Item 2. Properties
The location, general character and primary occupancy information with respect to Registrant's properties as of July 31, 1994 (including acquisitions through September 22, 1994) are set forth on the Summary of Properties Schedule on the pages immediately following.
Item 7.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
(a) Liquidity and Capital Resources
At July 31, 1994 the Trust had approximately $3.1 million in available cash and cash equivalents, $6.3 million in marketable securities and $22.9 million in mortgages receivable. These assets, which total $32.3 million, decreased $142.1 million from the level of a year ago because of the Trust's ongoing acquisition program. In addition, the Trust in December 1993, put in place an unsecured revolving credit facility which provides for borrowings of up to $65 million. Subsequent to July 31, 1994 the credit facility was increased to $100 million.
Revenues, net income, and funds from operations were at all-time highs.
Debt at July 31, 1994 consisted of approximately $28.1 million of mortgages payable with a weighted average interest cost of 9.4% and a $7.5 million note payable which represents a draw against the unsecured $65 million credit facility. The increase in mortgages payable was the net result of the assumption of a mortgage in connection with the acquisition of a factory outlet center and the repayment of certain high interest mortgages. Other liabilities increased primarily because of increases in real estate and other taxes payable, deposits payable and accounts payable. These increases are attributable to the larger property portfolio. Short-term debt consists of the note payable, the current portion of mortgages payable and normal trade payables.
During the year, the Trust issued three million shares of beneficial interest. The net proceeds of approximately $63 million were used to pay for property acquisitions, and repayment of the then outstanding balance on the credit facility.
Over the past three fiscal years, $33.6 million of funds were provided from the dividend reinvestment program. During 1994, the Trust made distributions of $64.7 million to shareholders, paid $196.5 million to acquire 25 properties and invested $23 million in improvements and expansions to properties.
Other sources of funds are available to the Trust. Based on management's internal valuation of the Trust's properties, including properties which are free and clear of mortgages, the estimated value is considerably in excess of the outstanding mortgage indebtedness totalling $28.1 million. Accordingly, management believes that substantial potential exists for additional mortgage financing as well as unsecured borrowing capacity from banks and other lenders.
(b) Results of Operations
1994 Versus 1993
In fiscal 1994, total revenues increased $24.7 million to $101 million. Rental income and related revenues increased $31.1 million to $96.4 million. The rental income increase came from properties in the portfolio which were acquired in fiscal 1994 or were owned for less than a full year in 1993, as well as from properties owned prior to fiscal 1993.
Interest and dividend income declined $6.4 million because of lower investment balances. Balances were lower because of the use of funds for property acquisitions.
Operating expenses increased $15.5 million to $46.9 million. Operating costs, real estate taxes and depreciation and amortization increased primarily because of property acquisitions. Interest expense increased because of higher outstanding mortgage payable balances and the use of the Trust's unsecured credit facility. The increase in the provision for doubtful accounts was mostly due to recoveries in 1993 which did not recur in 1994. In 1993 the Trust had bad debt recoveries of $651,000 versus $250,000 in 1994.
Administrative expenses increased due to higher personnel and travel costs associated with our larger property portfolio.
Income before gains on sales of properties and securities increased $9 million to $51.3 million. During the year, most of the Greenville Shopping Center, located in Greenville, North Carolina, was sold. Net income increased $9.1 million to $52.3 million and earnings per share increased to $1.06 from $.89.
During fiscal 1994 dividends declared and paid were $1.315 per share, a $.04 per share increase over the preceding fiscal year.
1993 versus 1992
In fiscal 1993 total revenues increased $11.6 million to $76.3 million. Rental income and related revenues increased $17.7 million to $65.3 million. Increases from properties in the Trust's portfolio for less than a full year in either 1993 or 1992 were partially offset by reductions from a shopping center that was sold in fiscal 1992 and because of one-time receipts of revenue in 1992 that did not recur in 1993.
Interest and dividend income declined $6.1 million to $11 million. The decrease was due to lower average invested balances and lower average yields. Investment balances were lower because of the use of funds for property acquisitions and improvements. Lower yields are a reflection of the overall market decline in interest rates.
Operating expenses increased $8.7 million to $31.4 million. Operating costs, real estate and other taxes and depreciation and amortization increased primarily because of property acquisitions. Interest on mortgages and notes declined as a result of the prepayment of mortgages in the first half of the year and the increase in mortgage indebtedness at the lower interest rates in the latter part of fiscal 1993. The increase in the provision for doubtful accounts was partially offset by recoveries of $651,000. In 1992 the Trust had recoveries of doubtful accounts of $305,000.
Administrative expenses increased due to higher personnel costs, professional fees and shareholder reporting costs.
There were no property sales in fiscal 1993 which was the primary reason for the reduction of $9.1 million in gains from asset sales.
Income before gains on sales of properties increased $2.9 million. Net income declined $6.2 million because of non-recurring gains from the sale of assets in 1992 in the amount of $9.7 million. Accordingly, earnings per share declined to $.89 for the same reason.
For the fiscal year ended July 31, 1993, dividends declared and paid were $1.275 per share, a 5.4% increase over the preceding fiscal year.
1992 versus 1991
In fiscal 1992 total revenues increased by $7.3 million to $64.7 million. Rental income and related revenues increased $6.2 million. Of this increase, $4.8 million is from properties which were in the Trust's portfolio for less than a full year in either 1992 or 1991 (net of the sale of shopping centers). The revenue from properties in the Trust's portfolio for at least a full year increased $2.1 million. As a result of a tenant's Chapter 11 bankruptcy filing and subsequent lease termination, revenue declined $672,000. Interest and dividend income increased $1.1 million to $17.1 million. The increase in income resulting from a higher investment base was partially offset by lower yields.
Operating expenses increased $2.5 million to $22.7 million. Operating costs, depreciation and amortization and taxes increased primarily because of the acquisition of new properties. Interest on mortgages decreased due to reductions in outstanding mortgage balances in the second half of fiscal 1991 and the first six months of fiscal 1992.
Other expenses increased $548,000 to $2.6 million. Of this increase, $399,000 was due to discounts received from the prepayment of mortgages in 1991 which did not recur in 1992. Administrative expenses increased as a result of higher costs associated with the management of an increased number of properties.
During the year ended July 31, 1992 the Trust sold Newdon Plaza in New City, New York, a 105,000 square foot shopping center, and a 100,400 square foot shopping center in Hickory, North Carolina. The gain on the sales was $9.7 million. Sales of securities during the current year resulted in a net gain of $382,000 compared to $368,000 in 1991.
Income before gains on the sale of properties and securities increased $4.3 million to $39.4 million, an increase of 12.2%. Net income rose 24% to $49.4 million and earnings per share increased $.03 to $1.08 on an increased number of average shares outstanding.
For the fiscal year ended July 31, 1992, dividends declared and paid were $1.21 per share, a 7.1% increase over the fiscal year ended July 31, 1991.
Item 8.
Item 8. Financial Statements and Supplementary Data
The response to this item is included in a separate section at the end of this report.
Item 9.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
PART III
Item 10.
Item 10. Trustees and Executive Officers of the Trust
Item 10 is incorporated herein pursuant to General Instruction G to this Form 10-K by reference to Registrant's definitive proxy statement which will be filed with the Securities and Exchange Commission pursuant to Regulation 14A not later than 120 days after the close of the fiscal year.
Executive Officers of the Trust
The executive officers of the Trust and their principal occupations are as follows:
Name Age ____ ___
William Newman. . . . . . . 68 Chairman of the Board and Chief Executive Chairman of the Officer of the Trust since its Board of Trustees and organization in 1972, President of the Chief Executive Officer Trust from 1972 to 1988 and President of the Trust's corporate predecessor from 1962 to 1972; formerly Chairman of National Association of Real Estate Investment Trusts; active in real estate for more than 40 years.
Arnold Laubich . . . . . . 64 President and Chief Operating Officer and President, Chief Trustee of the Trust since August 1, 1988; Operating Officer President of Dover Management Corp. (which and Trustee managed the Trust's properties) from 1972 to 1988; Senior Vice President of the Trust's predecessor from 1962 to 1972.
James M. Steuterman . . . . 38 Property acquisition officer for the Trust Executive Vice President since 1984; elected Vice President in and Trustee 1988; Senior Vice President and Trustee from 1990 to 1994; Executive Vice President since October 1994.
Dean Bernstein . . . . . . 36 Vice President - Acquisition and Finance Vice President - since October 1994; Vice President and Administration and Trustee since 1992; Assistant Vice Finance and Trustee President from 1991 to 1992; previously a Vice President in the Real Estate Group at Chemical Bank for three years.
William Kirshenbaum . . . . 58 Vice President of the Trust since 1981; Vice President, Treasurer since 1983. Treasurer
Leonard N. Cancell. . . . . 61 Senior Vice President of the Trust since Senior Vice President - August 1, 1988; Senior Vice President of Operations Dover Management from 1972 to 1988; employee of the Trust's predecessor from 1964 to 1972.
Michael I. Brown. . . . . . 52 Chief Financial Officer since 1991; Chief Financial Officer Controller of the Trust since 1987. and Controller
Irwin E. Kwartler . . . . . 68 Vice President of the Trust since 1982; Vice President previously, National Sales Manager, Kimball Division of Litton Industries.
Steven F. Siegel. . . . . . 34 General Counsel and Secretary of the Trust General Counsel since October 1991; formerly an associate and Secretary in the law firm of Miro, Miro & Weiner for six years.
Joseph Bosco. . . . . . . . 45 Vice President of the Trust since 1993; Vice President -- Apartment employee of the Trust since 1983. Operations
Item 11.
Item 11. Executive Compensation
Item 11 is incorporated herein pursuant to General Instruction G to this Form 10-K by reference to Registrant's definitive proxy statement which will be filed with the Securities and Exchange Commission pursuant to Regulation 14A not later than 120 days after the close of the fiscal year.
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Item 12 is incorporated herein pursuant to General Instruction G to this Form 10-K by reference to Registrant's definitive proxy statement which will be filed with the Securities and Exchange Commission pursuant to Regulation 14A no later than 120 days after the close of the fiscal year.
Item 13.
Item 13. Certain Relationships and Related Transactions
Item 13 is incorporated herein pursuant to General Instruction G to this Form 10-K by reference to Registrant's definitive proxy statement which will be filed with the Securities and Exchange Commission pursuant to Regulation 14A not later than 120 days after the close of the fiscal year.
PART IV
Item 14.
Item 14. Exhibits, Consolidated Financial Statements, Consolidated Financial Statement Schedules, and Reports on Form 8-K
(a) Consolidated Financial Statements. The following documents are filed as a part of this report:
The response to this portion of Item 14 is submitted as a separate section of this report.
(b) Reports on Form 8-K.
1. Form 8-K dated May 20, 1994 and Form 8-K/A Amendment No. 1 dated June 10, 1994. These reports contained Items 2 and 7.
2. Form 8-K/A Amendment No. 1 dated May 27, 1994 amending Form 8-K filed April 7, 1994. This report contained Item 7.
3. Form 8-K/A Amendment No. 2 dated July 6, 1994 amending Form 8-K/A Amendment No. 1 dated June 10, 1994. This report contained Item 7.
4. Form 8-K dated July 14, 1994 and Form 8-K/A Amendment No. 1 dated September 1, 1994. This report contained Items 2 and 7.
(c) Exhibits. The following exhibits are filed as exhibits to this Form:
*3.1 Amendment #4 dated December 6, 1972 to Declaration of Trust (amending Declaration of Trust in its entirety) filed as Exhibit 3.1(d) to Registration Statement No. 2-45633.
*3.2 Amendment #5 dated December 12, 1972 to Declaration of Trust filed with Registrant's Form 10-K for the fiscal year ended July 31, 1973.
*3.3 Amendment #6 dated December 13, 1979 to Declaration of Trust and filed as Appendix A to Registrant's Proxy Statement dated November 19, 1979 with respect to annual meeting of shareholders on December 13, 1979.
