UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-KSB
X ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1995
OR
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 0-9380
CAPITAL PROPERTIES, INC.
(Name of small business issuer in its charter)
Rhode Island 05-0386287
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
One Hospital Trust Plaza, Suite 920, Providence, Rhode Island 02903
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (401) 33l-0l00
Securities registered under Section 12(b) of the Exchange Act:
Name of each exchange
Title of each class on which registered
Common Stock-$1.00 par value Boston Stock Exchange
Securities registered under Section 12(g) of the Exchange Act:
None
(Title of Class)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months and (2)
has been subject to such filing requirements for the past 90 days.
Yes X No
Check if there is no disclosure of delinquent filers in response to Item 405
of Regulation S-B contained in this form and no disclosure will be contained,
to the best of issuer's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [X]
<PAGE>
For the year ended December 31, 1995, the issuer's revenues totalled
$3,010,000.
As of March 1, 1996, the aggregate market value of the voting stock held by
non-affiliates of the issuer was $4,062,000. (For this purpose, all
directors of the issuer are considered affiliates.)
As of March 1, 1996, the issuer had 1,000,000 shares of Common Stock
outstanding.
Documents Incorporated by Reference - Portions of the proxy statement for
the 1996 annual meeting of shareholders are incorporated by reference into
Part III. Portions of the annual report to shareholders of Capital Properties,
Inc. for the year ended December 31, 1995 are incorporated by reference into
Parts I, II, and III.
Exhibit Index - Page III-2.
Transitional Small Business Disclosure Format. Yes No X
<PAGE>
PART I
Item 1. - Description of the Business
Business Development
The Issuer was organized as a business corporation under the laws of Rhode
Island in 1983 as Providence and Worcester Company and is the successor by
merger in 1983 to a corporation also named Providence and Worcester Company
which was organized under the laws of Delaware in 1979. The Issuer's
corporate name was changed to Capital Properties, Inc. in 1984.
Business of Issuer
The Issuer conducts petroleum terminal operations (see "Petroleum Terminal
Property" in Item 2 below), owns certain properties in downtown Providence,
Rhode Island (see "Land Under Long-Term Leases," "Land Under Short-Term
Leases," and "Land Available for Leasing" in Item 2 below) and operates a
public parking garage and other downtown Providence properties as public
parking facilities (see "Parking Garage" in Item 2 below).
The Issuer owns all of the outstanding capital stock of Tri-State
Displays, Inc., through which the Issuer conducts a business which consists
of the leasing of land for boards along interstate and primary highways for
outdoor advertising purposes.
References hereinafter to the "Issuer" are, unless the context indicates
otherwise, collectively to the Issuer and its wholly-owned subsidiary and its
predecessors.
Miscellaneous
For information relating to the Issuer's dependence on one or a few major
customers, see Note 5 of Notes to Consolidated Financial Statements in the
Issuer's 1995 Annual Report to shareholders attached hereto as Exhibit 13
(hereinafter referred as the "1995 Annual Report"), which note is
incorporated herein by reference.
During the last two years, no monies were expended by the Issuer and its
subsidiary on material research and development activities.
Compliance with federal, state and local provisions which have been
enacted or adopted regulating the discharge of materials into the environment,
or otherwise relating
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to the protection of the environment, has not had a material effect upon the
capital expenditures, earnings or competitive position of the Issuer.
On December 31, 1995, the Issuer employed a total of 4 persons.
Item 2. - Description of Property
Principal Facilities
The Issuer's principal executive offices occupy 2,300 square feet in
premises located in Providence, Rhode Island and held under a lease expiring
in March 1998.
Investment Policies
The Issuer has no established policy for the purchase of additional
developed or undeveloped property. However, should suitable parcels become
available in the general area of the Issuer's current land holdings, the
Issuer would consider such an acquisition depending on current levels of cash
and the availability of financing. Any properties acquired would most likely
be leased primarily to developers under long-term leases.
Description of Real Estate and Operating Data
All of the properties described below (except the petroleum terminal
property) are shown on a map on page 5 of the Issuer's 1995 Annual Report,
which map is incorporated herein by reference.
All the properties described below are owned in fee by the Issuer. There
are no mortgages, liens or other encumbrances on such properties except for
Parcel 22.
In the opinion of management, all of the properties described below are
adequately covered by insurance. Insurance is also required of all tenants,
with the Issuer being named as an additional insured.
Petroleum Terminal Property - The Issuer holds title to approximately 8
acres of land fronting on the Seekonk River in East Providence, Rhode Island.
The property is used and operated primarily as a petroleum terminal with
aggregate storage capacity of 342,000 barrels. Although the Issuer has no
present plan therefor, the property can be further developed to contain
several additional storage tanks.
Additionally, the Issuer has the perpetual right to use the Wilkesbarre
Pier in the Port of Providence and its deep-water berth for receiving
petroleum products by tanker,
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and the perpetual right to transport such products from the Pier to its
terminal property through pipelines owned by a third party. The Issuer also
has the right to use a barge dock in the Seekonk River owned by a third party
for the off-loading of petroleum products.
This property is the only independent petroleum storage terminal
facility with deep-water access in the market area.
The terminal property is leased to a single tenant under a lease which
expires on September 30, 1996. The annual rental is $183,000 ($.53 per
square foot). The tenant has the option to purchase the terminal property
during the term of the lease. The purchase price during the first year of
the lease was $4,500,000, increased by an inflation factor in each of the
remaining four years ($5,100,000 at December 31, 1995). All of the petroleum
storage tanks and buildings are owned by the Issuer.
The following schedule sets forth certain information on the federal
tax basis of that portion of the petroleum terminal property which is
depreciated:
<TABLE>
<C> <S> <S>
Buildings Tanks
Federal Tax Basis (cost).............. $191,021 $2,246,787
Rate.................................. 2.5% to 5% 33.3% to 20%
Method................................ S/L S/L
Life (Years).......................... 20 to 40 5 to 33
</TABLE>
The 1995 real estate taxes, which are paid by the tenant, are $86,44l at
a $34.60 per Thousand Dollars of assessed valuation tax rate.
Parking Garage - The Issuer owns a 360-car parking garage adjacent to
a rail passenger station in downtown Providence, Rhode Island, together with
the underlying land (the Parking Garage). The Parking Garage is operated by
the Issuer under a management agreement with a firm experienced in parking
operations, which agreement is cancellable by either party on short notice.
The Issuer has no present plan for the future improvement of this property.
The Parking Garage is surrounded by parcels owned by the Issuer on which
there is surface parking. (See "Land Under Short-Term Leases" below for a
discussion of future development.) Several of these parcels are leased to
the firm mentioned above.
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Also, there is a parking garage under an apartment building adjacent to the
Parking Garage which, at this time, is available for public parking. However,
since the apartment building is fully occupied, its garage is not a
competitive factor. A 1,680-car parking garage, constructed in connection
with the Convention Center Project in downtown Providence, opened in 1992 but
has not affected the operations of the Issuer's Parking Garage and adjacent
parking facilities.
The federal tax basis of the Parking Garage (exclusive of the underlying
land) is $2,500,000, which is being depreciated on the straight-line method
at the rate of 2.5% over a 40-year life.
The 1995 real estate taxes are $87,212 on the Parking Garage and
$160,949 on the underlying land using a $28.17 per Thousand Dollars of
assessed valuation tax rate.
Land Under Long-Term Leases - The Issuer owns approximately 20.5 acres
of land within the Capital Center Project area of downtown Providence,
including 1.9 acres of air rights over Amtrak's Northeast Corridor railroad
tracks which run through downtown Providence. (The land underlying the
Parking Garage described above is also included in this acreage.) See the
map on page 5 of the Issuer's 1995 Annual Report, which map is incorporated
herein by reference.
At December 31, 1995, land leases for three separate land parcels within
this area have commenced with remaining terms of up to 97 years. These
leases have scheduled rent increases over their terms. For further
information on the development of these parcels by the tenants, reference is
made to the President's Report at pages 2 and 3 in the Issuer's 1995 Annual
Report, which report is incorporated herein by reference.
Land Under Short-Term Leases - Parcels 3E, 3W, 4E and 4W in the Capital
Center Project area and Parcels 21 and 22 immediately adjacent to this area
are leased to the same firm that operates the Parking Garage described above
for surface parking purposes. However, the Issuer continues to seek
developers for these parcels, and these leases can be terminated on short
notice should suitable development opportunities arise.
In connection with Parcel 4E, in 1989 the Issuer entered into a letter of
intent with a developer who proposes to construct an office building.
However, due to the current economic conditions in New England and the
difficulty in obtaining credit for
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commercial real estate development, the developer has delayed the project.
The Issuer is the largest single landowner in the Capital Center Project
area but is nevertheless subject to some measure of competition from other
landowners.
The State of Rhode Island had been storing concrete blocks on Parcel 9
in the Capital Center Project area in connection with the moving of two
rivers in this area but ceased using the parcel for storage as of December
31, 1994. The State's final reimbursement to the Issuer for the property
taxes on this parcel was in April 1995. The Issuer evaluated the use of the
parcel for surface parking but determined it was not a viable project at this
time.
Land Available for Lease - Parcel 6 in the Capital Center Project area,
which is available for lease, is operated by the Issuer for surface parking
under the same management agreement described above in "Parking Garage."
Item 3. Legal Proceedings
Petition for Assessment of Damages - For a discussion of the litiga-
tion currently pending with the State of Rhode Island, reference is made to
the President's Report at page 3 in the 1995 Annual Report, which report is
incorporated herein by reference.
Arbitration Proceedings - In 1994, a leak was discovered in a 25,000
barrel storage tank at the petroleum terminal facilities (the Facilities)
which allowed the escape of a small amount of fuel oil. The tank was emptied
and all required notices were made to the Rhode Island Department of Environ-
mental Management (the Agency). During 1995, the tank was repaired at a cost
to the Issuer of $35,000.
To date, monitoring wells have shown no ground water contamination, and
the contamination from the leak has been limited to the soil under the tank.
The Issuer's engineering consultants (the consultants) are working with the
Agency to determine the extent of remediation. The consultants have proposed
several options and have determined a range range of estimated costs (includ-
ing professional fees) to be $27,000 (for the capping of the contaminated
area) to $383,000 (for the complete removal of the contaminated soil and its
off-site disposal). The Agency has advised the Issuer that it will accept
the capping of the contaminated area as an appropriate remediation measure,
subject to the placement of a notice in the Issuer's deed describing the
location of the
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contaminated area.
Management is of the opinion that the terms of the lease not only make
the tenant solely responsible for the payment of all costs to remediate the
contaminated soil but also require the tenant to return the Facilities at the
termination of the lease in a condition substantially the same as when the
tenant took possession. The tenant does not agree that it is responsible for
the payment of such costs. The lease provides for arbitration in the event
that the parties cannot reach agreement.
Item 4. Submission of Matters to a Vote to Security Holders
Not applicable.
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PART II
Item 5. Market for Common Equity and Related Stockholder Matters
See page 23 of the Issuer's 1995 Annual Report, which page is
incorporated herein by reference.
Item 6. Managements Discussion and Analysis or Plan of Operation
See pages 6 through 9 of the Issuer's 1995 Annual Report, which pages
are incorporated herein by reference.
Item 7. Financial Statements
The following consolidated financial statements of the Issuer and its
subsidiary, set forth at pages 11 through 21 of the Issuer's 1995 Annual
Report, are incorporated hereby reference:
Consolidated balance sheet - December 31, 1995
Consolidated statements of income and retained earnings - years ended
December 31, 1995 and 1994
Consolidated statements of cash flows - years ended December 31, 1995
and 1994
Notes to consolidated financial statements - years ended December 31,
1995 and 1994
Item 8. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure
Not applicable.
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PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons of the
Issuer.
For information with respect to the directors and control persons of
the Issuer, see Pages 2, 3 and 4 of the Issuer's definitive proxy statement
for the 1996 annual meeting of its shareholders, which pages are incorporated
herein by reference.
