 853,116
Options granted (20,000) 20,000 $24.875
Options exercised --- (47,240) $18.00-$22.625
Options expired (1,750) $20.875-$25.75
--------- --------
December 31, 1994 5,441,000 824,126
========= ========
NOTE 11. SAVINGS AND RETIREMENT PLAN
------------------------------------
The Trust has a savings and retirement plan in accordance with the
provisions of Section 401(k) of the Internal Revenue Code. Under the
plan, the Trust, out of its current net income, contributed 50% of each
F19
employee's contribution. Employees' contributions range, at the
discretion of each employee, from 1% to 5% of compensation. In addition,
the Trust may make discretionary contributions within the limits of
deductibility set forth by the Code. Employees of the Trust, who work
over 1,000 hours annually, are eligible to become plan participants. The
Trust's expense for the years ended December 31, 1994, 1993 and 1992 was
$147,000, $133,000 and $100,000, respectively.
NOTE 12. INTEREST EXPENSE
-------------------------
The Trust incurred interest expense totalling $31.8 million, $31.8
million and $35.4 million, in 1994, 1993 and 1992, respectively, of which
$348,000, $216,000 and $237,000, respectively, was capitalized. Interest
paid was $39.9 million in 1994 which included $8.0 million of the premium
on the 5 1/4% convertible subordinated debentures which were redeemed in
April 1994. Interest paid in 1993 was $31.4 million and in 1992, $36.9
million.
NOTE 13. SUBSEQUENT EVENTS
--------------------------
On January 19, 1995 the Trust issued $100 million of 8-7/8% Senior
Notes due January 15, 2000, netting proceeds of $99.2 million. The notes,
which are not redeemable prior to maturity, pay interest semiannually on
January 15 and July 15 of each year. Proceeds from this offering were
used to pay off amounts drawn under the Trust's revolving credit
facilities and the $22.5 million mortgage on Northeast Plaza.
In order to protect itself against the risk that the general level of
interest rates for such securities would rise before the senior notes were
priced, in December 1994 the Trust entered into two interest rate hedge
agreements on a total principal amount of $75.0 million. The cost of the
agreements, which terminated on January 20, 1995, was $21,000 which will
be amortized into interest expense over the life of the notes.
In January 1995, the Trust executed an interest rate swap on $25.0
million, whereby the Trust swapped fixed interest payment obligations of
8.136% for a floating rate interest payment of three month LIBOR.
Consequently the Trust will have a floating rate of interest on $25.0
million of the senior notes.
On February 15, 1995 719,000 options at $20.75 were issued to
employees of the Trust.
On February 16, 1995 the Trust purchased a 6,800 square foot retail
building in Greenwich, Connecticut for $2.0 million cash.
F20
NOTE 14. QUARTERLY DATA (UNAUDITED)
-----------------------------------
The following summary represents the results of operations for each
quarter in 1994 and 1993:
(in thousands, except per share amounts)
Net Earnings
Revenue Income per share
------- ------ ---------
1994
March 31 $33,692 $4,083 $.15
June 30 32,794 5,206 .17
September 30 34,796 4,966 .16
December 31 36,482 6,211 .19
1993
March 31 $26,644 $2,521(1) $.10
June 30 28,444 2,825(2) .10
September 30 28,898 4,538 .16
December 31 31,351 8,246(3) .31
1) Income before extraordinary item was $2.6 million or $.10 per share.
2) Income before extraordinary item was $3.8 million or $.14 per share.
3) Income before extraordinary item was $5.2 million or $.19 per share.
The increasing revenue and net income during the past two years are
primarily due to the expansion of the Trust's portfolio and lower interest
costs. During the second quarter of 1993 the Trust had a loss on the
early retirement of debt of $.04 per share and in the fourth quarter of
1993 a gain on the early retirement of debt of $.11 per share.
F21
FEDERAL REALTY INVESTMENT TRUST
SUMMARY OF REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1994
COLUMN A COLUMN B COLUMN C COLUMN D
Initial cost to company
Cost
Building and Capitalized
Descriptions Encumbrance Land Improvements Subsequent
to
Acquisition
ALLWOOD (New Jersey) $3,574,000 $ $3,920,000 $231,000
ANDORRA (Pennsylvania) 2,432,000 12,346,000 1,462,000
BALA CYNWYD (Pennsylvania) 2,986,000 14,000,000 1,914,000
BARRACKS ROAD (Virginia) 22,086,000 4,363,000 16,459,000 10,601,000
BETHESDA AVENUE ROW (Maryland) 12,576,000 18,823,000 631,000
BLUESTAR (New Jersey) 27,278,000 29,922,000 1,050,000
BRAINERD VILLAGE (Tennessee) 1,920,000 8,006,000 2,377,000
BRICK PLAZA (New Jersey) 21,362,000 24,715,000 5,099,000
BRUNSWICK (New Jersey) 11,355,000 12,456,000 737,000
CLIFTON (New Jersey) 3,324,000 3,646,000 124,000
CONGRESSIONAL PLAZA (Maryland) 2,793,000 7,424,000 17,936,000
CROSSROADS (Illinois) 4,635,000 11,611,000 665,000
DEDHAM PLAZA (Massachusetts) 12,369,000 12,918,000 284,000
EASTGATE (North Carolina) 1,608,000 5,775,000 4,159,000
ELLISBURG CIRCLE (New Jersey) 4,028,000 11,309,000 9,029,000
FALLS PLAZA (Virginia) 4,391,000 530,000 735,000 1,203,000
FEASTERVILLE (Pennsylvania) 940,000 1,600,000 2,210,000
FEDERAL PLAZA (Maryland) 29,125,000 10,216,000 17,895,000 31,057,000
FLOURTOWN (Pennsylvania) 347,000 1,806,000 1,029,000
FOREST CITY (Michigan) 525,000 1,601,000 2,010,000
GAITHERSBURG SQUARE (Maryland) 7,701,000 5,271,000 4,438,000
GARDEN MARKET (Illinois) 2,677,000 4,829,000 90,000
GOVERNOR PLAZA (Maryland) 2,068,000 4,905,000 9,879,000
HAMILTON (New Jersey) 4,927,000 5,405,000 1,433,000
HUNTINGTON (New York) 14,593,000 16,008,000 3,522,000
IDYLWOOD PLAZA (Virginia) 4,308,000 10,026,000 117,000
LANCASTER (Pennsylvania) 1,353,000 2,103,000 2,519,000
LANGHORNE SQUARE (Pennsylvania) 720,000 2,974,000 8,243,000
F22
LAUREL (Maryland) 7,458,000 22,525,000 10,960,000
LAWRENCE PARK (Pennsylvania) 4,541,000 7,160,000 5,144,000
LOEHMANN'S PLAZA (Virginia) 6,573,000 1,237,000 15,096,000 4,412,000
MID PIKE PLAZA (Maryland) 10,041,000 10,335,000 5,005,000
NORTH CITY PLAZA (Pennsylvania) 325,000 2,175,000 507,000
NORTHEAST (Pennsylvania) 1,500,000 1,152,000 10,596,000 8,295,000
NORTHEAST PLAZA (Georgia) 22,500,000 6,930,000 26,236,000 5,172,000
NORTH LAKE COMMONS (Illinois) 2,529,000 8,604,000 178,000
OLD KEENE MILL (Virginia) 7,199,000 638,000 998,000 1,925,000
PAN AM SHOPPING CENTER (Virginia) 8,694,000 12,929,000 1,831,000
PERRING PLAZA (Maryland) 2,800,000 6,461,000 14,219,000
QUEEN ANNE PLAZA (Massachusetts) 3,319,000 8,457,000
QUINCE ORCHARD PLAZA (Maryland) 3,197,000 7,949,000 1,955,000
ROLLINGWOOD APTS. (Maryland) 552,000 2,246,000 3,208,000
RUTGERS (New Jersey) 13,154,000 14,429,000 327,000
SHILLINGTON (Pennsylvania) 804,000 1,387,000 1,530,000
SHIPS BUILDING (Connecticut) 1,683,000 2,159,000
TOWN & COUNTRY (Louisiana) 1,326,000 3,440,000 585,000
TOWN & COUNTRY (Illinois) 904,000 2,483,000 4,862,000
TROY (New Jersey) 3,102,000 5,193,000 5,115,000
TYSONS STATION (Virginia) 4,368,000 388,000 453,000 2,264,000
WESTFALLS (Virginia) 5,039,000 538,000 535,000 2,049,000
WILDWOOD (Maryland) 9,135,000 1,061,000 4,848,000
WILLIAMSBURG (Virginia) 2,758,000 7,160,000 2,117,000
WILLOW GROVE (Pennsylvania) 1,600,000 6,643,000 15,231,000
WILLOW LAWN (Virginia) 3,192,000 7,723,000 37,432,000
TOTALS $235,705,000 $126,581,000 $462,921,000 $263,220,000
========== =========== =========== ============
F23
FEDERAL REALTY INVESTMENT TRUST
SUMMARY OF REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1994
COLUMN A COLUMN E COLUMN F COLUMN G
Gross amount at which
carried at close of period
Accumulated
Building and Depreciation Date of
Descriptions Land Improvements Total and Construction
Amortization
ALLWOOD (New Jersey) $ $4,151,000 $4,151,000 $699,000 1958
ANDORRA (Pennsylvania) 2,432,000 13,808,000 16,240,000 2,705,000 1953
BALA CYNWYD (Pennsylvania) 3,565,000 15,335,000.0 18,900,000 543,000 1955
0
BARRACKS ROAD (Virginia) 4,363,000 27,060,000 31,423,000 7,909,000 1958
BETHESDA AVENUE ROW (Maryland) 19,454,000 19,454,000 537,000 1945-1991
BLUESTAR (New Jersey) 30,972,000 30,972,000 5,368,000 1959
BRAINERD VILLAGE (Tennessee) 1,920,000 10,383,000 12,303,000 2,499,000 1960
BRICK PLAZA (New Jersey) 29,814,000 29,814,000 4,058,000 1958
BRUNSWICK (New Jersey) 13,193,000 13,193,000 2,306,000 1957
CLIFTON (New Jersey) 3,770,000 3,770,000 632,000 1959
CONGRESSIONAL PLAZA (Maryland) 2,793,000 25,360,000 28,153,000 7,352,000 1965
CROSSROADS (Illinois) 4,635,000 12,276,000 16,911,000 518,000 1959
DEDHAM PLAZA (Massachusetts) 12,369,000 13,202,000 25,571,000 372,000 1959
EASTGATE (North Carolina) 1,608,000 9,934,000 11,542,000 2,901,000 1963
ELLISBURG CIRCLE (New Jersey) 4,028,000 20,338,000 24,366,000 1,060,000 1959
FALLS PLAZA (Virginia) 530,000 1,938,000 2,468,000 1,428,000 1962
FEASTERVILLE (Pennsylvania) 3,810,000 3,810,000 2,487,000 1958
FEDERAL PLAZA (Maryland) 10,216,000 48,952,000 59,168,000 5,873,000 1970
FLOURTOWN (Pennsylvania) 347,000 2,835,000 3,182,000 1,134,000 1957
FOREST CITY (Michigan) 525,000 3,611,000 4,136,000 1,450,000 1964
GAITHERSBURG SQUARE (Maryland) 7,701,000 9,709,000 17,410,000 286,000 1966
GARDEN MARKET (Illinois) 2,677,000 4,919,000 7,596,000 32,000 1958
GOVERNOR PLAZA (Maryland) 2,068,000 14,784,000 16,852,000 4,246,000 1963
HAMILTON (New Jersey) 6,838,000 6,838,000 1,293,000 1961
HUNTINGTON (New York) 19,530,000 19,530,000 3,078,000 1962
IDYLWOOD PLAZA (Virginia) 4,308,000 10,143,000 14,451,000 191,000 1991
LANCASTER (Pennsylvania) 4,622,000 4,622,000 2,373,000 1958
LANGHORNE SQUARE (Pennsylvania) 720,000 11,217,000 11,937,000 2,847,000 1966
LAUREL (Maryland) 7,458,000 33,485,000 40,943,000 7,783,000 1956
F24
LAWRENCE PARK (Pennsylvania) 12,304,000 12,304,000 7,635,000 1972
LOEHMANN'S PLAZA (Virginia) 1,248,000 19,497,000 20,745,000 6,832,000 1971
MID PIKE PLAZA (Maryland) 15,340,000 15,340,000 5,191,000 1963
NORTH CITY PLAZA (Pennsylvania) 325,000 2,682,000 3,007,000 708,000 1972
NORTHEAST (Pennsylvania) 1,152,000 18,891,000 20,043,000 4,491,000 1959
NORTHEAST PLAZA (Georgia) 6,933,000 31,405,000 38,338,000 8,220,000 1952
NORTH LAKE COMMONS (Illinois) 2,529,000 8,782,000 11,311,000 161,000 1989
OLD KEENE MILL (Virginia) 638,000 2,923,000 3,561,000 1,643,000 1968
PAN AM SHOPPING CENTER (Virginia) 8,694,000 14,760,000 23,454,000 811,000 1979
PERRING PLAZA (Maryland) 2,800,000 20,680,000 23,480,000 3,780,000 1963
QUEEN ANNE PLAZA (Massachusetts) 3,319,000 8,457,000 11,776,000 1967
QUINCE ORCHARD PLAZA (Maryland) 3,197,000 9,904,000 13,101,000 423,000 1975
ROLLINGWOOD APTS. (Maryland) 572,000 5,434,000 6,006,000 3,695,000 1960
RUTGERS (New Jersey) 14,756,000 14,756,000 2,493,000 1973
SHILLINGTON (Pennsylvania) 2,917,000 2,917,000 1,587,000 1956
SHIPS BUILDING (Connecticut) 1,683,000 2,159,000 3,842,000 1900
TOWN & COUNTRY (Louisiana) 1,326,000 4,025,000 5,351,000 487,000 1974
TOWN & COUNTRY (Illinois) 904,000 7,345,000 8,249,000 5,309,000 1968
TROY (New Jersey) 10,308,000 10,308,000 4,966,000 1966
TYSONS STATION (Virginia) 475,000 2,630,000 3,105,000 2,266,000 1954
WESTFALLS (Virginia) 559,000 2,563,000 3,122,000 1,557,000 1960
WILDWOOD (Maryland) 9,135,000 5,909,000 15,044,000 4,190,000 1958
WILLIAMSBURG (Virginia) 2,758,000 9,277,000 12,035,000 2,637,000 1961
WILLOW GROVE (Pennsylvania) 1,600,000 21,874,000 23,474,000 6,056,000 1953
WILLOW LAWN (Virginia) 3,192,000 45,155,000 48,347,000 11,538,000 1957
TOTALS $127,302,000 $725,420,000 $852,722,000 $160,636,000
=========== ============ ========== ===========
F25
FEDERAL REALTY INVESTMENT TRUST
SUMMARY OF REAL ESTATE AND
ACCUMULATED DEPRECIATION
DECEMBER 31, 1994
COLUMN A COLUMN H COLUMN I
Life on which
depreciation in
Date latest
Descriptions Acquired income
statements
is computed
ALLWOOD (New Jersey) 12/12/88 35 years
ANDORRA (Pennsylvania) 01/12/88 35 years
BALA CYNWYD (Pennsylvania) 09/22/93 35 years
BARRACKS ROAD (Virginia) 12/31/85 35 years
BETHESDA AVENUE ROW (Maryland) 12/31/93 35 years
BLUESTAR (New Jersey) 12/12/88 35 years
BRAINERD VILLAGE (Tennessee) 12/31/87 35 years
BRICK PLAZA (New Jersey) 12/28/89 35 years
BRUNSWICK (New Jersey) 12/12/88 35 years
CLIFTON (New Jersey) 12/12/88 35 years
CONGRESSIONAL PLAZA (Maryland) 04/01/65 20 years
CROSSROADS (Illinois) 07/19/93 35 years
DEDHAM PLAZA (Massachusetts) 12/31/93 35 years
EASTGATE (North Carolina) 12/18/86 35 years
ELLISBURG CIRCLE (New Jersey) 10/16/92 35 years
FALLS PLAZA (Virginia) 09/30/67 22 3/4 years
FEASTERVILLE (Pennsylvania) 07/23/80 20 years
FEDERAL PLAZA (Maryland) 06/29/89 35 years
FLOURTOWN (Pennsylvania) 04/25/80 30 years
FOREST CITY (Michigan) 03/29/73 25 3/4 years
GAITHERSBURG SQUARE (Maryland) 04/22/93 35 years
GARDEN MARKET (Illinois) 07/28/94 35 years
GOVERNOR PLAZA (Maryland) 10/01/85 35 years
HAMILTON (New Jersey) 12/12/88 35 years
HUNTINGTON (New York) 12/12/88 35 years
IDYLWOOD PLAZA (Virginia) 04/15/94 35 years
LANCASTER (Pennsylvania) 04/24/80 22 years
LANGHORNE SQUARE (Pennsylvania) 01/31/85 35 years
LAUREL (Maryland) 08/15/86 35 years
LAWRENCE PARK (Pennsylvania) 07/23/80 22 years
F26
LOEHMANN'S PLAZA (Virginia) 07/21/83 35 years
MID PIKE PLAZA (Maryland) 05/18/82 35 years
NORTH CITY PLAZA (Pennsylvania) 10/01/87 35 years
NORTHEAST (Pennsylvania) 08/30/83 35 years
NORTHEAST PLAZA (Georgia) 12/31/86 35 years
NORTH LAKE COMMONS (Illinois) 04/27/94 35 years
OLD KEENE MILL (Virginia) 06/15/76 33 1/3 years
PAN AM SHOPPING CENTER (Virginia) 02/05/93 35 years
PERRING PLAZA (Maryland) 10/01/85 35 years
QUEEN ANNE PLAZA (Massachusetts) 12/23/94 35 years
QUINCE ORCHARD PLAZA (Maryland) 04/22/93 35 years
ROLLINGWOOD APTS. (Maryland) 01/15/71 25 years
RUTGERS (New Jersey) 12/12/88 35 years
SHILLINGTON (Pennsylvania) 07/23/80 20 years
SHIPS BUILDING (Connecticut) 12/27/94 35 years
TOWN & COUNTRY (Louisiana) 12/31/90 35 years
TOWN & COUNTRY (Illinois) 10/15/73 25 years
TROY (New Jersey) 07/23/80 22 years
TYSONS STATION (Virginia) 01/17/78 17 years
WESTFALLS (Virginia) 10/05/72 25 years
WILDWOOD (Maryland) 05/05/69 33 1/3 years
WILLIAMSBURG (Virginia) 04/30/86 35 years
WILLOW GROVE (Pennsylvania) 11/20/84 35 years
WILLOW LAWN (Virginia) 12/05/83 35 years
F27
FEDERAL REALTY INVESTMENT TRUST
SCHEDULE III
SUMMARY OF REAL ESTATE AND ACCUMULATED
DEPRECIATION - CONTINUED
Three Years Ended December 31, 1994
Reconciliation of Total Cost
Balance, January 1, 1992 $566,056,000
Additions during period
Acquisitions 24,591,000
Improvements 18,991,000
Deduction during period -
disposition
of property and miscellaneous (10,771,000)
retirements -----------
Balance, December 31, 1992 598,867,000
Additions during period
Acquisitions 123,083,000
Improvements 37,110,000
Deduction during period -
disposition
of property and miscellaneous (972,000)
retirements ---------
Balance, December 31, 1993 758,088,000
Additions during period
Acquisitions 49,438,000
Improvements 46,916,000
Deductions during period - (1,720,000)
miscellaneous retirements -----------
Balance, December 31, 1994 $852,722,000
============
(A) For Federal tax purposes, the aggregate cost
basis is approximately $ 736,176,000 as of December
31, 1994.
F28
FEDERAL REALTY INVESTMENT TRUST
SCHEDULE III
SUMMARY OF REAL ESTATE AND ACCUMULATED
DEPRECIATION - CONTINUED
Three Years Ended December 31, 1994
Reconciliation of Accumulated Depreciation and
Amortization
Balance, January 1, 1992 $95,689,000
Additions during period
Depreciation and amortization 20,589,000
expense
Deductions during period -
disposition of
property and miscellaneous (3,096,000)
retirements -----------
Balance, December 31, 1992 113,182,000
Additions during period
Depreciation and amortization 22,643,000
expense
Deductions during period -
disposition of
property and miscellaneous (780,000)
retirements ---------
Balance, December 31, 1993 135,045,000
Additions during period
Depreciation and amortization 26,681,000
expense
Deductions during period -
miscellaneous
retirements (1,090,000)
-----------
Balance, December 31, 1994 $160,636,000
============
F29
FEDERAL REALTY INVESTMENT TRUST
SCHEDULE IV
MORTGAGE LOANS ON REAL ESTATE
Year Ended December 31, 1994
Column A Column B Column C Column D Column E Column F Column G
Face Amount Carrying Amount
Periodic Payment of of Mortgages
Description of Lien Interest Rate Maturity Date Terms Prior Liens Mortgages (1)
Second mortgage on 11% on May 1966 Interest accrues ---
shopping center in $700,000 monthly with $700,000 $0 (2)
Delaware payment deferred
Leasehold mortgage 10% December 2003 Interest only ---
on shopping center monthly;
in New Jersey $10,000,000 10,000,000 10,000,000 (3)
balloon payment
December 2003
Mortgage on 10% January 1966 Interest only ---
shopping center in monthly; balloon 4,020,000 3,178,000 (4)
New Jersey payment January 1996 --------- --------- ------------
--- $14,720,000 $13,178,000
======== =========== ============
1) For Federal tax purposes, the aggregate tax basis is approximately
$13,178,000 as of December 31, 1994.
2) This note was written off in 1994, since the collectibility is uncertain,
due to the current cash flow of the collateral property.
3) This mortgage is extendable for up to 45 years with interest increasing to a
maximum of 11%.
4) This mortgage is available for up to $4,020,000. At December 31, 1993,
$3,171,000 was outstanding.
F30
FEDERAL REALTY INVESTMENT TRUST
SCHEDULE IV
MORTGAGE LOANS ON REAL ESTATE - CONTINUED
Three Years Ended December 31, 1994
Reconciliation of Carrying Amount
Balance, January 1, 1992 $16,749,000
Additions during period
Increase in existing loan 11,000
Deductions during period
Collections of principal (67,000)
-----------
Balance, December 31, 1992 16,693,000
Additions during period
Increase in existing loan 47,000
Deductions during period
First trust on wrap mortgage
transferred to borrower (2,801,000)
Collections of principal (68,000)
-----------
Balance, December 31, 1993 13,871,000
Additions during period
Increase in existing loan 7,000
Deductions during period
Wrap portion of wrap mortgage
written off as uncollectible (700,000)
-----------
Balance, December 31, 1994 $13,178,000
==========
F31
Report of Independent Certified Public Accountants
on Supplemental Information
- --------------------------------------------------
Trustees and Shareholders
Federal Realty Investment Trust
In connection with our audit of the consolidated financial statements of
Federal Realty Investment Trust referred to in our report dated February 10,
1995 which is incorporated by refrence in Part II of this form, we have also
audited Schedules III and IV as of December 31, 1994 and for each of the three
years then ended. In our opnion, these schedules present fairly, in all
material respects, the information required to be set forth therein.
Grant Thornton LLP
Washington, D.C.
February 10, 1995
F32
Exhibit xxxii
SEVERANCE AGREEMENT
THIS AGREEMENT, made and entered into as of this 31st day of
December, 1994 by and between Federal Realty Investment Trust, an
unincorporated business trust organized under the laws of the District of
Columbia ("Employer"), and ________________________, ("Employee").