*3.4 Amendment #7 dated July 9, 1981 to Declaration of Trust and filed as an appendix to Registrant's Proxy Statement dated June 1, 1981 with respect to a special meeting of shareholders on July 9, 1981.
*3.5 Amendment #8 dated December 15, 1982 to Declaration of Trust and filed as Appendix A to Registrant's Proxy Statement dated November 15, 1982 with respect to annual meeting of shareholders held December 15, 1982.
*3.6 Amendment #9 dated December 10, 1985 to Declaration of Trust and filed as Appendix A to Registrant's Proxy Statement dated November 15, 1985 with respect to annual meeting of shareholders held December 10, 1985.
*3.7 Amendment #10 dated December 14, 1987 to Declaration of Trust and filed as Appendix A to Registrant's Proxy Statement dated November 2, 1987 with respect to annual meeting of shareholders held December 14, 1987.
*9.1 Agreement dated February 26, 1979 among William Newman, Joseph Newman and Melvin Newman filed as Exhibit 9 to Registration Statement No. 2-63669.
*9.2 Agreement dated December 17, 1981 between New Plan Realty Trust and Merchant Navy Officers Pension Fund Trustees Limited filed as Exhibit 9.1 to Post Effective Amendment No. 2 to Registration Statement 2-69682.
*9.3 Debenture Purchase Agreement and Amendment to Exhibits 9.2 and 9.3 herein filed as Exhibit 9.4 to Registration Statement 2-81432.
*9.4 Share Purchase Agreement between New Plan Realty Trust, Merchant Navy Officers Pension Fund Trustees Limited filed as Exhibit 9.5 to Registration Statement No. 2-90107.
9.5 Purchase Agreement dated December 18, 1990 between New Plan Realty Trust and Beleggingsmaatschappij Midas B.V.
*10.1 Lease dated January 30, 1964 between John Hancock Mutual Life Insurance Company and Roosevelt Mall Northeast, Inc. filed as Exhibit 12.4(a) to Registration Statement No. 2- 45633 (Registrant's leasehold interest in the Roosevelt Mall Shopping Center).
10.2 Revolving Credit Agreement by and among New Plan Realty Trust, the Lenders party thereto and The Bank of New York, as agent, dated as of December 30, 1993.
10.3 Amendment No. 1 to Revolving Credit Agreement by and among New Plan Realty Trust, the Lenders party thereto and The Bank of New York, as agent, dated as of Decembdr 30, 1993.
22 Subsidiaries of the Registrant.
23 Consents required with respect to material incorporated by reference in a previously filed Registration Statement.
(d) Financial Statement Schedules. The following documents are filed as a part of this report:
The response to this portion of Item 14 is submitted as a separate section of this report. ______________________________ *Incorporated herein by reference as above indicated.
SIGNATURES __________
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Trust has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
NEW PLAN REALTY TRUST (Registrant)
By:/s/ William Newman ________________________ William Newman Chief Executive Officer Dated: October 14, 1994
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 Trust and in the capacities and on the dates indicated.
Signature Title Date _________ _____ ____
/s/ William Newman Chief Executive Officer October 14, 1994 _____________________ and Trustee William Newman
/s/ Arnold Laubich President, Chief Operating October 14, 1994 _____________________ Officer and Trustee Arnold Laubich
/s/ Michael I. Brown Chief Financial Officer and October 14, 1994 _____________________ Chief Accounting Officer, Michael I. Brown Controller
/s/ James M. Steuterman Executive Vice President October 14, 1994 _____________________ and Trustee James M. Steuterman
/s/ Dean Bernstein Vice President - Administration October 14, 1994 _____________________ and Finance and Trustee Dean Bernstein
/s/ Melvin Newman Trustee October 14, 1994 _____________________ Melvin Newman
Trustee _________, 1994 _____________________ Norman Gold
Trustee _________, 1994 _____________________ Raymond H. Bottorf
Trustee _________, 1994 _____________________ John Wetzler
Trustee _________, 1994 _____________________ Gregory White
ANNUAL REPORT ON FORM 10-K
ITEM 8, ITEM 14(a)(1) AND (2), AND (d)
LIST OF CONSOLIDATED FINANCIAL STATEMENTS, SUPPLEMENTARY DATA AND CONSOLIDATED FINANCIAL STATEMENT SCHEDULES
CERTAIN EXHIBITS
YEAR ENDED JULY 31, 1994
NEW PLAN REALTY TRUST AND SUBSIDIARIES
NEW YORK, NEW YORK
Form 10-K Item 14(a)(1) and (2) NEW PLAN REALTY TRUST AND SUBSIDIARIES INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND CONSOLIDATED FINANCIAL STATEMENT SCHEDULES
The following financial statements of the Registrant are included in Item 8:
Independent Accountant's Report . . . . . . . . . . . . . . . . . .
Consolidated Balance Sheets as of July 31, 1994 and 1993 . . . . . .
Consolidated Statements of Income for the years ended July 31, 1994, 1993 and 1992 . . . . . . . . . . . . . . . .
Consolidated Statements of Changes in Shareholders' Equity for the years ended July 31, 1994, 1993 and 1992 . . . . . . . . .
Consolidated Statements of Cash Flows for the years ended July 31, 1994, 1993 and 1992 . . . . . . . . . . . . . . . .
Notes to Consolidated Financial Statements . . . . . . . . . . . . .
The following financial statement information and schedules of the Registrant are included in Item 14(d):
Schedules _________
II - Amounts Receivable from Related Parties and Underwriters, Promoters and Employees other than Related Parties . . . .
VIII - Valuation and Qualifying Accounts. . . . . . . . . . . . .
IX - Short-Term Borrowings. . . . . . . . . . . . . . . . . . .
X - Supplementary Income Statement Information . . . . . . . .
XI - Real Estate and Accumulated Depreciation . . . . . . . . .
XII - Mortgage Loans on Real Estate. . . . . . . . . . . . . . .
All other schedules for which provision is made in the applicable account regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable, and therefore have been omitted.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees and Shareholders of New Plan Realty Trust
We have audited the consolidated financial statements and financial statement schedules of New Plan Realty Trust and Subsidiaries listed in Item 14(a) of this Form 10-K. These financial statements and financial statement schedules are the responsibility of the Trust's management. Our responsibility is to express an opinion on these financial statements and financial statement schedules 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 consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of New Plan Realty Trust and Subsidiaries as of July 31, 1994 and 1993, and the consolidated results of their operations and their cash flows for each of the three years in the period ended July 31, 1994 in conformity with generally accepted accounting principles. In addition, in our opinion, the financial statement schedules referred to above, when considered in relation to the basic financial statements taken as a whole, present fairly, in all material respects, the information required to be included therein.
COOPERS & LYBRAND L.L.P.
New York, New York September 23, 1994
NEW PLAN REALTY TRUST AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS JULY 31, 1994 and 1993
ASSETS: 1994 1993 ____________ ____________
Real estate, at cost (Notes A and E) Land $111,670,790 $ 74,048,988 Buildings and improvements 509,671,528 314,178,925 ____________ ____________ 621,342,318 388,227,913
Less accumulated depreciation and amortization 49,101,916 38,183,206 ____________ ____________ 572,240,402 350,044,707
Cash and cash equivalents (Note A) 3,115,982 102,312,407
Marketable securities (Notes A and B) 6,292,596 47,988,162
Mortgages and notes receivable (Note C) 22,909,676 24,135,327
Receivables Trade and notes, net of allowances for doubtful accounts (1994 - $2,331,500; 1993 - $2,226,000) (Note A) 6,289,709 3,903,543 Other (Note D) 1,628,367 1,916,381 Prepaid expenses and deferred charges 2,428,510 1,464,445 Other assets 2,087,332 2,482,766 ____________ ____________
TOTAL ASSETS $616,992,574 $534,247,738 ============ ============
See notes to consolidated financial statements.
NEW PLAN REALTY TRUST AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS JULY 31, 1994 and 1993
LIABILITIES: 1994 1993 ____________ ____________
Mortgages payable (Note E) $28,060,067 $ 23,321,235 Note Payable (Note E) 7,500,000 - - - Other liabilities (Note F) 13,665,494 8,807,875 Tenants' security deposits 2,274,229 1,547,700 ____________ ____________
TOTAL LIABILITIES 51,499,790 33,676,810 ____________ ____________
COMMITMENTS AND CONTINGENCIES (NOTES G, H, I, J, and O) - - - - - -
SHAREHOLDERS' EQUITY: Preferred shares, par value $1.00, authorization limited to 1,000,000 shares; none issued - - - - - -
Shares of beneficial interest without par value, unlimited authorization; issued and out- standing (1994 - 52,594,161; 1993 - 48,956,564) (Note H) 609,067,613 530,900,723
Less loans receivable for the purchase of shares of beneficial interest (Note H) 3,630,421 2,761,098 ____________ ____________ 605,437,192 528,139,625
Less distributions in excess of net income 39,944,408 27,568,697 ____________ ____________
TOTAL SHAREHOLDERS' EQUITY 565,492,784 500,570,928 ____________ ____________
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $616,992,574 $534,247,738 ============ ============
See notes to consolidated financial statements.
NEW PLAN REALTY TRUST AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME FOR THE YEARS ENDED JULY 31, 1994, 1993 AND 1992
1994 1993 1992 ____________ _____________ ____________
Revenues: Rental income and related revenues (Notes A and K) $ 96,384,232 $ 65,307,505 $ 47,595,427 Interest and dividend income (Notes B and C) 4,570,283 11,001,265 17,096,787 ____________ ____________ ____________
100,954,515 76,308,770 64,692,214 ____________ ____________ ____________
Operating Expenses: Operating costs 21,982,525 14,325,052 9,981,576 Leasehold rent (Note J) 588,174 437,257 373,396 Real estate and other taxes 9,560,719 7,048,905 5,266,323 Interest expense 2,288,633 1,386,151 1,526,554 Depreciation and amortization 11,342,009 7,574,387 5,051,225 Provision for doubtful accounts 1,151,903 628,504 541,685 ____________ ____________ ____________
Total operating expenses 46,913,963 31,400,256 22,740,759 ____________ ____________ ____________
54,040,552 44,908,514 41,951,455
Other Expenses: Administrative expenses 2,713,163 2,619,754 2,569,531 ____________ ____________ ____________
Income Before Gain on Sale of Properties and Securities: 51,327,389 42,288,760 39,381,924
Gain on sale of properties 459,792 --- 9,681,857 Gain on sale of securities, net 530,075 939,878 381,872 ____________ ____________ ____________
989,867 939,878 10,063,729 ____________ ____________ ____________
Net Income $52,317,256 $ 43,228,638 $ 49,445,653 ============ ============ ============
Net Income Per Share (Note A) $ 1.06 $ .89 $ 1.08 ============ ============ ============
See notes to consolidated financial statements.
See notes to consolidated financial statements.
See notes to consolidated financial statements.
NEW PLAN REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JULY 31, 1994
Note A - Summary Of Significant Accounting Policies
Organization And Income Taxes
New Plan Realty Trust was organized July 31, 1972 as a Massachusetts Business Trust.
New Plan Realty Trust and subsidiaries (the "Trust") has elected to be taxed as a Real Estate Investment Trust ("REIT") under the provisions of the Internal Revenue Code. Accordingly, the Trust does not pay Federal income tax on income as long as income distributed to shareholders is at least equal to real estate investment trust taxable income. Further, the Trust pays no Federal income tax on capital gains distributed to shareholders. The Trust may be subject to tax by certain states that do not recognize the REIT. These taxes have been included in real estate and other taxes.
Basis of Consolidation
The consolidated financial statements include the accounts of New Plan Realty Trust and its wholly owned qualified REIT subsidiaries. All significant intercompany transactions and balances have been eliminated. Real Estate
Real estate is carried at cost less accumulated depreciation and amortization. For financial reporting purposes, depreciation is calculated on the straight-line method based on the estimated useful lives of the assets ranging from 5 to 40 years. Amortization is calculated on a straight-line basis over the shorter of the life of the lease or the estimated useful life of the asset.