The following are the executive officers of the Issuer:
<TABLE>
<CAPTION>
Date of First
Name Age Office Held Election to Office
<S> <C> <C> <C>
Barbara J. Dreyer 57 President and Treasurer 1995
Linda Eder 55 Vice President 1986
Edwin G. Torrance 64 Secretary 1995
</TABLE>
All officers hold their respective offices until their successors are
duly elected and qualified. Ms. Dreyer served as Secretary-Treasurer of the
Issuer from 1987 until her election to the office of President and Treasurer
in 1995.
Item 10. Executive Compensation.
See page 3 of the Issuer's definitive proxy statement for the 1996
annual meeting of its shareholders, which page is incorporated herein by
reference.
Item 11. Security Ownership of Certain Beneficial Owners and Management
See page 4 of the Issuer's definitive proxy statement for the 1996
annual meeting of its shareholders, which pages are incorporated herein by
reference.
Item 12. Certain Relationships and Related Transactions
See pages 3, 4 and 5 of the Issuer's definitive proxy statement for
the 1996 annual meeting of its shareholders, which pages are incorporated
herein by reference.
Item 13. Exhibits And Reports on Form 8-K
(a) Index of Exhibits:
(3) (a) Articles of Incorporation (incorporated by reference to
Exhibit 3 to the Issuer's annual report on Form 10-K for
the year ended December 31, 1988).
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(b) By-laws, as amended (incorporated by reference to Exhibit
3(b) to the Issuer's quarterly report on Form 10-QSB for the
quarter ended June 30, 1995).
(10) Material contracts:
(a) Note from Providence and Worcester Railroad Company to
Issuer dated January 1, 1988 (incorporated by reference to
Exhibit 10(a) to the Issuer's annual report on Form 10-KSB
for the year ended December 31, 1992) as modified by
Agreement dated August 16, 1995; see page III-4.
(b) Lease between Whiteco Metrocom, Inc. and Issuer dated
June 25, 1985 (incorporated by reference to Exhibit 10(b) to
the Issuer's annual report on Form 10-KSB for the year ended
December 31, 1992) as amended by agreement dated March 12,
1995 (incorporated by reference to Exhibit 10(c) to the
Issuer's quarterly report on Form 10-QSB for the quarter
ended June 30, 1995).
(c) Leases between Metropark, Ltd., and Issuer:
(1) Dated November 30, 1995; see page III-5.
(2) Dated November 10, 1994 (incorporated by reference
to Exhibit 10(c) (ii) to the Issuer's annual report
on Form 10-KSB for the year ended December 31, 1994).
(3) Dated November 10, 1994 (incorporated by reference to
Exhibit 10(c) (iii) to the Issuer's annual report on
Form 10-KSB for the year ended December 31, 1994).
(13) Annual report to shareholders for the year ended December 31,
1995; see page III-6.
(21) Subsidiary of the Issuer; see page III-7.
(99) Plan of the Issuer's parcels in downtown Providence
(incorporated by reference to page 5 of the Issuer's annual
report to
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shareholders for the year ended December 31, 1995), filed as
Exhibit 13 hereto.
(b) For the quarter ended December 31, 1995, no reports on Form 8-K
were filed.
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EXHIBIT 10 (a)
FIRST PROMISSORY NOTE MODIFICATION AGREEMENT
This First Promissory Note Modification Agreement is entered into as of
August 16, 1995, by and between PROVIDENCE AND WORCESTER RAILROAD COMPANY, a
Rhode Island corporation (hereinafter referred to as "Maker"), which is the
successor by merger to P&W Acquisitions, Inc., also a Rhode Island corpora-
tion, and CAPITAL PROPERTIES, INC., a Rhode Island corporation (hereinafter
referred to as the "Payee").
WITNESSETH:
WHEREAS, P&W Acquisitions, Inc. has heretofore executed and delivered to
the Payee a promissory note dated January 1, 1988 in the original principal
amount of $9,377,311.00; and
WHEREAS, P&W Acquisitions, Inc. was merged with and into the Maker, and
the Maker assumed all obligations of P&W Acquisitions, Inc. under said
promissory note dated January 1, 1988; and
WHEREAS, several prepayments of principal have previously been made on
said promissory note, and on August 16, 1995 the Maker made an additional
principal prepayment in the amount of $1,800,000, which reduced the outstand-
ing principal balance of said promissory note as of said date to
$4,681,253.51; and
WHEREAS, the Maker has agreed to make, on or before September 1, 1995,
and the Payee has agreed to accept, in satisfaction of the Maker's payment
obligations under said promissory note through September 1, 1995 (i) an
additional principal payment in the amount of $19,037.99, which will reduce
the outstanding principal balance of said promissory note to $4,662,215.52,
and (ii) an interest payment in the amount of $53,211.90, consisting of
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$32,406.30 (representing interest at the rate of 12% per annum accrued on the
outstanding principal balance of said promissory note through August 15,
1995) and $20,805.60 (representing interest at the rate of 10% per annum
accruing on the outstanding principal balance of said promissory note during
the period August 16-August 31, 1995); and
WHEREAS, Maker and Payee wish to modify said promissory note to reflect
the foregoing as well as other modifications agreed to by Maker and Payee;
NOW, THEREFORE, the Maker and Payee hereby mutually agree to modify said
promissory note dated January 1, 1988 in the following manner, effective
September 1, 1995 and subject to the prior payment by the Maker to the Payee
of the principal and interest referred to in the fourth preamble, above:
1. The caption and first paragraph of said promissory note are hereby
amended to read as follows:
"Promissory Note
$4,662,215.52 Providence, Rhode Island
September 1, 1995
For Value Received, Providence and Worcester Railroad Company, a
Rhode Island corporation (hereinafter referred to as "Maker"), promises to
pay to the order of Capital Properties, Inc., a Rhode Island corporation
(hereinafter referred to as "Payee"), the principal sum of Four Million Six
Hundred Sixty-two Thousand Two Hundred Fifteen and 52/100 Dollars
($4,662,215.52), payable at the times hereinafter specified, together with
interest, in arrears, from the date hereof on the unpaid principal balance
from time to time outstanding and on all unpaid installments of
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interest, whether before or after the maturity of or default under this note,
at the rate of ten percent (10%) per annum."
2. The third paragraph of said promissory note is hereby amended to
read as follows:
"Principal and interest hereunder shall be payable in one hundred
forty-seven (147) consecutive monthly installments in the amount of
$54,938.47 each commencing on the first day of October, 1995 and continuing
on the first day of each month thereafter through and including the first day
of December 2007, and one (1) final installment of the entire unpaid balance
of principal and interest on the first day of January 2008."
3. The fifth paragraph of said promissory note is hereby amended to read
as follows:
"This note may be prepaid at any time, in whole or in part, without
penalty or premium, subject to the giving to the Holder of not less than ten
(10) days' prior written notice thereof. All sums paid under this note shall
be applied first to any interest, fees, expenses and other charges then due
and unpaid, in such order as the Holder shall determine, with the remaining
balance, if any, to be applied to unpaid principal in the manner hereinafter
specified.
In the event of any partial prepayments of principal hereunder
(including, but not limited to, prepayments as a result of the payment to
the Holder of the proceeds of insurance on, condemnation of, or sale of, any
property at any time serving as security for this note or any sales of real
property or any interest in real property by the Maker):
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(i) the first $200,000 of such prepayments will be applied so
that the monthly payments of principal and interest otherwise thereafter
becoming due hereunder shall be recalculated to the end that the outstanding
principal balance of this note remaining after such prepayment shall,
together with all interest accruing thereon at the rate above specified, be
paid over the then remaining term of this note in equal monthly installments;
and
(ii) any additional prepayments of principal on this note over
and above the first $200,000 referred to in clause (i) will, to the extent of
fifty percent (50%) thereof, be applied as set forth in clause (i), above,
and fifty percent (50%) thereof shall be applied to installments of this note
in the inverse order of their maturity (as recalculated in accordance with
clause (i)).
At any time following written notice from the Holder, the Maker
shall apply fifteen percent (15%) of the net proceeds from any sale of real
property or any interest in real property, other than real property or any
interest in real property encumbered by the Mortgage (as hereinafter defined)
as a prepayment of principal of this note, such prepayments to be applied in
the manner and with the result set forth in clause (ii), above. The Holder
shall have the right, from time to time, to give, withdraw and reinstate any
such notice."
4. The seventh paragraph of said promissory note is hereby amended
to read as follows:
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"This note is secured by a Mortgage Deed of the Maker effective
January 1, 1988 which grants to the Payee a mortgage lien on certain real
estate and improvements thereon of the Maker (the "Mortgage")."
5. The eighth paragraph of said promissory note is hereby amended to
read as follows:
"Payee and any successor Holder may assign, transfer or negotiate
this note and any security for the performance of Maker's obligations
hereunder, and in such event all the provisions of this note and the Mortgage
shall inure to the benefit of and may be exercised by or on behalf of the
successor Holder, and all payments of principal and of interest due and to
become due under this note shall not thereafter be subject to any defense,
counterclaim or set-off which Maker may have against any prior Holder."
6. Clause 1 of the ninth paragraph of said promissory note is hereby
amended to read as follows:
"1. Nonpayment of any installment of principal and/or interest due
under this note when it shall become due and payable (no prior demand there-
for being necessary) and such nonpayment shall have continued for more than
ten (10) days after notice thereof from Holder to Maker."
7. Clause 2 of the ninth paragraph of said promissory note is hereby
amended to read as follows:
"2. Nonpayment of any other sum payable under this note, the Mortgage,
or any other documents, instruments or agreements ("Other Documents") now or
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hereafter securing this note or executed by Maker or any other person, corp-
oration or other entity now or hereafter liable, absolutely or contingently,
for the whole or any part of the indebtedness evidenced by this note, includ-
ing, without limitation, any guarantor(s) hereof (an "Other Liable Party") in
connection herewith, and, unless a different grace or notice period is
elsewhere specified, such nonpayment shall have continued for more than
ten (10) days after notice thereof from Holder to Maker."
8. Clause 3 of the ninth paragraph of said promissory note is hereby
amended to read as follows:
"3. Nonperformance or nonobservance of any of the other covenants,
agreements or conditions of the Mortgage or any of the Other Documents, and
unless a different grace or notice period is elsewhere specified, such
nonperformance or nonobservance shall have continued for more than thirty
(30) days after notice thereof from Holder to Maker; provided, however, that
if (a) the curing of such default cannot be accomplished with due diligence
within said thirty (30) day period, (b) Maker commences to cure such default
promptly after receipt of notice thereof from Holder and thereafter diligent-
ly and continuously prosecutes the cure of such default, and (c) the extens-
ion of the period for effecting a cure will not result in any material
impairment of any property given as security as for this note, the value
thereof or Holder's lien thereon, then such period of thirty (30) days shall
be extended for such period of time as Holder reasonably deems necessary for
Maker so acting to cure such default; provided further, however, such
extended cure period shall not be applicable to any default which may be
cured by the payment of money. The foregoing shall not
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be deemed to provide a grace or notice period for nonperformance or non-
observance of any covenant, agreement or condition which is specifically
listed as an Event of Default in any other paragraph of this note."
9. Clause 4 of the ninth paragraph of said promissory note is hereby
amended to read as follows:
"4. The occurrence of any "Event of Default" under the Mortgage, or
any of the Other Documents, or the occurrence of any event or condition which
would entitle Holder to exercise any of its remedies under the Mortgage or
any of the Other Documents."
10. Clause 6 of the ninth paragraph of said promissory note is hereby
amended to read as follows:
"6. The property mortgaged, pledged or otherwise given pursuant to
the Mortgage or any of the Other Documents to secure this note or any portion
thereof or any interest therein is conveyed, voluntarily encumbered or other-
wise transferred in any way without the prior written consent of the Holder."