WHEREAS, the Employee currently is employed by the Employer
pursuant to an Employment Agreement by and between the Employer and the
Employee dated as of April 13, 1989 [or as of January 1, 1993]
("Employment Agreement");
WHEREAS, the Employer has been concerned that the Employment
Agreements, although appropriate when originally entered into, could now
be viewed as overly generous by current industry standards and not in the
best interests of the Employer or its shareholders;
WHEREAS, the Employer has determined that, as of January 1, 1995,
it will give notice of its intention not to renew the Employment
Agreements, including Employee's Employment Agreement;
WHEREAS, Employer and Employee have agreed upon the terms of a
severance package as set forth in this Severance Agreement, which terms
shall be substituted for the terms of the Employment Agreement, except for
a change of control agreement, if any;
WHEREAS, the parties intend that the provisions of this Severance
Agreement shall be the entire agreement between the parties with respect
to payments and benefits due to the Employee upon termination of [his/her]
employment and shall be in lieu of any rights of the Employee to make any
claim or demand with respect to any severance payments or employment
arrangement arising from or alleged to arise from any prior severance or
employment arrangements, including the Employment Agreement.
NOW THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein and intending to be legally bound hereby, the
parties agree as follows:
1. Termination of Employment Agreement. As of the date
first written above, the Employment Agreement shall be null and void and
of no further force or effect.
2. Effective Date of Severance Agreement. The Severance
Agreement shall be effective as of the date first written above and shall
continue and remain in full force and effect until the termination of the
Employee's employment with the Employer unless earlier terminated by the
parties in writing.
DC-185541.2
3. Termination Without Cause. In the event that the
Employee's employment with Employer is terminated under any of the
following circumstances, the Employee will be deemed to have been
Terminated Without Cause and shall receive payments and benefits as
described in Section 3:
(a) by the Employer other than for Cause (as for
Cause is defined in Section 5, hereof);
(b) by the Employee within 6 months following the
occurrence of one or more of the following
events:
(i) the nature of Employee's duties or the
scope of Employee's responsibilities as
of the date first written above are
materially modified by the Employer
without the Employee's written consent;
(ii) Employer changes the location of its
principal office to outside a fifty (50)
mile radius of Washington, D.C.;
(iii) all or a substantial portion of the
business
of Employer is transferred to or merged
with another entity in a transaction in
which the Employer is not the surviving
entity; and
(iv) the Employer's setting of Employee's
base salary for any year at an amount
which is less than seventy-five percent
(75%) of the greater of (x) Employee's
base salary for the 1994 calendar year,
or (y) the Employee's highest base
salary during the three most recent
calendar years (including the year of
termination), regardless of whether such
salary reduction occurs in one year or
over the course of years.
(c) Decision by Employer to Terminate
Without Cause. The Employer's decision
to terminate Employee's employment
Without Cause shall be made by the Board
of Trustees.
(d) Severance Payment Upon Termination
Without Cause. Upon Termination Without
Cause, Employee will receive a severance
payment equal to one year's salary plus
F26
one month's pay for each year of service
to the Employer over five (5) years,
with a maximum of eighteen months'
salary payable ("Severance Salary
Term"). For the purpose of calculating
amounts payable pursuant to this Section
3(d) only, "salary" shall be an amount
equal to the then greater of (i) the
average of the Employee's annual base
salary plus average bonus paid over the
three years prior to termination, or
(ii) the Employee's annual base salary
in the year of termination plus the
average bonus amount paid over the past
three years. Payment also will be made
for vacation time that has accrued, but
is unused as of the date of termination.
No payments will be made for any partial
year of service.
(e) Benefits. Upon Termination Without Cause, the
Employee shall receive Full Benefits for nine (9)
months. Full Benefits are defined as the health
care, life insurance, disability insurance and
accidental death and dismemberment insurance
benefits afforded the Employee by the Employer as
of the date of termination. In the event that
the Employer alters any of the benefits provided
to all of its employees during the nine (9) month
period ("Coverage Period"), Employer satisfies
its obligations to provide Full Benefits to
Employee pursuant to this paragraph if it
provides Employee with the benefits Employer is
providing to its Employees during that period.
For purposes of COBRA continuation coverage, the
Employee shall not be deemed to have experienced
a qualifying event until the last day of the
Coverage Period.
(f) Loan Forgiveness. Upon Termination Without
Cause, Employee will continue to receive
forgiveness as otherwise scheduled to occur
during the Severance Salary Term of [his/her]
loan issued pursuant to the Employer's Share
Purchase Plan dated January 31, 1991 ("Share
Purchase Loan") at a rate of forgiveness equal to
one-sixteenth (1/16th) of the principal amount of
the loan for every 12 month period. The Share
Purchase Loan shall become due and payable twelve
(12) months after the expiration of the Severance
Salary Term. Given that Employee shall receive
only the loan forgiveness otherwise scheduled to
F27
occur, Employee shall not receive loan
forgiveness for more than one (1) twelve (12)
month period.
(g) Stock Options. Upon Termination Without Cause,
the vesting of options to purchase shares of
Employer's common stock granted to Employee and
outstanding as of the date of Employee's
termination and scheduled to vest during the
Severance Salary Term shall be accelerated such
that all such options will be vested as of the
date of Employee's termination of employment with
Employer. The terms of the Trust's stock option
plans shall determine the period during which any
vested options may be exercisable.
(h) Outplacement Services. Upon Termination Without
Cause, Employer shall make available at
Employer's expense to Employee at Employee's
option the services of an employment
search/outplacement agency selected by Employer
for a period not to exceed three (3) months
during the Severance Salary Term.
(i) Provision of Telephone/Secretary. Upon
Termination Without Cause, Employer shall provide
Employee for a period not to exceed six (6)
months from Employee's date of termination with a
telephone number assigned to Employee at
Employer's offices, telephone mail and a
secretary to answer the telephone. Such benefits
shall not include an office or physical access to
Employer's offices and will cease upon acceptance
by Employee of a position with another employer.
4. Severance Benefits Upon Voluntary Resignation. In the
event that Employee resigns upon thirty (30) days' written notice to
Employer, Employee shall be entitled to receive a cash payment equal to
one (1) month's salary for every year of service to the Trust over five
(5) years of service; such resignation payment shall not exceed six (6)
months' pay ("Resignation Term"). For the purposes of this section 4
only, "salary" shall mean Employee's then current annual base salary and
shall not include any bonus or other compensation. Payment also shall be
made for accrued, but unused vacation time.
(a) Benefits. The Employee shall receive Full Benefits
for the Resignation Term; provided, however, that Full
Benefits will cease upon the date Employee becomes
eligible for health benefits sponsored by another
employer of Employee. For purposes of COBRA continuation
coverage, except as provided in Section 4(d) below, the
F28
Employee shall be deemed to have experienced a qualifying
event on the last day the Employee is eligible to receive
Full Benefits pursuant to this Section 4(a).
(b) Loan Forgiveness. In the event that Employee resigns,
the terms of the Share Purchase Plan shall determine the
Employee's rights and responsibilities with respect to
the Employee's Share Purchase Loan.
(c) Stock Options. In the event that Employee resigns, the
terms of the Trust's stock option plans shall determine
the vesting of any options held by Employee as of the
date of resignation and the exercise period for any
vested option.
(d) Cessation of Benefits. In the event that, following
Employee's voluntary resignation, Employee becomes
employed by or affiliated with, as a consultant,
contractor or otherwise, any entity which is
substantially engaged in the business of property
investment or management ("Competitor"), all resignation
payments specified in this Section 4 shall cease upon the
date Employee commences such employment or affiliation.
Employee shall continue to receive health care benefits
from Employer until (i) Employee is eligible to receive
health care benefits from the Competitor, or (ii) the
date of expiration of the Employee's Resignation Term,
whichever comes first ("Cessation Date"). For purposes
of COBRA continuation, the Employee shall be deemed to
have experienced a qualifying event on the Cessation
Date.
5. Severance Benefits Upon Termination With Cause. The Employee
shall be deemed to have been terminated with Cause in the event that the
employment of Employee is terminated for any of the following reasons:
(a) failure to substantially perform [his/her] duties with
the Employer or an affiliate thereof;
(b) willful conduct which is demonstrably and materially
injurious to the Employer or an affiliate thereof,
monetarily or otherwise;
(c) breach of fiduciary duty involving personal profit; or
(d) willful violation in the course of performing [his/her]
duties for the Employer of any law, rule or regulation
(other than traffic violations or similar offenses). No
act or failure to act shall be considered willful unless
done or omitted to be done in bad faith and without
F29
reasonable belief that the action or omission was in the
best interest of the Employer.
(e) Decision by Employer to Terminate with Cause. The
decision to terminate the employment of Employee with
Cause shall be made by the Board of Trustees.
(f) Severance Payment Upon Termination with Cause. In the
event of termination for failure to perform pursuant to
Section 5(a), or termination for cause pursuant to
Section 5(b),(c) or (d) above, the terms of the Trust's
stock option and other plans will determine the terms of
loan forgiveness and loan repayment, the vesting of
options and the exercisability of vested options.
(i) For Cause Termination for Failure to Perform. In
the event that Employee's employment is
terminated with Cause pursuant to Section 5(a)
above, Employee shall receive a severance payment
and Full Benefits equal to the payment Employee
would have received had he/she voluntarily
resigned on the date of termination with Cause.
(ii) Other Cause Termination. In the event that
Employee's employment is terminated with Cause
pursuant to Section 5 (b),(c) or (d), Employee
shall receive all base salary due and payable as
of the date of Employee's termination of
employment. No payment shall be made for bonus or
other compensation. Payment also will be made
for accrued, but unused vacation time.
6. Confidentiality - Employer's Obligations. Unless the
Employee and Employer mutually agree on appropriate language for such
purposes, in the event that Employee's employment is Terminated Without
Cause or With Cause pursuant to Section 5(a) above, Employer, except to
the extent required by law, will not make or publish, without the express
prior written consent of Employee, any written or oral statement
concerning Employee's work-related performance or the reasons or basis for
the Employee's severing of his/her employment relationship with Employer.
7. Confidentiality - Employee's Obligations. Employee
acknowledges and reaffirms that Employee will comply with the terms of the
confidentiality letter executed by Employee upon commencement of
Employee's employment with Employer.
8. Payments. In the event of Employee's voluntary resignation,
severance payments made pursuant to this Severance Agreement shall be made
pro rata on a monthly basis. All other Severance Payments payable to
Employee pursuant to the terms of this Severance Agreement may be made
either as a lump sum payment or pro rata on a monthly basis, at Employee's
option.
F30
9. Source of Payments. All payments provided under this
Severance Agreement shall be paid in cash from the general funds of
Employer, and no special or separate fund shall be established and no
other segregation of assets shall be made to assure payment.
10. Tax Withholding. Employer may withhold from any benefits
payable under this Severance Agreement, and pay over to the appropriate
authority, all federal, state, county, city or other taxes as shall be
required pursuant to any law or governmental regulation or ruling.
11. Arbitration.
(a) Any controversy or claim arising out of or relating to
this Severance Agreement or the breach thereof shall be
settled by arbitration in accordance with the then
existing Commercial Arbitration Rules of the American
Arbitration Association, and judgment upon the award
rendered by the arbitrator(s) may be entered in any court
having jurisdiction thereof. The parties irrevocably
consent to the jurisdiction of the Federal and state
courts located in Maryland for this purpose. Each such
arbitration proceeding shall be located in Maryland.
(b) The arbitrator(s) may, in the course of the proceedings,
order any provisional remedy or conservatory measure
(including, without limitation, attachment, preliminary
injunction or the deposit of specified security) that the
arbitrator(s) consider to be necessary, just and
equitable. The failure of a party to comply with such an
interim order may, after due notice and opportunity to
cure with such noncompliance, be treated by the
arbitrator(s) as a default, and some or all of the claims
or defenses of the defaulting party may be stricken and
partial or final award entered against such party, or the
arbitrator(s) may impose such lesser sanctions as the
arbitrator(s) may deem appropriate. A request for
interim or provisional relief by a party to a court shall
not be deemed incompatible with the agreement to
arbitrate or a waiver of that agreement.
(c) The parties acknowledge that any remedy at law for breach
of this Severance Agreement may be inadequate, and that,
in the event of a breach by Employee of Section 7, any
remedy at law would be inadequate in that such breach
would cause irreparable competitive harm to Employer.
Consequently, in addition to any other relief that may be
available, the arbitrator(s) also may order permanent
injunctive relief, including, without limitation,
specific performance, without the necessity of the
prevailing party proving actual damages and without
regard to the adequacy of any remedy at law.
F31
(d) In the event that the Employee is the prevailing party in
such arbitration, then the Employee shall be entitled to
reimbursement by the Employer for all reasonable legal
and other professional fees and expenses incurred by
[him/her] in such arbitration or in enforcing the award,
including reasonable attorney's fees.
(e) The parties agree that the results of any such
arbitration proceeding shall be conclusive and binding
upon them.
12. No Assignment. Neither this Agreement nor any right,
remedy, obligation or liability arising hereunder or by reason hereof
shall be assignable by either the Employer or the Employee without the
prior written consent of the other party.
13. Amendment. This Agreement may be terminated, amended,
modified or supplemented only by a written instrument executed by the
Employee and the Employer.
14. Waiver. Either party hereto may by written notice to the
other: (i) extend the time for performance of any of the obligations or
other actions of the other party under this Agreement; (ii) waive
compliance with any of the conditions or covenants of the other party
contained in this Agreement; (iii) waive or modify performance of any of
the obligations of the other party under this Agreement. Except as
provided in the preceding sentence, no action taken pursuant to this
Agreement shall be deemed to constitute a waiver by the party taking such
action of compliance with any representations, warranties, covenants or
agreements contained herein. The waiver by any party hereto of a breach
of any provision of this Agreement shall not operate or be construed as a
waiver of any preceding or succeeding breach. No failure by either party
to exercise any right or privilege hereunder shall be deemed a waiver of
such party's rights to exercise the same any subsequent time or times
hereunder.
15. Severability. In case any one or more of the provisions of
this Agreement shall, for any reason, be held or found by determination of
the arbitrator(s) pursuant to an arbitration held in accordance with
Section 11, above to be invalid, illegal or unenforceable in any respect
(i) such invalidity, illegality or unenforceability shall not affect any
other provisions of this Agreement, (ii) this Agreement shall be construed
as if such invalid, illegal or unenforceable provision had never been
contained herein. Failure to insist upon strict compliance with any
provision of this Agreement shall not be deemed a waiver of such provision
or of any other provision of this Agreement.
16. Entire Agreement. Employee acknowledges receipt of a copy
of this Agreement, which has been executed in duplicate and agrees that,
with respect to employment arrangements and severance payments and
benefits allocable upon termination or severance of Employee's employment,
it is the entire Agreement with Employer except for a change of control
F32
agreement, if any. Any other oral or any written representations,
understandings or agreements with Employer or any of its officers,
Trustees or representatives covering the same subject matter which are in
conflict with this Agreement are hereby superseded by the provisions of
this Agreement which shall control.
17. Governing Law. This Agreement has been executed and
delivered in the State of Maryland and its validity, interpretation,
performance and enforcement shall be governed by the laws of said State;
provided, however, that any arbitration under Section 11 hereof shall be
conducted in accordance with the United States Arbitration Act as then in
force.
18. No Attachment. Except as required by law, no right to
receive payments under this Agreement shall be subject to anticipation,
commutation, alienation, sale, assignment, encumbrance, charge, pledge, or
hypothecation or the execution, attachment, levy, or similar process or
assignment by operation of law, and any attempt, voluntary or involuntary,
to effect any such action shall be null, void and of no effect.
19. Limitation on Liability. Employer, its trustees, employees,
officers, agents and shareholders shall not be personally liable under
this Severance Agreement, and Employee agrees to look solely to Employer's
property, real, personal or otherwise, tangible or intangible, for payment
of any claims hereunder.
20. Equal Opportunity. Included in this Severance Agreement by
reference is the equal opportunity clause required under 41 C.F.R. Section
60-1.4 under Executive Order 1126, as that clause is required to be
included under the Code of Federal Regulations or other rules, regulations
and relevant orders of the Secretary of Labor.
21. Headings. The section and other headings contained in this
Agreement are for reference purposes only and shall not affect the meaning
or interpretation of this Agreement.
22. Notices. Any notice required or permitted to be given under
this Agreement shall be in writing and shall be deemed to have been given
when delivered in person or when deposited in the U.S. mail, registered or
certified, postage prepaid, and mailed to the Employee's addresses set
forth herein and the business address of Employer, unless a party changes
its address for receiving notices by giving notice in accordance with this
Section, in which case, to the address specified in such notice.
F33
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
to be effective as of the day and year indicated above.
---------------------------------
Employee's Signature
Employee's Permanent Address:
_________________________________
_________________________________
FEDERAL REALTY INVESTMENT TRUST
By:______________________________
Morton S. Lerner
Chairman, Compensation Committee
F34
Exhibit xxxiii
CREDIT AGREEMENT
dated as of September 30, 1994 between
FEDERAL REALTY INVESTMENT TRUST
and
FIRST UNION NATIONAL BANK OF VIRGINIA
DC-185574.1
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
Section 1.1. Definitions 1
Section 1.2. Accounting Terms and Determinations 5
ARTICLE II
THE ADVANCES
Section 2.1. The Advances 6
Section 2.2. Method of Borrowing 6
Section 2.3. The Note 6
Section 2.4. Interest Rates 7
Section 2.5. Method of Electing Interest Rates 7
Section 2.6. Prepayment of Advances 8
Section 2.7. Late Charges 9
Section 2.8. Non-Usage Fee 9
Section 2.9 Commitment Fee 9
Section 2.10. General Provisions as to Payments 9
Section 2.11. Extension of the Line of Credit Period 10
Section 2.12. Funding Losses 10
Section 2.13. Optional Termination or Reduction of the Line of Credit
Commitment 10
Section 2.14. Incorporation by Reference 10
ARTICLE III
THE LETTERS OF CREDIT
Section 3.1. The Letters of Credit 10
Section 3.2. Method of Issuance 11
Section 3.3. Letter of Credit Disbursements 11
Section 3.4. Reimbursement and Other Payments 11
Section 3.5. Increased Cost; Reduced Rate of Return 12
Section 3.6. Late Charges 13
Section 3.7. Letter of Credit Fee 13
Section 3.8. General Provisions as to Payments 13
Section 3.9. Incorporation by Reference 13
Section 3.10. Obligations Absolute 14
ARTICLE IV
CONDITIONS TO ADVANCES AND LETTERS OF CREDIT
Section 4.1. Conditions to the First Advance and the First Letter of
Credit Charges 14
Section 4.2. Conditions to Each Advance 16
Section 4.3. Conditions to Each Letter of Credit 16
F36
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Section 5.1. Existence and Power 16
Section 5.2. Authorization; Non-Contravention 17
Section 5.3. Binding Effect 17
Section 5.4. Litigation 17
Section 5.5. Filings 17
Section 5.6. Financial Information 17
Section 5.7. ERISA Compliance 18
Section 5.8. Environmental Compliance 18
Section 5.9. Regulation U 19
ARTICLE VI
FINANCIAL COVENANTS
Section 6.1. Certain Definitions 19
Section 6.2. Minimum Shareholders' Equity 20
Section 6.3. Total Liabilities to Shareholders' Equity Ratio 20
Section 6.4. Minimum Funds From Operations 20
Section 6.5. Net Operating Income From Unleveraged Properties 20
Section 6.6. Dividends 20
ARTICLE VII
ADDITIONAL COVENANTS OF THE BORROWER
Section 7.1. Information 21
Section 7.2. Payment of Obligations 23
Section 7.3. Maintenance of Property; Insurance 23
Section 7.4. Conduct of Business and Maintenance of Existence 23
Section 7.5. Compliance with Laws 23
Section 7.6. Accounting; Inspection of Property; Books and Records 23
Section 7.7. Restriction on Debt 24
Section 7.8. Restriction on Liens 24
Section 7.9. Consolidations, Mergers and Sales of Assets 24
Section 7.10. Transactions with Affiliates 24
Section 7.11. Transactions with Other Persons 24
Section 7.12. ERISA Matters 24
Section 7.13. Environmental Matters 25
Section 7.14. Confession of Judgment 25
Section 7.15. Use of Proceeds 25
Section 7.16. Independence of Covenants 25
F37
ARTICLE VIII
DEFAULTS
Section 8.1. Events of Default 25
Section 8.2. Other Remedies 28
Section 8.3. Inspection of Properties 28
ARTICLE IX
CHANGE IN CIRCUMSTANCES
AFFECTING EURO-DOLLAR-BASED ADVANCES
Section 9.1. Basis for Determining Adjusted London Interbank Offered
Rate Inadequate or Unfair 28
Section 9.2. Illegality 29
Section 9.3. Increased Cost and Reduced Return 29
Section 9.4. Suspension of Advances 31
ARTICLE X
MISCELLANEOUS
Section 10.1. Notices 31
Section 10.2. No Waivers 31
Section 10.3. Expenses 31
Section 10.4. Indemnification 31
Section 10.5. Right of Set-Off 33
Section 10.6. Amendments and Waivers 33
Section 10.7. Successors and Assigns 33
Section 10.8. Governing Law 34
Section 10.9. Counterparts; Effectiveness 34
Section 10.10. Waiver of Jury Trial; Submission to Jurisdiction 34
Section 10.11. Waiver of Personal Liability 35
Section 10.12. Entire Agreement 35
Exhibit A - Form of Note
Exhibit B - Form of Letter of Credit Application
Exhibit C - Form of Opinion of Counsel
Schedule 1.1A - Authorized Persons
Schedule 5.8 - Environmental Matters
F38
CREDIT AGREEMENT
This CREDIT AGREEMENT (as amended, supplemented or modified from
time to time, this "Agreement") is dated as of September 30, 1994 and is
between FEDERAL REALTY INVESTMENT TRUST, a District of Columbia
unincorporated business trust (the "Borrower"), and FIRST UNION NATIONAL
BANK OF VIRGINIA, a national banking association (the "Bank").
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. The following terms, as used herein,
have the following meanings:
"Adjusted London Interbank Offered Rate" means, for any Interest
Period, a rate per annum equal to the quotient obtained (rounded upwards,
if necessary, to the next higher 1/16 of 1.00%) by dividing (i) the
applicable London Interbank Offered Rate by (ii) 1.00 minus the applicable
Euro-Dollar Reserve Percentage.
"Advances" has the meaning set forth in Section 2.1.
"Affiliate" means (i) any Person that directly, or indirectly
through one or more intermediaries, controls the Borrower or (ii) any
Person (other than the Borrower) that is controlled by or is under common
control with such controlling Person (the term "control" meaning the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the
ownership of voting securities, by contract or otherwise).
"Authorized Person" means any of the officers of the Borrower
identified on Schedule l.lA or any other officer of the Borrower
identified in a borrowing resolution delivered to and accepted by the
Bank.
"Available Amount" means, as of any date, $50,000,000 minus the
sum of (i) the aggregate unpaid principal amount of Advances outstanding
on such date plus (ii) the aggregate stated amount of Letters of Credit
outstanding on such date plus (iii) all unpaid Reimbursement Amounts as of
such date.
"Business Day" means (i) when used with respect to Advances that
bear or are to bear interest at the Prime-Based Rate, any day except a
Saturday, Sunday or other day on which commercial banks in McLean,
Virginia are authorized by law to close and (ii) when used with respect to
Advances that bear or are to bear interest at the Euro-Dollar-Based Rate,
F39
any day described in clause (i) above on which commercial banks are open
for international business (including dealings in dollar deposits) in
London.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of l980 (42 U.S.C. Section 9601 et seq.),
as amended by the Superfund Amendment and Reauthorization Act of 1986 and
as otherwise amended from time to time.
"Code" means the Internal Revenue Code of 1986, as amended.