The Trust records sales when, among other criteria, the parties are bound by the terms of a contract, all consideration has been exchanged and all conditions precedent to closing have been performed. These conditions are usually met at the time of closing.
The cost and related accumulated depreciation of assets sold are removed from the respective accounts and any gain or loss is recognized in income. Cash Equivalents
Cash equivalents consist of short-term, highly liquid debt instruments with maturities of three months or less at the date of purchase. Items classified as cash equivalents include: a Eurodollar certificate of deposit, insured bank certificates of deposit and commercial paper.
The carrying amount of cash equivalents approximates fair value due to the short-term maturities of these financial instruments.
At times cash balances at a limited number of banks may exceed insurable amounts. The Trust believes it mitigates its risks by investing in or through major financial institutions. Recoverability of investments is dependent upon the performance of the issuer.
Marketable Securities And Other Investments
Equity securities are carried at the lower of cost or market while debt securities are carried at cost. In connection with the sale of marketable securities and other investments, the cost basis is determined by using a weighted average method. Sales are recorded at trade date.
Revenue Recognition
Lease agreements between the Trust and retail tenants generally provide for additional rentals based on such factors as percentage of tenants' sales in excess of specified volumes, increases in real estate taxes, increases in Consumer Price Indices and common area maintenance charges. These additional rentals are generally included in income when reported to the Trust or when billed to tenants.
The Trust recognizes rental income from leases with scheduled rent increases on a straight-line basis over the lease term. Deferred rent receivable, included in trade and notes receivable, represents the difference between the straight-line rent and amounts currently due.
Concentration of Credit Risk
No tenant or single property accounts for more than 10% of the Trust's revenues.
Net Income Per Share
Net income per share is calculated using a weighted average number of shares outstanding during each year: 1994 - 49,501,984 shares; 1993 - 48,838,346 shares; 1992 - 45,970,728 shares.
Note B - Marketable Securities
The aggregate cost and market value of marketable securities at July 31 is as follows:
At July 31, 1994, gross unrealized gains and gross unrealized losses were $932,897 and $744,732 respectively.
The market value of marketable securities is based on quoted market prices as of July 31, 1994.
The Financial Accounting Standards Board has issued Statement of Financial Accounting Standard 115, "Accounting for Certain Investments in Debt and Equity Securities" ("SFAS 115"), which is effective for fiscal years beginning after December 15, 1993. The Trust has analyzed the impact of the standard and does not believe SFAS 115 will have a significant effect on its financial statements.
NEW PLAN REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JULY 31, 1994
Note C - Mortgages & Notes Receivable
July 31, 1994 1993
10% purchase money first mortgage collateralized by a shopping center in Connellsville, Pennsylvania, due July 31, 1995 $6,200,000 $6,200,000
9.875% purchase money first mortgage collateralized by a shopping center in Whitesboro, New York, due July 25, 1996 4,610,000 4,610,000
9.375% purchase money first mortgage, collateralized by a shopping center in New City, New York, due July 27, 1997 10,350,000 10,350,000
12% leasehold mortgage collateralized by a tenant lease, principal and interest payable monthly, due June 1, 2011 953,743 970,327
10.5% second mortgage collateralized by a shopping center in Hartsdale, New York, due February 1, 1999 500,000 _
9.5% purchase money first mortgage, collateralized by a shopping center in Hartsdale, New York, due January 18, 1994 - $ 2,005,000
11.5% note collateralized by a tenant lease, principal and interest payable monthly, due April 30, 2004 295,933 - ___________ ___________
$22,909,676 $24,135,327 =========== ===========
The fair value of mortgages receivable collaterized by real property is estimated based on discounting the future cash flows at a year-end risk adjusted lending rate that the Trust would utilize for loans of similar risk and duration. The aggregate fair value of the mortgages receivable approximates the carrying value as of July 31, 1994 and 1993.
The Financial Accounting Standards Board has issued Statement of Financial Accounting Standard 114, "Accounting by Creditors for Impairment of a Loan," which is effective for fiscal years beginning after December 15, 1994. The Trust has analyzed the impact of this standard and does not believe it will have an effect on its financial statements.
NEW PLAN REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JULY 31, 1994
Note D - Other Receivables July 31, ________ 1994 1993 _________ _________
Interest and dividends $ 405,359 $ 964,130 Notes receivables 410,000 -- Due from officers, trustees and employees (1) 499,409 570,320 Miscellaneous receivables 313,599 381,931 __________ __________ $1,628,367 $1,916,381 ========== ==========
(1) Amounts, which are interest bearing, are either due on demand or have scheduled maturities.
Note E - Mortgages and Note Payable
Mortgages are collateralized by real property with a carrying value of approximately $82,535,000 before accumulated depreciation and amortization. As of July 31, 1993, mortgages payable bear interest at rates ranging from 6.53% to 10.75%, having a weighted average rate of 9.4% per annum and mature from 1996 to 2001.
Scheduled principal payments during each of the next five fiscal years and thereafter are approximately as follows:
Year Ending July 31, Amount ____________________ ______
1995 $ 329,309 1996 14,704,963 1997 304,263 1998 3,088,024 1999 375,555 ___________ Thereafter 9,257,953
Total $28,060,067 ===========
The fair value of mortgages payable collateralized by real property is estimated based on discounting the future cash flows at a year-end borrowing rate which reflects the risk associated with mortgages of similar risk and duration. Certain other mortgages require the payment of interest only at a rate that follows certain short-term interest rate statistics such as treasury and prime rates and are therefore considered to be at fair value. The aggregate fair value of mortgages payable approximates the carrying value as of July 31, 1994.
On December 30, 1993 the Trust entered into a 364 day unsecured revolving credit facility providing for borrowings of up to $65 million, of which $7.5 million was outstanding at July 31, 1994. At the time of borrowing the Trust can choose from three interest rate options and several repayment options varying from one to twelve months. At July 31, 1994, the interest rate on the outstanding note payable under the credit facility was 5.125%.
There are restrictive covenants that place a ceiling on total indebtedness of the lesser of 50% of tangible net worth or $250,000,000, a ceiling on mortgage indebtedness of $105,000,000, a minimum interest coverage ratio of 2.5 to 1 and a minimum tangible net worth of $400,000,000. The fair value of the note payable to the bank under the credit facility approximates the carrying value as of July 31, 1994 as the rate on the credit facility is an adjustable market rate.
The Trust has available approximately $1,008,000 of an unused letter of credit as of July 31, 1994.
Interest costs capitalized for the years ended July 31, 1994 and 1993, were approximately $586,000 and $239,000, respectively. Interest paid for the years ended July 31, 1994, 1993 and 1992 was $2,875,000, $1,608,000 and $1,528,000, respectively.
NEW PLAN REALTY TRUST AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JULY 31, 1994
Note F - Other Liabilities
July 31, ________ 1994 1993 __________ __________ Construction costs payable $3,413,000 $2,253,822 Accounts payable 1,404,778 741,388 Real estate taxes payable 2,761,299 1,681,207 State and local taxes payable 2,232,311 1,776,079 Interest payable -- 12,995 Amounts due seller of property 157,433 175,695 Accrued costs associated with sale of shares of beneficial interest 311,742 -- Professional fees and costs 595,714 409,299 Deposits 550,000 -- Acquisition Costs 249,410 -- Other 1,782,793 1,574,863 Deferred rent expense 207,014 182,527 ___________ __________
$13,665,494 $8,807,875 =========== ==========
Note G - Retirement Plan
The Trust, effective August 1, 1989, implemented a Retirement Savings Plan (the "Savings Plan"). Participants in the Savings Plan may elect to contribute a portion of their earnings to the Savings Plan and the Trust may, at the discretion of the Board of Trustees, make a voluntary contribution to the Savings Plan. For the years ended July 31, 1994, 1993 and 1992, the Trust's contribution expense for the Savings Plan was $135,000, $123,000 and 87,000, respectively.
Note H - Shares Of Beneficial Interest
The Trust has a Dividend Reinvestment and Share Purchase Plan (the "Plan") whereby shareholders may invest cash distributions and make optional cash payments to purchase Shares of Beneficial Interest of the Trust without payment of any brokerage commission or service charge. The price per share of the additional shares to be purchased with invested cash distributions is the midpoint between the day's high and low sales prices on the New York Stock Exchange, less 5%.
The Trust has made loans to officers, trustees and employees for the purpose of purchasing its Shares of Beneficial Interest. These loans are demand and term notes bearing interest at rates ranging from 5.0% to 9.75%. Interest is payable quarterly.
Note I - Stock Option Plans
1985 Incentive Stock Option Plan
Pursuant to the 1985 Incentive Stock Option Plan (the "1985 Plan") options to purchase up to 450,000 Shares of Beneficial Interest may be granted to officers and key employees. The exercise price shall not be less than the fair market value of the shares on the date of grant of the option. Options will expire seven years from the date of grant. Options may only be granted within ten years of the date of the adoption of the Plan (i.e., by September 26, 1995). Options are not exercisable until one year from the date of grant, and thereafter are exercisable only as a percentage of the total number of shares covered by the option which begins at 20% during the second year and increases by 20% per year thereafter. The 1985 Plan is administered by a Stock Option Committee appointed by the Board of Trustees.
1991 Stock Option Plan
Pursuant to the 1991 Incentive Stock Option Plan (the "1991 Plan") options to purchase up to 1,000,000 Shares of Beneficial Interest may be granted to officers and key employees. The exercise price shall not be less than the fair market value of the shares on the date of grant of the option. Options will expire seven years from the date of grant. Options may only be granted within ten years of the date of the adoption of the 1991 Plan (i.e., by September 5, 2001). Options are not exercisable until one year from the date of grant, and thereafter are exercisable only as a percentage of the total number of shares covered by the option which begins at 20% during the second year and increases by 20% per year thereafter. The 1991 Plan is administered by a Stock Option Committee appointed by the Board of Trustees.
Non-Qualified Stock Option Plan
Pursuant to the Non-Qualified Stock Option Plan, the Trust granted options to purchase shares. Options are not exercisable until one year from the date of grant, and thereafter are exercisable 20% during the second year and increase by 20% per year thereafter. Other terms are similar to the terms of the 1985 Plan. The Trust no longer issues options to purchase Shares of Beneficial Interest from the Non-Qualified Stock Option Plan (the "Non-Qualified Plan").
March 1991 Stock Option Plan
Pursuant to the March 1991 Stock Option Plan (the "March 1991 Plan") two options for 650,000 Shares of Beneficial Interest each were granted to Mr. William Newman and Mr. Arnold Laubich. The grant of the two options, totaling 1,300,000 shares, was approved by the Board of Trustees on December 5, 1991. The exercise price shall not be less than the fair market value of the shares on the date of grant of the option. The two stock options are not exercisable during the first two years. Thereafter 30% of the shares will vest and may be purchased during the third year with the available shares vesting 10% per year thereafter.
The following table shows the activity and balances for each stock option plan.