11. Clause 7(a) of the ninth paragraph of said promissory note is hereby
amended to read as follows:
"(a) that certain Master Agreement dated November 30, 1987 among P&W
Acquisitions, Inc., the Payee and the Maker;"
12. Clause 7(b) of the ninth paragraph of said promissory note is hereby
amended to read as follows:
"(b) any of the Mortgage or Other Documents;"
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13. Clause 8 of the ninth paragraph of said promissory note is hereby
amended to read as follows:
"8. The occurrence of any "event of default" under any document,
agreement or instrument now or hereafter (a) evidencing or securing any other
obligation or indebtedness of Maker or any Liable Party to Holder now exist-
ing or hereafter arising or (b) evidencing any obligation or other indebted-
ness secured in whole or in part by any or all of the property covered by the
Mortgage or Other Documents, or the nonpayment, nonperformance or nonobser-
vance of any of the covenants, agreements or conditions of any such
documents, agreements or instruments, which nonpayment, nonperformance or
nonobservance shall have continued beyond the expiration of any applicable
grace or notice period, or the occurrence of any event or condition which
would entitle the obligee of or under any such documents, agreements or
instruments to exercise any of its remedies thereunder."
14. Clause 11 of the ninth paragraph of said promissory note is hereby
amended to read as follows:
"11. The dissolution, liquidation or termination of existence of
Maker or any Other Liable Party or a sale of assets of Maker or any Other
Liable Party out of the ordinary course of business."
15. The thirteenth paragraph of said promissory note is hereby amended
to read as follows:
"Maker will pay the legal and other fees and expenses of the Holder reason-
ably incurred in connection with or incidental to the enforcement of any of
the obligations
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of Maker or rights of the Holder under this note, the Mortgage or Other
Documents or any other agreement, document or instrument now or hereafter
executed in connection herewith, by litigation or otherwise; and all such
fees and expenses shall be indebtedness under this note and shall be secured
by the Mortgage or Other Documents."
16. The fourteenth paragraph of said promissory note is hereby amended to
read as follows:
"All provisions of this note, the Mortgage and the Other Documents
are expressly subject to the condition that in no event, whether by reason of
acceleration of maturity of the indebtedness evidenced hereby or otherwise,
shall the amount paid or agreed to be paid to Payee hereunder and deemed
interest under applicable law exceed the maximum rate of interest on the
unpaid principal balance of this note allowed by applicable law (the "Maximum
Allowable Rate"), which shall mean the law in effect on the date of this
note, except that if there is a change in such law which results in a higher
Maximum Allowable Rate being applicable to this note, then this note shall be
governed by such amended law from and after its effective date. In the event
that fulfillment of any provision of this note, the Mortgage or any of the
Other Documents results in the interest rate hereunder being in excess of the
Maximum Allowable Rate, the obligations to be fulfilled shall automatically
be reduced to eliminate such excess. If, notwithstanding the foregoing,
Payee or any successor Holder receives an amount which under applicable law
would cause the interest rate hereunder to exceed the Maximum Allowable Rate,
the portion thereof which would be excessive shall
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automatically be applied to and deemed a prepayment of the unpaid balance of
this note and not a payment of interest."
17. A new paragraph shall be added to said promissory note, immediately
following the fourteenth paragraph, as amended, reading as follows:
"All notices permitted or required hereunder shall be in writing and
shall be deemed to have been duly given if personally delivered or if sent by
telecopier or by registered or certified mail, return receipt requested and
postage prepaid, addressed as follows:
If to the Holder, to:
Capital Properties, Inc.
One Hospital Trust Plaza
Suite 920
Providence, Rhode Island 02903
Attn: Barbara J. Dreyer, President
If to the Maker, to:
Providence and Worcester Railroad Company
P.O. Box 16551
Worcester, Massachusetts 01601
Attn: Heidi J. Eddins, Secretary and General Counsel
or to such other address as the party to whom notice is to be given may have
furnished to the other party in writing. Any such notice shall be deemed to
have been received (a) in the case of personal delivery or telecopier
transmission, on the date of such delivery or transmission, and (b) in the
case of mailing, on the next business day following such mailing."
The Maker agrees to pay any legal fees incurred by the Payee in connection
with the
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negotiation and preparation of this First Promissory Note Modification
Agreement.
Except as herein modified, said promissory note dated January 1, 1988
is hereby ratified and confirmed and shall remain in full force and effect.
IN WITNESS WHEREOF, each of the Maker and Payee has caused this First
Promissory Note Modification Agreement to be duly executed and delivered by
its officer thereunto duly authorized as of the date first set forth above.
PROVIDENCE AND WORCESTER
RAILROAD COMPANY
/s/Wendy Sundeen By /s/Orville R. Harrold
Witness Orville R. Harrold, President
CAPITAL PROPERTIES, INC.
/s/Gloria P. Hopkins By /s/Barbara J. Dreyer
Witness Barbara J. Dreyer, President
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EXHIBIT (10)(c)(i)
L E A S E
THIS INDENTURE OF LEASE made as of the day of November,
1995, by and between CAPITAL PROPERTIES,INC., a Rhode Island
corporation (hereinafter referred to as "Landlord"), and
METROPARK, LTD., a Rhode Island corporation (hereinafter referred
to as "Tenant").
W I T N E S S E T H T H A T:
In consideration of the rents, covenants and agreements to be
paid, kept and performed by Tenant, as hereinafter provided,
Landlord hereby demises and leases to Tenant, and Tenant hereby
hires and takes from Landlord the real property known as Parcels
3W and 4W in the Capital Center, in Providence, Rhode Island, as
shown on a plan attached to this Lease as Exhibit A (hereinafter
called the "Premises").
TO HAVE AND TO HOLD the Premises, together with all rights,
privileges, easements and appurtenances thereunto belonging and
attaching, unto Tenant for a term of one year (hereinafter called
the "Term") commencing as of December 1, 1995, and ending on
November 30, 1997.
This Lease is made upon the covenants and agreements herein
set forth on the part of the respective parties, all of which the
parties respectively agree to observe and comply with during the
term hereof.
1. RENTAL.
During the period from December 1, 1995 to November 30,
1996, Tenant shall pay to Landlord an annual rental of One
Hundred Twenty-six Thousand ($126,000) Dollars payable in monthly
installments of Ten Thousand Five Hundred ($10,500) Dollars on
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the first day of each month. During the period from December 1,
1996 to November 30, 1997, Tenant shall pay to Landlord an annual
rental of One Hundred Thirty-two Thousand ($132,000) Dollars
payable in monthly installments of Eleven Thousand ($11,000)
Dollars on the first day of each month.
2. UTILITIES AND OTHER CHARGES.
Tenant will pay directly before the same become
delinquent all charges, duties, rates, license and permit fees
and other amounts of every description to which the Premises or
any part thereof or any improvement thereon erected or used by
Tenant may, during the term hereof, be assessed or become liable
for electricity, refuse collection, telephone or any other
utilities or services or any connection or meters therefor,
whether assessed to or payable by Landlord or Tenant. Tenant
will, within ten (10) days after receipt of written demand by
Landlord, furnish Landlord with receipts or other evidence
indicating that all such amounts have been paid. Provided,
however, that Tenant shall only be responsible for those charges
and assessments which are for the period of its occupancy of the
Premises.
3. TAXES AND ASSESSMENTS.
Landlord will pay and keep current the real estate taxes
assessed against the premises.
4. COMPLIANCE WITH LAWS AND REGULATIONS.
Tenant will at all times during the term hereof keep the
Premises in good order and a strictly sanitary condition and
observe and perform all laws, ordinances, orders, rules and
regulations now or hereafter made by any governmental authority
for the time being applicable to the Premises or any improvement
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thereon or use thereof, and with the orders, rules and
regulations of the National Board of Fire Underwriters or similar
organization so far as the same may relate to the use of the
Premises, and will indemnify Landlord against all actions, suits,
damages and claims by whomsoever brought or made by reason of the
nonobservance or nonperformance of such laws, ordinances, orders,
rules and regulations, or of this covenant. Nothing herein shall
obligate the Tenant to construct any additional improvements on
the Premises.
5. INSPECTION.
Tenant will permit Landlord and its agents at all
reasonable times during the term hereof to enter the Premises and
examine the state of repair and condition thereof, and the use
being made of the same. Landlord may also enter upon the
Premises to perform any repairs or maintenance which Tenant has
failed to perform hereunder, and to show the premises to
prospective purchasers, tenants and mortgagees. Further,
Landlord shall have the right to have test borings done on the
premises on weekends, but done in such a manner as not to
unreasonably interfere with Tenant's business thereon.
6. REPAIR AND MAINTENANCE.
Tenant will, at its own expense, from time to time and
at all times during the term hereof, well and substantially
repair, maintain, amend and keep the Premises, together with all
fixtures and items of personal property used or useful in
connection therewith, with all necessary reparations and
amendments whatsoever in as good order and condition as they now
are or may be put in, reasonable wear and tear and damage by the
elements and such unavoidable casualty against which insurance is
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not required hereunder excepted. Tenant will maintain the signs
on the Premises and fix all potholes that may develop. Tenant
will have the benefit of all warranties pertaining thereto.
Tenant will remove snow from the Premises and keep the sidewalks
clean and free from ice and snow.
7. USE.
Tenant shall use the Premises only for the operation of
a parking lot and other accessory uses relating to motor
vehicles.
8. NOTICES RE PREMISES.
Landlord will forthwith furnish Tenant copies of any
notices it receives regarding the Premises from any third parties
which notices relate to the Tenant's use and occupancy of the
Premises.
9. CANCELLATION OF LEASE.
Landlord and Tenant may cancel this Lease upon thirty
(30) days' notice to the other.
10. INSURANCE.
Tenant will, at its own cost and expense, effect and
maintain during the term hereof, a policy or policies of
comprehensive general liability insurance, or its equivalent,
with minimum limits of not less than $500,000 for injury to one
or more persons in any one occurrence, and also insurance in the
sum of not less than $1,000,000 against claims for property
damage in any one accident, such policy or policies to name
Landlord as additional assured, to require the insurer to give
Landlord at least ten days' written notice of its intention to
cancel, terminate or amend the insurance policy or policies in
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any material respect, and to cover the entire Premises. Tenant
may insure premises as part of a blanket policy.
11. LANDLORD'S COSTS AND EXPENSES.
If Tenant shall fail to comply with any of its
obligations hereunder, Landlord may, upon ten (10) days' prior
written notice to Tenant (or without notice in case of
emergency), take such action as may be reasonably required to
cure any such default by Tenant. Tenant will pay to Landlord, on
demand, all costs and expenses, including reasonable attorneys'
fees, incurred by Landlord in collecting any delinquent rents, or
other charges payable by Tenant hereunder, or in connection with
any litigation commenced by or against Tenant (other than
condemnation proceedings) to which Landlord, without any fault on
its part, shall be made a party. All such amounts owing to
Landlord shall constitute additional rent hereunder.
12. INDEMNIFICATION OF LANDLORD.
12.1. Tenant shall indemnify and save harmless Landlord
(regardless of Tenant's covenant to insure) against and from any
and all claims by or on behalf of any person or persons, firm or
firms, corporation or corporations, arising from the use,
occupancy, conduct or management of the Premises, unless done by
or contributed to Landlord, any of its agents, contractors,
servants, employees or licensees, and shall further indemnify and
save Landlord harmless against and from any and all claims
arising during the term hereof from any condition of the
Premises, or arising from any breach or default on the part of
Tenant in the performance of any covenant or agreement on the
part of Tenant to be performed pursuant to the terms of this
Lease, or arising from any act of Tenant or any of its agents,
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contractors, servants or employees to any person, firm or
corporation occurring during the term hereof in or about the
Premises or upon or under said areas, and from and against all
costs, counsel fees, expenses or liabilities incurred in or about
any such claim or action or proceeding brought thereon.
12.2 Tenant shall pay and indemnify Landlord against
all legal costs and charges incurred in obtaining possession of
the Premises after the default of Tenant or upon expiration or
earlier termination of the term hereof, other than by reason of
any default of Landlord, or in enforcing any covenant or
agreement of Tenant herein contained.
13. LIENS.
13.1 Tenant will not commit, suffer any act or neglect
whereby the Premises or any improvements thereon or the estate of
Landlord therein shall at any time during the term hereof become
subject to any attachment, judgment, lien, charge or encumbrance
whatsoever, except as herein expressly provided, and will
indemnify and hold Landlord harmless from and against all loss,
costs and expenses, including reasonable attorneys' fees, with
respect thereto.