"Controlled Group" means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated)
under common control which, together with the Borrower, are treated as a
single employer under section 414(b) or 414(c) of the Code.
"Debt" means, with respect to any Person at any date, without
duplication, (i) all obligations of such Person for borrowed money, (ii)
all obligations of such Person evidenced by bonds, debentures, notes or
other similar instruments, (iii) all obligations of such Person to pay the
deferred purchase price of property or services, (iv) all obligations of
such Person as lessee under capital leases, (v) all obligations of such
Person to purchase securities or other property which arise out of or in
connection with the sale of the same or substantially similar securities
or property, (vi) the stated amount of all letters of credit and similar
instruments issued for the account of such Person (including all
unreimbursed draws), (vii) all obligations of others secured by a Lien on
any asset of such Person, whether or not such obligation is assumed by
such Person and (viii) all obligations of others guaranteed by such
Person.
"Default" means any condition or event which constitutes an Event
of Default or which with the giving of notice or lapse of time or both
would, unless cured or waived, become an Event of Default.
"Effective Date" means the date on which this Agreement becomes
effective in accordance with Section 10.9.
"Environmental Requirements" means all federal, state and local
environmental laws (including, without limitation, CERCLA), rules,
regulations and orders regulating, relating to or imposing liability or
standards of conduct concerning any Hazardous Materials.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Euro-Dollar-Based Advance" means an Advance that bears or is to
bear interest at the Euro-Dollar-Based Rate.
"Euro-Dollar-Based Rate" means a rate of interest based on the
Adjusted London Interbank Offered Rate as provided in Section 2.4(b).
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"Euro-Dollar Reserve Percentage" means, for any Interest Period,
that percentage (expressed as a decimal) which is in effect on the first
day of such Interest Period, as prescribed by the Board of Governors of
the Federal Reserve System (or any successor), for determining the maximum
reserve requirement for a member bank of the Federal Reserve System in
Richmond, Virginia with deposits exceeding $5,000,000,000 in respect of
"Eurocurrency Liabilities" (or in respect of any other category of
liabilities which consists of or includes deposits by reference to which
the interest rate on Euro-Dollar-Based Advances is determined or any
category of extensions of credit or other assets which consists of or
includes loans by a non-United States office of the Bank to United States
residents).
"Event of Default" has the meaning set forth in Section 8.1.
"Existing Advances" means all Advances (as such term is defined
in the Prior Credit Agreement) made under the Prior Credit Agreement that
have not been fully repaid by the Borrower as of the Effective Date.
"Existing Euro-Dollar Advances" means all Existing Advances that,
as of the Effective Date, are bearing interest at the Euro-Dollar-Based
Rate (as such term is defined in the Prior Credit Agreement).
"Existing Prime-Based Advances" means all Existing Advances that,
as of the Effective Date, are bearing interest at the Prime-Based Rate (as
such term is defined in the Prior Credit Agreement).
"GAAP" means generally accepted accounting principles in the
United States.
"Hazardous Material" means (i) "hazardous wastes," as defined by
the Resource Conservation and Recovery Act of 1976, as amended from time
to time, (ii) "hazardous substances," as defined by CERCLA, (iii) "toxic
substances," as defined by the Toxic Substances Control Act, as amended
from time to time, (iv) "hazardous materials," as defined by the
Hazardous Materials Transportation Act, as amended from time to time, (v)
asbestos, oil or other petroleum products, radioactive materials, urea
formaldehyde foam insulation, radon gas and transformers or other
equipment that contains dielectric fluid containing polychlorinated
biphenyls and (vi) any substance whose presence is detrimental or
hazardous to health or the environment.
"Interest Period" means, with respect to each election of the
Euro-Dollar-Based Rate, the period commencing on the effective date of
such borrowing and ending one, two, three or six months thereafter, as
specified in the notice of such election; provided, however, that (i) any
such period that would otherwise end on a day that is not a Business Day
shall be extended to the next succeeding Business Day unless such Business
Day falls in another calendar month (in which case such period shall end
on the next preceding Business Day), (ii) any such period that begins on
the last Business Day of a calendar month shall, subject to clause (iii)
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below, end on the last Business Day of a calendar month and (iii) no such
period shall end after the Termination Date.
"Letter of Credit Application" means an application and agreement
for standby letter of credit substantially in the form of Exhibit B
hereto.
"Letter of Credit Commitment" has the meaning set forth in
Section 3.1.
"Letters of Credit" has the meaning set forth in Section 3.1.
"Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of
such asset (including the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title retention
agreement relating to such asset).
"Line of Credit Commitment" has the meaning set forth in Section
2.1.
"Line of Credit Period" means the period from and including the
Effective Date to but excluding the Termination Date.
"London Interbank Offered Rate" means, for any Interest Period,
the rate of interest designated as the British Banker's Association
settlement rate that appears on the display on page 3750 (under the
caption "USD" of the Telerate Services, Incorporated screen or on such
other display as may replace such page) as of 11:00 A.M. (London Time)
two Business Days before the first day of such Interest Period as the rate
per annum for deposits in dollars in the London interbank market for a
period of time comparable to such Interest Period; provided, however, that
if no offered quotations appear on the Telerate Services, Incorporated
screen or if quotations are not given on such screen for a period of time
comparable to such Interest Period, then the London Interbank Offered Rate
applicable to such Interest Period shall be the rate of interest
determined by the Bank to be the prevailing rate per annum quoted to it at
approximately 10:00 A.M. (Eastern Time) two Business Days before the first
day of such Interest Period by two or more New York Euro-Dollar Deposit
dealers of recognized standing selected by the Bank for the offering of
dollar deposits to the Bank by leading banks in the London interbank
market for a period of time comparable to such Interest Period and in an
amount approximately equal to the principal amount of the Advance to
which such Interest Period is to apply.
"Note" has the meaning set forth in Section 2.3.
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Person" means an individual, a corporation, a partnership, an
association, a trust, a limited liability company or any other entity or
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organization, including a government or political subdivision or an agency
or instrumentality thereof.
"Plan" means, at any time, an employee pension benefit plan that
is covered by Title IV of ERISA or is subject to the minimum funding
standards under section 412 of the Code and is either (i) maintained by a
member of the Controlled Group for employees of a member or members of the
Controlled Group or (ii) maintained pursuant to a collective bargaining
agreement or any other arrangement under which more than one employer
makes contributions and to which a member of the Controlled Group is then
making or accruing an obligation to make contributions or has within the
preceding five plan years made contributions.
"Prime-Based Advance" means an Advance that bears or is to bear
interest at the Prime-Based Rate.
"Prime-Based Rate" means a rate of interest based on the Prime
Rate as provided in Section 2.4(a).
"Prime Rate" means the rate of interest publicly announced by the
Bank in McLean, Virginia from time-to-time as its prime rate (which rate
the Borrower acknowledges and agrees is not necessarily intended to be the
lowest rate of interest charged by the Bank in connection with extensions
of credit to borrowers and the Bank acknowledges and agrees will be the
same as the prime rate publicly announced at such time by each other
banking subsidiary of First Union Corporation).
"Prior Credit Agreement" means that certain Credit Agreement
dated as of August 25, 1993, between Borrower and the Bank.
"Reimbursement Amounts" means all amounts drawn under the Letters
of Credit.
"Related Documents" has the meaning set forth in Section 3.10.
"Release" means any disposing of, discharging, injecting,
spilling, leaking, pumping, pouring, leaching, dumping, emitting,
escaping, emptying, seeping, placing or the like onto, into or upon any
land, water or air or otherwise entering the environment.
"Termination Date" means the later of (i) August 1, 1997 or (ii)
the date to which the Line of Credit Period has been extended pursuant to
Section 2.11.
"Unfunded Vested Liabilities" means, with respect to any Plan at
any time, the amount, if any, by which (i) the present value of all vested
nonforfeitable benefits under such Plan exceeds (ii) the fair market value
of all Plan assets allocable to such benefits, all determined as of the
then most recent valuation date for such Plan, but only to the extent that
such excess represents a potential liability of a member of the Controlled
Group to the PBGC or the Plan under Title IV of ERISA.
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Section 1.2. Accounting Terms and Determinations. Unless
otherwise specified herein, all accounting terms used herein shall be
interpreted, all accounting determinations required hereunder shall be
made and all financial statements delivered hereunder shall be prepared in
accordance with GAAP as in effect from time to time, applied on a basis
consistent (except for changes concurred in by the Borrower's independent
public accountants) with the most recent financial statements of the
Borrower delivered to the Bank.
ARTICLE II
THE ADVANCES
Section 2.1. The Advances. The Bank agrees, on the terms and
conditions set forth in this Agreement, from time to time on any Business
Day during the Line of Credit Period, to make one or more loans to the
Borrower in an aggregate principal amount not to exceed the Available
Amount as of such Business Day (the "Line of Credit Commitment"). Each of
the loans made to the Borrower pursuant to this Section 2.1 (the
"Advances") shall be in an amount equal to $5,000 or an integral multiple
thereof. The Borrower may, within the foregoing limits, borrow amounts
under this Section 2.1, repay such amounts at maturity in accordance with
Section 2.5, prepay such amounts in accordance with Section 2.6 and
reborrow amounts under this Section 2.1. Commencing as of the Effective
Date, all Existing Advances shall be deemed to be Advances made under this
Agreement and shall be subject to the terms hereof; except, however, that
each Existing Euro-Dollar Advance shall continue to bear interest at its
current rate of interest until the last day its current Interest Period,
at which time the interest rate applicable to such Existing Euro-Dollar
Advance shall change to an interest rate provided for herein in accordance
with Section 2.5. Existing Prime-Based Advances shall bear interest at
the Prime-Based Rate until changed pursuant to Section 2.5.
Section 2.2. Method of Borrowing. The Borrower may request
loans pursuant to Section 2.1 by giving the Bank notice (which notice may
be given by telephone by an Authorized Person if promptly confirmed in
writing by an Authorized Person) not later than 10:00 A.M. (Eastern Time)
at least two Business Days before the date of the proposed loan specifying
(i) the date of the proposed loan (which must be a Business Day), (ii)
the amount to be borrowed, (iii) the Borrower's reason for requesting the
loan and an explanation of how the proceeds from the loan will be
utilized, (iv) whether the proposed loan is to bear interest at the Prime-
Based Rate or the Euro-Dollar-Based Rate and (v) in the case of a proposed
loan that is to bear interest at the Euro-Dollar-Based Rate, the Interest
Period applicable thereto. The Bank shall (unless it determines that any
applicable condition specified in this Agreement has not been satisfied)
make the amount to be borrowed available to the Borrower not later than
2:00 P.M. (Eastern Time) on the date of the proposed loan. On each day on
which a Reimbursement Amount arises, the Borrower shall be deemed to have
requested an Advance in an amount equal to such Reimbursement Amount.
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Section 2.3. The Note. The Advances shall be evidenced by, and
shall be repayable with interest in accordance with, a single note
substantially in the form of Exhibit A hereto and appropriately completed
(the "Note"). The Bank shall record on its books, and prior to any
transfer of the Note shall make on the schedule forming a part thereof
appropriate notations to evidence, the date and amount of each Advance and
the date and amount of each payment of principal made by the Borrower with
respect thereto; provided, however, that any failure of the Bank to make
such a notation or any error therein shall not in any manner affect the
obligation of the Borrower to repay the Advances in accordance with the
terms of the Note. The Borrower hereby irrevocably authorizes the Bank to
record such information and to make such notations.
Section 2.4. Interest Rates.
(a) If the Borrower elects, or this Agreement otherwise
provides, that an Advance shall bear interest at the Prime-Based Rate,
such Advance shall bear interest on the outstanding principal amount
thereof, for each day from and including the date on which such Advance is
made to but excluding the date on which such Advance is due, at a rate per
annum equal to the Prime Rate for such day minus 1.00%. The Prime-Based
Rate shall be adjusted automatically on and as of the effective date of
any change in the Prime Rate. All such interest shall be payable on the
first day of each month.
(b) If the Borrower elects that an Advance shall bear interest
at the Euro-Dollar-Based Rate, such Advance shall bear interest on the
outstanding principal amount thereof, for each day during the applicable
Interest Period, at a rate per annum equal to the sum of the applicable
Adjusted London Interbank Offered Rate plus 85 basis points. All such
interest shall be payable on the first day of each month.
(c) At maturity (whether upon acceleration or otherwise), or
upon the occurrence and during the continuation of an Event of Default,
the unpaid principal amount of, and all accrued but unpaid interest on,
the Advances shall automatically bear interest for each day at a rate per
annum equal to the sum of 4.75% plus the Adjusted London Interbank Offered
Rate (assuming a one-month Interest Period) for such day.
Section 2.5. Method of Electing Interest Rates.
(a) Each Advance shall bear interest initially at the type of
rate specified by the Borrower in the applicable notice delivered to the
Bank pursuant to Section 2.2. Thereafter, the Borrower may from time to
time elect to change or continue the type of interest rate applicable to
such Advance (subject in each case to the provisions of Article IX), as
follows:
(i) if such Advance is bearing interest at the Prime-
Based Rate, the Borrower may elect to change the applicable rate to the
Euro-Dollar-Based Rate as of any Business Day;
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(ii) if such Advance is bearing interest at the Euro-
Dollar-Based Rate, the Borrower may elect to change the applicable rate to
the Prime-Based Rate, or may elect to continue such Advance at the Euro-
Dollar-Based Rate for an additional Interest Period, in each case
beginning on the last day of the then applicable Interest Period;
(iii) if such Advance is bearing interest at the Prime-
Based Rate, the Borrower may elect to designate such Advance as any
combination of Prime-Based Advances or Euro-Dollar-Based Advances as of
any Business Day (subject to the definition of Interest Period); and
(iv) if such Advance is bearing interest at the Euro-
Dollar-Based Rate, the Borrower may elect to designate such Advance as any
combination of Prime-Based Advances or Euro-Dollar-Based Advances as of
the last day of the then applicable Interest Period (subject to the
definition of Interest Period).
The Borrower shall make each such election by delivering a notice to the
Bank not later than 10:00 A.M. (Eastern Time) at least two Business Days
before the new type of interest rate or the additional Interest Period
selected in such notice is to begin.
(b) Each notice of interest rate election delivered pursuant to
subsection (a) above shall specify with respect to each outstanding
Advance to which such notice applies:
(i) the date on which the new type of interest rate
or additional Interest Period selected in such notice is to begin, which
shall comply with the applicable clauses of subsection (a) above;
(ii) if the type of interest rate applicable to such
Advance is to be changed, the new type of interest rate selected and, if
the new rate is a Euro-Dollar-Based Rate, the duration of the initial
Interest Period;
(iii) if such Advance is currently bearing interest at
the Euro-Dollar-Based Rate and such type of interest rate is to be
continued for an additional Interest Period, the duration of such
additional Interest Period; and
(iv) if such Advance is to be designated as a
combination of Prime-Based Advances and Euro-Dollar-Based Advances, the
information specified in clauses (i) through (iii) above as to each such
Prime-Based Advance and each such Euro-Dollar-Based Advance.
Each Interest Period specified in such notice of interest rate election
shall comply with the provisions of the definition of Interest Period.
(c) If the Borrower fails to deliver a timely notice of interest
rate election pursuant to subsection (a) above selecting a new type of
interest rate for an additional Interest Period for any Euro-Dollar-Based
Advance, such Euro-Dollar-Based Advance shall bear interest at the Euro-
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Dollar-Based Rate (assuming a one-month Interest Period) commencing on the
last day of the then current Interest Period (and continuing until the
Borrower elects a different type of interest rate for such Euro-Dollar-
Based Advance as provided in this Section 2.5).
Section 2.6. Prepayment of Advances.
(a) The Borrower may prepay the Prime-Based Advances in whole or
in part at any time or from time to time by paying the principal amount to
be prepaid plus accrued interest thereon to the date of prepayment.
(b) The Borrower may prepay the Euro-Dollar-Based Advances in
whole or in part at any time or from time to time by paying the principal
amount to be prepaid plus accrued interest thereon to the date of
prepayment; provided, however, that the Borrower shall reimburse the Bank
on demand in accordance with Section 2.12 for any actual loss or
reasonable expense incurred by the Bank as a result of the Borrower's
repayment of a Euro-Dollar-Based Advance other than on the last day of the
applicable Interest Period.
(c) If on any date the sum of (i) the aggregate unpaid principal
amount of Advances outstanding on such date plus (ii) the aggregate stated
amount of Letters of Credit outstanding on such date plus (iii) all unpaid
Reimbursement Amounts as of such date exceeds $50,000,000, the Borrower
shall immediately prepay the Advances in an amount equal to such excess.
Section 2.7. Late Charges. If the Borrower fails to make any
payment of interest on the Advances, or fails to pay any fee or other
amount due with respect to the Advances, within 10 Business Days after the
date such payment was due, the Borrower shall pay to the Bank a late
charge equal to 5.00% of the amount of such payment. If the Borrower has
not received, on or before the last day of any calendar month, a statement
from the Bank setting forth the interest then due with respect to the
Advances, the Borrower shall estimate the amount of such interest in good
faith and shall pay such amount to the Bank (and the Borrower shall not
incur a late charge if such amount is paid within 10 Business Days after
the date such interest payment was due). If the Borrower thereafter
receives a statement from the Bank setting forth the interest then due
with respect to the Advances and the amount of such interest exceeds the
estimated payment made by the Borrower, the Borrower shall, upon its
receipt of such statement, pay an amount equal to such excess to the Bank.
Section 2.8. Non-Usage Fee. The Borrower shall pay to the Bank
on the fifteenth day of January, April, July and October of each year,
commencing October 15, 1994, a non-usage fee equal to 0.125% per annum of
the average daily Available Amount during the preceding calendar quarter;
except, however, that with respect to the calendar quarter ending
September 30, 1994, the non-usage fee to be paid by the Borrower shall be
calculated on a pro-rated basis by applying the provisions of Section 2.8
of the Prior Credit Agreement (to the Available Amount thereunder) to the
portion of such calendar quarter that precedes the Effective Date and
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applying the provisions of this Section 2.8 (to the Available Amount
hereunder) to the remainder of such quarter.
Section 2.9. Commitment Fee. Concurrently upon the full
execution of this Agreement, the Borrower shall pay to the Bank a one-time
commitment fee equal to $31,250.
Section 2.10. General Provisions as to Payments. The Borrower
shall make each payment of principal of and interest on the Advances (and
each payment of a non-usage fee or late charge) not later than 11:00 A.M.
(Eastern Time) on the date when due, in federal or other immediately
available funds, to the Bank at the Bank's address specified in Section
10.1. Whenever any payment of principal of or interest on the Advances
(or any payment of a non-usage fee or late charge) is due on a day which
is not a Business Day, the date for payment thereof shall be extended to
the next succeeding Business Day. If the date for any payment of
principal of the Advances (or the date for any payment of a non-usage fee
or late charge) is extended by operation of law or otherwise, interest
thereon shall be payable for such extended time.
Section 2.11. Extension of the Line of Credit Period. The Bank
shall review the Line of Credit Commitment on or before August 1 of each
year, commencing August l, 1995, and may, in its sole and absolute
discretion, extend the Line of Credit Period from time to time for an
additional one year period. The Bank shall have the unconditional right
not to extend the Line of Credit Period, notwithstanding that no Event of
Default exists. The Bank shall notify the Borrower on or before August 1
of each year, commencing August 1, 1995, whether the Bank has elected to
extend the Line of Credit Period.
Section 2.12. Funding Losses. If (i) the Borrower makes any
principal payment with respect to the Euro-Dollar-Based Advances on any
day other than the last day of the applicable Interest Period (pursuant to
Article II or IX or otherwise), (ii) the Borrower converts Euro-Dollar-
Based Advances to Prime-Based Advances on any day other than the last day
of the applicable Interest Period (pursuant to Article XI or otherwise) or
(iii) the Borrower fails to borrow a Euro-Dollar-Based Advance in
accordance with any loan request delivered to the Bank in accordance with
Section 2.2, the Borrower shall reimburse the Bank on demand for any
actual loss or reasonable expense incurred by the Bank as a result of such
event, including, without limitation, any loss incurred in obtaining,
liquidating or employing deposits from third parties. The Bank shall
deliver to the Borrower a certificate showing the calculation of the
amount of such loss or reasonable expense, which certificate shall be
conclusive in the absence of manifest error. The Bank may use any
reasonable averaging and attribution methods in calculating such loss or
reasonable expense.
Section 2.13. Optional Termination or Reduction of the Line of
Credit Commitment. The Borrower may, upon at least 45 day's notice to the
Bank, (i) terminate the Line of Credit Commitment or (ii) reduce the
unused portion of the Line of Credit Commitment from time to time by an
F48
aggregate amount of $5,000,000 or any integral multiple of $1,000,000 in
excess thereof; provided, however, that the Borrower may not terminate or
reduce the Line of Credit Commitment on or before August 1, 1995; and,
provided, further, that the Borrower may not terminate the Line of Credit
Commitment at any time that any Euro-Dollar-Based Advance or Letter of
Credit is outstanding and may not reduce the Line of Credit Commitment on
any date below an amount equal to the sum of (i) the aggregate unpaid
principal amount of Euro-Dollar-Based Advances outstanding on such date
plus (ii) the aggregate stated amount of Letters of Credit outstanding on
such date plus (iii) all unpaid Reimbursement Amounts as of such date.
Section 2.14. Incorporation by Reference. The terms and
conditions of the Note are hereby incorporated by reference into this
Agreement with the same force and effect as if fully set forth herein.
ARTICLE III
THE LETTERS OF CREDIT
Section 3.1. The Letters of Credit. The Bank agrees, on the
terms and conditions set forth in this Agreement, from time to time on
any Business Day during the Line of Credit Period, to issue one or more
commercial standby letters of credit for the account of the Borrower in an
aggregate stated amount not to exceed the lesser of (i) the Available
Amount as of such Business Day and (ii) $2,000,000 (the "Letter of Credit
Commitment"). Each of the letters of credit issued pursuant to this
Section 3.1 (the "Letters of Credit") (i) shall expire no later than the
Termination Date, (ii) shall have a stated amount of at least $10,000 and
(iii) shall be used for the purposes set forth in Section 7.15.
Section 3.2. Method of Issuance. The Borrower may request the
Bank to issue letters of credit pursuant to Section 3.1 by delivering to
the Bank, at the Bank's address referred to in Section 10.1 (Facsimile #
(703) 827-1723), a Letter of Credit Application executed by an Authorized
Person not later than 11:00 A.M. (Eastern Time) at least two Business
Days before the requested date of issuance specifying (i) the stated
amount of the letter of credit (which shall be at least $10,000), (ii)
the name and address of the beneficiary of the Letter of Credit, (iii)
whether the letter of credit is revocable or irrevocable, (iv) the type
of letter of credit to be issued, (v) the date the letter of credit is to
be issued, (vi) the date the letter of credit is to expire (which shall
be no later than the Termination Date), (vii) the purpose of the letter
of credit and an explanation of how the letter of credit will be used
(which shall be in accordance with Section 7.15), (viii) the terms and
conditions for any draws under the letter of credit and (ix) such other
information as the Bank may deem necessary or desirable. The Bank shall
(unless it determines that any applicable condition specified in this
Agreement has not been satisfied) send a letter of credit conforming to
the terms specified in the related Letter of Credit Application to the
Borrower not later than 2:00 P.M. (Eastern Time) on the requested date of
issuance.
F49
Section 3.3. Letter of Credit Disbursements. The Bank shall
notify the Borrower promptly of the presentment for payment of any Letter
of Credit, together with notice of the date such payment shall be made.
Subject to the terms and provisions of such Letter of Credit, this
Agreement and the related Letter of Credit Application, the Bank shall
make such payment to the designated beneficiary.