March Non- 1991 1991 1985 Plan Qualified Plan Plan Plan ________ ______________ _____ ____
Outstanding, July 31, 1991 105,200 157,800 -- Exercised (42,500) (116,300) Cancelled (3,000) Granted 240,800 3,200 1,300,000 ________ _______ _________
Outstanding July 31, 1992 300,500 44,700 1,300,000
Exercised (30,240) (33,400) Cancelled (35,600) Granted 100,000 5,000 ________ _______ _________
Outstanding July 31, 1993 334,660 16,300 1,300,000
Exercised (15,860) (11,300) Cancelled (37,800) (3,000) Granted 64,500 182,000 ________ _______ _________ _______
Outstanding July 31, 1994 345,500 5,000 1,300,000 179,000 ======== ======= ========= =======
Options exercisable at July 31, 1994 43,944 1,000 520,000 -
Average outstanding option price which is the market price of the shares on the dates of grant $21.79 $21.88 $18.88 $21.87
Average price of options exercised during fiscal 1994 $19.81 $16.50 - -
Note J - Lease Agreements
The Trust has entered into leases, as lessee, in connection with ground leases for shopping centers which it operates, an office building which it sublets and administrative office space for the Trust. These leases are accounted for as operating leases. The minimum annual rental commitments during the next five fiscal years and thereafter are approximately as follows:
Year Ending July 31, Amount ____________________ ______
1995 $ 958,000 1996 907,000 1997 804,000 1998 803,000 1999 769,000 Thereafter 18,496,000 ___________
Total $22,737,000 ===========
For the years ended July 31, 1994, 1993 and 1992, the lease for office space included contingent rentals for real estate tax escalations and operating expense increases of $105,000, $96,000 and $61,000, respectively. In addition, one ground lease has fixed rent escalations every four years and two ground leases have renewal options.
Note K - Rental Income Under Operating Leases
Minimum future rentals to be received during the next five fiscal years and thereafter with initial or remaining noncancelable lease terms in excess of one year are approximately as follows:
Year Ending July 31, Amount ____________________ ______
1995 $68,784,000 1996 61,750,000 1997 56,065,000 1998 49,806,000 1999 41,451,000 Thereafter 249,319,000 ____________
Total $527,175,000 ============
The above table assumes that all leases which expire are not renewed, therefore neither renewal rentals nor rentals from replacement tenants are included.
Minimum future rentals do not include contingent rentals, which may be received under certain leases on the basis of percentage of reported tenants' sales volume, increases in Consumer Price Indices, common area maintenance charges and real estate tax reimbursements. Contingent rentals included in income for the years ended July 31, 1994, 1993 and 1992 amounted to approximately $15,684,000, $10,775,000 and $8,945,000, respectively.
Note L - Pro Forma Financial Information (Unaudited)
The Trust acquired 15 shopping centers, three factory outlets and seven apartment complexes during the year ended July 31, 1994. The pro forma financial information shown below is based on the historical statements of the Trust after giving effect to the acquisitions as if such acquisitions took place on August 1, 1992. The approximately $209,000,000 aggregate acquisition cost included existing mortgages and $196,500,000 in cash.
The pro forma financial information is presented for informational purposes only and may not be indicative of results that would have actually occurred if the acquisitions had been in effect at August 1, 1992. Also, they may not be indicative of the results that may be achieved in the future.
July 31, 1994 1993 ______________________________________________________ Pro forma total revenues $107,313,000 $99,479,000 Pro forma net income $ 53,355,000 $50,598,000 Pro forma earnings per share $ 1.08 $ 1.04 ______________________________________________________
Note M - Quarterly Financial Information (Unaudited) (Amounts In Thousands, Except Share Data)
Income Before Gain on Sale Earnings Year Ended of Property Net Per July 31, Revenues and Securities Income Share _______________________________________________________________ ____ First $21,904 $ 11,570 $12,064 $.25 Second 24,862 12,445 12,941 .26 Third 26,287 13,138 13,138 .27 Fourth 27,902 14,174 14,174 .28
____ First $18,127 $10,413 $10,415 $.22 Second 18,348 10,378 10,678 .22 Third 19,721 10,571 11,202 .23 Fourth 20,113 10,927 10,934 .22
Note N - Supplemental Cash Flow Information
The Trust entered into the following non-cash investing and financing activities for the years ended July 31,:
1994 1993 ____ ____ Mortgages payable assumed in the acquisition of shopping centers $12,019,000 $12,059,000
Increase in loans receivable in connection with the issuance of Shares of Beneficial Interest 1,158,000 319,000
Construction costs payable for the expansion of a shopping center 3,413,000 2,254,000
State and local income taxes paid for the years ended July 31, 1994, 1993 and 1992 were $152,000, $169,000 and $123,000, respectively.
Note O - Subsequent Events
Subsequent to July 31, 1994 the Trust purchased a shopping center containing an aggregate of 102,000 gross rentable square feet and an apartment complex containing 164 units. The newly acquired properties are located in Ohio and New Jersey. The aggregate purchase price for the properties was approximately $13,300,000 in cash.
On August 29, 1994 the Trustees declared a cash distribution to shareholders of record as of September 15, 1994 in the amount of $.335 ($17,619,000) per share payable on October 4, 1994.
In September 1994 the $65 million revolving credit facility (Note E) was increased to $100 million.
(A) Loans are unsecured except as specifically noted.
_____________________
(1) Trade receivables charged to the reserve.
NEW PLAN REALTY TRUST SUPPLEMENTARY INCOME STATEMENT INFORMATION SCHEDULE X
COLUMN A COLUMN B
Item Charged to Cost and Expenses
Year Ended July 31,
1994 1993 1992
1. Maintenance and Repairs 3,103,292 $1,947,992 $1,295,906
2. Depreciation and amort- ization of intangible assets, preoperating costs and similar deferrals (a)
3. Taxes, other than payroll and income taxes:
Real estate 8,821,700 6,556,112 4,947,739
4. Royalties (a)
5. Advertising costs 2,231,725 840,331 219,494
______________________________
(a) Not included since such costs and expenses are not applicable or did not exceed 1% of total revenues.
(1) Aggregate cost is the same for Federal income tax purposes
Year Ended July 31,
1994 1993 1992 ____ ____ ____
Balance, beginning of period $24,135,327 $33,700,044 $19,813,104
Additions during period: New mortgage loans 800,000 -- 14,150,000
Reductions during period: Collection of principal (1,525,651) (9,564,717) (13,060)
Amounts refinanced (500,000) --
Reduction in mortgage receivable in connection with prepaid acquisition -- -- (250,000) costs ___________ ___________ ___________
Balance, end of period $22,909,676 $24,135,327 $33,700,044 =========== =========== ===========
NEW PLAN REALTY TRUST INDEX TO EXHIBITS
No. Page ___ ____
*3.1 Amendment #4 dated December 6, 1972 to Declaration of Trust (amending Declaration of Trust in its entirety) filed as Exhibit 3.1(d) to Registration Statement No. 2-45633.
*3.2 Amendment #5 dated December 12, 1972 to Declaration of Trust filed with Registrant's Form 10-K for the fiscal year ended July 31, 1973.
*3.3 Amendment #6 dated December 13, 1979 to Declaration of Trust and filed as Appendix A to Registrant's Proxy Statement dated November 19, 1979 with respect to annual meeting of shareholders on December 13, 1979.
*3.4 Amendment #7 dated July 9, 1981 to Declaration of Trust and filed as an appendix to Registrant's Proxy State- ment dated June 1, 1981 with respect to a special meeting of shareholders on July 9, 1981.
*3.5 Amendment #8 dated December 15, 1982 to Declaration of Trust and filed as Appendix A to Registrant's Proxy Statement dated November 15, 1982 with respect to annual meeting of shareholders held December 15, 1982.
*3.6 Amendment #9 dated December 10, 1985 to Declaration of Trust and filed as Appendix A to Registrant's Proxy Statement dated November 15, 1985 with respect to annual meeting of shareholders held December 10, 1985.
*3.7 Amendment #10 dated December 14, 1987 to Declaration of Trust and filed as Appendix A to Registrant's Proxy Statement dated November 2, 1987 with respect to annual meeting of shareholders held December 14, 1987.
*9.1 Agreement dated February 26, 1979 among William Newman, Joseph Newman and Melvin Newman filed as Exhibit 9 to Registration Statement No. 2-63669.
*9.2 Agreement dated December 17, 1981 between New Plan Realty Trust and Merchant Navy Officers Pension Fund Trustees Limited filed as Exhibit 9.1 to Post Effective Amendment No. 2 to Registration Statement 2-69682.
*9.3 Debenture Purchase Agreement and Amendment to Exhibits 9.2 and 9.3 herein filed as Exhibit 9.4 to Registration Statement 2-81432.
*9.4 Share Purchase Agreement between New Plan Realty Trust, Merchant Navy Officers Pension Fund Trustees Limited filed as Exhibit 9.5 to Registration Statement No. 2- 90107.
9.5 Purchase Agreement dated December 18, 1990 between New Plan Realty Trust and Beleggingsmaatschappij Midas B.V.
*10.1 Lease dated January 30, 1964 between John Hancock Mutual Life Insurance Company and Roosevelt Mall Northeast, Inc. filed as Exhibit 12.4(a) to Registration Statement No. 2-45633 (Registrant's leasehold interest in the Roosevelt Mall Shopping Center).
10.2 Revolving Credit Agreement by and among New Plan Realty Trust, the Lenders party thereto and The Bank of New York, as agent, dated as of December 30, 1993.
10.3 Amendment No. 1 to Revolving Credit Agreement by and among New Plan Realty Trust, the Lenders party thereto and The Bank of New York, as agent, dated as of December 30, 1993.
22 Subsidiaries of the Registrant.
23 Consents required with respect to material incorporated by reference in a previously filed Registration Statement.
____________________________ * Incorporated herein by reference as above indicated.
EXHIBIT 9.5
PURCHASE AGREEMENT
PURCHASE AGREEMENT, dated as of December 18, 1990, between NEW PLAN REALTY TRUST, a Massachusetts business trust ("NPRT"), and BELEGGINGSMAATSCHAPPIJ MIDAS B.V. (the "Fund"). 1. Purchase and Sale of Firm Shares. Subject to the terms and conditions of this Agreement and on the basis of the representations and warranties hereinafter set forth, NPRT agrees to sell to the Fund, and the Fund agrees to purchase from NPRT, 4,000,000 of NPRT's shares of beneficial interest, without par value (NPRT's shares of beneficial interest, without par value, are herein referred to as the "Shares" and such 4,000,000 Shares are herein referred to as the "Firm Shares"), at a purchase price of U.S. $67,110,500. Delivery of the Firm Shares will be made at the offices of Shearman & Sterling, 599 Lexington Avenue, New York, New York, at 10:00 a.m., New York time on January 10, 1991 or such other time and date as the parties hereto shall agree (the "Closing Date"), against payment of the purchase price therefor in funds that are immediately available and deposited with National Westminster Bank USA, New York, New York, for credit to NPRT's account. In addition to the Firm Shares, the Fund may purchase up to 500,000 Shares through open market purchases on or before April 30, 1991. In the event the Fund has not purchased 500,000 Shares in the open market by April 30, 1991, the Fund shall be obligated to purchase from NPRT, and NPRT shall be obligated to sell to the Fund, that number of Shares which, when added to such number of Shares purchased by the Fund in open market purchases, will aggregate 500,000 Shares (such 500,000 Shares are herein referred to as the "Market Shares"; those Market Shares purchased from NPRT are herein sometimes referred to as the "NPRT Market Shares", and the Firm Shares and the Market Shares are herein referred to collectively as the "Fund Shares"). The purchase price of the NPRT Market Shares shall be U.S. $17.50 per share. Within five business days immediately following April 30, 1991, the Fund shall advise NPRT in writing of the number of Shares purchased in the open market, and the closing of the purchase of the NPRT Market Shares shall be held no later than May 15, 1991. The Fund shall have the right to elect to purchase the NPRT Market Shares from NPRT earlier, by giving NPRT written notice setting forth the number of Shares to be purchased and the number of Market Shares then owned by the Fund, in which event the closing shall take place within 10 business days after receipt by NPRT of such notice on such business day as the Fund and NPRT shall agree. The closing of the purchase from NPRT of the NPRT Market Shares shall be at the place and in the manner referred to in the preceding paragraph, provided that at this closing the conditions to the obligation of the Fund set forth in paragraph 6 hereof shall be satisfied (this closing date and the closing date for the purchase of the Firm Shares sometimes collectively are herein referred to as the "Closing Dates"). In no event, except as provided in paragraph 9(g), shall the aggregate number of Market Shares purchased by the Fund exceed 500,000 Shares. 2. Representations, Warranties and Agreements of NPRT. NPRT represents and warrants to, and agrees with, the Fund that: (a) Financial Statements. NPRT has delivered to the Fund the following documents: (i) NPRT's Annual Reports on Form 10-K to the Securities and Exchange Commission (the "Commission") for the fiscal years ended July 31, 1988, 1989 and 1990;
(ii) NPRT's Quarterly Report on Form 10-Q to the Commission for the quarter ended October 31, 1990, which includes a balance sheet of NPRT as of October 31, 1990 (the "October 31 Balance Sheet");
(iii) NPRT's Registration Statement on Form S-3 (No. 33-28026);
(iv) NPRT's Proxy Statements relating to NPRT's meetings of shareholders (whether annual or special) held since July 31, 1988; and
(v) NPRT's Reports on Form 8-K and Form 8 filed with the Commission since July 31, 1988.