13.2 If due to any act or neglect of Tenant, any
mechanic's, laborer's or materialmen's lien shall at any time be
filed against the premises or any part hereof, Tenant, within
thirty (30) days after notice of the filing thereof shall cause
the same to be discharged of record by payment, bonding or
otherwise, and if Tenant shall fail to cause the same to be
discharged, then Landlord may, in addition to any other right or
remedy, cause the same to be discharged, either by paying the
amount claimed to be due, or by procuring the discharge of such
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lien by deposit or by bonding proceedings, and all amounts so
paid by Landlord, together with all reasonable costs and expenses
incurred in connection therewith, and together with interest
thereon at the rate of ten percent (10%) per annum from the
respective dates of payment, shall be paid by Tenant to Landlord,
on demand, as additional rent hereunder.
13.3 Nothing in this Lease contained shall be deemed or
construed in any as constituting the consent or request of
Landlord, express or implied by inference or otherwise, to any
contractor, subcontractor, laborer, materialmen, architect or
engineer for the performance of any labor or the furnishing of
any materials or services for or in connection with the Premises
or any part thereof. Notice is hereby given that Landlord shall
not be liable for any labor or materials or services furnished or
to be furnished to Tenant upon credit, and that no mechanic's or
other lien for any such labor, materials, or services shall
attach to or affect the fee or reversionary or other estate or
interest of Landlord in the Premises of and in this Lease.
14. DEFAULT.
14.1 In the event that during the term hereof any of
the following events shall occur (each of which shall be an
"Event of Default"):
(a) Tenant shall default in the payment of any
installment of the Rent for ten (10) days after the same shall
become due, during which ten-dayperiod Tenant may cure the
default;
(b) Tenant or any permitted assignee of Tenant shall
(i) apply for or consent to an appointment of a receiver, a
trustee or liquidator of it or of all or a substantial part of
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its assets; (ii) make a general assignment for the benefit of
creditors; (iii) be adjudicated a bankrupt or insolvent; (iv)
file a voluntary petition in bankruptcy or a petition or an
answer seeking reorganization or an arrangement with creditors to
take advantage of any insolvency law or an answer admitting the
material allegations of a petition filed against it in any
bankruptcy, reorganization or insolvency proceeding or corporate
action shall be taken by it for the purpose of effecting any of
the foregoing;
(c) An order, judgment or decree shall be entered,
without the application, approval or consent of Tenant or any
permitted assignee of Tenant by any court of competent
jurisdiction, approving a petition seeking reorganization of
Tenant or such assignee or appointing a receiver, trust or
liquidator of Tenant or such assignee or of all or a substantial
part of its assets and such order, judgment or decree shall
continue unstayed and in effect for any period of sixty (60)
consecutive days; or
(d) Any other default by Tenant in performing any of
its other obligations hereunder shall continue uncorrected for
ten (10) days after receipt of written notice thereof from
Landlord, during which period Tenant or such assignee may cure
the default; then Landlord may, by giving written notice to
Tenant, either (a) terminate this Lease, (b) re-enter the
Premises by summary proceedings or otherwise, expelling Tenant
and removing all of Tenant's property therefrom, and relet the
Premises and receive the rent therefrom, or (c) exercise any
other remedies permitted by law. Tenant shall also be liable for
the reasonable cost of obtaining possession of and reletting the
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Premises and of any repairs and alterations or other payments
necessary to prepare them for reletting. Any and all such
amounts shall be payable to Landlord upon demand.
Notwithstanding anything contained herein to the contrary, no
termination of this Lease prior to the last day of the term
hereof, except as provided in Section 15 hereof, shall relieve
Tenant of its liability and obligations under this Lease, and
such liability and obligations shall survive any such
termination.
14.2 In the event of any breach by Tenant of any of the
covenants, agreements, terms or conditions contained in this
Lease, Landlord shall be entitled to enjoin such breach or
threatened breach and shall have the right to invoke any right
and remedy allowed at law or in equity, or by statute or
otherwise, as though reentry, summary proceedings and other
remedies were not provided for in this Lease.
14.3 Each right and remedy of Landlord provided for in
this Lease shall be cumulative and shall be in addition to every
other right or remedy provided for in this Lease or now or
hereafter existing, at law or in equity, or by statute or
otherwise, and the exercise or beginning of the exercise by
Landlord of any one or more of the rights or remedies provided
for in this Lease, or now or hereafter existing at law or in
equity, or by statute or otherwise, shall not preclude the
simultaneous or later exercise by Landlord of any or all other
rights or remedies provided for in this Lease, or now or
hereafter existing at law or in equity, or by statute or
otherwise.
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15. EMINENT DOMAIN.
If the whole or any part of the demised premises shall
be condemned or acquired by eminent domain for any public or
quasi-public use or purpose, then the term of this Lease shall
cease and terminate as of the date of vesting of title in such
proceeding and all rentals shall be paid up to the date of the
vacating of the premises by Tenant and Tenant shall have no claim
against Landlord nor the condemning authority for the value of
any unexpired term of this Lease.
In the event of any condemnation or taking as aforesaid,
whether whole or partial, Tenant shall not be entitled to any
part of the award paid for such condemnation and Landlord is to
receive the full amount of such award, Tenant hereby expressly
waiving any right or claim to any part thereof.
16. CONDITION OF PREMISES.
Tenant represents that the Premises, the sidewalks and
structures adjoining the same, and any subsurface conditions
thereof, and the present uses and non-uses thereof, have been
examined by Tenant, and Tenant agrees that it will accept the
same in the condition or state in which they, or any of them, now
are, without representation or warranty, express or implied in
fact or by law, by Landlord, and without recourse to Landlord as
to the nature, condition or usability thereof, or the use or uses
to which the Premises, or any part thereof, may be put.
17. INDEPENDENT COVENANTS--NO WAIVER.
17.1 Each and every of the covenants and agreements
contained in this Lease shall be for all purposes construed to be
separate and independent covenants and the waiver of the breach
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of any covenant contained hereby by Landlord shall in no way or
manner discharge or relieve Tenant from Tenant's obligation to
perform each and every of the covenants contained herein.
17.2 If any term or provision of this Lease or the
application thereof to any person or circumstance shall to any
extent be invalid or unenforceable, the remainder of this Lease,
or the application of such term or provision to persons or
circumstances other than those as to which it is invalid or
unenforceable, shall not be affected thereby, and each term and
provision of this Lease shall be valid and shall be enforced to
the fullest extent permitted by law.
17.3 The failure of Landlord to insist in any one or
more cases upon the strict performance of any of the covenants of
this Lease shall not be construed as a waiver or a relinquishment
for the future of such covenant. A receipt by Landlord of rent
with knowledge of the breach of any covenant hereof shall not be
deemed a waiver of such breach, and no waiver by Landlord of any
provision of this Lease shall be deemed to have been made unless
expressed in writing and signed by Landlord. All remedies to
which Landlord may resort under the terms of this Lease or by law
provided shall be cumulative.
18. SUBORDINATION.
This Lease and the rights of Tenant hereunder are
subject and subordinate in all respects to all matters of record,
including, without limitation, deeds and all mortgages which may
now or hereafter be placed on or affect the Premises, or any part
thereof, and/or Landlord's interest or estate therein, and to
each advance made and/or hereafter to be made under any such
mortgages, and to all renewals, modifications, consolidations,
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replacements and extensions thereof, and all substitutions
therefor; provided, however, that before such subordination shall
be effective, Landlord shall cause the mortgagee, or other party
in interest, as the case may be, to deliver to Tenant an assent
to this Lease, in proper form for recording whereby such
mortgagee or other party agrees that no foreclosure of such
mortgage or any action taken with respect thereto, by such
mortgagee or any other person claiming by or through or under
such mortgage (or other interest) shall disturb the possession of
Tenant under this Lease so long as Tenant is not in default
hereunder, and that the validity and continuance of this Lease
will be so recognized. Simultaneously with the delivery of such
an agreement, Tenant agrees to execute and deliver an instrument
in proper form for recording, wherein Tenant agrees to and does
subordinate this Lease to the liens of the mortgagees and others
as above-mentioned, and to all renewals, modifications,
consolidations and replacements and extensions of such mortgages
thereunder, and to any persons claiming by, through or under such
mortgages or other such interest.
19. QUIET ENJOYMENT.
Landlord covenants that Tenant, upon paying the rent and
performing the covenants hereof on the part of Tenant to be
performed shall and may peaceably and quietly have, hold and
enjoy the Premises and all related appurtenances, rights,
privileges and easements throughout the term hereof without any
lawful hindrance by Landlord and any person claiming by, through
or under it.
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20. RETURN OF PREMISES.
At the expiration or other temination of the term
hereof, Tenant will remove from the Premises its property and
that of all claiming under it and will peaceably yield up to
Landlord the Premises in as good condition in all respects as the
same were at the commencement of this Lease, except for ordinary
wear and tear, damage by the elements, by any exercise of the
right of eminent domain or by public or other authority, or
damage which Landlord is required herein to replace, restore or
rebuild or damage for which no insurance is required hereunder.
21. CONSTRUCTION.
The mention of the parties hereto by name or otherwise
shall be construed as including and referring to their respective
successors and assigns as well as to the parties themselves
whenever such construction is required or admitted by the
provisions hereof; and all covenants, agreements, conditions,
rights, powers and privileges hereinbefore contained shall inure
to the benefit of and be binding upon the successors and assigns
of such parties, unless otherwise provided.
22. PERMITS.
Tenant, at its cost, shall obtain any necessary permits
for the Premises from the City of Providence.
23. NOTICES.
Whenever notice shall be given under this Lease, the
same shall be in writing and shall be sent by certified or
registered mail, return receipt requested as follows:
To the Landlord: One Hospital Trust Plaza
Suite 920
Providence, Rhode Island 02903
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To the Tenant: c/o Charles Meyers
56 Pine Street
Providence, Rhode Island 02903
To the Tenant's Alan T. Dworkin, Esq.
Attorney: 164 Airport Road
Warwick, Rhode Island 02889
or to such other address or addresses as each party may from time
to time designate by like notice to the other. Said notice shall
be valid and times begin to run hereunder upon receipt of the
party to which said notice is given.
IN WITNESS WHEREOF, the parties hereto have caused these
presents to be executed in duplicate as of the day and year first
above written.
CAPITAL PROPERTIES, INC.
By/s/ Barbara J. Dreyer
Barbara J. Dreyer, President
METROPARK, LTD.
By/s/ Charles Meyers
Charles Meyers, President
STATE OF RHODE ISLAND
COUNTY OF PROVIDENCE
In Providence, in said County on the 30th day of November
1995, before me personally appeared BARBARA J. DREYER, President
of CAPITAL PROPERTIES, INC., to me known and known by me to be
the person executing the foregoing instrument on behalf of said
corporation, and she acknowledged said instrument by her executed
to be her free act and deed and the free act and deed of said
corporation.
/s/ Gloria P. Hopkins
Notary Public
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STATE OF RHODE ISLAND
COUNTY OF PROVIDENCE
In Providence, in said County on the 30th day of November
1995, before me personally appeared CHARLES MEYERS, President of
METROPARK, LTD., to me known and known by me to be the person
executing the foregoing instrument on behalf of said corporation,
and he acknowledged said instrument by him executed to be his
free act and deed and the free act and deed of said corporation.
/s/ Gloria P. Hopkins
Notary Public
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GUARANTEE
In consideration of the execution of the foregoing lease by
the Landlord, the undersigned (jointly and severally, if more
than one) guarantees that the Tenant will pay all rent thereunder
and will perform all other terms, conditions or agreements on its
part to be performed or fulfilled, and agrees that the foregoing
lease may be amended from time to time by the parties thereto
without notice to the undersigned. The undersigned consents that
extensions of time of payment or any other indulgences may be
granted to the Tenant without notice to and without releasing or
affecting in any way the liability of the undersigned and the
undersigned waives demand and notice of default. This guarantee
is in addition to any other security which the Landlord may have
for the performance of the Tenant's obligations and the Landlord
may have the recourse to this guarantee without first pursuing
the Landlord's remedies against such other security, if any. The
Landlord may release, in whole or in part, any other security
without releasing or affecting in any way the liability of the
undersigned. In addition, the undersigned will pay to the
Landlord all costs and expenses (including attorneys' fees)
incurred in connection with the enforcement of this guarantee.