Section 3.4. Reimbursement and Other Payments. In addition to
(but without duplication of) the payments required by any Letter or Credit
Application, the Borrower shall pay to the Bank (i) on each date that any
amount is drawn under any Letter of Credit, a sum equal to such amount so
drawn plus any and all reasonable charges and expenses which the Bank may
pay or incur in connection with such drawing, (ii) on demand, the amount
of any and all reasonable charges and expenses which the Bank may pay or
incur in connection with any transfer, amendment or extension of a Letter
of Credit and (iii) on demand, any and all charges and expenses (including
reasonable attorneys' fees and expenses) which the Bank may pay or incur
in connection with the prosecution or defense of any action arising out of
or otherwise relating to a Letter of Credit, including, without
limitation, any action to enjoin full or partial payment of any draft
drawn against any Letter of Credit. The Borrower shall pay the foregoing
charges and expenses (other than the Reimbursement Amounts) to the Bank
within 10 Business Days after the Borrower receives notice thereof. The
Reimbursement Amounts shall be evidenced by, and shall be repayable with
interest in accordance with, the Note. The Bank shall record, and prior to
any transfer of the Note shall make on the schedule forming a part thereof
appropriate notations to evidence, the date and amount of each
Reimbursement Amount and the date and amount of each payment made by the
Borrower with respect thereto; provided, however, that any failure of the
Bank to make such a notation or any error therein shall not in any manner
affect the obligation of the Borrower to repay the Reimbursement Amounts
in accordance with the terms of the Note. The Borrower hereby irrevocably
authorizes the Bank to record such information and to make such notations.
Section 3.5. Increased Cost; Reduced Rate of Return.
(a) If the adoption of any applicable law, rule or regulation,
or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration
thereof, or compliance by the Bank with any request or directive (whether
or not having the force of law) of such authority, central bank or
comparable agency adopted or promulgated after the date hereof:
(i) shall subject the Bank to any tax, duty or other
charge with respect to any Letter of Credit, or shall change the basis of
taxation of payments to the Bank of any amounts due to the Bank under this
Article III or otherwise in respect of any Letter of Credit (except for
changes in the rate of tax on the overall net income of the Bank imposed
by the United States of America or by the jurisdiction in which the Bank's
principal executive office is located or any political subdivision or
taxing authority therein); or
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(ii) shall impose, modify or deem applicable any
reserve, special deposit or similar requirement (including, without
limitation, any such requirement imposed by the Board of Governors of the
Federal Reserve System) against assets of, deposits with or for the
account of or credit extended by the Bank or shall impose on the Bank any
other condition affecting any Letter of Credit or this Agreement in
respect of any Letter of Credit;
and the result of any of the foregoing is to increase the cost to the Bank
of issuing or maintaining any Letter of Credit or to reduce the amount of
any sum received or receivable by the Bank under this Agreement in respect
of any Letter of Credit or its commitment to issue Letters of Credit
hereunder by an amount deemed by the Bank to be material (which increase
in cost or decrease in amount received or receivable shall be the result
of the reasonable allocation by the Bank of the aggregate of such
increases or decreases resulting from such events), then the Borrower
shall pay to the Bank in accordance with subsection (d) below such
additional amount or amounts as will compensate the Bank for such
increased cost or reduction.
(b) If the Bank shall determine that any applicable law, rule,
regulation or guideline in existence on the date hereof regarding capital
adequacy or the adoption after the date hereof of any law, rule,
regulation or guideline regarding capital adequacy, or any change in any
of the foregoing or in the interpretation or administration of any of the
foregoing by any governmental authority, central bank or comparable agency
charged with the interpretation or administration thereof, or compliance
by the Bank with any request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority, central
bank or comparable agency, has or would have the effect of reducing the
rate of return on the Bank's capital or the capital of any Person
controlling the Bank as a consequence of the Bank's obligations under any
Letter of Credit or this Agreement to a level below that which the Bank or
such controlling Person could have achieved but for such law, change or
compliance (taking into consideration the Bank's policies with respect to
capital adequacy) by an amount deemed by the Bank to be material, then the
Borrower shall pay to the Bank in accordance with subsection (d) below
such additional amount or amounts as will compensate the Bank for such
reduction.
(c) The Bank will promptly notify the Borrower of any event of
which it has knowledge which will entitle the Bank to compensation
pursuant to this Section 356 and will deliver to the Borrower with each
demand for payment a certificate, signed by an officer of the Bank,
setting forth the amount or amounts to be paid to it hereunder, explaining
in reasonable detail the calculation of such amount or amounts and setting
forth in reasonable detail the method by which the Bank allocated any such
amount or amounts to the Borrower. Any such certificate shall be
conclusive in the absence of manifest error. In determining such amount,
the Bank may use any reasonable averaging and attribution methods
generally used by the Bank for the purpose or calculating increased costs
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and reduced returns and allocating increased costs and reduced returns to
borrowers.
(d) All payments required by this Section 3.5 shall be made by
the Borrower within 30 days after demand by the Bank. All such payments
not made on or before the tenth Business Day after such demand shall be
accompanied by interest thereon for each day from and including such tenth
Business Day to but excluding payment in full thereof at a rate equal to
the Adjusted London Interbank Offered Rate (calculated for each such day
assuming a one-month Interest Period) plus 1.00% per annum. The Borrower
shall not be obligated to reimburse the Bank for any increased cost or
reduced return incurred more than 90 days after the date that the Bank
receives actual notice of such increased cost or reduced return unless the
Bank gives notice thereof to the Borrower in accordance with this Section
3.5 during such 90-day period .
Section 3.6. Late Charges. If the Borrower fails to pay any
Reimbursement Amount or any fee or other amount due with respect to the
Letters of Credit within 10 Business Days after the date such payment was
due, the Borrower shall pay to the Bank a late charge equal to 5.00% of
the amount of such payment.
Section 3.7. Letter of Credit Fee. The Borrower shall pay to
the Bank upon the issuance of each Letter of Credit a letter of credit fee
equal to the greater of $500 or 2.00% per annum of the stated amount of
such Letter of Credit. The Bank shall refund to the Borrower a portion of
any letter of credit fee paid with respect to a Letter of Credit that does
not remain outstanding for its scheduled term (based on the amount of time
that such Letter of Credit remains outstanding).
Section 3.8. General Provisions as to Payments. The Borrower
shall make each payment required under this Article III or under any
Letter of Credit, in federal or other immediately available funds, to the
Bank at the Bank's address specified in Section 10.1.
Section 3.9. Incorporation by Reference. The terms and
conditions of the Letter of Credit Applications are hereby incorporated by
reference into this Agreement with the same force and effect as if fully
set forth herein. In the event that a term or condition of any Letter of
Credit Application is inconsistent with a term or condition of this
Agreement, the term or condition of this Agreement shall control.
Section 3.10. Obligations Absolute. The obligations of the
Borrower under this Article III and the Letter of Credit Applications
shall be absolute, unconditional and irrevocable, and shall be performed
strictly in accordance with the terms of this Agreement and the Letter of
Credit Applications under all circumstances whatsoever, including, without
limitation, the following:
(i) any Letter of Credit or any other agreement or
instrument relating thereto (the "Related Documents") proving to be
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forged, fraudulent, invalid, unenforceable or insufficient in any respect;
(ii) any amendment or waiver of, or any consent to
departure from, all or any of the Related Documents;
(iii) the existence of any claim, setoff, defense or
other right which the Borrower may have at any time against the Bank, any
beneficiary or transferee of any Letter of Credit or any other person or
entity, whether in connection with this Agreement, the Related Documents
or any unrelated transaction;
(iv) any document presented under any Letter of Credit
(or any endorsement thereon) proving to be forged, fraudulent, invalid,
unenforceable or insufficient in any respect or any statement therein
being inaccurate in any respect whatsoever;
(v) payment by an authorized officer of the Bank (or
pursuant to the instructions of an authorized officer of the Bank) under
any Letter of Credit against presentation of a sight draft or certificate
which does not comply with the terms of such Letter of Credit, including,
without limitation, the circumstances referred to in clause (iv) above or
the failure of any document to bear reference or to bear adequate
reference to such Letter of Credit; provided, however, that such payment
shall not have constituted gross negligence or willful misconduct of the
Bank; or
(vi) any use to which any Letter of Credit may be put.
ARTICLE IV
CONDITIONS TO ADVANCES AND LETTERS OF CREDIT
Section 4.1. Conditions to the First Advance and the First
Letter of Credit. The obligation of the Bank to make the first Advance or
to issue the first Letter of Credit is subject to the satisfaction of the
following conditions:
(i) receipt by the Bank of a duly executed Note, dated on or
before the date of such Advance or such Letter of Credit, complying with
the provisions of Section 2.3;
(ii) all legal matters incident to this Agreement, the
Note and the Letter of Credit Applications and the transactions
contemplated hereby and thereby shall be reasonably satisfactory to Patton
Boggs, L.L.P., counsel for the Bank;
(iii) receipt by the Bank of a certificate of the
Secretary of the Borrower dated the date of such Advance and certifying
(A) that attached thereto is a true and complete copy of the declaration
of trust of the Borrower as in effect on the date of such certification,
(B) as to the absence of dissolution or liquidation proceedings by or
against the Borrower, (C) that attached thereto is a true and complete
F53
copy of the bylaws of the Borrower as in effect on the date of such
certification, (D) that attached thereto is a true and complete copy of
resolutions adopted by the board of trustees of the Borrower authorizing
the execution, delivery and performance of this Agreement, the Note and
any Letter of Credit Applications and that such resolutions have not been
amended and are in full force and effect on the date of such certification
and (E) as to the incumbency and specimen signatures of each officer of
the Borrower executing this Agreement, the Note, any Letter of Credit
Applications or any other document delivered in connection herewith or
therewith;
(iv) receipt by the Bank of an opinion of counsel for
the Borrower substantially in the form of Exhibit C hereto and covering
such additional matters relating to the transactions contemplated hereby
as the Bank may reasonably request;
(v) receipt by the Bank of a certificate of an
authorized officer of the Borrower, dated the date of such Advance or such
Letter of Credit, certifying that, to the best of the Borrower's
knowledge, no Default has occurred and is continuing or would result from
such Advance or such Letter of Credit and that the representations and
warranties of the Borrower set forth in this Agreement are true and
correct on and as of the date of such Advance or such Letter of Credit;
(vi) receipt by the Bank of such evidence as it may
reasonably request confirming that the financial institutions described in
Section 7.7(iii) do not have the right to confess judgment against the
Borrower;
(vii) receipt by the Bank of a fully executed
intercreditor agreement satisfactory to the Bank among all of the
financial institutions described in Section 7.7(iii); and
(viii) receipt by the Bank of all documents it may
reasonably request relating to the existence of the Borrower and its
authority to execute, deliver and perform this Agreement, the Note and the
Letter of Credit Applications and the validity of this Agreement, the Note
and the Letter of Credit Applications and any other matters relevant
hereto or thereto, all in form and substance satisfactory to the Bank and
its counsel.
Section 4.2. Conditions to Each Advance. The obligation of the
Bank to make each Advance is subject to the satisfaction of the following
conditions:
(i) the fact that no Default has occurred and is
continuing or would result from such Advance;
(ii) the fact that the representations and warranties
of the Borrower set forth in this Agreement are true and correct on and as
of the date of such Advance; and
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(iii) the fact that the amount of such Advance does not
exceed the Available Amount.
Section 4.3. Conditions to Each Letter of Credit. The
obligation of the Bank to issue each Letter of Credit is subject to the
satisfaction of the following conditions:
(i) receipt by the Bank of a Letter of Credit
Application for such Letter of Credit executed by an Authorized Person;
(ii) the fact that no Default has occurred and is
continuing or would result from such Letter of Credit;
(iii) the fact that the representations and warranties
of the Borrower set forth in this Agreement are true and correct on and as
of the date of such Letter of Credit; and
(iv) the fact that the stated amount of such Letter of
Credit does not exceed the lesser of (A) the Available Amount as of the
date of such Letter of Credit and (B) $2,000,000.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants that:
Section 5.1 Existence and Power. The Borrower is an
unincorporated business trust, validly existing and in good standing under
the laws of the District of Columbia, has all powers and all material
governmental licenses, authorizations, consents and approvals required to
carry on its business as now conducted and is not a "foreign person"
within the meaning of sections 1445 and 7701 of the Code. The Borrower is
duly qualified or licensed to do business in each jurisdiction where
qualification or licensing is required by the nature of its business or
the character and location of its property, business or customers and in
which the failure to so qualify or be licensed, as the case may be, in the
aggregate, could have a material adverse effect on the business, financial
position, results of operations or properties of the Borrower.
Section 5.2. Authorization; Non-Contravention. The execution,
delivery and performance by the Borrower of this Agreement, the Note and
the Letter of Credit Applications are within its power, have been duly
authorized by all necessary action, require no action by or in respect of,
or filing with, any governmental body, agency or official and do not
contravene, or constitute (with or without the giving of notice or lapse
of time or both) a default under, any provision of applicable law or of
the declaration of trust or bylaws of the Borrower or of any agreement,
judgment, injunction, order, decree or other instrument binding upon or
affecting the Borrower or result in the creation or imposition of any Lien
on any of its assets or the assets of its subsidiaries.
F55
Section 5.3. Binding Effect. This Agreement constitutes a
valid and binding agreement of the Borrower, each of the Letter of Credit
Applications, when executed and delivered in accordance with this
Agreement, will constitute a valid and binding agreement of the Borrower
and the Note, when executed and delivered in accordance with this
Agreement, will constitute a valid and binding obligation of the Borrower,
in each case enforceable against the Borrower in accordance with its
terms, except as (i) the enforceability hereof and thereof may be limited
by bankruptcy, insolvency or similar laws affecting creditors' rights
generally and (ii) rights of acceleration and the availability of
equitable remedies may be limited by equitable principles of general
applicability.
Section 5.4. Litigation. Except as disclosed in the Borrower's
Form 10-Q for the quarter ended June 30, 1994 filed with the Securities
and Exchange Commission, there is no action, suit or proceeding pending
against, or to the knowledge of the Borrower threatened against or
affecting, the Borrower or any of its subsidiaries before any federal,
state or local government, authority, agency, court or other body, officer
or entity, or before any arbitrator with authority to bind a party at law,
in which there is a reasonable possibility of a decision which could
materially adversely affect the business, financial position, results of
operations or properties of the Borrower and its subsidiaries or which in
any manner draws into question the validity of this Agreement, the Note or
any Letter of Credit Application, and there is no basis known to the
Borrower for any such action, suit or proceeding.
Section 5.5. Filings. All actions by or in respect of, and all
filings with, any governmental body, agency or official required in
connection with the execution, delivery and performance of this Agreement,
the Note and any Letter of Credit Application, or necessary for the
validity or enforceability hereof and thereof or for the protection or
perfection of the rights and interests of the Bank hereunder and
thereunder, will, prior to the date of delivery hereof or thereof, have
been duly taken or made, as the case may be, and will at all times
thereafter remain in full force and effect.
Section 5.6. Financial Information.
(a) The audited balance sheet of the Borrower as of December 31,
1993 and the related audited statements of operations, cash flows and
shareholders' equity for the fiscal year then ended, copies of which have
been delivered to the Bank, fairly present, in conformity with GAAP, the
financial position of the Borrower as of such date and its results of
operations and cash flows for such fiscal year. As of the date of such
financial statements, the Borrower did not have any material contingent
obligation, contingent liability, liability for taxes, long-term lease or
unusual forward or long-term commitment which is not reflected in any of
such financial statements or in the notes thereto.
(b) The unaudited balance sheet of the Borrower as of June 30,
1994 and the related unaudited statements of operations, cash flows and
F56
shareholders' equity for the calendar quarter then ended, copies of which
have been delivered to the Bank, fairly present, in conformity with GAAP
applied on a basis consistent with the financial statements referred to in
subsection (a) above, the financial position of the Borrower as of such
date and its results of operations and cash flows for such calendar
quarter (subject to normal year-end adjustments).
(c) Since June 30, 1994, there has been no material adverse
change in the business, financial position, results of operations or
properties of the Borrower.
Section 5.7. ERISA Compliance. Each member of the Controlled
Group has fulfilled its obligations under the minimum funding standards of
ERISA and the Code with respect to each Plan, and is in compliance in all
material respects with the provisions of ERISA and the Code presently
applicable to each Plan, and has not incurred or does not reasonably
expect to incur any liability to the PBGC or a Plan under Title IV of
ERISA. The execution and delivery of this Agreement and the issuance of
the Note will not involve any transaction which is subject to the
prohibitions of Section 406 of ERISA or in connection with which a tax
would be imposed pursuant to section 4975 of the Code. No Lien has been
attached, and no Person has threatened to attach a Lien, on any property
of the Borrower as a result of the Borrower's failure to comply with
ERISA.
Section 5.8. Environmental Compliance.
(a) Except as described in Schedule 5.8 or disclosed in the
Borrower's Form 10-Q for the quarter ended June 30, 1994 filed with the
Securities and Exchange Commission, neither the Borrower nor any of its
subsidiaries is (i) in default with respect to any order, writ, injunction
or decree of any court or (ii) in default in any respect under any
Environmental Requirement, which default is likely to materially adversely
affect the business, financial position, results of operations or
properties of the Borrower and its subsidiaries.
(b) Except as described in Schedule 5.8 or disclosed in the
Borrower's Form 10-Q for the quarter ended June 30, 1994 filed with the
Securities and Exchange Commission, (i) the Borrower and each of its
subsidiaries is in compliance in all material respects with all applicable
Environmental Requirements and state and federal health and safety
statutes and regulations, other than violations that are unlikely to
materially adversely affect the business, financial position, results of
operations or properties of the Borrower and its subsidiaries, and (ii) to
the best of the Borrower's knowledge, neither the Borrower nor any of its
subsidiaries is the subject of any evaluation under any Environmental
Requirement or any other federal, state or local investigation to evaluate
whether any remedial action is needed to respond to a Release of Hazardous
Material or any other environmental matter, other than investigations that
are unlikely to materially adversely affect the business, financial
position, results of operations or properties of the Borrower and its
subsidiaries.
F57
Section 5.9. Regulation U. The Advances will not be used by
the Borrower, directly or indirectly, for the purpose of purchasing or
carrying any margin stock or for the purpose of reducing or retiring any
indebtedness that was originally incurred to purchase or carry margin
stock or for any other purpose that might constitute the Advances a
"purpose credit" within the meaning of Regulation U or Regulation X of the
Board of Governors of the Federal Reserve System.
ARTICLE VI
FINANCIAL COVENANTS
The Borrower agrees that so long as the Bank is committed to make
Advances or issue Letters of Credit hereunder or any amount payable
hereunder or under the Note or any Letter of Credit Application remains
unpaid:
Section 6.1. Certain Definitions. As used in this Article VI
and elsewhere in this Agreement, the following terms have the following
meanings:
"Annual Dividends" means, for any calendar year, the aggregate
amount of all dividends and other distributions paid by the Borrower to
its shareholders or otherwise in respect of equity securities or other
evidences of equity or beneficial interests in the Borrower.
"Funds From Operations" means, for any calendar quarter, the
Borrower's net income (or net loss) on a consolidated basis for such
quarter before depreciation of real estate owned, amortization, gains on
sales of investments and extraordinary items (as such term is defined by
GAAP).
"Net Operating Income from Unleveraged Properties" means, for any
period of four consecutive calendar quarters, the Borrower's aggregate net
income (or loss) on a consolidated basis from Unleveraged Real Properties
before depreciation, amortization, gains on sales of investments and
extraordinary items (as such term is defined by GAAP).
"Shareholders' Equity" means, at any date, (i) shareholders'
equity of the Borrower (as set forth in the Borrower's most recent
statement of shareholders' equity) plus (ii) the sum as of such date of
subscriptions receivable, deferred compensation, treasury stock (valued at
cost) and changes in accumulated dividends in excess of the Borrower's net
income (utilizing a base amount of $79,434,000 per the June 30, 1992
financial statements of the Borrower).
"Special Nonrecurring Loss" means any nonrecurring expense
incurred by the Borrower not in the ordinary course of its business, such
as expenses incurred as a result of the relocation of the Borrower's
headquarters, the write-off or down of notes receivable or marketable
securities, the material impairment of long-lived assets, litigation
settlements and nonrecurring, material environmental liabilities, but in
F58
all cases excluding any expense that constitutes an extraordinary item (as
such term is defined by GAAP).
"Total Liabilities" means, at any date, all obligations of the
Borrower on a fully consolidated basis on such date in respect of capital
leases, mortgages payable, notes payable, senior notes, convertible
debentures and secured or unsecured debt owing to banks or other financial
institutions.
"Unleveraged Real Properties" means all real properties and
improvements thereon either (i) owned by Borrower or its consolidated
subsidiaries that are not subject to any Liens whatsoever, or (ii) leased
by Borrower or its consolidated subsidiaries under a capital lease (as
such term is used under GAAP) where Borrower's (or its subsidiaries')
leasehold interest is not subject to any Liens whatsoever (other than the
capital lease itself).
Section 6.2.Minimum Shareholders' Equity. The Borrower will not
permit Shareholders' Equity to be less than $300,000,000 as of the last
day of any calendar quarter (commencing as of September 30, 1994)..
Section 6.3. Total Liabilities to Shareholders' Equity Ratio.
The Borrower will not permit the ratio of (i) Total Liabilities to (ii)
Shareholders' Equity to exceed 2.00 to 1.00 as of the last day of any
calendar quarter.
Section 6.4. Minimum Funds From Operations. The Borrower will
not permit Funds From Operations to be less than (i) $9,000,000 for any
calendar quarter or (ii) $40,000,000 in the aggregate for any period of
four consecutive calendar quarters (commencing with the four quarter
period ending December 31, 1994). The Borrower will not permit the
aggregate amount of Funds From Operations for any calendar year, to be
less than 85% of the aggregate amount of Funds From Operations for the
immediately preceding calendar year.
Section 6.5. Net Operating Income From Unleveraged Properties.
The Borrower will not permit Net Operating Income From Unleveraged
Properties to be less than $20,000,000 for any period of four consecutive
calendar quarters.
Section 6.6. Dividends. The Borrower will not permit (i) Annual
Dividends in the 1994 calendar year to exceed 102% of the aggregate amount
of Funds From Operations for such calendar year, and (ii) Annual Dividends
in any calendar year thereafter to exceed 100% of the aggregate amount of
Funds From Operations for such calendar year; provided, however, that in
any calendar year in which the Borrower suffers or incurs a Special
Nonrecurring Loss, the Borrower will be permitted to increase the amount
of Annual Dividends otherwise permitted by this Section 6.6 by an amount
equal to the lesser of (i) the amount of the Special Nonrecurring Loss or
(ii) $5,000,000.