NPRT has not filed, or been required to file, any other document with the Commission under the Securities Act of 1933, as amended (the "1933 Act") or the Securities Exchange Act of 1934, as amended (the "Exchange Act") since the filing on or before December 17, 1990 of the Form 10-Q report referred to in clause "(ii)" above. The reports, registration statement and proxy statements identified above represent all of the documents (other than Reports on Form 10-Q and the Form S-3 relating to NPRT's Dividend Reinvestment Plan, not referred to above) filed by NPRT with the Commission since July 31, 1988 (collectively, the "Reports"). NPRT has filed all forms, reports and documents required to be filed with the Commission since July 31, 1988. The Reports were prepared in accordance with the requirements of the Exchange Act and did not at the time they were filed contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained therein not misleading. Except as described in the letter, dated the date hereof, from NPRT to the Fund (the "NPRT Letter"), NPRT's Annual Report on Form 10-K for the fiscal year ended July 31, 1990 and its Report on Form l0-Q for the quarter ended October 31, 1990, were true and correct in all material respects on the respective dates thereof, the description of NPRT's business in Item 1 of said Form 10-K is true and correct in all material respects as of the date hereof, and no amendment thereto is required to be filed with the Commission under the 1933 Act or the 1934 Act. All of the financial statements contained in the Reports were, on the respective dates thereof, true, correct and accurate, were prepared in accordance with generally accepted accounting principles applied, except as stated in such financial statements or the notes thereto, on a consistent basis throughout the periods covered and present fairly the financial condition of NPRT at the dates indicated and the results of operations and the changes in financial position for the periods indicated. NPRT does not have any liabilities or obligations which are in the aggregate material, whether accrued, absolute, contingent or otherwise, except (i) as reflected in the July 31, 1990 balance sheet contained in the Form 10-K for the year then ended (the "July 31, 1990 Balance Sheet") or the notes thereto or the October 31 Balance Sheet or the notes thereto and not heretofore discharged, (ii) as set forth in the NPRT Letter or (iii) those incurred in the normal and ordinary course of business since October 31, 1990. (b) Tax Returns. Except for matters which NPRT is disputing in pending proceedings as set forth in the NPRT Letter, NPRT has filed all Federal, state and local income tax returns which are required to be filed, such returns have been correctly prepared and all income and other taxes due have been fully paid or adequately reserved for, except in all cases where failure so to file, incorrect preparation of such returns or failure so to pay would not individually or in the aggregate have a material effect on NPRT's business, operations or financial condition. (c) Absence of Certain Changes. NPRT has no current intention and is not considering any plans or proposals to make any material change in the general nature of its business. Except as set forth in the Reports and in the NPRT Letter, since October 31, 1990: (i) NPRT has not (A) made any new material acquisitions of properties or entered into any commitments to make any material acquisitions of properties, (B) issued, assumed or guaranteed any indebtedness for money borrowed or (C) declared or paid any dividends on, or made any distributions to the holders of, its shares of beneficial interest; and
(ii) other than events and developments relating to or affecting the general economy and generally affecting segments of the industries in which NPRT has interests, there has not been (A) any material adverse change, or any development involving a prospective material adverse change, in the financial condition of NPRT taken as a whole, (B) any damage, destruction or loss to physical property, whether or not covered by insurance, materially and adversely affecting the assets, business or prospects of NPRT, (C) any change, or any development involving a prospective change, in the estimated fair value or net realizable value of any investments of NPRT so as to require, under generally accepted accounting principles, any material change in the allowance for possible investment losses set forth in the October 31 Balance Sheet, (D) any other event directly pertaining to and materially and adversely affecting the assets or, to NPRT's actual knowledge, the business of NPRT, or (E) any amendment to the Declaration of Trust of NPRT, which was last amended as of December 14, 1987 (the "Declaration of Trust").
(d) Organization and Standing. NPRT is a voluntary business association commonly known as a business trust of the type described in Chapter 182 of the General Laws of Massachusetts, duly established and validly existing pursuant to the Declaration of Trust under the laws of the Commonwealth of Massachusetts and has full power and authority (trust and other) to own its property and conduct its business as presently being conducted. NPRT is duly qualified to do business in good standing in each jurisdiction in which the ownership of its property or the conduct of its business makes such qualification necessary, except in all cases where failure so to qualify would not individually or in the aggregate have a material adverse effect on NPRT's business, operations or financial condition. NPRT is operating, and has operated during all taxable years for which the period to assess tax has not expired, in such manner as to qualify as a real estate investment trust under the Internal Revenue Code of 1986, as amended (the "Internal Revenue Code"). NPRT made the election to be taxed as a real estate investment trust commencing with its taxable year ended July 31, 1973, and such election has not been terminated or revoked. To the knowledge of NPRT, shares of beneficial interest of NPRT during all periods to which such election has been applicable have been beneficially owned in such a manner as to permit NPRT to qualify as a real estate investment trust under the Internal Revenue Code. To the knowledge of NPRT, NPRT has been a "domestically- controlled REIT" as such term is defined in section 897(h)(4)(B) of the Internal Revenue Code for the five year period ending on the date hereof. NPRT covenants and agrees that (i) it shall not issue any shares of beneficial interest or other equity securities of NPRT to any "foreign person" (as such term is used in section 897(h)(4)(B) of the Internal Revenue Code or any successor provision) if such issuance would result in ownership of 48 percent or more of the value of outstanding shares of beneficial interest and other equity securities of NPRT, directly or indirectly, by "foreign persons" and (ii) it shall make reasonable efforts, such as the issuance of new equity securities to U.S. persons, to assure that the ownership by "foreign persons" of shares of beneficial interest and other equity securities of NPRT does not equal or exceed 48 percent of the value of all outstanding shares of beneficial interest and other equity securities. (e) Capitalization. At the date hereof, the authorized interests of the shareholders of NPRT consist of an unlimited number of Shares, 35,271,180 of which are issued and outstanding, and 1,000,000 Preferred Shares, par value $1.00 per share, none of which have been issued. All of such outstanding Shares have been duly and validly issued and are fully paid and non-assessable by NPRT. There are no options, warrants, calls or commitments of any kind relating to, or securities convertible into, the Shares, except as contemplated hereby and as disclosed in the Reports and in the Proxy Statement and except for employees' stock option plans and agreements for the issuance of not more than an aggregate of 50,000 additional Shares to employees and 5,000 additional Shares to independent contractors. (f) Assets and Encumbrances. NPRT has good and insurable title to all its assets, including those reflected in the October 31, 1990 Balance Sheet or purported to have been acquired thereafter (except properties sold or otherwise disposed of since such date in the normal and ordinary course of business), free and clear of all liens, encumbrances, security interests and adverse claims, except for the security interests securing the mortgage notes payable reflected in the October 31, 1990 Balance Sheet or the notes thereto, except as set forth in the NPRT Letter and except for absences or defects of title, liens and encumbrances which do not interfere in any material respect with the conduct of the business of NPRT. Except as set forth in the October 31, 1990 Balance Sheet or the notes thereto or the NPRT Letter, all mortgage notes owned by NPRT and reflected on said balance sheet are valid and legally binding obligations of the issuer thereof and constitute prior perfected security interests in the assets securing such notes and not more than an aggregate of $100,000 of payments of principal or interest on such mortgage notes owned by NPRT are in default. (g) Litigation. Except as set forth in the Reports and the NPRT Letter, there are no actions, proceedings or investigations pending, or, to the knowledge of NPRT, threatened, against or affecting NPRT or any of its assets or rights, in any court or before any authority, which if adversely determined would materially and adversely affect the financial condition, business, assets or rights of NPRT. (h) Compliance with Other Instruments. Subject to the matters set forth in the Reports and the NPRT Letter, NPRT is not in breach or violation of the terms, conditions or provisions of, or in default under, (i) the Declaration of Trust, (ii) any indenture, mortgage or other agreement or instrument under which NPRT has outstanding any indebtedness for money borrowed, or (iii) except for immaterial breaches or violations, any statute, law, rule, regulation, order, judgment, decree or other agreement or instrument to which it is subject; and upon approval by The New York Stock Exchange of the listing of the Firm Shares and the NPRT Market Shares, the execution, delivery and performance by NPRT of this Agreement, the issuance, sale and delivery by NPRT of the Firm Shares and the NPRT Market Shares and the consummation by NPRT of the transactions contemplated hereby will not conflict with, or result in a breach or violation of the terms, conditions or provisions of, or constitute a default under, or result in the creation or imposition of any lien pursuant to the terms of, any of the foregoing. (i) Regulatory Approval. No consent, approval, authorization or order of, or filing, registration or qualification with, any court or other governmental agency or instrumentality is required in connection with the execution and delivery by NPRT of this Agreement, the issuance, sale and delivery by NPRT of the Firm Shares or the NPRT Market Shares or the consummation by NPRT of the transactions contemplated hereby, except for the filing of a report on Form BE-13A and related forms pursuant to the rules of the Department of Commerce promulgated under the International Investment Survey Act of 1976 and the filing of a Current Report on Form 8-K pursuant to the rules of the Commission promulgated under the Exchange Act. (j) Accuracy of Information. All information and documents listed herein as having been furnished or made available to the Fund, its counsel or its representatives prior to the date hereof were true and correct in all material aspects when furnished. The minute books of NPRT made available to Shearman & Sterling contain accurate records of all Board of Trustees and shareholders meetings of NPRT held since December 31, 1985. (k) Authority Relative to this Agreement. NPRT has all necessary power and authority to enter into this Agreement and to carry out its obligations hereunder. The execution and delivery of this Agreement by NPRT and the consummation by NPRT of the transactions contemplated hereby have been duly authorized by all necessary trust action on the part of NPRT. This Agreement has been duly executed and delivered by NPRT and, assuming the due authorization, execution and delivery by the Fund hereof, constitutes a legal, valid and binding obligation of NPRT. (l) ERISA. The Reports set forth all employee benefit plans (within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA")) and all other benefit plans or arrangements currently maintained by NPRT or with respect to which it has, or reasonably expects to have, any liability (the "Plans"). Each Plan is now, and has been, operated in all material respects in accordance with the requirements of applicable law, including the tax-qualification requirements of Section 401(a) and 501(a) of the Internal Revenue Code with respect to any Plan intended to be so qualified. NPRT has not incurred, nor reasonably expects to incur, any material unfunded liability with respect to any of the Plans. The accumulated benefit obligation of any Plan subject to Title IV of ERISA does not exceed by a material amount the assets of such Plan. 3. Representations, Warranties and Agreements of the Fund. The Fund represents and warrants to, and agrees with, NPRT that: (a) Organization and Standing. The Fund is duly organized and validly existing under the laws of the Netherlands and has full power and authority to complete the transactions contemplated by this Agreement. (b) Due Authorization. The purchase from NPRT of the Firm Shares and the NPRT Market Shares and the execution of this Agreement have been duly authorized by the Board of Directors of the Fund, and execution of this Agreement and the completion of the purchase from NPRT of the Firm Shares and the NPRT Market Shares by the Fund will not violate any law or rule of any governmental agency to which the Fund is subject. (c) Investment Intent. The Fund is purchasing the Firm Shares, and will purchase the NPRT Market Shares, for its own account for investment and not with a view to any resale or distribution thereof. If the Fund should in the future decide to dispose of any of the Firm Shares or the NPRT Market Shares (which it does not now contemplate), the Fund agrees that it shall do so only in compliance with the 1933 Act and Section 5 hereof. (d) Regulatory Approval. No consent, approval, authorization or order of, or filing, registration or qualification with, any court or other governmental agency or instrumentality is required in connection with the execution and delivery by the Fund of this Agreement or the consummation by the Fund of the transactions contemplated hereby, except for the filing by the Fund of statements on Schedule 13D and reports on Form 3 or Form 4 under Rules 13d-l and 16a-l, respectively, promulgated by the Commission under the Exchange Act, and a report on Form BE-13B and related forms pursuant to the rules of the Department of Commerce promulgated under the International Investment Survey Act of 1976 (all of which the Fund agrees to file). The purchase by the Fund of the Fund Shares does not require the filing of a Pre-Merger Notification Form and related documents under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. (e) Taxes, etc. No taxes, levies, imposts or charges of the Netherlands or any political subdivision or taxing authority thereof or therein are required to be paid by NPRT in connection with the issue, sale and delivery of the Firm Shares or the Market Shares hereunder. (f) Ownership of Shares. As of the date hereof, the Fund does not own, beneficially or otherwise, any Shares. 4. Covenants of NPRT. NPRT hereby covenants and agrees with the Fund as follows: (a) Election of Trustees. NPRT will, if requested by the Fund: (i) As soon as practicable after receipt of such request (A) invite a representative of the Fund to attend as a guest all meetings of the Board of Trustees of NPRT until a person designated by the Fund is elected to such Board of Trustees and (B) call a special meeting of shareholders of NPRT to be held as soon as practicable for the purpose of (x) adopting an amendment to the NPRT Declaration of Trust increasing the number of authorized Trustees on NPRT's Board of Trustees to not more than 15 and (y) electing a person designated by the Fund to fill one of the vacancies created by such amendment, the adoption of such amendment and the election of such designee to have been recommended by the Board; and
(ii) so long as the Fund beneficially owns at least 9.9% of NPRT's outstanding Shares, include the Fund's designee in NPRT's Board of Trustees' nominees for election as Trustees at each annual meeting of shareholders unless a designee of the Fund already serves as a Trustee and the term of such Trustee does not expire at such annual meeting.