Executed this 10th day of November, 1994.
/s/ Charles Meyers
Charles Meyers
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EXHIBIT 13
BRIEF DESCRIPTION OF
THE COMPANY'S BUSINESS
The Company's business consists of the leasing of certain of its real estate
interests in downtown Providence, Rhode Island, the operation of other
downtown Providence properties as public parking facilities, and the leasing
of its petroleum storage terminal facilities in East Providence, Rhode Island.
Through its wholly-owned susidiary, Tri-State Displays, Inc., the Company
also leases outdoor advertising locations along interstate and primary
highways for outdoor advertising purposes.
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PRESIDENT'S REPORT
In the accompanying financial statements for the calendar year 1995, the
Company is reporting income before taxes of $161,000.
The Company's common stock is listed on the Boston Stock Exchange under the
symbol "CPI," and is also traded over-the-counter.
During 1995, the Company paid a dividend of $.30 per share on the Company's
outstanding stock. The Company has been classified as a personal holding
Company (PHC) for federal income tax purposes due to the present composition
of the Company's stock ownership and revenues. A PHC is subject to an
additional tax on amounts classified as undistributed PHC income. This
classification did not affect the Company's federal income tax liability
because the Company made sufficient dividend distributions to shareholders.
DOWNTOWN PROVIDENCE REAL ESTATE
The Company owns approximately 20.5 acres of land within the Capital Center
Project area (Capital Center) of downtown Providence, including 1.9 acres of
air rights over Amtrak's Northeast Corridor (Boston to New York City) railroad
tracks. These properties, shown on the plan which appears on page 5 of this
Report, are Parcels 2, 3S, 3W, 3E, 4W, 4E, 5, 6, 7A, 8 and 9. The Company
also owns a 15,000 square foot parcel (Parcel 22) and a 3,000 square foot
parcel (Parcel 21) which are located outside of, but immediately adjacent to,
Capital Center.
The Company has entered into long-term land leases (approximately 100 years)
on three of its parcels with private developers. On Parcel 3S, CFG
Associates, L.P. (CFG) completed the construction of an office building in
1990. The general partner in CFG is a subsidiary of Citizens Financial Group,
Inc. whose commercial banking affiliate is the building's principal tenant.
Citizens Financial Group, Inc. is, in turn, an affiliate of Royal Bank of
Scotland.
On Parcel 8, Gateway Eight Limited Partnership (Gateway Eight) completed the
construction of an office building which is fully occupied by First Data
Corporation. Gateway Eight is an affiliate of Congress Group Ventures, Inc.
of Cambridge, Massachusetts.
On Parcel 5, Parcel Five Limited Partnership (Parcel Five L.P.) completed the
construction of an apartment building containing approximately 225 units.
Parcel Five L.P. is affiliated with a Harvard University endowment fund.
The Company owns a below-grade parking garage located on Parcel 7A, which
garage is adjacent to the Amtrak rail passenger station. This garage and
Parcel 6 are being operated by the Company for public parking purposes under
a management agreement with a firm experienced in parking operations.
Parcels 3E, 4E, 3W, 4W, 21 and 22 have been leased to the same firm for
surface parking purposes under leases which can be terminated on short notice
should suitable development opportunities arise.
The Company, in 1989, entered into a letter of intent with One Park Row East
Corporation (One Park Row), an affiliate of First Quebec Corporation of
Montreal, Canada, for the proposed construction of an office building
containing approximately 95,000 gross square feet on Parcel 4E. The plans
for this development have already been approved by the Capital Center
Commission, and all permits necessary to commence construction have been
obtained. However, construction will not commence until such time as One
Park Row has identified tenants to occupy a significant portion of the
building. When such tenants have been identified, the letter of intent will
be supplanted by a formal land lease yet to be fully negotiated.
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Providence Place Mall, a regional shopping mall containing 1.2 million square
feet of retail space and a 4,000 car garage, is proposed to be built on a
13.2 acre site to the west of the Company's properties in Capital Center
(marked "H" on the plan). The developer, Providence Place Group, anticipates
groundbreaking in late spring and completion of the project in 18 months.
According to the developer, anchor stores include Nordstrom, Filene's and
Lord & Taylor. The proposed Mall would be connected to the remainder of the
Capital Center area via the riverwalks along the Woonasquatucket River.
RIVER RELOCATION AND RELATED CONDEMNATION
When a River Relocation Project in the Capital Center area was first proposed,
the Company, concerned primarily that the relocation plan would delay the
availability of its properties for development purposes, opposed the
relocation and, in 1985, brought suit for damages against the State and the
City. In January 1987, the Company entered into a Settlement Agreement with
the State which resulted in a dismissal of that lawsuit.
In order to accommodate the relocation of the rivers, the State condemned a
portion of the Company's property in November 1987. The State and City had
previously agreed to share all land condemnation costs. As part of the
Settlement Agreement, in 1989 the State deeded to the Company a 72,000 square
foot parcel of land in Capital Center (Parcel 9). As payment for Parcel 9,
the Company was required to return to the State an amount equal to the State's
share of the condemnation award, but the Company was entitled to retain the
balance of such award. In April 1988, the Company filed a petition in the
Rhode Island Superior Court for an increased condemnation award alleging that
the award paid in 1987 ($2,600,000) was inadequate. In January 1992, the
Superior Court awarded the Company an additional condemnation award of
$401,000 plus interest from the date of condemnation. The Company had
asserted in the Superior Court that it was entitled to an additional
condemnation award in excess of $6,000,000 plus interest, and accordingly, in
February 1992, the Company appealed the decision of the Superior Court to the
Rhode Island Supreme Court. In January 1994, the Supreme Court overturned the
Superior Court decision and returned the matter to the Superior Court for a
retrial of the case. The case was retried in 1995. The Company expects a
decision in the summer of 1996. The Company is unable to determine what
amount, if any, will be awarded beyond that paid in 1987. Under the
Settlement Agreement, the Company may be required to return to the State a
portion of any additional award as and when finally determined.
PROVIDENCE AND WORCESTER RAILROAD COMPANY
In 1988, in accordance with a plan of distribution, the Company transferred
the ownership of Providence and Worcester Railroad Company (Railroad) to the
Company's shareholders. As part of the plan, the Company received a
promissory note in the amount of $9,377,000 payable over a period of twenty
years with interest at 12% per year, prepayable at any time without penalty.
Such prepayments reduced the required monthly payments (not changing the term
of the note).
During 1995, Railroad informed the Company that it had secured a commitment
from a bank which would enable it to borrow funds in an amount sufficient to
prepay the entire balance of its note at an interest rate below 10%. The
Company and Railroad negotiated an agreement reducing the interest rate to 10%
upon Railroad's prepayment of $1,800,000 on its note. The agreement further
provides that the first $200,000 of any future prepayments will reduce the
required monthly payments over the remaining term of the note. Thereafter,
50% of any additional prepayments will reduce the required monthly payments,
and the balance will be applied to reduce the note in inverse order of
maturity of the remaining principal payments.
The Company used the proceeds to prepay in full its note payable to a bank in
the amount of $1,755,000. The Company now has no long-term debt.
-3-
<PAGE>
The prepayment by Railroad, together with the interest rate adjustment,
results in a current monthly payment of principal and interest over the
remaining twelve-year term in the amount of $55,000. At December 31, 1995,
the balance on the note from Railroad is $4,614,000.
Prior to negotiating the agreement, Railroad made additional voluntary
prepayments totalling $55,000 and $300,000 during 1995 and 1994, respectively.
During 1995, the Company also entered into an agreement with Railroad
releasing a portion of the collateral securing the note in exchange for the
right to have Railroad convey the Wilkesbarre Pier in East Providence, Rhode
Island for the sum of $1 to a purchaser of the Company's petroleum terminal
facilities in East Providence. The Pier is used for the berthing of vessels
which off-load petroleum products which are transported by pipeline to the
terminal. The Company believes that this right to convey the pier enhances
the saleability of the terminal facilities.
The note is now secured by a first mortgage on a significant portion of
Railroad's operating right-of-way in Massachusetts, exclusive of the track
structure which includes rails, ties, fasteners and ballast.
OTHER OPERATIONS
In 1991, the Company's petroleum storage facilities were leased to Coastal
Oil New England, Inc. (Coastal), an affiliate of Coastal Corporation, under a
five-year lease under which Coastal had the option to extend the lease term
for an additional five years. Coastal has notified the Company that it is not
exercising its option to extend the lease term. The lease also gives Coastal
the option to purchase the petroleum storage facilities during the term of the
lease. Coastal and the Company are presently in negotiations to extend the
present lease for an additional three-year period. In addition, several
parties have expressed an initial interest in leasing or acquiring the
facilities should Coastal vacate the facilities.
Tri-State Displays, Inc., the Company's wholly-owned subsidiary, owns or
controls 22 locations along interstate and primary highways in Rhode Island
and Massachusetts which are leased to Whiteco Metrocom (a division of Whiteco
Industries, Inc., of Merrillville, Indiana) for commercial advertising
purposes. These locations contain a total of 41 billboard faces, which
billboards are owned by Whiteco. All of the billboard faces are the large
painted bulletins normally seen along interstate and primary highways. The
Company has additional locations along interstate and primary highways in
Rhode Island, Massachusetts and Connecticut, and, in cooperation with outdoor
advertising companies, is attempting to obtain public permits to use some of
these additional locations for outdoor advertising purposes. In addition to
its outdoor advertising activities, Whiteco owns and/or operates 25 hotels and
family entertainment centers and conducts business in 35 states.
* * *
Theodore P. Cohen is not standing for reelection as a director of the Company
in April of this year. Mr. Cohen has been a director of the Company since
1984, and his wisdom and business experience have greatly assisted management
in moving the Company forward. We thank him for his many years of devoted
service.
Sincerely,
/s/ Barbara J. Dreyer
Barbara J. Dreyer
President
February 29, 1996
-4-
<PAGE>
MAP IN ANNUAL REPORT
The map in the Annual Report to Shareholders is a plan of a portion of
downtown Providence, Rhode Island, which indicates those parcels owned by the
Issuer in that area known as "Capital Center" and immediately adjacent
thereto. A legend contains the Parcel Number, the Parcel Size and the
Development on the Parcels as follows:
<TABLE>
<CAPTION>
Parcel No. Square Feet
CAPITAL PARCEL SIZE DEVELOPMENT ON PARCELS
CENTER
<S> <C> <C>
2 92,000
3S 48,000........... 13 Story Office Building -
235,000 gross square feet
3W 35,000
3E 24,000
4W 46,000
4E 22,000
5 54,000........... 8 Story Luxury Apartment Building -
454,000 gross square feet
6 386,000.......... (Land, 303,000; Air rights, 83,000)
7A 76,000........... 360 Car Public Parking Garage
8 36,000........... 4 Story Office Building - 114,000
gross square feet
9 72,000
</TABLE>
<TABLE>
<CAPTION>
OUTSIDE
CAPITAL
CENTER
<S> <C>
21 3,000
22 15,000
</TABLE>
(See President's Report, pages 2 and 3, for discussion of the
development on the parcels.)
-5-
<PAGE>
CAPITAL PROPERTIES, INC. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Financial condition:
In 1988, in accordance with a plan of distribution, the Company transferred
the ownership of Providence and Worcester Railroad Company (Railroad) to the
Company's shareholders. The Company and Railroad have a common controlling
shareholder. As part of the plan, the Company received a promissory note in
the amount of $9,377,000 payable over a period of twenty years with interest
at 12% per year, prepayable at any time without penalty. Such prepayments
reduced the required monthly payments (not changing the term of the note).
During 1995, Railroad informed the Company that it had secured a commitment
from a bank which would enable it to borrow funds in an amount sufficient to
prepay the entire balance of its note at an interest rate below 10%. The
Company and Railroad negotiated an agreement reducing the interest rate to
10% upon Railroad's prepayment of $1,800,000 on its note. The agreement
further provides that the first $200,000 of any future prepayments will
reduce the required monthly payments over the remaining term of the note.