ARTICLE VII
F59
ADDITIONAL COVENANTS OF THE BORROWER
The Borrower agrees that so long as the Bank is committed to make
Advances or issue Letters of Credit hereunder or any amount payable
hereunder or under the Note or any Letter of Credit Application remains
unpaid:
Section 7.1. Information. The Borrower will deliver or cause
to be delivered to the Bank:
(i) within 120 days after the end of each fiscal year of the
Borrower, copies of the Borrower's Annual Report to Shareholders and
Annual Report on Form 10-K for such fiscal year, such reports to include a
balance sheet of the Borrower as of the end of such fiscal year and the
related statements of operations, cash flows and shareholders' equity for
such fiscal year, setting forth in each case in comparative form the
figures for the previous fiscal year, all in reasonable detail and
accompanied by an opinion thereon by independent public accountants
satisfactory to the Bank, which opinion shall state that such financial
statements present fairly the financial position of the Borrower as of the
date of such financial statements and the results of its operations and
cash flows for the period covered by such financial statements in
conformity with GAAP applied on a consistent basis (except for changes in
the application of which such accountants concur) and shall not contain
any "going concern" or like qualification or exception or qualifications
arising out of the scope of the audit;
(ii) within 60 days after the end of each of the first
three quarters of each fiscal year of the Borrower, a copy of the
Borrower's Quarterly Report on Form 10-Q for such quarter, such report to
include all financial statements and financial information required by
Rule 1001 of Regulation SX (which includes a balance sheet of the Borrower
as of the end of such Quarter and the related statements of operations,
shareholders' equity and cash flows for such quarter and for the portion
of such fiscal year ended at the end of such quarter, setting forth in
each case in comparative form the figures for the corresponding quarter of
the previous fiscal year and for the corresponding portion of the previous
fiscal year), all certified (subject to normal year-end audit adjustments)
as complete and correct by the chief financial officer or chief accounting
officer of the Borrower;
(iii) simultaneously with the delivery of each set of
financial statements referred to in clauses (i) and (ii) above, a
certificate of the chief financial officer or chief accounting officer of
the Borrower (A) setting forth in reasonable detail the calculations
necessary to confirm whether the Borrower is in compliance with the
financial covenants set forth in Sections 6.2, 6.3, 6.4, 6.5 and 6.6, (B)
stating whether there exists on the date of such certificate any Default
and, if any Default then exists, setting forth the details thereof and the
action that the Borrower is taking or proposes to take with respect
thereto and (C) stating whether, since the date of the most recent
previous delivery of financial statements pursuant to clause (i) or (ii)
above, there has been any material adverse change in the business,
F60
financial position, results of operations or properties of the Borrower,
and, if so, the nature of such material adverse change;
(iv) forthwith upon the occurrence of any Default, a
certificate of the chief financial officer or chief accounting officer of
the Borrower setting forth the details thereof and the action that the
Borrower is taking or proposes to take with respect thereto;
(v) each underwriting package utilized by Borrower or
any of its subsidiaries in connection with an acquisition of property by
the Borrower within 15 days after the closing thereof;
(vi) a copy of each prospectus (and all amendments and
supplements thereto) filed by the Borrower or any of its subsidiaries with
the U.S. Securities and Exchange Commission within 15 days after filing;
(vii) promptly after obtaining actual knowledge of the
commencement of, or of a material threat of the commencement of, any
action, suit or proceeding against the Borrower or any of its subsidiaries
before any federal, state or local government, authority, agency, court or
other body, officer or entity, or before any arbitrator with authority to
bind a party at law, in which there is a reasonable possibility of a
decision which could materially adversely affect the business, financial
position, results of operations or properties of the Borrower and its
subsidiaries (or, in the case of a material threat of the commencement of
any such action, suit or proceeding, in which a decision which could
materially adversely affect the business, financial position, results of
operations or properties of the Borrower and its subsidiaries is probable)
or which in any manner draws into question the validity of this Agreement,
the Note or any Letter of Credit Application, a certificate of an officer
of the Borrower setting forth the nature of such action, suit or
proceeding and such additional information as may be reasonably requested
by the Bank;
(viii) within 60 days after the end of each fiscal
quarter of the Borrower, a certificate of an officer of the Borrower
setting forth the nature of each environmental problem affecting any of
the properties of the Borrower or any of its subsidiaries as to which
there is a reasonable possibility or a material adverse affect on the
business, financial position, results of operations or properties of the
Borrower, a summary of any remediation efforts or other actions taken or
proposed to be taken with respect thereto and such additional information
as may be reasonably requested by the Bank;
(ix) promptly upon transmission thereof, copies of all
press releases and other statements made available generally by the
Borrower to the public concerning material developments in the business,
financial position, results of operations or properties of the Borrower;
and
(x) from time to time such additional information
regarding the business, financial position, results of operations or
F61
properties of the Borrower and its subsidiaries as the Bank may reasonably
request (including, without limitation, rent rolls on all of the
properties of the Borrower (to be delivered no more frequently than twice
during any calendar year) and a schedule of payments for all Debt
instruments of the Borrower).
Section 7.2. Payment of Obligations. The Borrower will, and
will cause each of its subsidiaries to, pay and discharge, as the same
shall become due and payable, (i) all its obligations and liabilities,
including all claims or demands of material men, mechanics, carriers,
warehouse men, landlords and other like persons which, in any such case,
if unpaid, might by law give rise to a Lien upon any of the Borrower's or
any such subsidiary's property or assets, and (ii) all lawful taxes,
assessments and charges or levies made upon it or its, or any such
subsidiary or any such subsidiary's, properties or assets by any
governmental body, agency or official (except where any of the items in
clause (i) or (ii) of this Section 7.2 is being diligently contested in
good faith and the Borrower has set aside on its books, if required under
GAAP, appropriate reserves for the accrual of any such items).
Section 7.3. Maintenance of Property; Insurance. The Borrower
will, and will cause each of its subsidiaries to, keep all its properties
in good working order and condition, subject to ordinary wear and tear,
maintain with financially sound and reputable insurance companies
insurance on all its properties in at least such amounts and against at
least such risks (and with such risk retentions) as are usually insured
against by companies engaged in the same or a similar business and furnish
to the Bank upon request full information as to the insurance carried.
Section 7.4. Conduct of Business and Maintenance of Existence.
The Borrower will continue to engage in business of the same general type
as now conducted by the Borrower and will preserve, renew and keep in full
force and effect its existence as a real estate investment trust and its
rights, privileges and franchises necessary or desirable in the normal
conduct of its business.
Section 7.5 Compliance with Laws. The Borrower will, and will
cause each of its subsidiaries to, (i) comply in all material respects
with all applicable laws, ordinances, rules, regulations, and requirements
of governmental authorities (including, without limitation, ERISA and the
rules and regulations thereunder and all Environmental Requirements
(subject to Section 7.13)), except where the necessity of compliance
therewith is contested in good faith by appropriate proceedings and (ii)
at all times cause to be done those things necessary to maintain, preserve
and renew its qualification as a real estate investment trust under the
Code and all applicable regulations thereunder.
Section 7.6 Accounting: Inspection of Property; Books and
Records. The Borrower will keep proper books of record and account in
which full, true and correct entries in conformity with GAAP shall be made
of all dealings and transactions in relation to its business and
activities and the business and activities of its subsidiaries, will
F62
maintain its fiscal reporting periods on the present basis and will permit
representatives of the Bank, at Borrower's expense (not to exceed $1,500
in the aggregate during any calendar year), to visit and inspect any of
the Borrower's or its subsidiaries' properties, to examine and make
abstracts from any of the Borrower's books and records and to discuss the
Borrower's affairs, finances and accounts with the Borrower's executive
officers (who, on the Effective Date, are those officers identified in
Section 8.1(xi)) and independent public accountants, all at such
reasonable times and as often as the Bank may reasonably request.
Section 7.7 Restriction on Debt. The Borrower and its
subsidiaries will not incur or at any time be liable with respect to any
Debt except Debt which meets any one of the following criteria: (i) Debt
outstanding under this Agreement and the Note; (ii) Debt having an
original term in excess of three years; and (iii) unsecured Debt owing to
financial institutions (including the Bank) and having an aggregate unpaid
principal balance of $175,000,000 or less but only if all such financial
institutions shall have executed and delivered to the Bank an inter-
creditor agreement regarding such unsecured Debt satisfactory to the Bank.
Section 7.8 Restriction on Liens. The Borrower will not, and
will not permit any of its subsidiaries to, at any time create, assume or
suffer to exist any Lien (other than Liens permitted under Section 7.2 and
broker's liens arising in the ordinary course of business) on any of its
properties or assets (whether now owned or hereafter acquired) or assign
or subordinate any present or future right to receive assets as security
for the repayment of any Debt that is unsecured as of the Effective Date.
Section 7.9. Consolidations, Mergers and Sales of Assets. The
Borrower will not (i) consolidate or merge with or into any other Person
or (ii) sell, lease or otherwise transfer all or any substantial part of
its assets to any other Person; provided, however, that the Borrower may
merge with another real estate investment trust or company if the Borrower
is the surviving entity in such merger and no Default shall have occurred
and be continuing immediately after giving effect to such merger.
Section 7.10. Transactions with Affiliates. The Borrower will
not directly or indirectly pay any funds to or for the account of, make
any investment in, engage in any transaction with or effect any
transaction in connection with any joint enterprise or other joint
arrangement with any Affiliate except in the ordinary course of business
pursuant to the reasonable requirements of the business of the Borrower
and upon fair and reasonable terms no less favorable to the Borrower than
would be obtained in a comparable arms-length transaction with a Person
not an Affiliate.
Section 7.11. Transactions with Other Persons. The Borrower
will not enter into any agreement with any Person whereby any of them
shall agree to any restriction on the Borrower's right to amend or waive
any of the provisions of this Agreement.
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Section 7.12. ERISA Matters. The Borrower will not at any time
permit any Plan to (i) engage in any "prohibited transaction" (as such
term is defined in section 4975 of the Code or in Section 406 of ERISA),
(ii) incur any "accumulated funding deficiency" (as such term is defined
in Section 302 of ERISA), whether or not waived, or (iii) be terminated in
a manner that could result in the imposition of a Lien on the property of
the Borrower pursuant to Section 4068 of ERISA. The Borrower will deliver
or cause to be delivered to the Bank if and when any member of the
Controlled Group (i) gives or is required to give notice to the PBGC of
any "reportable event" (as defined in Section 4043 of ERISA) with respect
to any Plan which might constitute grounds for a termination of such Plan
under Title IV of ERISA, or knows that the plan administrator of any Plan
has given or is required to give notice of any such reportable event, a
copy of the notice of such reportable event given or required to be given
to the PBGC, (ii) receives notice of complete or partial withdrawal
liability under Title IV of ERISA, a copy of such notice, or (iii)
receives notice from the PBGC under Title IV of ERISA of an intent to
terminate or appoint a trustee to administer any Plan, a copy of such
notice.
Section 7.13. Environmental Matters.
(a) Except as set forth in subsection (b) below, the Borrower
will, and will cause each of its subsidiaries to, (i) comply with all
Environmental Requirements, (ii) obtain, maintain and comply with all
permits, licenses, registrations and authorizations required under all
Environmental Requirements and (iii) comply with all court orders, consent
orders, settlement agreements or other settlement documents issued by, or
entered into with, any administrative or governmental agency or entity
concerning compliance with all Environmental Requirements.
(b) The Borrower shall not be deemed to be in violation of
subsection (a) above if (i) the Borrower, its subsidiaries and/or its
tenants or other potentially responsible parties have initiated and are
diligently pursuing in good faith appropriate measures satisfactory to the
court or agency having jurisdiction over the matter to cure or eliminate
the compliance failure and (ii) there has been set aside on the Borrower's
consolidated financial statements a reserve deemed by the Borrower in its
reasonable business judgment to be sufficient to cover the noncompliance
liability or such greater amount as may be required by GAAP and (iii) such
noncompliance will not materially adversely affect the business, financial
position, results of operations or properties of the Borrower and its
subsidiaries.
Section 7.14. Confession of Judgment. The Borrower will not,
and will not permit any of its subsidiaries to, grant any other unsecured
bank lender that provides revolving credit to the Borrower or any of its
subsidiaries the right to confess judgment against the Borrower.
Section 7.15. Use of Proceeds. The Borrower will use the
Advances to provide working capital for investment activities, for
construction, renovation and tenant fit-up for the shopping centers and
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other properties acquired by the Borrower, for debt reduction, for the
payment of dividends and for other similar purposes permissible for real
estate investment trusts. The Borrower will use the Letters of Credit in
connection with, among other things, loans, refinancings and acquisitions
and to guarantee payment or performance under the terms of development or
construction contracts.
Section 7.16. Independence of Covenants. All covenants
contained herein shall be given independent effect. If a particular
action or condition is not permitted by any of such covenants, the fact
that such action or condition would be permitted by an exception to, or
otherwise be within the limitations of, another covenant shall not avoid
the occurrence of a Default if such action is taken or such condition
exists.
ARTICLE VIII
DEFAULTS
Section 8.1. Events of Default. If one or more of the following
events ("Events of Default") shall have occurred and be continuing:
(i) the Borrower shall fail to pay when due or within
10 Business Days thereafter any principal of or interest on the Advances,
any Reimbursement Amount or any other amount payable hereunder or under
the Note or any Letter of Credit Application;
(ii) the Borrower shall fail to observe or perform any
covenant contained in Article VI or Section 7.7, 7.8, 7.9, 7.10, 7.11,
7.12, 7.13, 7.14 or 7.15 of this Agreement;
(iii) the Borrower shall fail to observe or perform any
covenant or agreement contained in this Agreement (other than those
covered by clause (i) or (ii) above) or any Letter of Credit Application
for 10 Business Days after written notice thereof shall have been given to
the Borrower by the Bank; provided, however, that the Borrower shall be
entitled to a reasonable period of time (not to exceed 60 days following
the Borrower's receipt of such written notice) to cure such failure if (A)
the Bank reasonably determines that such failure cannot be remedied within
such 10 Business Day period, (B) the Borrower initiates action to cure
such failure within such 10 Business Day period, (C) the Borrower proceeds
diligently and in good faith to cure such failure and (D) the Bank
determines that such failure will not impair the ability of the Borrower
to pay when due or within 10 Business Days thereafter any principal of or
interest on the Advances, any Reimbursement Amount or any other amount
payable hereunder or under the Note or any Letter of Credit Application;
(iv) any representation, warranty, certification or
statement made by the Borrower in this Agreement or any Letter of Credit
Application, or in any certificate, financial statement or other document
delivered pursuant hereto or thereto, shall prove to have been incorrect
in any material respect when made;
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(v) the Borrower or any of its subsidiaries shall
fail to make any payment in respect of any Debt (other than the Note)
owing to the Bank or any other recourse Debt owing to any Person
(including, without limitation, mortgage notes or capital leases in excess
of $1,000,000, senior notes or subordinated convertible debentures) when
due or within any applicable grace period;
(vi) any event or condition shall occur which results
in the acceleration of the maturity of any Debt of the Borrower or any of
its subsidiaries owing to the Bank or any other recourse Debt of the
Borrower or its subsidiaries or enables the holder of such Debt or any
Person acting on such holder's behalf to accelerate the maturity thereof;
(vii) the Borrower shall commence a voluntary case or
other proceeding seeking liquidation, reorganization or other relief with
respect to itself or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it
or any substantial part of its property, or shall consent for any such
relief or to the appointment of or taking possession by any such official
in an involuntary case or other proceeding commenced against it, or shall
make a general assignment for the benefit of creditors, or shall fail
generally to pay its debts as they become due, or shall take any action to
authorize any of the foregoing;
(viii) an involuntary case or other proceeding shall be
commenced against the Borrower seeking liquidation, reorganization or
other relief with respect to it or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian or other similar
official of it or any substantial part of its property, and such
involuntary case or other proceeding shall remain undismissed and unstayed
for a period of 30 days, or an order for relief shall be entered against
the Borrower under the federal bankruptcy laws as now or hereafter in
effect;
(ix) one or more judgments or orders for the payment
of money in excess of $1,000,000 individually or $2,500,000 in the
aggregate shall be rendered against the Borrower and such judgment or
order shall continue unsatisfied for a period of 30 days during which
execution thereof shall not be effectively stayed;
(x) the Internal Revenue Service shall make a final
determination that the Borrower has failed to maintain its qualification
as a real estate investment trust, the Internal Revenue Service shall make
a preliminary determination that Borrower has failed to maintain its
qualification as a real estate investment trust and the Borrower shall
fail promptly to contest or remedy such determination by appropriate
proceedings or the stock of the Borrower shall cease to be publicly
traded;
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(xi) Steven J. Guttman and any two of Robert S.
Wennett, Mary Jane Morrow, Hal A. Vasvari and Ron D. Kaplan shall cease to
participate actively as senior managers of the Borrower;
(xii) any senior debt of the Borrower shall be rated
below investment grade by Standard & Poor's Corporation; or
(xiii) the bank shall determine in good faith that a
material adverse change has occurred in the financial condition of the
Borrower since the date of this Agreement, and the Borrower shall fail to
correct such change to the satisfaction of the Bank within 10 days after
written notice thereof shall have been given to the Borrower by the Bank;
then, and in every such event, the Bank may, at its option, by notice to
the Borrower, terminate the Line of Credit Commitment and the Letter of
Credit Commitment and declare the Note (together with accrued but unpaid
interest thereon) to be immediately due and payable (and the Note shall
thereupon become immediately due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by the
Borrower); provided, however, that upon the occurrence of any of the
Events of Default specified in clause (vii) or (viii) above, without any
notice to the Borrower or any other act by the Bank, the Line of Credit
Commitment and the Letter of Credit Commitment shall terminate and the
Note (together with accrued but Unpaid interest thereon) shall immediately
become due and payable without presentment, demand, protest or other
notice of any kind, all of which are hereby waived by the Borrower.
Section 8.2. Other Remedies. If a Default or an Event of
Default shall occur and be continuing, the Bank may proceed to protect and
enforce its rights under this Agreement and the Note by exercising such
remedies as are available to the Bank in respect thereof under applicable
law, either by suit in equity or by action at law or both, for specific
performance of any covenant or other agreement contained in this Agreement
or in aid of the exercise of any power granted in this Agreement. No
failure or delay by the Bank in exercising any right, power or privilege
hereunder or under the Note shall operate as a waiver thereof nor shall
any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies herein provided shall be cumulative and not
exclusive of any rights or remedies provided by law .
Section 8.3. Inspection of Properties. The Bank, upon
obtaining any judgment against the Borrower, shall have the right to enter
upon, and the Borrower hereby specifically grants to the Bank a license
(effective only upon the entry of a judgment) to enter upon, any of the
Borrower's properties that the Bank may seek to acquire in connection with
the enforcement of such judgment for the purpose of inspecting, testing
and assessing the properties for the presence of Hazardous Materials. The
Borrower shall reimburse the Bank upon demand for all costs and expenses
of any and all inspections, testing and assessing. If the Borrower fails
to reimburse the Bank upon demand for such costs, then the Bank may pursue
all its legal remedies to recover such costs.
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ARTICLE IX
CHANGE IN CIRCUMSTANCES
AFFECTING EURO-DOLLAR-BASED ADVANCES
Section 9.1. Basis for Determining Adjusted London Interbank
Offered Rate Inadequate or Unfair. If on or prior to the first day of any
Interest Period:
(i) the Bank is advised that deposits in dollars (in
the applicable amounts) are not being offered in the relevant market for
such Interest Period or
(ii) the Bank determines that the Adjusted London
Interbank Offered Rate will not adequately and fairly reflect the cost to
the Bank of maintaining or funding the Euro-Dollar-Based Advances for such
Interest Period (and such determination is also made with respect to all
or substantially all other borrowers from the Bank that pay interest at a
rate based on the Adjusted London Interbank Offered Rate),
the Bank shall promptly give notice thereof to the Borrower, whereupon,
until such circumstances no longer exist, the right of the Borrower to
elect to have the Advances bear interest at the Euro-Dollar-Based Rate
shall be suspended and the Euro-Dollar-Based Advances then outstanding
shall begin bearing interest at the Prime-Based Rate at the end of the
Interest Period(s) applicable to such Euro-Dollar-Based Advances.
Section 9.2. Illegality. If, after the date of this Agreement,
the adoption of any applicable law, rule or regulation, or any change
therein, or any change in the interpretation or administration thereof by
any governmental authority, central bank or comparable agency charged with
any interpretation or administration thereof, or compliance by the Bank
with any request or directive (whether or not having the force of law) of
any such authority, central bank or comparable agency shall make it
unlawful or impossible for the Bank to make, maintain or fund the Euro-
Dollar-Based Advances, the Bank shall promptly give notice thereof to the
Borrower. Before giving any notice to the Borrower pursuant to this
Section 9.2, the Bank shall designate a different lending office if such
designation will avoid the need for giving such notice and will not, in
the reasonable judgment of the Bank, be otherwise disadvantageous to the
Bank. If such notice is given, the Euro-Dollar-Based Advances then
outstanding shall begin bearing interest at the Prime-Based Rate either
(i) on the last day of the applicable Interest Period if the Bank may
lawfully continue to maintain and fund such Advances at the Euro-Dollar-
Based Rate to such day or (ii) immediately if the Bank may not lawfully
continue to maintain and fund such Advances at the Euro-Dollar-Based Rate
to such day (in which case the Borrower shall reimburse the Bank on demand
for any resulting loss or reasonable expense in accordance with Section
2.12).
Section 9.3. Increased Cost and Reduced Return..
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(a) If, after the date of this Agreement, the adoption of any
applicable law, rule or regulation, or any change therein, or any change
in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with any
interpretation or administration thereof, or compliance by the Bank with
any request or directive (whether or not having the force of law) of any
such authority, central bank or comparable agency:
(i) shall subject the Bank to any tax, duty or other
charge with respect to the Euro-Dollar-Based Advances or the Bank's
obligation to make the Euro-Dollar-Based Advances, or shall change the
basis of taxation of payments to the Bank of the principal of or interest
on the Euro-Dollar-Based Advances or any other amounts due under this
Agreement or the Note in respect of the Euro-Dollar-Based Advances or the
Bank's obligation to make the Euro-Dollar-Based Advances (except for
changes in the rate of tax on the overall net income of the Bank imposed
by the jurisdiction in which the Bank's principal executive office is
located); or
(ii) shall impose, modify or deem applicable any
reserve, special deposit or similar requirement (including, without
limitation, any such requirement imposed by the Board of Governors of the
Federal Reserve System, but excluding any such requirement included in the
applicable Euro-Dollar Reserve Percentage) against assets of, deposits
with or for the account of, or credit extended by, the Bank, or shall
impose on the Bank or on the London interbank market any other condition
affecting the Euro-Dollar-Based Advances or the Bank's obligation to make
the Euro-Dollar-Based Advances;
and the result of any of the foregoing is to increase the cost to the Bank
of making or maintaining the Euro-Dollar-Based Advances, or to reduce the
amount of any sum received or receivable by the Bank under this Agreement
or under the Note, then the Borrower shall pay to the Bank in accordance
with subsection (c) below such additional amount or amounts as will
compensate the Bank for such increased cost or reduction.
(b) If the Bank shall determine that any applicable law, rule,
regulation or guideline or the adoption after the date of this Agreement
of any law, rule, regulation or guideline regarding capital adequacy, or
any change in any of the foregoing or in the interpretation or
administration of any of the foregoing by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by the Bank with any request or
directive regarding capital adequacy (whether or not having the force of
law) of any such authority, central bank or comparable agency, has or
would have the effect of reducing the rate of return on the Bank's capital
or the capital of any Person controlling the Bank as a consequence of the
Bank's obligations under this Agreement to a level below that which the
Bank or such controlling Person could have achieved but for such law,
adoption, change or compliance (taking into consideration the Bank's
policies with respect to capital adequacy) by an amount deemed by the Bank
to be material, then from time to time the Borrower shall pay to the Bank
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in accordance with subsection (c) below such additional amount or amounts
as will compensate the Bank for such reduction.
(c) The Bank will promptly notify the Borrower of any event of
which it has knowledge, occurring after the date of this Agreement, which
will entitle the Bank to compensation pursuant to this Section 9.3 and
will deliver to the Borrower with each demand for payment a certificate,
signed by an officer of the Bank, setting forth the amount or amounts to
be paid to it hereunder, explaining in reasonable detail the calculation
of such amount or amounts and setting forth in reasonable detail the
method by which the Bank allocated any such amount or amounts to the
Borrower. Any such certificate shall be conclusive in the absence of
manifest error. In determining such amount, the Bank may use any
reasonable averaging and attribution methods generally used by the Bank
for the purpose of calculating increased costs and reduced returns and
allocating increased costs and reduced returns to borrowers. The Bank
will designate a different lending office if such designation will avoid
the need for, or reduce the amount of, such compensation and will not, in
the reasonable judgment of the Bank, be otherwise disadvantageous to it.