Any person designated by the Fund other than Messrs. Wim G. Bleijenberg and Jean L.M.J. Klijnen shall be subject to the approval of the Chairman of NPRT or the nominating committee of the Board of Trustees; provided, however, that such approval shall not be unreasonably withheld. At any time that (1) there is no member of the Board of Trustees who was designated by the Fund pursuant to clause (ii) above and (2) the Fund beneficially owns at least 9.9% of NPRT's outstanding Shares, NPRT shall (A) permit an authorized representative of the Fund meeting the criteria set forth in the immediately preceding sentence to attend all meetings of the Board of Trustees and shall provide the Fund with such notice of and other information with respect to such meetings and actions proposed to be taken without meetings as are delivered to the Trustees and (B) notify the Fund, within ten days thereafter, of the taking of any written action by the Board in lieu of a meeting thereof. The member of the Board of Trustees designated by the Fund pursuant to clauses (i) and (ii) above shall be appointed a member of the Audit Committee of the Board of Trustees. In the event of any vacancy in the Board of Trustees between annual meetings of NPRT's shareholders, the Fund will cause its designee as Trustee to vote to fill the vacancy with the person nominated by the nominating committee of the Board, or in the absence of any such nomination, the person proposed by the Chief Executive officer of NPRT. (b) Financial Statements and Other Documents. So long as the Fund beneficially owns at least 9.9% of NPRT's outstanding Shares, NPRT will dispatch to the Fund, within seven days after the filing thereof with the Commission, two copies of all documents filed by it with the Commission under the 1933 Act or the Exchange Act. If NPRT should cease to be subject to the reporting requirements of the Commission under Section 13(a) or Section 15(d) of the Exchange Act, it will nevertheless furnish to the Fund substantially the same financial statements, and in substantially the same form and at substantially the same times, as it would have been required to include in any filings with the Commission had it been subject to such requirements. (c) Access to Information. NPRT has given, and will give so long as the Fund beneficially owns at least 9.9% of NPRT's outstanding Shares, the Fund, its counsel and its auditors, reasonable access to the books, records, personnel and facilities of NPRT, and will comply with all reasonable requests for the furnishing of information and documents; provided, however, that the Fund agrees not to publish or disclose information or documents not otherwise made public other than to its counsel or auditors without NPRT's prior written consent. (d) Restriction on Issuance of Shares. For a period of six months from the Closing Date of the Firm Shares, NPRT shall not, except for Shares issued pursuant to NPRT's Dividend Reinvestment Plan in effect on the date hereof and Shares issued under any 401k plan, employee stock option, purchase plan or agreement in effect on the date of this Agreement, issue or sell any Shares at a price of less than U.S. $16.75 or issue, sell or grant any option, warrants or calls relating to, or any security convertible into, any Shares which have an exercise or conversion price of less than U.S. $16.75 per Share. (e) Use of Proceeds. NPRT will invest the proceeds from the sale of the Firm Shares and the NPRT Market Shares (net of the reasonable expenses payable by NPRT under Section 9(c) hereof and any other out-of-pocket expenses incurred by NPRT in connection with the execution and delivery of this Agreement and the issuance, sale and delivery of the Firm Shares and the NPRT Market Shares) as follows: The primary use of the proceeds will be for acquisitions of additional properties as suitable opportunities arise. NPRT's principal emphasis has been and is expected to continue to be shopping centers and garden apartment properties. The Trust may also use a portion of the proceeds to renovate, expand and improve existing Trust properties and to add to working capital. In the interim, such proceeds may be invested in short-term or intermediate-term government securities, obligations of the Government National Mortgage Association, bankers' acceptances, certificates of deposit of commercial banks and savings banks and savings and loan associations which are members of the Federal Deposit Insurance Corporation, deposits in members of the Federal Home Loan Bank System, time deposits, commercial paper, other market instruments, bonds, notes and common and preferred stock.
Neither such proceeds nor any income earned from investments thereof shall be used for any purposes other than making the investments permitted by the first sentence of this paragraph (e); provided, however, that any such income may be used to pay cash dividends on, or to make distributions to holders of, NPRT's Shares. 5. Covenants of the Fund. For the purpose of establishing criteria to determine whether, at various points of time in the future, the then members of the Board of Trustees and the then executive officers of NPRT reflect some degree of continuity with their then immediate predecessors for the purposes of this paragraph 5 and paragraph 8, (i) a "Continuing Trustee" means a Trustee who either was a Trustee on the Closing Date, or at any time thereafter is a Trustee whose nomination was approved by a majority of the Continuing Trustees (provided that, in the event only two Trustees constitute all of the Continuing Trustees and one of such Trustees is a Continuing Officer, the Trustee who is a Continuing Officer shall be deemed to be "a majority of the Continuing Trustees" for purposes of this clause (i)), (ii) an "Executive Officer" means an executive officer of NPRT required to be named as an executive officer in NPRT's then most recent Annual Report on Form 10-K, and (iii) a "Continuing Officer" means an Executive Officer who either at any time now or hereafter has been an Executive Officer for at least two years, or who at any time now or hereafter is elected to his or her office by a majority of the Continuing Trustees. The Fund hereby covenants and agrees with NPRT that, provided Continuing Trustees constitute a majority of the Board of Trustees and Continuing officers constitute a majority of the Executive Officers: (a) Restriction on Disposition of Shares. Except for sales or transfers to affiliates of the Fund, the Fund will not pledge, hypothecate, sell or transfer any of the Firm Shares or the NPRT Market Shares for a period of ten years from the Closing Date; provided, however, that after the closing for the NPRT Market Shares the Fund may pledge all or any part of the Fund Shares from time to time pursuant to bona fide loan transactions where the Fund's obligations are guaranteed by an entity satisfactory to NPRT and which expressly provide that in the event the Fund Shares are transferred by reason of exercise of the pledgee's rights, all transferees of the Fund Shares shall remain bound by the provisions of this Agreement (provided, however that the rights and obligations of all transferees which are affiliates of the Fund shall be governed by paragraph 9(e) hereof, and provided, further that if the pledgee is a non- affiliate of the Fund, it and its transferees shall not be bound by those provisions contained in paragraph 5 hereof) but shall not have any of the Fund's rights to designate a Trustee or receive access to financial information or the Fund's registration rights herein contained, including without limiting the generality of the foregoing, those rights set forth in paragraphs 4 and 7 hereof; provided, further, that beginning five years after the Closing Date, the Fund may sell up to one-half of the maximum number of Shares which the Fund is permitted at any time to own under this Agreement (i) in underwritten public offerings registered under the 1933 Act and, in the case of public offerings resulting from the exercise of the rights of the Fund under paragraph 7(a) hereof, in which the managing underwriter or underwriters represent that it is their intention to distribute the Firm Shares and the net Shares being sold in such a manner that no single purchaser will acquire more than 10% of the total of the Firm Shares and the NPRT Market Shares originally purchased by the Fund or (ii) in placements either registered under the 1933 Act or exempt therefrom under Rule 144 promulgated thereunder in which no purchaser acquires more than 5% of the total of the Firm Shares and the NPRT Market Shares originally purchased by the Fund. Notwithstanding the foregoing, if at any time after the date hereof: (x)(i) there is signed a termination or modification of the existing income tax convention between the United States and the Netherlands with the effect that at any time after the effective date thereof dividend distributions by NPRT to the Fund will be subject to United States tax at a rate in excess of 15 percent or (ii) the ownership of shares of beneficial interest and other equity securities of NPRT held by "foreign persons" (as such term is used in section 897(h)(4)(B) of the Internal Revenue Code or any successor provision), directly or indirectly, equals or exceeds 48 percent in value of all outstanding shares of beneficial interest and other equity securities of NPRT, then the Fund shall have the right at its sole cost and expense to sell or otherwise dispose of all or part of the Fund Shares and (y) legislation shall be introduced in the United States Congress which, if enacted, would subject the Fund to United States tax on the sale or exchange of Shares, then the Fund shall have the right at its sole cost and expense to sell or otherwise dispose of all Shares held by the Fund (or that portion of the Shares owned by the Fund as may be necessary to reduce the ownership of Shares by the Fund so that such legislation is inapplicable to the Fund). Any Shares sold or otherwise disposed of by the Fund pursuant to the preceding sentence shall be sold or otherwise disposed of (x) in an underwritten public offering registered under the 1933 Act or (y) in one or more private placements exempt from registration under the 1933 Act to one or more persons approved by NPRT, such approval not to be unreasonably withheld. (b) Voting Fund Shares. Provided that William Newman, Joseph Newman and Melvin D. Newman or their respective heirs, executors, legal representatives, successors or assigns (except open market purchasers), vote the Shares owned or the voting of which is controlled by them in favor of the election as a Trustee of any person designated by the Fund in accordance with paragraph 4(a) hereof, the Fund will vote the Fund Shares: (i) for a period from the Closing Date until December 24, 2001, in favor of the election of the Board of Trustees' nominees for Trustees; and
(ii) for a period of five years from the Closing Date, in the manner recommended by the Board of Trustees of NPRT on any proposal presented by the Board to the shareholders of NPRT provided, however, that the Fund shall not be required to vote in any such manner if such vote would adversely affect the Fund's Shares by decreasing the amount of dividends or distributions payable on account of the Fund Shares or the amount payable thereon upon liquidation of the Trust or by having some other demonstrable adverse economic effect on the Fund Shares, or by diminishing or eliminating any voting rights pertaining thereto or the Fund's right to designate a Trustee or the Fund's registration rights (any proposal which would equally affect all of the Trust's Shares, so that the effect on the Fund's Shares is pro rata in proportion to all of the Trust's Shares then outstanding, is not a proposal which "adversely affects the Fund's Shares" within the meaning of this proviso, e.g., a proposal to approve a large issuance of shares).