Thereafter, 50% of any additional prepayments will reduce the required
monthly payments, and the balance will be applied to reduce the note in
inverse order of maturity of the remaining principal payments.
The Company used the proceeds to prepay in full its note payable to a bank
in the amount of $1,755,000. The Company now has no long-term debt.
The prepayment by Railroad, together with the interest rate adjustment,
results in a current monthly payment of principal and interest over the
remaining twelve-year term in the amount of $55,000.
Prior to negotiating the agreement, Railroad made additional voluntary
prepayments totalling $55,000 and $300,000 during 1995 and 1994, respectively.
During 1995, the Company also entered into an agreement with Railroad
releasing a portion of the collateral securing the note in exchange for the
right to have Railroad convey the Wilkesbarre Pier in East Providence, Rhode
Island for the sum of $1 to a purchaser of the Company's petroleum terminal
facilities in East Providence. The Pier is used for the berthing of vessels
which off-load petroleum products which are transported by pipeline to the
terminal. The Company believes that this right to convey the Pier enhances
the saleability of the terminal facilities.
The note is now secured by a first mortgage on a significant portion of
Railroad's operating right-of-way in Massachusetts, exclusive of the track
structure which includes rails, ties, fasteners and ballast. Due to the
active railroad use of the collateral, the Company may not have immediate
access thereto in the event of non-payment by Railroad. Based upon an
independent appraisal, it is the opinion of management that the collateral
is of sufficient value to satisfy the obligation of Railroad in the event of a
default.
The Company intends to hold the note to maturity.
In addition to the note from Railroad, the Company's principal assets consist
of land, a public parking garage, petroleum storage facilities and outdoor
advertising sites. A significant portion of the land consists of approxi-
mately 20.5 acres, including 1.9 acres of air rights, in downtown Providence,
Rhode Island, held for development. As of December 31, 1995, the Company had
entered into three long-term land leases covering approximately 3.2 acres of
land. The tenants of each parcel have constructed buildings
-6-
<PAGE>
which are substantially occupied. The Company is engaged in discussions
concerning the possible development of other parcels but is unable to predict
when leases on additional parcels will commence. However, the Company will
continue to use the available parcels for public surface parking. The
Company anticipates that future development of the remaining properties will
consist primarily of long-term ground leases under which the significant
portion of future rental income will not be earned until the buildings are
completed by the tenants and occupied.
Certain of the Company's land leases provide for scheduled rent increases
over their terms which extend to the year 2091. In accordance with the
provisions of Statement of Financial Accounting Standards No. 13 (Accounting
for Leases) and certain of its interpretations, the Company recognizes the
rental income on the straight-line basis over the term of each lease;
however, the Company does not report as income that portion of such straight-
line rentals which management is unable to conclude is realizable
(collectible) due to the length of the lease terms and other related
uncertainties. At December 31, 1995, the cumulative amount not reported as
income is $8,560,000.
Since October 1, 1991, the Company's petroleum storage facilities (the
Facilities) have been leased under a 5-year agreement under which the tenant
pays an annual rental of $183,000 plus reimbursement of property taxes
(approximately $86,000 annually) and had the option to extend the lease term
for an additional five years. The tenant has notified the Company that it is
not exercising its option to extend the lease term. The lease also gives the
tenant an option to purchase the Facilities during the term of the lease at a
price which increases annually by an inflation factor ($5,100,000 at December
31, 1995). The Company has not been advised by the tenant as to whether it
will purchase the Facilities.
The Company and the tenant are presently in negotiations to extend the
present lease for an additional 3-year period. In addition, several parties
have expressed an initial interest in leasing or acquiring the Facilities
should the present tenant vacate the Facilities. There is no assurance that
the tenant and the Company can arrive at a mutually agreeable arrangement
prior to the September 30, 1996 expiration of the lease term or that any of
the presently interested parties will enter into a transaction acceptable to
the Company. Should a transaction not be entered into with the present
tenant or any of the presently interested parties, management believes that
sufficient time exists to evaluate its options and make its decision whether
to place the Facilities for sale or seek a tenant.
In 1994, a leak was discovered in a 25,000 barrel storage tank at the
Facilities which allowed the escape of a small amount of fuel oil. The tank
was emptied and all required notices were made to the Rhode Island Department
of Environmental Management (the Agency). During 1995, the tank was repaired
at a cost to the Company of $35,000.
To date, monitoring wells have shown no ground water contamination, and the
contamination from the leak has been limited to the soil under the tank. The
Company's engineering consultants (the consultants) are working with the
Agency to determine the extent of remediation. The consultants have proposed
several options and have determined a range of estimated costs (including
professional fees) to be $27,000 (for the capping of the contaminated area)
to $383,000 (for the complete removal of the contaminated soil and its off-
site disposal). The Agency has advised the Company that it will accept the
capping of the contaminated area as an appropriate remediation measure,
subject to the placement of a notice in the Company's deed describing the
location of the contaminated area.
During 1995, the tenant informed the Company of the erosion of a slope and
damage to a retaining wall which caused the washing away of several tons of
soil. The consultants have proposed several options to effect repairs to
the retaining wall and have determined
-7-
<PAGE>
a range of estimated costs (including professional fees) to be $15,000 (to
repair the eroded channel) to $136,000 (to include the replacement of the
retaining wall).
Management is of the opinion that the terms of the lease not only make the
tenant solely responsible for the payment of all costs to remediate the
contaminated soil and to repair the erosion of the slope and retaining wall,
but also require the tenant to return the Facilities at the termination of
the lease in a condition substantially the same as when the tenant took
possession. The tenant does not agree that it is responsible for the payment
of such costs. The lease provides for arbitration in the event that the
parties cannot reach agreement.
Due to the negotiations with the tenant to extend the lease, the tenant's
option to purchase the Facilities, and discussions held to date with other
parties expressing an initial interest in the Facilities, management cannot
determine which of the possible courses of action it will pursue in connec-
tion with the remediation of the contaminated soil and the repair of the
erosion and retaining wall. As management is of the opinion that the tenant
has financial responsibility for all costs, the Company is providing for the
estimated costs to remediate the contaminated soil and remedy the erosion
situation by reporting a liability of $42,000 and a corresponding receivable
from the tenant on the accompanying consoliated balance sheet at December 31,
1995.
Management is also of the opinion that there is a possibility that in the
near term the Company could accept financial responsibility for some of the
remediation or repair costs as part of either an eventual lease or sale of
the facilities, or the Company could be found financially responsible as a
result of an arbitration proceeding.
In management's opinion, the Company will continue to be able to generate
adequate amounts of cash to meet substantially all of its operating
expenditures.
In 1994 and 1995, the Company paid dividends of $.40 and $.30 per share,
respectively, with respect to the Company's outstanding common stock. The
Company expects to be in a position to continue dividend payments on a semi-
annual basis; however, the declaration of any dividend and the amount thereof
will depend on the Company's future earnings, financial condition and other
relevant factors.
In connection with river relocations in downtown Providence, Rhode Island, in
1987 the State of Rhode Island condemned a portion of the Company's property
and paid an award of $2,600,000. As part of an agreement to purchase another
parcel of land from the State, the Company was required to return to the
State a portion of the condemnation award ($1,600,000). In April 1988, the
Company filed a petition in the Rhode Island Superior Court for an increased
condemnation award alleging that the award paid in 1987 was inadequate. In
January 1992, the Superior Court awarded the Company an additional
condemnation award of $401,000 plus interest from the date of the condemna-
tion. The interest is calculated by using a published Treasury bill rate
which compounds annually and, through December 31, 1995, totals approximately
58% of any additional award. The Company had asserted in the Superior Court
that it was entitled to an additional condemnation award in excess of
$6,000,000 plus interest, and accordingly, in February 1992, the Company
appealed the decision of the Superior Court to the Rhode Island Supreme Court.
In January 1994, the Supreme Court overturned the Superior Court decision and
returned the matter to the Superior Court for a retrial of the case. The case
was retried in 1995. The Company expects a decision in the summer of 1996.
The Company is unable to determine what amount, if any, will be awarded
beyond that paid in 1987. Under the aforementioned agreement, the Company
may be required to return to the State a portion of any additional award as
and when finally determined.
The Company has no established policy for the purchase of additional land.
However, should suitable parcels become available in the general area of the
Company's current land holdings, the Company would consider such an
acquisition depending on current levels of cash and the availability of
financing.
Under an agreement with the State of Rhode Island entered into in 1990, the
Company will owe the State $158,000 sixty days after the completion by the
State of a construction contract for certain public improvements affecting
one of the Company's parcels. The Company anticipates that such payment will
be reimbursable by the developer of such parcel. The agreement is secured
by a mortgage on one of the Company's parcels. The agreement further
provides that, should the amount not be paid when it is due, interest will
accrue from the due date at the prime rate plus 1%. Except for this
agreement, none of the Company's remaining properties and equipment are
pledged as collateral.
For the two years ended December 31, 1995, the Company has been classified
as a personal holding company (PHC) for federal income tax purposes due to
the present composition of the Company's stock ownership and revenues. A PHC
is subject to an additional tax of 39.6% on amounts classified as undistri-
buted PHC income. This classification did not affect the Company's federal
income tax liability in 1994 or 1995 because the Company made sufficient
dividend distributions to shareholders.
Future cash outlays for income taxes will be a more significant portion of
total tax expense and presently exceeds total tax expense for financial
reporting purposes. This results principally from the recognition of rental
income on a contractual basis for tax reporting purposes and additional
depreciation claimed for financial reporting purposes.
Results of operations:
The Company's total income for 1995 increased 7% over the 1994 level.
The increase in rental income results principally from scheduled rental
increases in long-term land leases and the recognition of the excess of
straight-line over contractual rents associated with the leases. Expenses
applicable to rental income increased 30% over the 1994 level principally
due to (1) an unexpected increase in property taxes (approximately $126,000)
resulting from an increase in the assessed valuations and (2) deferred
engineering costs (approximately $46,000) incurred in connection with the
proposed paving of one of the Company's parcels, which project was abandoned
when it was determined that the cost of regulatory environmental requirements
would not make the project viable.
For 1995, income applicable to garage and surface parking increased 9% over
the 1994 level due to increased usage. Expenses applicable to garage and
surface parking increased 30% over the 1994 level principally due to an
unexpected increase in property taxes (approximately $139,000) resulting
from an increase in the assessed valuations.
The Company has filed an appeal for an abatement of the increase in the
property taxes but to date no hearing on the matter has been scheduled. The
Company is unable to determine if the appeal will result in the lowering of
the taxes and abatement of amounts paid to date.
Also included in total income for 1995 is $75,000 resulting from the sale of
properties and equipment, principally the Company's only billboard which was
sold to its tenant. The decrease in interest income on the note receivable
from Railroad results from prepayments in 1995 and 1994 totalling $1,855,000
and $300,000, respectively, and the reduction in 1995 of the interest rate on
the note from 12% to 10%.
General and administrative expenses increased 6% over the 1994 level
principally due to an increase in legal and professional fees primarily
relating to the condemnation trial, offset in part by a decrease in payroll
and related costs resulting from a reduced number of employees and a decrease
in travel and entertainment expense.
The Company had two notes payable outstanding with a bank, one of which was
fully prepaid in September 1994 and the other of which was fully prepaid in
August 1995.
- 9-
<PAGE>
Lefkowitz, Garfinkel, Champi & DeRienzo P.C.
Certified Public Accountants/Business Consultants
INDEPENDENT AUDITORS' REPORT
Board of Directors
Capital Properties, Inc.
Providence, Rhode Island
We have audited the accompanying consolidated balance sheet of Capital
Properties, Inc. and subsidiary as of December 31, 1995, and the related
consolidated statements of income and retained earnings and cash flows for
the years ended December 31, 1995 and 1994. These financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Capital Properties, Inc.
and subsidiary as of December 31, 1995, and the results of their operations
and their cash flows for the years ended December 31, 1995 and 1994, in
conformity with generally accepted accounting principles.