(d) All payments required by this Section 9.3 shall be made by
the Borrower within 30 days after demand by the Bank. All such payments
not made on or before the tenth Business Day after such demand shall be
accompanied by interest thereon for each day from and including such tenth
Business Day to but excluding payment in full thereof at a rate equal to
the Adjusted London Interbank Offered Rate (calculated for each such day
assigning a one-month Interest Period) plus 1.00% per annum. The Borrower
shall not be obligated to reimburse the Bank for any increased cost or
reduced return incurred more than 90 days after the date that the Bank
receives actual notice of such increased cost or reduced return unless the
Bank gives notice thereof to the Borrower in accordance with this Section
9.3 during such 90-day period .
Section 9.4. Suspension of Advances. If notice has been given
pursuant to Section 9.2 requiring that the Euro-Dollar-Based Advances
cease to bear interest at the Euro-Dollar-Based Rate, then, unless and
until the Bank notifies the Borrower that the circumstances giving rise to
such notice no longer apply or that the Bank has elected to continue such
Euro-Dollar-Based Advances at the Euro-Dollar-Based Rate through the end
of the Interest Period(s) applicable to such Euro-Dollar-Based Advances,
the Euro-Dollar-Based Advances then outstanding shall begin bearing
interest at the Prime-Based Rate from and including the date of such
notice (notwithstanding any prior election by the Borrower to the
contrary).
ARTICLE X
MISCELLANEOUS
Section 10.1. Notices. All notices, requests and other
communications to a party hereunder shall be in writing and shall be given
to such party at its address set forth on the signature page hereof or
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such other address as such party may hereafter specify for that purpose by
notice to the other. Each such notice, request or other communication
shall be effective (i) if given by mail, two Business Days after such
communication is deposited in the mails with first class postage prepaid,
addressed as aforesaid or (ii) if given by any other means, when delivered
at the address specified in this Section 10.1.
Section 10.2. No Waivers. No failure or delay by the Bank in
exercising any right, power or privilege hereunder (except as set forth in
Section 3.5(d) and Section 9.3(d)) or under the Note or any Letter of
Credit Application shall operate as a waiver thereof, nor shall any single
or partial exercise thereof preclude any other or further exercise thereof
or the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any
rights or remedies provided by law.
Section 10.3. Expenses. The Borrower shall pay (i) all out-of-
pocket expenses of the Bank, including the reasonable fees and
disbursements of its counsel, in connection with the preparation of this
Agreement, any waiver or consent hereunder, any amendment hereof or any
Default hereunder and (ii) if an Event of Default occurs, all out-of-
pocket expenses incurred by the Bank, including the reasonable fees and
disbursements of any counsel, in connection with such Event of Default and
any collection or other enforcement proceedings resulting therefrom. The
Borrower shall indemnify the Bank against any transfer taxes, documentary
taxes, assessments or charges made by any governmental authority by reason
of the execution and delivery of this Agreement or the Note.
Section 10.4. Indemnification. In consideration of the
execution and delivery of this Agreement by the Bank, the Borrower hereby
indemnifies, exonerates and holds the Bank and its Affiliates, officers,
directors, employees and agents (collectively, the "Indemnified Parties")
free and harmless from and against any and all actions, causes of action,
suits, losses, costs, liabilities, obligations, penalties, fines, demands,
defenses, damages, disbursements or expenses of any kind or nature
whatsoever (including attorneys' fees and costs and experts' fees and
disbursements and expenses incurred in investigating, settling, defending
against or prosecuting any litigation, claim or proceeding) which may at
any time be imposed upon, incurred by or asserted or awarded against any
Indemnified Party (irrespective of whether any such Indemnified Party is a
party to the action of which indemnification hereunder is sought), whether
incurred in connection with actions between or among the parties hereto or
the parties hereto and third parties (collectively, the "Indemnified
Liabilities"), incurred by the Indemnified Parties or any of them as a
result of, or arising out of, or relating to:
(i) the actual or alleged presence of any Hazardous
Material on, in, under or affecting, the transportation of any Hazardous
Material to or from, or the Release of any Hazardous Material from or in
connection with, all or any portion of any property, owned, leased or
operated by the Borrower or any of its subsidiaries, the ground water or
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any surrounding areas (provided that there is a nexus to the Borrower's or
such subsidiary's property);
(ii) any misrepresentation, inaccuracy or breach of
any warranty contained in or referred to in Section 5.8;
(iii) the failure of the Borrower or any of its
subsidiaries to comply with any Environmental Requirement during or after
the term of this Agreement;
(iv) the imposition of any Lien for damages caused by
or the recovery of any costs for the cleanup, Release or threatened
Release of Hazardous Material by the Borrower or any of its subsidiaries,
or in connection with any property owned or formerly owned by the Borrower
or any of its subsidiaries; or
(v) any actual or alleged prohibited transaction or
any actual or alleged sale of a prohibited loan under ERISA or under any
state statute regulating investments of, and fiduciary obligations with
respect to, governmental plans relating to Section 3(32) of ERISA, and in
obtaining any individual prohibited transaction exemption under ERISA or
any administrative exemption under any state statute that may be required
(in the Bank's sole discretion) that the Bank or any of the Bank's
affiliates or Indemnified Parties may incur, directly or indirectly, as a
result of any misrepresentation, inaccuracy or breach of any warranty
contained in or referred to in Section 5.7.
The obligations of the Borrower in respect of Indemnified Liabilities
shall survive repayment of the Note or any transfer of the Borrower's
property by foreclosure or by a deed in lieu of foreclosure, regardless of
whether caused by or within the control of the Borrower. Notwithstanding
any of the foregoing, the Borrower shall not be responsible, or otherwise
liable for, any Indemnified Liabilities arising for the account of a
particular Indemnified Party by reason of the relevant Indemnified Party's
gross negligence or willful misconduct or breach of this Agreement. The
Borrower and its successors and assigns hereby waive, release and agree
not to make any claim or bring any cause or recovery action against the
Bank or any other Indemnified Party in respect of claims arising under
clauses (i) through (v) above. It is expressly understood and agreed that
to the extent that any such Person is strictly liable in respect of any
such claim, the Borrower's obligations to such Person under this Section
10.4 shall likewise be without regard to fault on the part of the Borrower
with respect to the violation or condition which results in liability of
such Person. If and to the extent that the foregoing undertaking may be
unenforceable for any reason, the Borrower hereby agrees to make the
maximum contribution to the payment and satisfaction of each of the
Indemnified Liabilities which is permissible under applicable law.
Section 10.5. Right of Set-Off. Upon the occurrence and during
the continuance of any Event of Default, the Bank is hereby authorized at
any time and from time to time, to the fullest extent permitted by law, to
set off and apply any and all deposits (general or special, time or
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demand, provisional or final) at any time held and other indebtedness at
any time owing by the Bank to or for the credit or the account of the
Borrower against any and all of the obligations now or hereafter existing
under this Agreement or the Note, irrespective of whether or not the Bank
shall have made any demand hereunder or under the Note and although such
obligation may be unmatured. The rights of the Bank under this Section
10.5 are in addition to other rights and remedies (including, without
limitation, other rights of set-off ) which the Bank may have. The Bank
agrees to notify the Borrower promptly after it exercises any such right
of set-off.
Section 10.6. Amendments and Waivers. Any provision of this
Agreement, the Note or any Letter of Credit Application may be amended or
waived if, but only if, such amendment or waiver is in writing and is
signed by the Borrower and the Bank.
Section 10.7. Successors and Assigns.
(a) The provisions of this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors
and assigns, except that the Borrower may not assign or otherwise transfer
any of its rights under this Agreement without the prior written consent
of the Bank.
(b) The Bank may at any time grant to one or more banking
subsidiaries of First Union Corporation (each, a "Participant")
participating interests in the Line of Credit Commitment or in any or all
of the Advances. In the event of any such grant by the Bank of a
participating interest to a Participant, whether or not upon notice to the
Borrower, the Bank shall remain responsible for the performance of its
obligations hereunder, and the Bank shall continue to deal solely and
directly with the Borrower in connection with the Bank's rights and
obligations under this Agreement. Any agreement pursuant to which the
Bank may grant such a participating interest shall provide that the Bank
shall retain the sole right and responsibility to enforce the obligations
of the Borrower under this Agreement including, without limitation, the
right to approve any amendment, modification or waiver of any provision of
this Agreement or the Note.
(c) The Bank may at any time assign to one or more banks or
other institutions (each, an "Assignee") all or part of its rights and
obligations under this Agreement and the Note, and such Assignee shall
assume such rights and obligations, pursuant to an instrument executed by
such Assignee and the Bank with (and subject to) the consent of the
Borrower (which may be withheld in the Borrower's sole discretion);
provided, however, that any partial assignment shall be in the amount of
at least $500,000 or integral multiples thereof. Upon execution and
delivery of such an instrument and payment by such Assignee to the Bank or
an amount equal to the purchase price agreed between such Assignee and the
Bank, such Assignee shall become a party to this Agreement and shall have
all the rights and obligations of a bank with a Line of Credit Commitment
as set forth in such instrument of assumption, and the Bank shall be
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released from its obligations hereunder, to a corresponding extent, and no
further consent or action by any party shall be required. Upon the
consummation of any assignment pursuant to this Section 10.7(c), the Bank
and the Borrower shall make appropriate arrangements so that, if required,
a new Note is issued to such Assignee. In the event that such Assignee is
not incorporated under the laws of the United States of America or any
jurisdiction thereof, such Assignee shall, prior to the first date on
which interest or fees are payable hereunder for its account deliver to
the Borrower certification as to exemption from deduction or withholding
of any United States federal income taxes.
(d) The Bank may furnish any information concerning the Borrower
in its possession from time to time to Participants and Assignees
(including prospective Participants and Assignees) and may, with the prior
written consent of the Borrower, furnish such information in response to
credit inquiries consistent with general banking practice.
(e) No Participant, Assignee or other transferee of the Bank's
rights shall be entitled to receive any greater payment under Section 9.3
than such transferee would have been entitled to receive with respect to
the rights assigned or otherwise transferred, unless such assignment or
transfer is made with the Borrower's prior written consent or by reason of
the provisions of Section 9.2 or 9.3 requiring the Bank to designate a
different lending office under certain circumstances or at a time when the
circumstances giving rise to such greater payment did not exist.
Section 10.8. Governing Law. This Agreement and the Note shall
be deemed to be contracts made under seal and shall be governed by and
construed in accordance with the laws of the Commonwealth of Virginia,
except as otherwise provided herein.
Section 10.9. Counterparts; Effectiveness. This Agreement may
be signed in counterparts, each of which shall be an original, with the
same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement shall become effective when the Bank shall
have received counterparts hereof signed by both parties.
Section 10.10. Waiver of Jury Trial; Submission to Jurisdiction.
The Borrower and the Bank hereby irrevocably and unconditionally waive all
right to trial by jury in any action, proceeding, or counterclaim arising
out of or related to this Agreement or the Notes or any of the
transactions contemplated hereby or thereby. Any legal action or
proceeding with respect to this Agreement or the Notes or any document
related hereto or thereto shall be brought in the U.S. District Court for
the Eastern District of Virginia sitting in Alexandria, Virginia, or a
Commonwealth of Virginia state court sitting in Fairfax County, Virginia,
and by execution and delivery of this Agreement the Borrower and the Bank
hereby accept for themselves and in respect of their property, generally
and unconditionally, the jurisdiction of the aforesaid courts. The
Borrower and the Bank hereby irrevocably and unconditionally waive any
objection, including, without limitation, any objection to the laying of
venue or based on the grounds of the forum non conveniens which they now
F74
or hereafter may have to the bringing of any action or proceeding in such
respective jurisdictions.
Section 10.11. Waiver of Personal Liability. The Borrower's
Third Amended and Restated Declaration of Trust on file in the Office of
the Recorder of Deeds of the District of Columbia provides that neither
the shareholders nor the trustees of the Borrower, nor any officer,
employee, representative or agent of the Borrower, shall be personally
liable for the satisfaction of the obligations of the Borrower under this
Agreement, the Note or any Letter of Credit Application. The Bank hereby
agrees to look solely to the Borrower and the property of the Borrower for
the satisfaction of any claim arising from this Agreement, and shall not
seek to impose personal liability on any shareholder, trustee, officer,
employee, representative or agent of the Borrower in connection with any
such claim. As used in this Section 10.11, the term "trustee" shall mean,
collectively, the individuals currently serving as trustees of the
Borrower, as long as they continue in office, and all other individuals
then in office who have been duly elected or appointed as trustees of the
Borrower.
Section 10.12. Entire Agreement. This Agreement, the Note and
the Letter of Credit Applications set forth the entire agreement of the
parties with respect to the subject matter hereof and thereof and
supersede all previous understandings, written or oral, in respect
thereof. The Borrower may not, from and including the Effective Date,
borrow amounts pursuant to the Prior Credit Agreement ; and as of the
Effective Date, the Prior Credit Agreement shall terminate and be of no
further force or effect.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be only executed by their respective authorized officers as
of the day and year first above written.
FEDERAL REALTY INVESTMENT TRUST
By:____________________________
Ron D. Kaplan
Vice President -
Capital Markets
4800 Hampden Lane
Bethesda, Maryland 20814
Attention: Legal Department
FIRST UNION NATIONAL BANK OF VIRGINIA
By:____________________________
Terry W. Miller
Vice President
F75
1970 Chain Bridge Road
McLean, Virginia 22102-4099
Schedule 1.1A
AUTHORIZED PERSONS
Executive Officers
Steven J. Guttman
Ron D. Kaplan
Catherine R. Mack
Mary Jane Morrow
Hal A. Vasvari
Robert S. Wennett
Trustees
Steven J. Guttman
Count Arthur Cornet
Arnold M. Kronstadt
Dennis Berman
Samuel J. Gorlitz
Donald H. Misner
Walter F. Loeb
Morton B. Lerner
George L. Perry
F76
Exhibit xxxiv
SECOND AMENDMENT TO REVOLVING CREDIT AGREEMENT
This Second Amendment to Revolving Credit Agreement ("this Second
Amendment"), is made the 30th day of September, 1994, by and between
FEDERAL REALTY INVESTMENT TRUST, an unincorporated business trust
organized under the laws of the District of Columbia ("Borrower"), having
an office at 4800 Hampden Lane, Suite 500, Bethesda, Maryland 20814, and
CORESTATES BANK, N.A.*/, a national banking association ("Bank"), having
an office at 17th Floor, Centre Square West, 1500 Market Street,
Philadelphia, Pennsylvania 19102.
B a c k g r o u n d
A. Borrower and Bank are parties to a Revolving Credit
Agreement dated as of September 1, 1993, as amended by a First Amendment
to Revolving Credit Agreement (the "First Amendment") dated January 31,
1994 (as so amended, the "Revolving Credit Agreement"). All capitalized
terms used but not specifically defined herein have the meanings defined
in the Revolving Credit Agreement.
B. Borrower has requested Bank to increase the amount of the
Commitment, to extend the Commitment Termination Date, and to the modify
certain of the other terms and conditions of the Revolving Credit
Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, and intending to be
legally bound hereby, Borrower and Bank agree as follows:
1. Paragraphs 1 and 2 of the First Amendment shall be of no
further force or effect.
2. Henceforth, the Commitment Termination Date shall be
December 31, 1997.
3. Henceforth, the term "Commitment" shall mean the Bank's
obligation to advance to Borrower $30,000,000.00, as such amount may be
reduced from time to time in accordance with Section 2.04 of the Revolving
Credit Agreement.
*/ CoreStates Bank, N.A. also conducts business as Philadelphia
National Bank, as CoreStates First Pennsylvania Bank and as CoreStates
Hamilton Bank.
F82
DC-185470.2
4. Commencing on the execution of this Second Amendment, the
Commitment Fee shall be calculated at the rate of 1/8th of 1% (.08%) per
annum on the average daily unused portion of the Bank's Commitment from
such date to and including the Commitment Termination Date. Such
Commitment Fee shall continue to be payable in accordance with the
provisions of Section 2.16 of the Revolving Credit Agreement.
5. To evidence Borrower's obligations under the Revolving
Credit Agreement with respect to the increased Commitment, Borrower has
executed and delivered to Bank a Note dated the date of this Second
Amendment in the stated principal amount of $30,000,000.00. Such Note
replaces and shall supersede the $20,000,000.00 dated September 1, 1993
executed and delivered by Borrower, which prior Note shall be marked
"Replaced" and returned to Borrower. All references in the Revolving
Credit Agreement to the "Note" shall henceforth mean the aforesaid
$30,000,000.00 Note dated the date of this Second Amendment.
6. Borrower shall pay to Bank, upon the execution of this
Second Amendment, an additional fee in the amount of $12,500.00, which
constitutes a "Closing Fee" payable with respect to the afore-said
increase in the Commitment.
7. Section 5.07(b) of the Revolving Credit Agreement is
hereby amended by deleting the amount "$80,000,000.00" and substitu-ting
in its place "$175,000,000.00".
8. Section 6.13 of the Revolving Credit Agreement is hereby
amended by deleting the amount "$100,000,000.00" and substitu-ting in its
place $130,000,000.00". Henceforth, in determining whether the covenant
contained in Section 6.13 is performed by Borrower, there may be included
as "unencumbered real properties" Capitalized Leases having a "value" of
not more than $30,000,000.00 in the aggregate. For purposes of the
Revolving Credit Agreement, the "value" of a Capitalized Lease shall be
equal to ten (10) times the annualized "net operating income" derived
during the most recently concluded fiscal quarter by Borrower from the
property that is the subject of such Capitalized Lease, and the term "net
operating income" shall mean the amount by which all revenues collected by
Borrower with respect to such property (excluding condemnation awards and
the proceeds of insurance other than loss of rents insurance) exceed all
operating costs and expenses incurred by Borrower with respect to such
property (including all rental payments due under the Capitalized Lease,
regardless of whether such payments were made, but excluding capital
expenditures and the cost of all repairs and replacements paid for with
the proceeds of insurance or condemnation awards).
9. Except as specifically modified hereby, the Revolving
Credit Agreement remains in full force and effect, in accordance with its
terms. Borrower hereby ratifies and confirms all of Borrower's
obligations to Bank under the Revolving Credit Agreement and represents
to, and agrees with, Bank that Borrower has no defense, set-off or
counterclaim to or against any of Borrower's obligations under the
Revolving Credit Agreement.
F83
IN WITNESS WHEREOF, Borrower and Bank have executed this Fourth
Amendment as of the day and year first above written.
FEDERAL REALTY INVESTMENT TRUST
Wayne G. Tatusko By: Ron D. Kaplan
Witness Ron D. Kaplan, Vice President-
Capital Markets
CORESTATES BANK, N.A.
By: Glenn W. Gallagher
Glenn W. Gallagher,
Vice President
F84
Exhibit XXXV
FIRST AMENDMENT TO CREDIT AGREEMENT
THIS FIRST AMENDMENT TO CREDIT AGREEMENT (this "Amendment") is
made as of this 30th day of September, 1994 by and between FEDERAL REALTY
INVESTMENT TRUST, a District of Columbia unincorporated business trust
(the "Borrower"), and MELLON BANK, N.A., a national banking association
(the "Bank").
BACKGROUND
A. Reference is made to the Credit Agreement dated as of
February 11, 1994 by and between the Borrower and the Bank (the "Original
Agreement") pursuant to which the Bank extended to Borrower a revolving
credit facility in the maximum amount of $15,000,000. Capitalized terms
used herein and not otherwise defined herein shall have the meaning
provided in the Original Agreement.
B. The Borrower has requested that the Bank increase the
available amount under the Credit Facility from $15,000,000 to $20,000,000
and reduce the non-usage fee from one-quarter of one percent (.25%) to
one-eight of one percent (.125%).
C. The Bank has agreed to make such changes subject to the
conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and for other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. The Original Agreement is hereby amended as follows:
a. The term "Available Amount" appearing in Section
1.1 is hereby amended and restated to read in its entirety as follows:
"Available Amount" means as of any date, $20,000,000
minus the aggregate unpaid principal amount of advances
outstanding on such date."
b. Section 2.8 is hereby amended and restated in its
entirety as follows:
"Section 2.8 Non-Usage Fee. The Borrower shall pay to the Bank
on the 15th day of January, April, July and October of each year,
commencing October 15, 1994, a non-usage fee equal to 0.125% per
F86
DC-185518.2
annum of the average daily Available Amount during the preceding
calendar quarter."
c. The form of Note attached as Exhibit A to the
Original Agreement (the "Original Note") is hereby amended and restated to
read in its entirety as set forth in the Amended and Restated Note
attached as Exhibit A of this Amendment (the "Amended and Restate Note").
2. From and after the date hereof all references in the
Original Agreement to the "Note" shall be to the Amended and Restated Note
in the form attached hereto as Exhibit A and executed in connection with
this Amendment, so as to extend the provisions of the Original Agreement,
as modified by this Amendment, to the Amended and Restated Note.
3. The Borrower hereby certifies that, as of the date
hereof:
a. each of the representations and warranties
contained in the Original Agreement, as modified
by this Amendment, are true and correct;
b. the Borrower is in compliance with all of the
terms, covenants and conditions contained in the
Original Agreement, as modified by this
Amendment, including, without limitation, all of
the financial covenants; and
c. there exists no Default or Event of Default under
the Original Agreement.
4. The Borrower agrees that it shall promptly notify the
Bank in writing of (a) the committed amounts, interest rates, non-usage
and other fees, and maturity dates of all credit facilities entered into
by the Borrower after the date hereof and (b) any increase or decrease in
the committed amounts, interest rates, non-usage and other fees, and
maturity dates under and in any other credit facilities to which the
Borrower (now or hereafter) is a party. Such notice shall include a
detailed summary which sets forth the nature of such changes.
5. Recognizing and in consideration of the Bank's agreement
to the amendments herein set forth, the Borrower hereby waives and
releases the Bank and its respective officers, attorneys, agents, and
employees from any liability, suit, damage, claim, loss or expense of any
kind or nature whatsoever and howsoever arising out of or in any way
connected with or relating to the Bank's acts or omissions with respect to
the Original Agreement, the Original Note, or any documents executed in
connection with any of the foregoing (collectively, the "Documents"). The
Borrower further hereby indemnifies, holds harmless and agrees to defend
the Bank and its respective officers, attorneys, agents and employees from
and against any loss, damage, judgment, liability or expense (including
reasonable counsel fees) suffered by or rendered against the Bank or any
F87
of them on account of anything arising out of or in connection with the
Documents.
6. All of the terms, conditions, provisions, and covenants
in the Documents (which are hereby ratified and confirmed) shall remain
unaltered and in full force and effect except as modified by this
Amendment.
7. The Borrower agrees to pay all of the Bank's expenses
incurred in connection with the preparation of this Amendment and the
transactions contemplated by this amendment, including without limitation,
the reasonable fees and expense of the Bank's counsel.
8. This Amendment shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania.
9. Each and every one of the terms and provisions of this
Amendment shall be binding upon and shall inure to the benefit of the
Borrower, the Bank and their respective successors and assigns.
10. This Amendment may be executed in one or more
counterparts, each of which shall be deemed to be an original as against
any party whose signature appears thereon, and all of which shall
constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be duly executed by their respective authorized officers as of the day
and year first above written.
FEDERAL REALTY INVESTMENT TRUST
By: Ron D. Kaplan
--------------------------------
Ron D. Kaplan
Vice President - Capital Markets
MELLON BANK, N.A.