6. Conditions to Obligation of the Fund. The obligation of the Fund to purchase and pay for the Shares shall be subject to the accuracy as of each Closing Date (as if made on such Closing Date) of the representations and warranties of NPRT herein, to the performance by NPRT of its obligations hereunder to be performed on or before such Closing Date, and to the satisfaction of the following conditions on such Closing Date: (a) Opinion of NPRT's Counsel. The Fund shall have received an opinion or opinions of Hofheimer Gartlir & Gross or Altheimer & Gray, counsel to NPRT, dated the Closing Date and in form and substance satisfactory to the Fund, to the effect that: (i) NPRT is a voluntary business association commonly known as a business trust of the type described in Chapter 182 of the General Laws of Massachusetts, duly established and validly existing pursuant to the Declaration of Trust under the laws of the Commonwealth of Massachusetts and has the requisite power to conduct the business in which it is engaged on the Closing Date;
(ii) This Agreement has been duly authorized, executed and delivered by NPRT and constitutes a valid and legally binding obligation of NPRT, enforceable in accordance with its terms, subject,,as to enforcement, to bankruptcy, insolvency, reorganization or other laws of general applicability relating to or affecting the enforcement of creditors' rights and to general equity principles (except that such counsel need not express an opinion as to the indemnity and contribution agreements in Section 7(e) hereof);
(iii) All of the outstanding Shares (including the Firm Shares and the Market Shares) have been duly authorized and the outstanding Shares are, and the Firm Shares and the Market Shares when issued in accordance with paragraph 1 hereof will be, validly issued, fully paid and nonassessable by the Trust, and neither the Declaration of Trust nor general principles of Massachusetts law provide the shareholders of NPRT with preemptive rights;
(iv) No consent, approval, authorization or order of, or filing, registration or qualification with, any court or other governmental agency or instrumentality is required in connection with the execution, sale and delivery by NPRT of this Agreement, the issuance, sale and delivery by NPRT of the Firm Shares or the NPRT Market Shares or the consummation by NPRT of the transactions contemplated hereby, except for the filing by NPRT of a report on Form BE-13A and related forms pursuant to the rules of the Department of Commerce promulgated under the International Investment Survey Act of 1976 and the filing of a current Report on Form 8-K pursuant to the rules of the Commission promulgated under the Exchange Act;
(v) The execution, delivery and performance by NPRT of this Agreement, the issuance, sale and delivery by NPRT of the Firm Shares and the NPRT Market Shares and the consummation by NPRT of the transactions contemplated by this Agreement are not required to be approved by the holders of NPRT's Shares and do not conflict with, or result in a breach or violation of the terms, conditions or provisions of, or constitute a default under, or result in the creation or imposition of any lien pursuant to the terms of, the Declaration of Trust, or any statute, law, rule or regulation or any order, judgment, decree, indenture, mortgage or other agreement or instrument known to such counsel to which NPRT is subject;
(vi) Except as set forth in the Reports, the NPRT Letter or the October 31, 1990 Balance Sheet or the notes thereto, there are no actions, proceedings or investigations pending, or to the knowledge of such counsel threatened, against or affecting NPRT or any of its properties or rights, which if adversely determined would materially and adversely affect the financial condition, business, assets or rights of NPRT; and
(vii) It is not necessary in connection with the issue, sale and delivery of the Firm Shares or the NPRT Market Shares, under the circumstances contemplated by this Agreement, to register such Shares under the 1933 Act.
(b) Opinion of Counsel for the Fund. The Fund shall receive from Shearman & Sterling, special counsel for the Fund, such opinion as to the issuance of the Firm Shares and the NPRT Market Shares and other matters as the Fund may require, and NPRT shall have furnished to such counsel such documents as such counsel may reasonably request for the purpose of enabling them to pass upon such matters. (c) Certificate of NPRT. The Fund shall have received a certificate or certificates, dated the Closing Date and in form and substance satisfactory to the Fund, signed by The Chief Executive Officer or the Chief Operating Officer of NPRT to the effect that the representations and warranties of NPRT herein are true and correct, as if made at and as of the Closing Date, and that NPRT has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied at or prior to the Closing Date. (d) Listing. The New York Stock Exchange shall have approved the listing of the Firm Shares and the NPRT Market Shares to be purchased from NPRT. (e) Reliance on Massachusetts Lawyers. In rendering their opinions, Hofheimer Gartlir & Gross, Altheimer & Gray and Shearman & Sterling may rely, as to all matters of Massachusetts law, upon the opinion of Hale & Dorr or Fordham & Starrett or other Massachusetts counsel reasonably acceptable to the Fund. (f) Voting Agreement. Messrs. William Newman, Joseph Newman and Melvin D. Newman (sometimes herein referred to collectively as the "Newmans") shall have executed an agreement in form reasonably satisfactory to the Fund to vote the Shares owned or the voting of which is controlled by them in favor of the election as a Trustee of any person designated by the Fund in accordance with paragraph 4(a) hereof. 7. Registration Rights. NPRT hereby covenants and agrees as follows: (a) Required Registration of Fund Shares. At any time after five years from the Closing Date (or at such earlier time as mutually agreed in writing by the parties hereto or as permitted by paragraph 5(a) hereof), upon the written request (which shall specify the number of Fund Shares intended to be sold and describe the nature of any proposed sale) of the Fund, NPRT will as soon as practicable (but in any event within six months of the receipt by NPRT of such request, subject to subparagraph "(f)" hereinbelow) prepare, file and use its best efforts to cause to become effective a registration statement under the 1933 Act with respect to such of the Fund Shares as the Fund shall have requested be registered (NPRT shall use Form S-3 if available), subject to the provisions of paragraph "5" hereof, and NPRT shall take whatever action may be required to permit the sale of all such Shares, subject to the provisions of said subparagraph "(f)". (b) Incidental Registration. If NPRT at any time plans to file a registration statement covering proposed sales for cash of its equity securities (other than shares issuable upon the exercise of employee stock options or pursuant to any employee share purchase or similar plan) under the 1933 Act (otherwise than pursuant to the provisions of "(a)" above), it will give written notice to the Fund at least 15 days prior to the day on which such registration statement is filed and, at the Fund's written request given within ten days after the receipt of such notice (which request shall specify the number of Fund Shares intended to be sold or disposed of by the Fund), NPRT will use its best efforts to cause all Shares for which registration shall have been requested to be included in such registration statement to the extent required to permit the sale or other disposition thereof in accordance with the method described by the Fund, subject to the provisions of (f) below and of Section 5 hereof. (c) Expenses and Maintenance of Registration. NPRT shall keep effective and maintain any registration specified in paragraph (a) or (b) above for such period as the Fund may deem necessary for the purpose of selling or disposing of the Fund Shares, which period shall not exceed the lesser of (y) three months or (z) such period during which the financial statements in the registration statement do not become stale, and from time to time during such period shall amend or supplement the prospectus used in connection therewith to the extent necessary in order to comply with applicable law. NPRT shall furnish the Fund with as many copies of any prospectus (and of any amended or supplemented prospectus) in connection with any such registration as it may reasonably request and shall, when and as requested by the Fund, take any action necessary to permit the offering of the Fund Shares covered by such registration under the securities laws of such states as it may reasonably designate; provided, however, that NPRT shall not be required to qualify as a foreign corporation to do business or to give a general consent to service of process. All expenses, disbursements and fees in connection with any registration contemplated by paragraph (a) or (b) above or under this paragraph (c) shall be borne by the persons seeking to sell the Shares so registered in proportion to the number of such Shares sought to be sold by such persons. (d) Opinion of Counsel Upon Registration. At the time when any registration statement under the 1933 Act pursuant to paragraph (a) or (b) above becomes effective, and at the time of each post-effective amendment, NPRT will furnish to the Fund, and any underwriters or broker-dealers through whom the Fund Shares may be sold, (A) an opinion of counsel to NPRT to the effect that (i) to the best of the knowledge of such counsel, no stop order suspending the effectiveness of the registration statement has been issued and no proceedings for that purpose have been instituted or are pending or contemplated under the 1933 Act, (ii) the registration statement and the prospectus, as of the effective date of the registration statement or amendment, as the case may be, appeared on their face to be appropriately responsive in all material respects to the requirements of the 1933 Act and the applicable rules and regulations of the Commission thereunder, (iii) such counsel have no reason to believe that the registration statement or the prospectus, as of the effective date of the registration statement or amendment, as the case may be, contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein not misleading and (iv) the Fund Shares offered thereby have been duly authorized and validly issued and are fully paid and non- assessable by NPRT; it being understood that such counsel need not express any opinion or belief as to the financial statements or other financial data contained in the registration statement or prospectus, and (B) a comfort letter from the independent public accountants of NPRT, in customary form and covering such matters of the type customarily covered by the comfort letters given by such accountants to the underwriters in NPRT's underwritten public offerings managed by nationally recognized underwriters. (e) Indemnification. NPRT hereby agrees to indemnify the Fund, any underwriter or broker-dealer through whom the Fund Shares may be sold and each person, if any, who controls the Fund or any such underwriter or broker-dealer within the meaning of the 1933 Act, against all losses, claims, damages, liabilities or expenses or actions in respect thereof (under the 1933 Act or common law or otherwise) caused by any untrue statement of a material fact contained in any registration statement or prospectus (and as amended or supplemented if NPRT shall have furnished any amendments or supplements thereto) or any preliminary prospectus or caused by any omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading; and will reimburse the Fund for any legal or other expenses reasonably incurred by it in connection with investigating or defending against such loss, claim, damage, liability or action, except insofar as such losses, claims, damages, liabilities or expenses are caused by any untrue statement or omission contained in information furnished in writing to NPRT by the Fund expressly for use therein. In connection with any registration statement in which the Fund is participating, the Fund promptly will furnish NPRT in writing such information as shall reasonably be requested by NPRT for use in any such registration statement or prospectus and will indemnify NPRT, its Trustees and officers, each underwriter and each person, if any, who controls NPRT or any underwriter within the meaning of the 1933 Act, against any losses, claims, damages, liabilities and expenses and actions in respect thereof (under the 1933 Act or common law or otherwise) resulting from any untrue statement of a material fact or any omission of a material fact required to be stated in the registration statement or prospectus or necessary to make the statements therein not misleading; and will reimburse NPRT for any legal or other expenses reasonably incurred by it in connection with investigating or defending against such loss, claim, damage, liability or action, but only to the extent that such untrue statement or omission is contained in information so furnished in writing by the Fund expressly for use therein. Each party hereto will also agree that in the event any such indemnification by it is held by a court to be unavailable, such party will contribute to any damages paid by the other party or any underwriter or broker-dealer which would have been paid had such indemnification not been held to be unavailable. (f) Limitations on Rights to Registration. Notwithstanding the provisions of (a) above: (i) NPRT shall not be required to register Fund Shares owned by the Fund or any assignee of the Fund under the 1933 Act if in the opinion of counsel to NPRT and the opinion of special counsel to the Fund or any assignee of the Fund, as the case may be, such registration is not necessary under the circumstances;
(ii) NPRT shall not be required to file more than two registration statements pursuant to the provisions of "(a)" above, and NPRT shall be required to file the second such registration statement only at such time which does not, in NPRT's reasonable judgment, materially and adversely interfere with NPRT's plans for any public offering and/or private placement of its Shares contemplated to occur within six months of the date of the Fund's notice requesting registration or its use of Shares to acquire property in a pending transaction or where the registration statement requirements would cause its officers and staff to devote any substantial business time to the compiling or updating of financial information outside of the normal course of business.