/s/ Lefkowitz, Garfinkel, Champi & DeRienzo P.C.
February 29, 1996
10 Weybosset Street - Providence, Rhode Island 02903 - Tel(40l1)421-4800 -
1-800-927-LGCD - Fax (40l)421-0643
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<PAGE>
CAPITAL PROPERTIES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1995
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Properties and equipment (net of accumulated
depreciation)............................................ $ 9,376,000
Cash and cash equivalents................................. 767,000
Note receivable, Providence and Worcester Railroad
Company.................................................. 4,614,000
Other receivables......................................... 214,000
Accrued rental income of $8,839,000 less amount for which
realization is not assured of $8,560,000................. 279,000
Prepaid and other......................................... 194,000
$15,444,000
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Accounts payable........................................ $ 17,000
Accrued expenses:
Property taxes......................................... 519,000
Other.................................................. 133,000
Deferred income taxes................................... 1,430,000
2,099,000
Contingencies (Notes 5 and 9)
Shareholders' equity:
Common stock, $1 par; authorized, issued and
and oustanding 1,000,000 shares........................ 1,000,000
Capital in excess of par................................ 10,828,000
Retained earnings....................................... 1,517,000
13,345,000
$15,444,000
</TABLE>
See notes to consolidated financial statements.
-11-
<PAGE>
CAPITAL PROPERTIES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
YEARS ENDED DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPION>
1995 1994
<S> <C> <C>
Income:
Rentals.................................... $ 1,759,000 $ 1,533,000
Garage and surface parking revenues........ 483,000 443,000
Interest:
Providence and Worcester Railroad Company. 668,000 835,000
Other..................................... 35,000 21,000
Gain on sale of properties and equipment... 75,000
3,020,000 2,832,000
Expenses:
Expenses applicable to:
Rental income............................. 805,000 617,000
Garage and surface parking................ 797,000 611,000
General and administrative................. 1,133,000 1,067,000
Interest................................... 124,000 198,000
2,859,000 2,493,000
Income before income taxes.................. 161,000 339,000
Income tax expense (benefit):
Current.................................... 188,000 269,000
Deferred................................... (105,000) (123,000)
83,000 146,000
Net income.................................. 78,000 193,000
Retained earnings, beginning................ 1,739,000 1,946,000
Dividends on common stock
(1995, $.30; 1994, $.40)................... (300,000) (400,000)
Retained earnings, ending................... $ 1,517,000 $ 1,739,000
Earnings per common share................... $.08 $.19
</TABLE>
See notes to consolidated financial statements.
-12-
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
<S> <C> <S>
Cash flows from operating activities:
Net income..................................... $ 78,000 $ 193,000
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation................................ 364,000 382,000
Gain on sale of properties and equipment.... (75,000)
Accrued rental income....................... (128,000) 33,000
Deferred income taxes....................... (105,000) (123,000)
Changes in assets and liabilities:
Increase in:
Other receivables......................... (58,000)
Prepaid and other......................... (26,000) (29,000)
Accrued expenses.......................... 129,000 58,000
Decrease in:
Other receivables......................... 38,000
Accounts payable.......................... (30,000) (20,000)
Income taxes payable...................... (78,000)
Net cash provided by operating activities...... 167,000 436,000
Cash flows from investing activities:
Purchase of properties and equipment........... (10,000) (24,000)
Proceeds from:
Collection of note receivable, Providence and
Worcester Railroad Company.................. 2,068,000 506,000
Sale of properties and equipment............. 138,000
Net cash provided by investing activities...... 2,196,000 482,000
Cash flows from financing activities, payment of:
Note payable, bank............................. (2,053,000) (574,000)
Dividends...................................... (300,000) (400,000)
Cash used in financing activities.............. (2,353,000) (974,000)
Increase (decrease) in cash and cash equivalents 10,000 (56,000)
Cash and cash equivalents, beginning............ 757,000 813,000
Cash and cash equivalents, ending............... $ 767,000 $ 757,000
Supplemental disclosures, cash paid for:
Interest....................................... $ 119,000 $ 212,000
Income taxes................................... $ 345,000 $ 268,000
</TABLE>
See notes to consolidated financial statements.
-13-
<PAGE>
CAPITAL PROPERTIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995 AND 1994
1. Basis of presentation and summary of significant accounting policies:
Basis of presentation and principles of consolidation:
The accompanying consolidated financial statements include the accounts
of the Company and its wholly-owned subsidiary, Tri-State Displays, Inc.
(TSD). All significant intercompany accounts and transactions between the
Company and TSD have been eliminated in consolidation.
Description of business:
The Company operates in one business segment as a lessor of properties and
equipment and as an operator of adjacent public parking facilities
principally in the Providence, Rhode Island area.
Use of estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements. Estimates also affect the reported amounts of
revenue and expenses during the reporting period. Actual results could
differ from those estimates.
Cash and cash equivalents:
The Company considers all highly liquid investments with a maturity of
three months or less when purchased to be cash equivalents. Cash
equivalents, which consist of short-term uninsured repurchase agreements
which the Company routinely purchases, totalled $673,000 at December 31,
1995.
Properties and equipment:
Properties and equipment are stated at cost. Depreciation is being
provided by the straight-line method over the estimated useful lives of
the respective assets.
Income taxes:
The Company and its subsidiary file a consolidated Federal income tax
return.
Income taxes are provided based on earnings reported for financial statement
purposes. The provision for income taxes differs from the amounts
currently payable because of temporary differences in the recognition of
certain income and expense items for financial reporting and tax reporting
purposes.
Rental income:
The Company's properties and equipment leased to others are under
operating leases. The Company reports rental income when earned under the
operating method.
Certain of the Company's land leases provide for scheduled rent increases
over their remaining terms (28 to 97 years). In accordance with the
provisions of Statement of
-14-
<PAGE>
Financial Accounting Standards No. 13 (Accounting for Leases) and certain
of its interpretations, the Company is recognizing the rental income on
the straight-line basis over the terms of the leases; however, the Company
does not report as income that portion of such straight-line rentals which
management is unable to conclude is realizable (collectible) due to the
length of the lease terms and other related uncertainties.
2. Properties and equipment:
Properties and equipment consist of the following:
<TABLE>
<S> <C>
Properties and equipment on lease or
held for lease:
Land and land improvements............ $ 6,140,000
Petroleum storage facilities:
Buildings and structures............. 325,000
Equipment, tanks..................... 4,163,000
10,628,000
Other:
Land and land improvements............. 192,000
Buildings, principally parking garage.. 2,536,000
Equipment.............................. 83,000
2,811,000
13,439,000
Less accumulated depreciation:
Properties and equipment on
lease or held for lease............... 3,483,000
Other.................................. 580,000
4,063,000
$ 9,376,000
</TABLE>
3. Note receivable, Providence and Worcester Railroad Company:
In 1988, in accordance with a plan of distribution, the Company transferred
the ownership of Providence and Worcester Railroad Company (Railroad) to
the Company's shareholders. The Company and Railroad have a common
controlling shareholder. As part of the plan, the Company received a
promissory note in the amount of $9,377,000 payable over a period of
twenty years with interest at 12% per year, prepayable at any time without
penalty. Such prepayments reduced the required monthly payments (not
changing the term of the note).
During 1995, Railroad informed the Company that it had secured a commit-
ment from a bank which would enable it to borrow funds in an amount
sufficient to prepay the entire balance of its note at an interest rate
below 10%. The Company and Railroad negotiated an agreement reducing the
interest rate to 10% upon Railroad's prepayment of $1,800,000 on its note.
The agreement further provides that the first $200,000 of any future
prepayments will reduce the required monthly payments over the remaining
term of the note. Thereafter, 50% of any additional prepayments will
reduce the required monthly payments, and the balance will be applied to
reduce the note in inverse order of maturity of the remaining principal
payments.
-15-
<PAGE>
CAPITAL PROPERTIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1995 AND 1994
3. Note receivable, Providence and Worcester Railroad Company (continued):
The Company used the proceeds to prepay in full its note payable to a bank
in the amount of $1,755,000.
The prepayment by Railroad, together with the interest rate adjustment,
results in a current monthly payment of principal and interest over the
remaining twelve-year term in the amount of $55,000.
Prior to negotiating the agreement, Railroad made additional voluntary
prepayments totalling $55,000 and $300,000 during 1995 and 1994,
respectively.
During 1995, the Company also entered into an agreement with Railroad
releasing a portion of the collateral securing the note in exchange for
the right to have Railroad convey the Wilkesbarre Pier in East Providence,
Rhode Island for the sum of $1 to a purchaser of the Company's petroleum
terminal facilities in East Providence. The Pier is used for the berthing
of vessels which off-load petroleum products which are transported by
pipeline to the terminal. The Company believes that this right to convey
the Pier enhances the saleability of the terminal facilities (see Note 5).
The note is now secured by a first mortgage on a significant portion of
Railroad's operating right-of-way in Massachusetts, exclusive of the track
structure which includes rails, ties, fasteners and ballast. Due to the
active railroad use of the collateral, the Company may not have immediate
access thereto in the event of non-payment by Railroad. Based upon an
independent appraisal, it is the opinion of management that the collateral
is of sufficient value to satisfy the obligation of Railroad in the event
of a default.
The Company intends to hold the note to maturity.
4. Other receivables:
<TABLE>
<S> <C>
Rentals, principally tenant property
tax reimbursements....................... $ 134,000
Petroleum terminal tenant................. 42,000
Interest, Providence and Worcester
Railroad Company......................... 38,000
$ 214,000
</TABLE>
5. Description of leasing arrangements:
At December 31, 1995, the Company had entered into land leases for three
separate land parcels with remaining terms of up to 97 years. The Company
also leases petroleum storage facilities and various parcels of land
(leased principally for outdoor advertising and surface parking) for
remaining terms of up to 28 years.
For those leases with scheduled rent increases, the cumulative excess of
straight-line over contractual rentals (considering scheduled rent
increases over the initial 30 to 102 year terms of the leases) amounted to
$8,839,000 through December 31, 1995. Management has been able to con-
clude that a portion of the excess of straight-line over contractual
rentals ($279,000 through December 31, 1995) is realizable when payable
over the terms of the leases.
-16-
<PAGE>
Several leases provide that the tenants reimburse the Company for property
taxes ($326,000 and $297,000 in 1995 and 1994, respectively), which
amounts are excluded from rental income and expenses applicable to rental
income on the accompanying consolidated statements of income and retained
earnings.
Minimum future contractual rental payments to be received from noncan-
cellable leases as of December 31, 1995 are:
<TABLE>
<CAPTION>
Year ending December 31,
<S> <C>
1996..................... $ 1,270,000
1997...................... 1,139,000
1998...................... 1,218,000
1999...................... 1,273,000
2000...................... 1,360,000
2001 to 2091.............. 170,372,000
$176,632,000
</TABLE>
Rental income from major tenants as a percentage of the Company's total
rental income is as follows:
<TABLE>
<CAPTION>
Tenant 1995 1994
<S> <C> <C>
A................ 27.2% 17.6%
B................ 18.1 20.3
C................ 17.3 17.7
D................ 16.3 15.8
E................ 10.4 12.0
F................ 9.1 9.9
</TABLE>
In the event of tenant default, the Company has the right to reclaim its
leased assets together with any improvements thereon.
Since October 1, 1991, the Company's petroleum storage facilities (the
Facilities) have been leased under a 5-year agreement under which the
tenant pays an annual rental of $183,000 plus reimbursement of property
taxes (approximately $86,000 annually) and had the option to extend the
lease term for an additional five years. The tenant has notified the
Company that it is not exercising its option to extend the lease term.
The lease also gives the tenant an option to purchase the Facilities
during the term of the lease at a price which increases annually by an
inflation factor ($5,100,000 at December 31, 1995). The Company has not
been advised by the tenant as to whether it will purchase the Facilities.