By: Frederick A. Felter
-----------------------------
Frederick A. Felter
Vice President
F88
Exhibit XXXVI
FIRST AMENDMENT TO REVOLVING CREDIT AGREEMENT
This FIRST AMENDMENT TO REVOLVING CREDIT AGREEMENT (the "First
Amendment") is entered into as of the 30th day of September, 1994, by and
between FEDERAL REALTY INVESTMENT TRUST, a District of Columbia
unincorporated business trust (the "Borrower"), and SIGNET BANK/MARYLAND,
a Maryland banking corporation (the "Bank").
PREFACE
Reference is made to the $25,000,000 Revolving Credit Agreement
dated as of June 22, 1993 between the Borrower and the Bank (the "Credit
Agreement"). Except as otherwise provided, capitalized terms used herein
and not defined herein shall have the meanings set forth in the Credit
Agreement.
The Borrower has requested that the Credit Agreement be amended
as hereinafter provided to extend the Termination Date, to increase the
Commitment and to modify certain covenants contained in the Credit
Agreement. The Borrower has also requested that the Bank enter into the
Intercreditor Agreement dated as of September 30, 1994, among the
Borrower, the Bank, First Union National Bank of Virginia, Corestates
Bank, N.A. and Mellon Bank, N.A.. The Bank is willing to agree to such
requests, subject to the terms and conditions contained herein.
NOW THEREFORE, in consideration of the foregoing and for other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. AMENDMENTS TO THE CREDIT AGREEMENT. The Credit Agreement is
hereby amended as follows:
a. The definition of "Loan Documents" in
Section 1.1 of the Credit Agreement is
amended by adding the phrase ", as any
of the foregoing may be amended,
extended, modified or restated from time
to time" to the end of the existing text
of such definition.
b. Section 1.1 of the Credit Agreement is
amended by adding a new definition of
"Intercreditor Agreement" to read as
follows:
"Intercreditor Agreement" means the
Intercreditor Agreement dated as of
September 30, 1994 among the Borrower,
the Bank, First Union National Bank of
Virginia, Corestates Bank, N.A. and
Mellon Bank, N.A., as such Intercreditor
Agreement may be amended, extended,
modified or restated from time to time,
c. Section 2.1(a) of the Credit Agreement
is amended by deleting the existing
Section 2.1(a) and inserting in lieu
thereof the following:
"Subject to the terms and conditions
hereof, the Bank agrees to make a loan
or loans (individually a "Loan" and
collectively the "Loans") to the
Borrower from time to time prior to the
Termination Date on a revolving basis in
an aggregate principal amount not to
exceed (i) the lesser of (A)
"$30,000,000 (the "Commitment") , and
(B) an amount equal to thirty percent
(30%) of the total committed lending
limits of the Banks (as defined in
Section 3 of the Intercreditor
Agreement) under the Bank Agreements (as
defined in Section 3 of the
Intercreditor Agreement), minus (ii) the
Letter of Credit Usage. The Loans may
be repaid and the principal amount
thereof reborrowed throughout the
Termination Date, subject to all of the
terms and conditions hereof."
d. Section 2.1(b) of the Credit Agreement
is amended by deleting the date
"December 1, 1995" in the first sentence
of such subsection and inserting in lieu
thereof the date "July 1, 1997".
e. Section 3.1(b) of the Credit Agreement
is amended by deleting the phrase "1/4
of 1% per annum" and inserting in lieu
thereof the phrase "1/8 of 1% per
annum".
f. Section 3.4 of the Credit Agreement is
redesignated as Section 3.5 and a new
Section 3.4 is added to read as follows:
"3.4 Mandatory Prepayments. If at any
time the aggregate principal amount of
Loans outstanding hereunder exceeds the
F92
maximum amount available to be borrowed
pursuant to Section 2.1 hereof, the
Borrower shall immediately prepay such
Loans in an amount equal to such excess,
together with all interest accrued on
the amount required to be so prepaid and
all other amounts due and payable to the
Bank under this Agreement including,
without limitation, any amount payable
under Section 2.9 hereof. Any such
prepayment shall be applied by the Bank
to such Loans as the Bank shall in its
sole discretion elect; provided,
however, that if no Default or Event of
Default has occurred and is continuing,
such prepayment shall be applied to such
Loans as the Borrower may direct."
g. Section 2.8(b) of the Credit Agreement
is amended by deleting clause (ii) and
inserting in lieu thereof the following:
"(ii) no Letter of Credit shall be
issued which would cause the sum of the
outstanding principal amount of all
Loans and the Letter of Credit Usage to
exceed the lesser of (A) the Commitment
and (B) an amount equal to thirty
percent (30%) of the total committed
lending limits of the Banks (as defined
in Section 3 of the Intercreditor
Agreement) under the Bank Agreements (as
defined in Section 3 of the
Intercreditor Agreement), and"
h. Section 7.7(a) of the Credit Agreement
is amended by deleting the existing
Section 7.7 (a) and inserting in lieu
thereof the following:
"(a) Adjusted Tangible Net Worth to be
less than (i) $296,000,000 from and
including December 31, 1992 through and
including December 30, 1993, (ii)
$300,000,000 from and including December
31, 1993 through and including September
29, 1994, and (iii) $345,000,000 as of
September 30, 1994 or at any time
thereafter;"
i. Section 7.11(a) of the Credit Agreement
is amended by deleting clause (A)
F93
thereof and redesignating clauses (B)
and (C) thereof as clauses (A) and (B) ,
respectively.
j. Section 7.15(a) of the Credit Agreement
is amended by deleting the existing
Section 7.15(a) and substituting in lieu
thereof the following:
"(a) hold (directly or indirectly,
including without limitation by an
investment or interest in any Person)
any ownership interest or other
investment in "unimproved land" or
invest (directly or indirectly,
including without limitation by an
investment or interest in any Person) in
or acquire "unimproved land" or invest
(directly or indirectly, including
without limitation by an investment or
interest in any Person) in or make or
incur "improvement expenditures" or
otherwise increase the "aggregate cost"
of any "unimproved land" unless (x) all
or substantially all of the
improvements, if any, with respect to
each such parcel of unimproved land
shall consist of one or more retail
shopping centers and (y) the "aggregate
cost" of all "unimproved land"
(including, without limitation,
"improvement expenditures") (after
giving effect to any such acquisition,
investment, expenditure or increase, if
applicable) shall not exceed at any time
15% of Adjusted Tangible Net Worth at
such time. For purposes of this Section
7.15 (a) the following terms shall have
the meanings indicated:
(i) the term "unimproved land"
shall mean any real property
other than property that either
(A) at any time since the date
of its acquisition by the
Borrower or any Subsidiary of
the Borrower, has had "completed
retail improvements"
constructed thereon or (B) as of
the date of any determination
has and maintains a "preleasing
rate" of 70% or more;
F94
(ii) the term "completed retail
improvements" shall mean
improvements comprising one or
more retail shopping centers
that (x) have been substantially
completed and for which all
certificates of occupancy
(and/or any other necessary
governmental permits) needed to
occupy and use at least 70% of
the rentable area of such
improvements for such retail
shopping purposes have been
obtained and are in effect and
(y) at the same time shall have
a "preleasing rate" of 70% or
more;
(iii) the term "aggregate cost"
shall mean, as of the date of
any determination, with respect
to all real estate that
constitutes unimproved land as
of such date, all costs paid or
incurred by the Borrower or any
of its Subsidiaries in
connection with or as a result
of investing in or acquiring or
owning the unimproved land
(directly or indirectly,
including without limitation by
an investment or interest in any
Person), including without
limitation the purchase price
thereof, all closing costs
therefor and all "improvement
expenditures" relating to
unimproved land;
(iv) the term "improvement
expenditures" shall mean all
expenditures made or incurred
relating to improvements on or
serving unimproved land,
including without limitation
expenditures for design,
development, construction, or
installation of such
improvements, or acquisition of
materials in connection with
such improvements; and
F95
(v) the term "preleasing
rate" shall mean a percentage
determined by dividing (X) the
rentable square footage rented
by tenants for a parcel pursuant
to mutually binding bona fide
third party lease agreements
containing terms and conditions
that are usual and customary for
improvements of such type by
(Y) the total rentable square
footage of the improvements to
be made to such parcel.
k. Section 8.1(d)(i) of the Credit
Agreement is amended by inserting after
the phrase "Section 7.15" the phrase
"(other than Section 7.15(a))".
l. Section 8.1 of the Credit Agreement is
amended by adding an new subsection (e)
thereto to read as follows:
"(e) default shall occur in the
observance or performance by the
Borrower of any covenant, agreement or
provision contained in the Intercreditor
Agreement which is not remedied within 5
days after the date thereof;"
and redesignating clauses (e) through
(l) thereof as clauses (f) through (m),
respectively.
m. Exhibit D to the Credit Agreement (Form
of Officer's Compliance Certificate) is
amended by deleting the existing
paragraph 4(a) and the related footnote
and substituting the following:
(a) Adjusted Tangible Net Worth to
be less than $345,000,000:
n. Exhibit D to the Credit Agreement (Form
of Officer's Compliance Certificate) is
further amended by adding a new
paragraph 8 thereto, which shall read as
follows:
8. The "aggregate cost" of all
"unimproved land" has not exceeded, and
the Borrower and its Subsidiaries have
F96
not made acquisitions, investments or
expenditures or otherwise increased the
"aggregate cost" of all "unimproved
land" so that such "aggregate cost"
exceeded, 15% of Adjusted Tangible Net
Worth at any time during the Quarter,
and the Borrower and its Subsidiaries
have otherwise complied in all respects
with Section 7.15(a) of the Credit
Agreement at all times during the
Quarter. In making the foregoing
statement, the following parcels had a
"preleasing rate" of 70% or more (as
indicated below) at all times relevant
to determining compliance with Section
7.15(a) of the Credit Agreement at all
times during the Quarter:
[name of parcel] ___% preleasing rate
[name of parcel] ___% preleasing rate
2. REPRESENTATIONS AND WARRANTIES. The Borrower represents and
warrants that (i) all representations and warranties made in or in
connection with the Credit Agreement and this First Amendment are true,
correct and complete on and as of the date hereof (after giving effect to
this First Amendment and the transactions contemplated hereby) except that
the representations and warranties in Section 5.3(a) of the Credit
Agreement shall be deemed to refer to the most recent audited consolidated
financial statements furnished to the Bank pursuant to Section 7.6 of the
Credit Agreement; (ii) no event that would constitute a Default or an
Event of Default under the Credit Agreement has occurred and is continuing
or will occur as a result of this First Amendment or the transactions
contemplated hereby; (iii) the Borrower and its Subsidiaries are in
compliance with Sections 7.7(a) and 7.15(a) of the Credit Agreement, as
amended hereby, as of the date of this First Amendment; (iv) except as
disclosed in writing to the Bank, there have been no amendments to the
Declaration of Trust or the Bylaws of the Borrower except as disclosed in
writing to the Bank from the copies previously delivered to the Bank
pursuant to Section 6.1 or 6.2 of the Credit Agreement; and (v) the
execution and delivery of this First Amendment and the performance of the
Borrower's obligations under the Credit Agreement, as amended hereby, have
been approved by all necessary action of the Borrower and the officer
executing this First Amendment has been duly authorized to execute and
deliver this First Amendment on behalf of the Borrower.
3. CONDITIONS TO AMENDMENT. The effectiveness of the agreement
of the Bank to this First Amendment is subject to the satisfaction of the
following conditions precedent:
(a) The Bank shall have received the following, all of
which must be in form and substance satisfactory to the Bank in its sole
discretion:
F97
(i) this First Amendment, duly executed by the Borrower
and the Bank;
(ii) an Amended Revolving Credit Note, in the form
attached hereto as Exhibit A (the "Amended Revolving
Credit Note"), duly executed by the Borrower;
(iii) a certificate of good standing of the Borrower as
an unincorporated business trust from the State of
Maryland; and
(iv) such additional agreements, opinions,
certifications, instruments and other documents relating
hereto, to the Credit Agreement or to the Intercreditor
Agreement that the Bank may deem necessary or desirable.
b. All representations and warranties made in or in connection
with the Credit Agreement and this First Amendment (including, without
limitation, the representations and warranties set forth in Section 2 of
this First Amendment) shall be true, correct and complete on and as of the
date hereof.
c. No Default or Event of Default under the Credit Agreement
shall have occurred and be continuing or will occur as a result of this
First Amendment or the transactions contemplated hereby.
d. No Claims or Defenses. The Borrower acknowledges and agrees
that its obligations under the Credit Agreement, as amended hereby, are
its valid obligations and, as of the date hereof, there are no claims,
setoffs or defenses to the payment or performance by the Borrower of such
obligations, and that the Bank may enforce the payment and performance of
such obligations as set forth in the Credit Agreement, as amended hereby,
and the Amended Revolving Credit Note.
5. Counterpart Execution. This First Amendment may be executed
in any number of counterparts, and by the different parties on different
counterparts, each of which when so executed and delivered shall be deemed
an original, but all such counterparts taken together shall constitute one
and the same instrument. In making proof of this agreement it shall only
be necessary to account for and produce one such counterpart.
6. Survival of Representations. All representations and
warranties made in the Credit Agreement or in certificates given pursuant
thereto or provided for under any other Loan Documents shall survive the
execution and delivery of this First Amendment and the Amended Revolving
Credit Note, and shall continue in full force and effect with respect to
the date as of which they were made as long as any credit is in use or
available under the Credit Agreement. All representations and warranties
made herein or in certificates given pursuant hereto shall survive the
execution and delivery of this First Amendment and of the Amended
Revolving Credit Note and shall continue in full force and effect with
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respect to the date as of which they were made as long as any credit is in
use or available under the Credit Agreement (as amended hereby).
7. Entire Agreement. From and after the effectiveness of this
First Amendment, the Credit Agreement (as amended hereby) and the Amended
Revolving Credit Note constitute the entire understanding of the parties
with respect to the subject matter thereof and any prior agreements,
whether written or oral, or contemporaneous oral agreements, with respect
thereto are superseded hereby.
8. GOVERNING LAW. THE CREDIT AGREEMENT, THIS FIRST AMENDMENT
AND THE AMENDED REVOLVING CREDIT NOTE, AND THE RIGHTS AND DUTIES OF THE
PARTIES HERETO AND THERETO, INCLUDING MATTERS OF CONSTRUCTION, VALIDITY
AND PERFORMANCE, SHALL BE GOVERNED AND DETERMINED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF MARYLAND WITHOUT GIVING EFFECT TO THE CHOICE OF LAW
RULES THEREOF.
9. References to the Credit Agreement and the Note. Except as
herein specifically amended the Credit Agreement shall remain in full
force and effect in accordance with its terms. From and after the
effectiveness hereof, whenever reference is made in any agreement
(including without limitation the Credit Agreement), note, certificate,
notice, document, letter or conversation to the Credit Agreement or to the
Note, such reference shall, without more, be deemed to refer to the Credit
Agreement, as amended hereby, or to the Amended Revolving Credit Note, as
applicable.
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IN WITNESS WHEREOF the parties hereto have executed this First
Amendment as of the date first written above.
FEDERAL REALTY INVESTMENT TRUST
By: Ron D. Kaplan
--------------------------------------
Name: Ron D. Kaplan
--------------------------------
Title: Vice President - Capital Markets
--------------------------------
SIGNET BANK/MARYLAND
By: Susan Elliott Benninghoff
-------------------------------------
Name: Susan Elliott Benninghoff
-----------------------------
Title: Vice President
-----------------------------
Attachments
Exhibit A -- Form of Amended Revolving Credit Note
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Exhibit xxxvii
STATE DEPARTMENT OF ASSESSMENTS
AND TAXATION
APPROVED FOR RECORD
12-19-94 at 11:42 a.m.
ARTICLES OF INCORPORATION
OF
STREET RETAIL, INC.
FIRST: The undersigned, Patricia A. Lankenau, whose post office address
is Suite 1111, 2600 Virginia Avenue, N.W., Washington, DC 20037, being at
least eighteen (18) years of age, does hereby form a corporation under the
General Corporation Law of the State of Maryland.
SECOND: The name of the Corporation (which is hereinafter called the
"Corporation") is Street Retail, Inc.
THIRD: The purposes for which the Corporation is formed are as follows:
1. Acquisition of existing buildings located in downtown
urban and suburban areas throughout the United States, providing that
those areas serve densely populated and stable residential communities.
2. The Corporation is further authorized to have and
exercise any and all powers or privileges now or hereafter conferred by
the General Corporation Law of the State of Maryland or under any Act
amendatory thereof or supplemental thereto or in substitution therefor.
FOURTH: The post office address of the principal office of the
Corporation in Maryland is:
4800 Hampden Lane, Suite 500
Bethesda, Maryland 20814
FIFTH: The name and post office address of the resident agent of the
Corporation in Maryland is:
Steven J. Guttman
4800 Hampden Lane, Suite 500
Bethesda, Maryland 20814
Said resident agent is an individual actually residing in the State of
Maryland.
SIXTH: The total number of shares of capital stock which the Corporation
has authority to issue is one million (1,000,000) shares of one class of
common stock with a par value of $.01. The aggregate par value of all
stock the Corporation has authority to issue is Ten Thousand Dollars
($10,000).
SEVENTH: The number of initial directors of the Corporation shall
be three (3), which number may be increased or decreased pursuant to the
Bylaws of the Corporation and the names of the directors who shall act
until the first annual meeting or until their successors are elected and
qualified are:
Steven J. Guttman
Hal A. Vasvari
M.J. Morrow
EIGHTH: Provisions limiting or denying to stockholders the preemptive
right to acquire additional shares of capital stock of the Corporation are
as follows: No holder of capital stock shall be entitled as a matter of
right to subscribe for or purchase any part of any new or additional issue
of capital stock of any class, whether now or hereafter authorized or
whether issued for money, for a consideration other than money, or by way
of dividend.
NINTH: The provisions for the regulation of the internal affairs of the
Corporation are to be stated in the Bylaws of the Corporation, as the same
may be amended from time to time.
I have signed these Articles of Incorporation on December 19,
1994, acknowledging it to be my act and that the matters and facts set
forth herein are true in all material respects.
/s/Patricia A. Lankenau
---------------------------
Patricia A. Lankenau
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Exhibit xxxviii BY-LAWS
OF
STREET RETAIL, INC.
ARTICLE I
OFFICES
The Corporation may have such office(s) at such place(s), both
within and without the State of Maryland, as the Board of Directors from
time to time determines or as the business of the Corporation from time to
time requires.
ARTICLE II
MEETINGS OF THE STOCKHOLDERS
Section 1. Annual Meetings. Annual meetings of the
Stockholders shall be held at 10:00 a.m. on the 1st day of May (beginning
in the year 1995) if not a legal holiday, then on the next secular day
following, or at such other date and time during the month of May and at
such place (within or without the State of Maryland) as is designated from
time to time by the Board of Directors and stated in the notice of the
meeting. At each annual meeting the stockholders shall elect a Board of
Directors and shall transact such other business as may properly be
brought before the meeting.
Section 2. Special Meetings. Unless otherwise
prescribed by law, the Articles of Incorporation or these By-laws, special
meetings of the stockholders for any purpose or purposes may be called by
the Chairman of the Board, if any, or by the President or Secretary upon
the written request of a majority of the total number of directors of the
Corporation or of holders owning not less than twenty-five percent (25%)
of the shares of capital stock of the Corporation issued and outstanding
and entitled to vote at any such meeting. Requests for special meetings
shall state the purpose or purposes of the proposed meeting.
Section 3. Notices of Annual and Special Meetings.
(a) Except as otherwise provided by
law, the Articles of Incorporation or these By-laws, written notice of any
annual or special meeting of the stockholders shall state the place, date
and time thereof and, in the case of a special meeting, the purpose or
purposes for which the meeting is called, and shall be given to each
stockholder of record entitled to vote at such meeting not less than ten
(10) nor more than ninety (90) days prior to the meeting.
DC-185613.2
* As adopted by the Board of Directors on December 20, 1994.
(b) Notice of any meeting of
stockholders (whether annual or special) to act upon an amendment of the
Articles of Incorporation, a reduction of stated capital or a plan of
merger, consolidation or sale of all or substantially all of the
Corporation's assets shall be given to each stockholder of record entitled
to vote at such meeting not less than ten (10) nor more than ninety (90)
days before the date of such meeting. Any such notice shall be
accompanied by a copy of the proposed amendment or plan of reduction,
merger, consolidation or sale.
Section 4. List of Stockholders. At least ten (10) days
(but not more than fifty (50) days) before any meeting of the
stockholders, the officer or transfer agent in charge of the stock
transfer books of the Corporation shall prepare and make a complete
alphabetical list of the stockholders entitled to vote at such meeting,
which list shows the address of each stockholder. The list so prepared
shall be maintained at a place within the city where the meeting is to be
held, which place shall be specified in the notice of the meeting, or, if
not so specified, at the place where the meeting is to be held, and shall
be open to inspection by any stockholder, for any purpose germane to the
meeting, during ordinary business hours during a period of no less than
ten (10) days prior to the meeting. The list also shall be produced and
kept open at the meeting (during the entire duration thereof) and, except
as otherwise provided by law, may be inspected by any stockholder or proxy
of a stockholder who is present in person at such meeting.
Section 5. Presiding Officers; Order of Business.
(a) Meetings of the stockholders
shall be presided over by the Chairman of the Board, if any, or, if the
Chairman is not present (or, if there is none), by the President, or, if
the President is not present, by a Vice President, or if a Vice President
is not present, by such person who is chosen by the Board of Directors,
or, if none, by a chairperson to be chosen at the meeting by stockholders
present in person or by proxy who own a majority of the shares of capital
stock of the Corporation entitled to vote and represented at such meeting.
The secretary of meetings shall be the Secretary of the Corporation, or,
if the Secretary is not present, an Assistant Secretary, or if an
Assistant Secretary is not present, such person as may be chosen by the
Board of Directors, or, if none, by such person who is chosen by the
Chairperson at the meeting.
(b) The following order of business,
unless otherwise ordered at the meeting by the Chairperson thereof, shall
be observed as far as practicable and consistent with the purposes of the
meeting:
(1) Call of the meeting to order.
(2) Presentation of proof of mailing
of notice of the meeting and, if
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the meeting is a special
meeting, the call thereof.
(3) Presentation of proxies.
(4) Determination and announcement
that a quorum is present.
(5) Reading and approval (or waiver
thereof) of the minutes of the
previous meeting.
(6) Reports, if any, of officers.
(7) Election of directors, if the
meeting is an annual meeting or
a meeting called for such
purpose.
(8) Consideration of the specific
purpose or purposes for which
the meeting has been called
(other than the election of
directors).
(9) Transaction of such other
business as may properly come
before the meeting.
(10) Adjournment.
Section 6. Quorum; Adjournments.
(a) The holders of a majority of the
shares of capital stock of the Corporation issued and outstanding and
entitled to vote at any given meeting present in person or by proxy shall
be necessary to and shall constitute a quorum for the transaction of
business at all meetings of the stockholders, except as otherwise provided
by law or by the Articles of Incorporation.
(b) If a quorum is not present in
person or by proxy at any meeting of stockholders, the stockholders
entitled to vote thereat, present in person or by proxy, shall have the
power to adjourn the meeting if the time and place thereof are announced
at the meeting at which the adjournment is taken, until a quorum is
present in person or by proxy.
(c) Even if a quorum is not present
in person or by proxy at any meeting of stockholders, the stockholders
entitled to vote thereat, present in person or by proxy, shall have the
power to adjourn the meeting from time to time for good cause, without
notice of the adjourned meeting if the time and place thereof are
F105
announced at the meeting at which the adjournment is taken, until a date
which is not more than thirty (30) days after the date of the original
meeting.