(iii) The rights to registration specified in (b) above shall be limited to situations where a proposed public distribution of the Fund Shares to be registered is to be effected forthwith upon the effectiveness of a registration statement with respect thereto;
(iv) The minimum number of Fund Shares included in a registration statement pursuant to the provisions of paragraph (a) above shall be 1,000,000; and
(v) If NPRT has filed a registration statement covering the sale for its own account of its own securities to underwriters for the purpose of making a public offering and Fund Shares are to be included therein pursuant to the provisions of paragraph (b) above and if in the judgment of the managing underwriter or underwriters of the proposed public offering of such securities such inclusion would materially and adversely affect such public offering and notification of such determination is given to the Fund as promptly as practicable, the number of Shares to be offered for the account of the Fund shall be reduced to the extent recommended by such managing underwriter or underwriters; provided that, if securities are being offered for the account of other persons as well as NPRT, the proportion by which the number of Shares intended to be offered by the Fund is reduced shall not exceed the proportion by which the number of Shares intended to be offered by such other persons is reduced; and provided further that if the reduction in the number of Shares to be offered by the Fund would, in the judgment of such managing underwriter or underwriters, be insufficient to substantially eliminate the material adverse effect that inclusion of the Fund Shares requested to be included would have on such offering, such Fund Shares shall be excluded from such offering. If any such Fund Shares are therefore not included in two such registration statements, NPRT will file an additional registration statement pursuant to the provisions of paragraph (a) above.
8. Additional Agreements. Except as provided in this Section 8, the Fund agrees, provided Continuing Trustees constitute a majority of the Board of Trustees and Continuing Officers constitute a majority of the Executive Officers, that for a period of 15 years after the Closing Date the Fund will not, without the prior consent of NPRT's Board of Trustees specifically expressed in a resolution adopted by a majority of the Trustees of NPRT who are not designated by the Fund, acquire, by purchase or otherwise, any securities, including convertible securities, which entitle the holder directly or upon conversion to vote for the election of Trustees of NPRT ("Voting Securities"), if immediately after such acquisition the Fund, its Trustees and officers would hold in the aggregate more than 15% of the total votes of all Voting Securities at the time outstanding (assuming conversion of all convertible securities); provided, however, that the provisions of this paragraph shall not prevent the Fund from converting any securities held by it into Shares, if such securities have been called for redemption by NPRT or NPRT has taken other action which would cause a failure so to convert such securities to have an adverse effect on the Fund. So long as the Fund beneficially owns at least 9.9% of the Shares, NPRT agrees that in the event that it should propose to issue and sell for cash additional Voting Securities (such additional Voting Securities are herein referred to as the "Additional Securities"), it will give the Fund notice of such proposal (the "Proposal Notice") and the Fund shall thereupon have the right to purchase from NPRT sufficient securities of the same class and having the same terms as the Additional Securities so that after the issuance of the Additional Securities the Fund will own the same percentage of Shares as the Fund owned prior to the issuance of the additional shares (such securities which the Fund shall have a right to purchase are herein referred to as the "Fund's Additional Securities"); provided, however, that on and after the fifteenth anniversary date of the initial Closing Date, the Fund's rights hereunder shall be limited to maintaining a percentage of Shares which shall not exceed 9.9% of the outstanding Shares. The purchase price per share to be paid by the Fund for the Fund's Additional Securities shall be the public offering price or sales price or, in the case of a subscription offering made to all holders of outstanding Shares, the subscription price, less in each case underwriting discounts or commissions, if any. The Fund's right to purchase the Additional Securities shall be exercised by written notice to NPRT given by the Fund not more than seven business days following receipt by the Fund of the Proposal Notice, setting forth the amount of the Fund's Additional Securities to be purchased. Upon receipt by NPRT of such notice, the Fund shall be obligated to purchase from NPRT, and NPRT shall be obligated to sell to the Fund, such amount of the Fund's Additional Securities, such purchase and sale to take place on the closing of the issuance of the Additional Securities (in the event of a private placement, such purchase and sale shall take place within 30 days of the closing of the private placement); provided, however, that in the event the Additional Securities are not issued within three months after the receipt by NPRT of the notice setting forth the amount of the Fund's Additional Securities to be purchased by the Fund, then the parties shall have no further obligations pursuant to this sentence and NPRT shall not thereafter proceed with the issuance of the Additional Securities without giving the Fund a new notice pursuant to the preceding sentence. All references to "Fund Shares" in paragraphs 5, 7 and 9(e) hereof shall be deemed to include the Fund's Additional Securities. The right to purchase Additional Securities provided for in this paragraph shall not apply to (a) Shares issued for a consideration other than cash, (b) Shares issued under NPRT's Dividend Reinvestment and Share Purchase Plan or (c) up to 200,000 Shares issued during any fiscal year of NPRT under any employee or Trustee stock option or purchase plan or pension plan at a purchase price equal to not less than 85% of the fair market value of such Shares on the date of purchase or the date any such option is granted. 9. Miscellaneous. (a) Termination. The Fund, provided that prior to the breach or default hereinbelow described the Fund was complying with its obligations under this Agreement, may elect to terminate all or any of the provisions of paragraph 5 hereof after any of the following events: (i) if NPRT breaches, or defaults in the performance of, any of its covenants contained in Section 2 or 4 of this Agreement or elsewhere in this Agreement in any material respect (whether or not such covenants are valid and legally binding obligations of NPRT) or if during their survival period any of NPRT's representations or warranties contained herein are incorrect in any material respect, or (ii) if Messrs. William Newman, Joseph Newman or Melvin D. Newman or their respective heirs, executors, legal representatives, successors or assigns (except open market purchasers), fail to vote the Shares owned or controlled by them in favor of the election as a Trustee of any person designated by the Fund in accordance with paragraph 4(a) hereof (whether or not such covenants are valid and legally binding obligations of such person). If the breach or default is a material breach of subparagraphs (a), (d) or (e) of paragraph 4 or if there is a breach of covenant of the type described in clause (ii) immediately above, the Fund also may elect to terminate all or any of the provisions of paragraph 8 hereof. In the event of any election to terminate hereunder, the Fund shall forthwith give written notice thereof to NPRT and shall not take any action prohibited by Section 5 or 8 hereof unless and until the termination becomes effective. No termination pursuant to this paragraph 9(a) as a result of any such breach or default shall be effective if (i) NPRT or the Newmans shall have remedied or cured such breach or default within 30 days after receipt by them of such notice or, if in NPRT's reasonable judgment such breach or default cannot be cured within such 30-day period, NPRT or the Newmans shall have commenced such remedy or cure within such 30 day period and shall complete such remedy or cure within an aggregate of 60 days after receipt by them of such notice or (ii) NPRT or the Newmans shall have been enjoined by a court of competent jurisdiction from performing or abiding by the covenant so breached or defaulted upon, provided NPRT or the Newmans shall use their best efforts to cause such injunction to be dissolved (including the exhaustion of all rights of appeal). No investigation by the Fund shall affect the representations and warranties of NPRT in Section 2 or the right of the Fund to terminate any portion of this Agreement as provided in this Section 9(a). (b) Amendment. This Agreement may be amended or supplemented in any respect at any time by an agreement in writing executed in the same manner as this Agreement. (c) Expenses. NPRT shall bear all United States taxes which may be payable in respect of the issue, sale or delivery of any of the Firm Shares or the NPRT Market Shares and the fees and expenses of NPRT's counsel and NPRT's Massachusetts counsel, and the fees of Merrill Lynch & Co. (which is paying its own expenses), investment bankers for NPRT in respect of the transactions contemplated hereby. The Fund shall bear the fees and expenses of Shearman & Sterling, special counsel for the Fund or any substitute for such special counsel (and any other counsel with whom they may consult) in connection with this Agreement, and with respect to the NPRT Market Shares, the Fund shall pay a portion of the fees of Merrill Lynch & Co. equal to 13/16ths of 1% of the purchase price for such Shares. Each party hereto represents to the other that it is not aware of any other person who is entitled, or who may assert a right, to receive a broker's, finder's or similar fee in connection with this Agreement. (d) Survival of Representations and Warranties. All representations and warranties contained herein or made in writing in connection herewith shall survive the execution and delivery of this Agreement and the delivery by NPRT of the Firm Shares, and the NPRT Market Shares, regardless of any investigation made by the Fund or on its behalf, for a period of three years from the Closing Date of the Firm Shares. (e) Successor and Assigns. All covenants and agreements in this Agreement shall bind and inure to the benefit of the respective successors and assigns of the parties hereto whether so expressed or not; provided, however, that no purchaser of any of the Fund Shares (other than an affiliate of the Fund except as provided in paragraph 5(a)) shall have the benefits of a successor or assign by reason merely of such purchase but such purchaser shall be bound by the Fund's obligations under this Agreement, except that the provisions of Section 7 shall inure to the benefit of and be binding upon any purchaser of more than 200,000 Fund Shares. Notwithstanding the foregoing, Purchasers of Fund Shares in any public offering of such Fund Shares shall not be subject to any of the obligations, or have the benefit of any of the rights, of the Fund under this Agreement. (f) Notices. All communications provided for hereunder shall be hand delivered, sent by courier, or sent by facsimile transmission and confirmed by a hand delivered confirmation or a fax advice of such delivery. If at any time either party is delivering a communication to the other party, a fax advice of such delivery shall be faxed to the other party at the time such communication is deposited with a courier or other by hand deliverer. If to the Fund, such communications shall be addressed to the Fund at its offices at Oude Lindestraat 70, correspondentieadres, postbus 2980, 6401 DL Heerlen, The Netherlands, Attn: Jean L.M.J. Klijnen, with a copy to Shearman & Sterling, at 599 Lexington Avenue, New York, New York 10022, Attn: Cornelius Dwyer, Jr., Esq.; if to NPRT, addressed to it at its offices at 1120 Avenue of the Americas, New York, New York 10036, with copies to Hofheimer Gartlir & Gross, 633 Third Avenue, New York, New York 10017 and Altheimer & Gray, 10 South Wacker Drive, Chicago, Illinois 60606; or to such other address with respect to any party as such party shall notify the other party hereto in writing. (g) Stock Splits. All numbers of Shares and prices per Share included herein shall be adjusted for any stock dividends, stock splits or revenue stock splits paid or made after the date of this Agreement. (h) Descriptive Headings. The descriptive headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement. (i) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York. (j) Legends on Shares: REIT Qualification. The Fund acknowledges that the certificates for the Firm Shares and the NPRT Market Shares delivered on the Closing Dates will bear the legend required by Section 6.3 of the Declaration of Trust and a legend referring to the Fund's agreements in the second sentence of Section 3(c) hereof and in Section 5 hereof and the Fund agrees to be bound by the provisions of such legends. (k) Immunity of Trustees, et al. No obligation of NPRT hereunder is personally binding upon, nor shall resort in respect thereof be had to the private property of, any of the Trustees, shareholders, officers, employees or agents of NPRT, but the Trust Property (as defined in the Declaration of Trust) or a specific portion thereof only shall be bound. IN WITNESS WHEREOF, this Agreement has been executed on behalf of NPRT and the Fund, all as of the date first above written.
NEW PLAN REALTY TRUST BELEGGINGSMAATSCHAPPIJ MIDAS B.V.
By By
Title: Title:
The undersigned, to induce NPRT (the terms used herein are those used in the above Agreement) to enter in to the above Agreement with the Fund, the undersigned's wholly-owned subsidiary, and for other good and valuable consideration the receipt whereof is hereby acknowledged, hereby guarantees to NPRT, and its successors and assigns, the full payment of the purchase price by the Fund for the Firm Shares on the initial Closing Date if the conditions for the payment of the purchase price have been satisfied. This guaranty of the undersigned is irrevocable and shall bind the undersigned and its successors and assigns.
ALGEMEEN BURGERLIJK PENSIOENFONDS
By