The Company and the tenant are presently in negotiations to extend the
present lease for an additional 3-year period. In addition, several
parties have expressed an initial interest in leasing or acquiring the
Facilities should the present tenant vacate the Facilities. There is no
assurance that the tenant and the Company can arrive at a mutually
agreeable arrangement prior to the September 30, 1996 expiration of the
lease term or that any of the presently interested parties will enter into
a transaction acceptable to the Company. Should a transaction not be
entered into with the present tenant or any of the presently interested
parties, management believes that sufficient time exists to evaluate its
options and make its decision whether to place the Facilities for sale or
seek a tenant.
-17-
<PAGE>
CAPITAL PROPERTIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1995 AND 1994
5. Description of leasing arrangements (continued):
In 1994, a leak was discovered in a 25,000 barrel storage tank at the
Facilities which allowed the escape of a small amount of fuel oil. The
tank was emptied and all required notices were made to the Rhode Island
Department of Environmental Management (the Agency). During 1995, the
tank was repaired at a cost to the Company of $35,000, which amount is
included in expenses applicable to rental income on the accompanying
consolidated statements of income and retained earnings for the year ended
December 31, 1995.
To date, monitoring wells have shown no ground water contamination, and
the contamination from the leak has been limited to the soil under the
tank. The Company's engineering consultants (the consultants) are working
with the Agency to determine the extent of remediation. The consultants
have proposed several options and have determined a range of estimated
costs (including professional fees) to be $27,000 (for the capping of the
contaminated area) to $383,000 (for the complete removal of the
contaminated soil and its off-site disposal). The Agency has advised the
Company that it will accept the capping of the contaminated area as an
appropriate remediation measure, subject to the placement of a notice in
the Company's deed describing the location of the contaminated area.
During 1995, the tenant informed the Company of the erosion of a slope and
damage to a retaining wall which caused the washing away of several tons
of soil. The consultants have proposed several options to effect repairs
to the retaining wall and have determined a range of estimated costs
(including professional fees) to be $15,000 (to repair the eroded channel)
to $136,000 (to include the replacement of the retaining wall).
Management is of the opinion that the terms of the lease not only make
the tenant solely responsible for the payment of all costs to remediate
the contaminated soil and to repair the erosion of the slope and retaining
wall, but also require the tenant to return the Facilities at the
termination of the lease in a condition substantially the same as when the
tenant took possession. The tenant does not agree that it is responsible
for the payment of such costs. The lease provides for arbitration in the
event that the parties cannot reach agreement.
Due to the negotiations with the tenant to extend the lease, the tenant's
option to purchase the Facilities, and discussions held to date with other
parties expressing an initial interest in the Facilities, management
cannot determine which of the possible courses of action it will pursue in
connection with the remediation of the contaminated soil and the repair of
the erosion and retaining wall. As management is of the opinion that the
tenant has financial responsibility for all costs, the Company is
providing for the estimated costs to remediate the contaminated soil and
remedy the erosion situation by reporting a liability of $42,000 and a
corresponding receivable from the tenant on the accompanying consolidated
balance sheet at December 31, 1995 in accrued expenses, other and other
receivables, respectively.
Management is also of the opinion that there is a possibility that in the
near term the Company could accept financial responsibility for some of
the remediation or repair costs as part of either an eventual lease or
sale of the Facilities, or the Company could be found financially
responsible as a result of an arbitration proceeding.
-18-
<PAGE>
6. Income taxes:
A reconciliation of the income tax provision as computed by applying the
United States income tax rate (34%) to income before income taxes is as
follows:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Computed "expected tax expense.... $ 55,000 $ 115,000
Increase (decrease) in taxes
resulting from:
State income tax, net of
Federal income tax benefit..... 16,000 38,000
Statutory and other............. 12,000 (7,000)
$ 83,000 $ 146,000
</TABLE>
Deferred income taxes are recorded based upon differences between
financial statement and tax bases of assets and liabilities. The tax
effects of temporary differences which give rise to deferred tax assets
and liabilities at December 31, 1995, were as follows:
<TABLE>
<S> <C>
Gross deferred tax liabilities:
Property having a financial statement
basis in excess of its tax basis...... $1,483,000
Excess of straight-line over
contractual rental income............. 111,000
1,594,000
Gross deferred tax assets,
principally professional fees in
connection with condemnation case...... (164,000)
$1,430,000
</TABLE>
7. Commitments:
Under an agreement with the State of Rhode Island entered into in 1990,
the Company will owe the State $158,000 sixty days after the completion
by the State of a construction contract for certain public improvements
affecting one of the Company's parcels. The Company anticipates that
such payment will be reimbursable by the developer of such parcel.
Accordingly, the Company has not provided for such obligation on the
accompanying consolidated financial statements. The agreement is secured
by a mortgage on one of the Company's parcels. The agreement further
provides that, should the amount not be paid when it is due, interest will
accrue from the due date at the prime rate plus 1%.
The Company leases certain properties and equipment under noncancellable
leases which expire at various dates to 2005. In most cases, management
expects that in the normal course of business, leases that expire will be
renewed or replaced by other leases. Rent expense amounted to $99,000 and
$111,000 in 1995 and 1994, respectively. Future
-19-
<PAGE>
CAPITAL PROPERTIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1995 AND 1994
7. Commitments (continued):
minimum lease payments under noncancellable leases at December 31, 1995
are as follows: 1996, $93,000; 1997, $96,000; 1998, $49,000; 1999,
$40,000; 2000, $26,000; and thereafter, $73,000.
A trust for the benefit of the controlling shareholder is the holder of
rights with respect to the use of a pier, two petroleum pipelines and a
barge dock located in East Providence, Rhode Island. Since February 1983,
the Company and the tenant of its Facilities have had the right to
utilize the Facilities for the transportation of petroleum products, in
consideration for which the Company and the tenant are obligated to pay
the trust a fee based upon the number of barrels of product transported
through the pipelines or over the barge dock. The fee is subject to
adjustment as of October 1 of each year to reflect changes in the
Consumer Price Index.
Under the terms of the 1991 lease of the Company's Facilities in East
Providence, Rhode Island (see Note 5), the tenant pays a significant
portion of the amount due to the trust for the usage of the pipeline.
The Company's share of the pipeline usage fee amounted to $30,000 and
$24,000 for 1995 and 1994, respectively, which amounts are included in
expenses applicable to rental income on the accompanying consolidated
statements of income and retained earnings.
The Company has the option to purchase the rights of the trust in the
Facilities at any time during the twelve-month period following September
30, 1997, at a price equal to twice the payments due for the twelve-month
period ending September 30, 1997, but not less than $50,000. Based upon
1995 usage, the purchase price would be approximately $250,000.
Should the Company not purchase the rights of the trust, the Company's
responsibility will continue under the present arrangement. Under the
agreement with the trust, the Company can assign its rights to purchase
to a third party.
9. Pending litigation:
In connection with the River Relocation Project, in 1987 the State of
Rhode Island condemned a portion of the Company's property and paid an
award of $2,600,000. As part of an agreement to purchase another parcel
of land from the State, the Company was required to return to the State a
portion of the condemnation award ($1,600,000).
In April 1988, the Company filed a petition in the Rhode Island Superior
Court for an increased condemnation award alleging that the award paid in
1987 was inadequate. In January 1992, the Superior Court awarded the
Company an additional condemnation award of $401,000 plus interest from
the date of the condemnation. The interest is calculated by using a
published Treasury bill rate which compounds annually and, through
December 31, 1995, totals approximately 58% of any additional award. The
Company had asserted in the Superior Court that it was entitled to an
additional condemnation award in excess of $6,000,000 plus interest, and
accordingly, in Februay
-20-
<PAGE>
1992, the Company appealed the decision of the Superior court to the Rhode
Island Supreme Court. In January 1994, the Supreme Court overturned the
Superior Court decision and returned the matter to the Superior Court for
a retrial of the case. The case was retried in 1995. The Company expects
a decision in the summer of 1996. The Company is unable to determine what
amount, if any, will be awarded beyond that paid in 1987. Under the
aforementioned agreement, the Company may be required to return to
the State a portion of any additional award as and when finally determined.
The Company has incurred professional fees in connection with the case
which totalled $154,000 and $9,000 in 1995 and 1994, respectively, which
are included in general and administrative expenses on the accompanying
consolidated statements of income and retained earnings.
10. Fair value of financial instruments:
The carrying amounts of the Company's financial instruments approximate
their fair values due to the short maturities of cash and cash equiva-
lents, other receivables and accounts payable and the recently revised
terms of the note receivable, Providence and Worcester Railroad Company.
-21-
<PAGE>
DIRECTORS AND OFFICERS
OF CAPITAL PROPERTIES, INC.
<TABLE>
<S> <C>
Robert H. Eder, Chairman of Chairman of Providence and
Board of Directors Worcester Railroad Company
Barbara J. Dreyer, Director, President and Treasurer of Capital
President and Treasurer Properties, Inc.
Linda Eder, Vice President Vice President of Capital
Properties, Inc.
Edwin G. Torrance, Secretary Attorney-at-law
Providence, Rhode Island
Stephen J. Carlotti, Assistant Secretary Attorney-at-law
Providence, Rhode Island
Theodore P. Cohen, Director Attorney-at-law
New York, New York
Harold J. Harris, Director Retailer
Providence, Rhode Island
Henry S. Woodbridge, Jr., Director Consultant
Pomfret, Connecticut
TRANSFER AGENT INDEPENDENT AUDITORS
Fleet National Bank Lefkowitz, Garfinkel, Champi &
Stock Transfer Department DeRienzo P. C.
Post Office Box 366 10 Weybosset Street
Providence, Rhode Island 02901 Providence, Rhode Island 02903
-22-
<PAGE>
MARKET FOR THE COMPANY'S COMMON STOCK
AND
RELATED SECURITY HOLDER MATTERS
The Company's common stock is traded on the Boston Stock Exchange, symbol
"CPI." The following table shows the high and low trading prices for the
Company's common stock during the quarterly periods indicated, as obtained
from the Boston Stock Exchange, together with dividends paid per share during
such periods.
</TABLE>
<TABLE>
<CAPTION>
Trading Prices Dividends
High Low Paid
<S> <C> <C> <C>
1995
1st Quarter............... 7 1/2 6 3/4 -0-
2nd Quarter............... 9 1/4 8 .10
3rd Quarter............... 9 1/4 8 1/8 -0-
4th Quarter............... 9 8 1/8 .20
1994
1st Quarter............... 8 7/8 7 1/4 -0-
2nd Quarter............... 7 7/8 7 1/4 .10
3rd Quarter............... 8 1/2 7 7/8 -0-
4th Quarter............... 8 5/8 6 .30
</TABLE>
At March 1, 1996 there were 507 holders of record of the Company's common
stock.
-23-
<PAGE>
EXHIBIT 21
CAPITAL PROPERTIES, INC. AND SUBSIDIARY
SUBSIDIARY OF THE ISSUER
(AS OF MARCH 1, 1996)
<TABLE>
<S> <C>
Subsidiary State of Incorporation
Tri-State Displays, Inc. Rhode Island
</TABLE>
III-7
SIGNATURES
In accordance with Section 13 or 15(d) of th Exchange Act, the Issuer
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
CAPITAL PROPERTIES, INC.
By /s/ Barbara J. Dreyer
Barbara J. Dreyer
President and Treasurer
Dated: March 22, 1996
In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the Issuer and in the capacities and
on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ Barbara J. Dreyer President, Treasurer March 22, 1996
Barbara J. Dreyer and Director
(Principal Executive
Officer, Principal
Financial Officer and
Principal Accounting
Officer)
/s/Robert H. Eder Director March 21, 1996
Robert H. Eder
/s/Harold J. Harris Director March 22, 1996
Harold J. Harris
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SEC
FORM 10KSB AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 767,000
<SECURITIES> 0
<RECEIVABLES> 4,828,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 13,439,000
<DEPRECIATION> 4,063,000
<TOTAL-ASSETS> 15,444,000
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 1,000,000
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 15,444,000
<SALES> 0
<TOTAL-REVENUES> 3,020,000
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,735,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 124,000
<INCOME-PRETAX> 161,000
<INCOME-TAX> 83,000
<INCOME-CONTINUING> 78,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 78,000
<EPS-PRIMARY> .08
<EPS-DILUTED> 0
</TABLE>