(d) Any business which might have
been transacted at a meeting as originally called may be transacted at any
meeting held after adjournment as provided in this Section 6 at which
reconvened meeting a quorum is present in person or by proxy. Anything in
paragraph (b) of this Section 6 to the contrary notwithstanding, if an
adjournment is for more than thirty (30) days, or if after an adjournment
a new record date is fixed for the adjourned meeting, notice of the
adjourned meeting shall be given to each stockholder of record entitled to
vote thereat.
Section 7. Voting.
(a) At any meeting of stockholders
every stockholder having the right to vote shall be entitled to vote in
person or by proxy. Except as otherwise provided by law or by the
Articles of Incorporation, each stockholder of record shall be entitled to
one vote (on each matter submitted to a vote) for each share of capital
stock registered in his, her or its name on the books of the Corporation.
(b) All elections of directors, and
except as otherwise provided by law or by the Articles of Incorporation,
all other matters, shall be determined by a vote of a majority of the
shares present in person or represented by proxy and voting on such other
matters.
Section 8. Action by Consent. Any action required or
permitted to be taken at any meeting of the stockholders may be taken
without a meeting, without prior notice and without a vote, if a written
consent in lieu of such meeting, which consent sets forth the action so
taken, is signed before or after such action by all of the stockholders
entitled to vote with respect to the subject matter thereof. All written
consents shall be filed with the minutes of the stockholders.
ARTICLE III
DIRECTORS
Section 1. General Powers; Number: Tenure. The business
and affairs of the Corporation shall be managed under the direction of its
Board of Directors, which may exercise all powers of the Corporation and
perform or authorize the performance of all lawful acts and things which
are not by law, the Articles of Incorporation or these By-laws directed or
required to be exercised or performed by the stockholders. The number of
directors of the Corporation shall be not less than three (3) nor more
fifteen (15) provided, however, that if there is stock outstanding and so
long as there are less than three stockholders, the number of directors
may be less than three but not less than the number of stockholders. The
directors shall be elected at the annual meeting of the stockholders
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(except as otherwise provided in Section 2 of this Article III), and each
director elected shall hold office until the next succeeding annual
meeting of the stockholders or until his successor has been elected and
has qualified. Directors need not be stockholders nor residents of the
State of Maryland.
Section 2. Vacancies. The stockholders may elect a
successor to fill a vacancy on the Board of Directors which results from
the removal of a director. A majority of the remaining directors, whether
or not sufficient to constitute a quorum, may fill a vacancy on the Board
of Directors which results from any cause except an increase in the number
of directors. A majority of the entire Board of Directors may fill a
vacancy which results from an increase in the number of directors. Every
director chosen to fill a vacancy as in this Section 2 provided shall hold
office until the next annual meeting of the stockholders or until his
successor has been elected and has qualified.
Section 3. Removal; Resignation.
(a) Except as otherwise provided by
law, the Articles of Incorporation or these By-laws, at any meeting of the
stockholders called expressly for such purpose any director may be
removed, with or without cause, by a vote of stockholders holding a
majority of the shares issued and outstanding and entitled to vote at an
election of directors.
(b) Any director may resign at any
time by giving written notice to the Board of Directors, the Chairman of
the Board, the President, or the Secretary of the Corporation. Unless
otherwise specified in such written notice, a resignation shall take
effect upon delivery thereof to the Board of Directors or the designated
officer. A resignation need not be accepted in order for it to be
effective.
Section 4. Place of Meetings. The Board of Directors
may hold both regular and special meetings either within or without the
State of Maryland, at such place as the Board from time to time deems
advisable.
Section 5. Annual Meeting. The annual meeting of each newly
elected Board of Directors shall be held as soon as is practicable (but in
no event more than ten (10) days) following the annual meeting of
stockholders, and no notice to the newly elected directors of such meeting
shall be necessary for such meeting to be lawful, provided a quorum is
present thereat.
Section 6. Regular Meetings. Additional regular
meetings of the Board of Directors may be held without notice, at such
time and place as from time to time may be determined by the Board of
Directors.
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Section 7. Special Meetings. Special meetings of the
Board of Directors may be called by the Chairman of the Board or by the
President or by any two (2) directors upon two (2) days' notice to each
director if such notice is delivered personally or sent by telegram, or
upon five (5) days' notice if sent by mail.
Section 8. Quorum; Adjournments. A majority of the
number of directors then in office shall constitute a quorum for the
transaction of business at each and every meeting of the Board of
Directors, and the act of a majority of the directors present at any
meeting at which a quorum is present shall be the act of the Board of
Directors, except as may otherwise specifically be provided by law, the
Articles of Incorporation or these By-laws. If a quorum is not present at
any meeting of the Board of Directors, the directors present may adjourn
the meeting, from time to time, without notice other than announcement at
the meeting, until a quorum is present.
Section 9. Compensation. Directors shall be entitled to
such compensation for their services as directors as from time to time may
be fixed by the Board of Directors and in any event shall be entitled to
reimbursement of all reasonable expenses incurred by them in attending
directors' meetings. Any director may waive compensation for any meeting.
No director who receives compensation as a director shall be barred from
serving the Corporation in any other capacity or from receiving
compensation and reimbursement of reasonable expenses for any or all such
other services.
Section 10. Action by Consent. Any action required or
permitted to be taken at any meeting of the Board of Directors may be
taken without a meeting and without prior notice if a written consent in
lieu of such meeting which sets forth the action so taken is signed either
before or after such action by all directors. All written consents shall
be filed with the minutes of the Board's proceedings.
Section 11. Meetings by Telephone or Similar
Communications. The Board of Directors may participate in meetings by
means of conference telephone or similar communications equipment, whereby
all directors participating in the meeting can hear each other at the same
time, and participation in any such meeting shall constitute presence in
person by such director at such meeting. A written record shall be made
of all actions taken at any meeting conducted by means of a conference
telephone or similar communications equipment.
ARTICLE IV
COMMITTEES
Section 1. Executive Committee.
(a) By resolution duly adopted by a
majority of the whole Board, the Board of Directors may designate two or
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more directors to constitute an Executive Committee. One of such
directors shall be designated as Chairman of the Executive Committee.
Each member of the Executive Committee shall continue as a member thereof
until the expiration of his term as a director, or until his earlier
resignation from the Executive Committee, in either case unless sooner
removed as a member of the Executive Committee or as a director by any
means authorized by these By-laws.
(b) The Executive Committee shall
have and may exercise all of the rights, powers and authority of the Board
of Directors, except as expressly limited by the General Corporation Law
of the State of Maryland, as amended from time to time.
(c) The Executive Committee shall
fix its own rules of procedure and shall meet at such time and at such
place or places as may be provided by its rules. The Chairman of the
Executive Committee, or, in the absence of a Chairman a member of the
Executive Committee chosen by a majority of the members present, shall
preside at meetings of the Executive Committee, and another member thereof
chosen by the Executive Committee shall act as Secretary. A majority of
the Executive Committee shall constitute a quorum for the transaction of
business, and the affirmative vote of a majority of the members thereof
shall be required for any action of the Executive Committee. The
Executive Committee shall keep minutes of its meetings and deliver such
minutes to the Board of Directors.
Section 2. Other Committees. The Board of Directors,
by resolution duly adopted by a majority of directors at a meeting at
which a quorum is present, may appoint such other committee or committees
as it shall deem advisable and with such limited authority as the Board of
Directors shall from time to time determine.
Section 3. Other Provisions Regarding Committees.
(a) The Board of Directors shall
have the power at any time to fill vacancies in, change the membership of,
or discharge any committee.
(b) Members of any committee shall
be entitled to such compensation for their services as such as from time
to time may be fixed by the Board of Directors and in any event shall be
entitled to reimbursement of all reasonable expenses incurred in attending
committee meetings. Any member of a committee may waive compensation for
any meeting. No committee member who receives compensation as a member of
any one or more committees shall be barred from serving the Corporation in
any other capacity or from receiving compensation and reimbursement of
reasonable expenses for any or all such other services.
(c) Unless prohibited by law, the
provisions of Section 10 ("Action by Consent") and Section 11 ("Meetings
by Telephone or Similar Communications") of Article III shall apply to all
committees from time to time created by the Board of Directors.
F109
ARTICLE V
OFFICERS
Section 1. Positions. The officers of the Corporation
shall be chosen by the Board of Directors and shall consist of a
President, one or more Vice Presidents (if and to the extent required by
law or if not required, if the Board of Directors from time to time
appoints a Vice President or Vice Presidents), a Secretary and a
Treasurer. Only the President need be a director. The Board of Directors
also may choose a Chairman of the Board, one or more Assistant Secretaries
and/or Assistant Treasurers and such other officers and/or agents as the
Board from time to time deems necessary or appropriate. The Board of
Directors may delegate to the President of the Corporation the authority
to appoint any officer or agent of the Corporation and to fill a vacancy
other than the Chairman of the Board, President, Secretary or Treasurer.
The election or appointment of any officer of the Corporation in itself
shall not create contract rights for any such officer. All officers of
the Corporation shall exercise such powers and perform such duties as from
time to time shall be determined by the Board of Directors. Any two or
more offices may be held by the same person except the offices of
President and Secretary and of President and Vice President.
Section 2. Term of Office; Removal. Each officer of the
Corporation shall hold office at the pleasure of the Board and any officer
may be removed, with or without cause, at any time by the affirmative vote
of a majority of the directors then in office, provided that any officer
appointed by the President pursuant to authority delegated to the
President by the Board of Directors may be removed, with or without cause,
at any time whenever the President in his or her absolute discretion shall
consider that the best interests of the Corporation shall be served by
such removal. Removal of an officer by the Board or by the President, as
the case may be, shall not prejudice the contract rights, if any, of the
person so removed. Vacancies (however caused) in any office may be filled
for the unexpired portion of the term by the Board of Directors (or by the
President in the case of a vacancy occurring in an office to which the
President has been delegated the authority to make appointments).
Section 3. Compensation. The salaries of all officers of
the Corporation shall be fixed from time to time by the Board of
Directors, and no officer shall be prevented from receiving a salary by
reason of the fact that he also receives from the Corporation compensation
in any other capacity.
Section 4. Chairman of the Board. The Chairman of the
Board (if the Board of Directors so deems advisable and selects one) shall
be an officer of the Corporation and, subject to the direction of the
Board of Directors, shall perform such executive, supervisory and
management functions and duties as from time to time may be assigned to
him or her by the Board. The Chairman of the Board, if present, shall
preside at all meetings of the stockholders and all meetings of the Board
of Directors.
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Section 5. President. The President shall be the chief
executive officer of the Corporation and, subject to the direction of the
Board of Directors, shall have general charge of the business, affairs and
property of the Corporation and general supervision over its other
officers and agents. In general, the President shall perform all duties
incident to the office of President of a stock corporation and shall see
that all orders and resolutions of the Board of Directors are carried into
effect. Unless otherwise prescribed by the Board of Directors, the
President shall have full power and authority on behalf of the Corporation
to attend, act and vote at any meeting of security holders of other
corporations in which the Corporation may hold securities. At any such
meeting the President shall possess and may exercise any and all rights
and powers incident to the ownership of such securities which the
Corporation possesses and has the power to exercise. The Board of
Directors from time to time may confer like powers upon any other person
or persons.
Section 6. Vice Presidents. In the absence or
disability of the President, the Vice President, if any (or in the event
there is more than one, the Vice Presidents in the order designated, or in
the absence of any designation, in the order of the election), shall
perform the duties and exercise the powers of the President. The Vice
President(s) also generally shall assist the President and shall perform
such other duties and have such other powers as from time to time may be
prescribed by the Board of Directors.
Section 7. Secretary. The Secretary shall attend all
meetings of the Board of Directors and of the stockholders and shall
record all votes and the proceedings of all meetings in a book to be kept
for such purposes. The Secretary also shall perform like duties for the
Executive Committee or other committees, if required by any such
committee. The Secretary shall give (or cause to be given) notice of all
meetings of the stockholders and all special meetings of the Board of
Directors and shall perform such other duties as from time to time may be
prescribed by the Board of Directors, the Chairman of the Board or the
President. The Secretary shall have custody of the seal of the
Corporation, shall have authority (as shall any Assistant Secretary) to
affix the same to any instrument requiring it, and to attest the seal by
his or her signature. The Board of Directors may give general authority
to officers other than the Secretary or any Assistant Secretary to affix
the seal of the Corporation and to attest the affixing thereof by his or
her signature.
Section 8. Assistant Secretary. The Assistant
Secretary, if any (or in the event there is more than one, the Assistant
Secretaries in the order designated, or in the absence of any designation,
in the order of their election), in the absence or disability of the
Secretary, shall perform the duties and exercise the powers of the
Secretary. The Assistant Secretary (ies) shall perform such other duties
and have such other powers as from time to time may be prescribed by the
Board of Directors.
F111
Section 9. Treasurer. The Treasurer shall have the
custody of the corporate funds, securities, other similar valuable
effects, and evidences of indebtedness, shall keep books belonging to the
Corporation and shall deposit all moneys and other valuable effects in the
name and to the credit of the Corporation in such depositories as from
time to time may be ordered by the Board of Directors from time to time
and shall render to the Chairman of the Board, the President and the Board
of Directors, at regular meetings of the Board or whenever any of them may
so require, an account of all transactions and of the financial condition
of the Corporation.
Section 10. Assistant Treasurer. The Assistant
Treasurer, if any (or in the event there is more than one, the Assistant
Treasurers in the order designated, or in the absence of any designation,
in the order of their election), in the absence or disability of the
Treasurer, shall perform the duties and exercise the powers of the
Treasurer. The Assistant Treasurer(s) shall perform such other duties and
have such other powers as from time to time may be prescribed by the Board
of Directors.
ARTICLE VI
NOTICES
Section 1. Form; Delivery. Any notice required or permitted
to be given to any director, officer, stockholder of committee member
shall be given in writing, either personally or by first-class mail with
postage prepaid, in either case addressed to the recipient at his or her
address as it appears in the records of the Corporation. Personally
delivered notices shall be deemed to be given at the time they are
delivered at the address of the named recipient as it appears in the
records of the Corporation, and mailed notices shall be deemed to be given
at the time they are deposited in the United States mail. Notice to a
director also may be given by telegram sent to his address as it appears
on the records of the Corporation and shall be deemed given at the time
delivered at such address.
Section 2. Waiver; Effect of Attendance. Whenever any
notice is required to be given by law, the Articles of Incorporation or
these By-laws, a written waiver thereof, signed by the person or persons
entitled to such notice, whether before or after the time stated therein,
shall be the equivalent of the giving of such notice. In addition, any
stockholder who attends a meeting of stockholders in person, or who is
represented at such meeting by a proxy, or any director or committee
member who attends a meeting of the Board of Directors or a committee
thereof shall be deemed to have had timely and proper notice of the
meeting, unless such stockholder (or his or her proxy) or director or
committee member attends for the express purpose of objecting to the
transaction of any business on the grounds that the meeting is not
lawfully called or convened.
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ARTICLE VII
INDEMNIFICATION AND EXCULPATION: TRANSACTIONS
WITH AFFILIATED PERSONS
Section 1. Indemnification and Exculpation. Reference is
hereby made to Section 2-418 of the General Corporation Law of the State
of Maryland (or any successor provision thereto). The Corporation shall
indemnify each person who may be indemnified (the "Indemnitees") pursuant
to such section, to the full extent permitted thereby. In each and every
situation where the Corporation may do so under such section, the
Corporation hereby obligates itself to so indemnify the Indemnitees, and
in each case, if any, where the Corporation must make certain
investigations on a case-by-case basis prior to indemnification, the
Corporation hereby obligates itself to pursue such investigations
diligently, it being the specific intention of these By-laws to obligate
the Corporation to indemnify each person whom it may indemnify to the
fullest extent permitted by law at any time and from time to time. To the
extent not prohibited by Section 2-418 of the General Corporation Law of
the State of Maryland (or any other provision of the General Corporation
Law of the State of Maryland), the officers and directors of the
Corporation shall not be liable to the Corporation for any mistake or
misjudgment, negligence or otherwise, except for their own individual
willful misconduct or bad faith.
Section 2. Common or Interested Officers and Directors.The
officers and directors shall exercise their powers and duties in good
faith and with a view to the best interests of the Corporation. No
contract or other transaction between the Corporation and one or more of
its officers or directors, or between the Corporation and any corporation,
firm, association, or other entity in which one or more of the officers or
directors of the Corporation are officers or directors, or are pecuniarily
or otherwise interested, shall be either void or voidable because of such
common directorate, officership or interest, because such officers or
directors are present at the meeting of the Board of Directors or any
committee thereof which authorizes, approves or ratifiers the contract or
transaction, or because his, her or their votes are counted for such
purpose, if (unless otherwise prohibited by law) any of the conditions
specified in the following paragraphs exist:
(a) the material facts of the common
directorate or interest or contract or transaction are disclosed or known
to the Board of Directors or Committee thereof and the Board or Committee
authorizes or ratifiers such contract or transaction in good faith by the
affirmative vote of a majority of the disinterested directors, even though
the number of such disinterested directors may be less than a quorum; or
(b) the material facts of the common
directorate, interest, contract or transaction are disclosed or known to
the stockholders entitled to vote thereon and the contract or transaction
is specifically approved in good faith by vote of the stockholders; or
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(c) the contract or transaction is
fair and commercially reasonable to the Corporation at the time it is
authorized, approved or ratified by the Board, a committee thereof, or the
stockholders, as the case may be.
Common or interested directors may be counted in determining whether a
quorum is present at any meeting of the Board of Directors or committee
thereof which authorizes, approves or ratifiers any contract or
transaction, and may vote thereat to authorize any contract or transaction
with like force and effect as if he, she or they were not such officers or
directors of such other corporation or were not so interested.
ARTICLE VIII
STOCK CERTIFICATES
Section 1. Form; Signatures. Each stockholder who
has fully paid for any stock of the Corporation shall be entitled to
receive a certificate representing such shares, and such certificate shall
be signed by the Chairman of the Board (if any) or the President or a Vice
President and by the Treasurer or an Assistant Treasurer or the Secretary
or an Assistant Secretary of the Corporation. Signatures on the
certificate may be facsimile, in the manner prescribed by law. Each
certificate shall exhibit on its face the number and class (and series, if
any) of the shares it represents. Each certificate also shall state upon
its face the name of the person to whom it is issued and that the
Corporation is organized under the laws of the State of Maryland. Each
certificate may (but need not) be sealed with the seal of the Corporation
or facsimile thereof. In the event any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed upon
a certificate ceases to be such officer, transfer agent or registrar
before the certificate is issued, the certificate nevertheless may be
issued by the Corporation with the same effect as if such person were such
officer at the date of issue of the certificate. All stock certificates
representing shares of capital stock which are subject to restrictions on
transfer or to other restrictions may have imprinted thereon a notation of
such restriction.
Section 2. Registration of Transfer. Upon surrender
to the Corporation or to any transfer agent of the Corporation of a
certificate for shares duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer, the Corporation, or its
transfer agent, shall issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon the
Corporation's books.
Section 3. Registered Stockholders. Except as otherwise
provided by law, the Corporation shall be entitled to recognize the
exclusive right of a person who is registered on its books as the owner of
shares of its capital stock to receive dividends or other distributions
(to the extent otherwise distributable or distributed), to vote (in the
case of voting stock) as such owner, and to hold liable for calls and
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assessments a person who is registered on its books as the owner of shares
of its capital stock. The Corporation shall not be bound to recognize any
equitable or legal claim to or interest in such shares on the part of any
other person. The Corporation (its transfer agent) shall not be required
to send notices or dividends to a name or address other than the name or
address of the stockholders appearing on the stock ledger maintained by
the Corporation (or by the transfer agent or registrar, if any), unless
any such stockholder shall have notified the Corporation (or the transfer
agent or registrar, if any), in writing, of another name or address at
least ten (10) days prior to the mailing of such notice or dividend.
Section 4. Record Date. In order that the Corporation
may determine the stockholders of record who are entitled (i) to notice of
or to vote at any meeting of stockholders or any adjournment thereof, (ii)
to express written consent to corporate action in lieu of a meeting, (iii)
to receive payment of any dividend or other distribution, or (iv) to
allotment of any rights or to exercise any rights in respect of any
change, conversion or exchange of stock for the purpose of any other
lawful action or in order that the Corporation may make a determination of
the stockholders of record for any other lawful purpose, the Board of
Directors, in advance, may fix a date as the record date for any such
determination. Such date shall not be more than fifty (50) days nor less
than ten (10) days before the date of such meeting, nor more than fifty
(50) days prior to the date of any other action. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
the stockholders shall apply to any adjournment of the meeting taken
pursuant to Section 6 of Article II; provided, however, that the Board of
Directors, in its discretion, may fix a new record date for the adjourned
meeting.
Section 5. Lost, Stolen or Destroyed Certificate. The
Board of Directors may direct a new certificate to be issued in place of
any certificate theretofore issued by the Corporation which is claimed to
have been lost, stolen or destroyed, upon the making of an affidavit of
that fact by the person claiming the certificate to be lost, stolen or
destroyed. When authorizing such issue of a new certificate, the Board of
Directors, in its discretion, may require as a condition precedent to
issuance that the owner of such lost, stolen or destroyed certificate, or
his or her legal representative, advertise the same in such manner as the
Board shall require and/or to give the Corporation a bond in such sum, or
other security in such form, as the Board may direct, as indemnity against
any claim that may be made against the Corporation with respect to the
certificate claimed to have been lost, stolen or destroyed.
ARTICLE IX
GENERAL PROVISIONS
Section 1. Dividends. Subject to the General
Corporation Law of the State of Maryland and to any provisions of the
Articles of Incorporation relating to dividends, dividends upon the
outstanding capital stock of the Corporation may be declared by the Board
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of Directors at any annual, regular or special meeting and may be paid in
cash, in property or in shares of the Corporation's capital stock.
Section 2. Reserves. The Board of Directors, in its
sole discretion, may fix a sum which may be set aside or reserved over and
above the paid-in capital of the Corporation for working capital or as a
reserve for any proper purpose, and from time to time may increase,
diminish or vary such fund or funds.
Section 3. Fiscal Year. The fiscal year of the
Corporation shall be as determined from time to time by the Board of
Directors.
Section 4. Seal. The corporate seal shall have inscribed
thereon the name of the Corporation, the year of its incorporation and the
words "Corporate Seal" and "State of Maryland."
Section 5. Amendment of the By-laws. To the extent
not prohibited by law, the Board of Directors shall have the power to
make, alter and repeal these By-laws, and to adopt new by-laws, in all
cases by an affirmative vote of a majority of the whole Board, provided
that notice of the proposal to make, alter or repeal these By-laws, or to
adopt new by-laws, is included in the notice of the meeting of the Board
of Directors at which such action takes place.
Certification
We, Steven J. Guttman and J. Lynn Taylor, President and
Secretary, respectively, of Street Retail, Inc., (the "Corporation"), DO
HEREBY CERTIFY that the foregoing is a true and correct copy of the
Corporation's By-laws as adopted by the Board of Directors of the
Corporation on December 20, 1994.
Attest:
/s/J. Lynn Taylor /s/Steven J. Guttman
-------------------------- ------------------------------
Secretary President
{Corporate Seal}
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Exhibit 23
Consent of Independent Accountants
----------------------------------
We have issued our reports dated February 10, 1995 accompanying the
consolidated financial statements and schedules included in the Annual
Report of Federal Realty Investment Trust on Form 10K for the year ended
December 31, 1994. We hereby consent to the incorporation by reference of
said reports in the Registration Statement of Federal Realty Investment
Trust on Form S-3 (File No. 33-51029, effective December 31, 1993).
Grant Thornton LLP
Washington, D.C.
March 21, 1995
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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