<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (Amendment No. )
Filed by the Registrant [x]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
<TABLE>
<S> <C>
[x] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED
BY RULE 14a-6(e) (2))
</TABLE>
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
FEDERAL REALTY INVESTMENT TRUST
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i) (4) and O-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule O-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
O-11(a) (2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
Notes:
<PAGE>
March 31,1999
Dear Shareholder:
Please accept my personal invitation to attend our Annual Meeting of
Shareholders on Wednesday, May 5, 1999 at 10:00 a.m. This year's meeting will
be held at the Doubletree Hotel, 1750 Rockville Pike, Rockville, Maryland.
The business to be conducted at the meeting is set forth in the formal
notice that follows. In addition, Management will provide a review of 1998
operating results and discuss the outlook for the future. After the formal
presentation, the Trustees and Management will be available to answer any
questions that you may have.
Your vote is important. I urge you to complete, sign and return the enclosed
proxy card.
I look forward to seeing you on May 5.
Sincerely,
Steven J. Guttman
President and Chief Executive
Officer
<PAGE>
FEDERAL REALTY INVESTMENT TRUST
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 5, 1999
To Our Shareholders:
The 1999 Annual Meeting of Shareholders of Federal Realty Investment Trust
("Federal Realty" or the "Trust") will be held at the Doubletree Hotel, 1750
Rockville Pike, Rockville, Maryland, on Wednesday, May 5, 1999, at 10:00 a.m.
for the purpose of considering and acting upon the following:
1. The election of three Trustees to serve for the ensuing three years and
one Trustee to serve for the ensuing two years.
2. The approval of a proposal to reorganize the Trust under the laws of the
State of Maryland through an amendment and restatement of the
declaration of trust (the "Reorganization").
3. The transaction of such other business as may properly come before the
meeting or any adjournment.
Shareholders of record at the close of business on March 25, 1999 are
entitled to notice of and to vote at the Annual Meeting.
If there are not sufficient votes to approve the proposal to amend and
restate the declaration of trust, the Annual Meeting may be postponed or
adjourned to permit further solicitation of proxies by the Trust.
For the Trustees:
Nancy J. Herman
Vice President--General
Counsel and Secretary
PLEASE FILL OUT, DATE AND SIGN THE ENCLOSED FORM OF PROXY AND RETURN IT IN THE
ACCOMPANYING POSTAGE PAID ENVELOPE, EVEN IF YOU PLAN TO ATTEND THE MEETING.
YOU MAY REVOKE YOUR PROXY IN WRITING, OR AT THE ANNUAL MEETING IF YOU WISH TO
VOTE IN PERSON.
<PAGE>
FEDERAL REALTY INVESTMENT TRUST
1626 East Jefferson Street, Rockville, Maryland 20852
PROXY STATEMENT
March 26, 1999
Proxies in the form enclosed are solicited by the Board of Trustees of
Federal Realty Investment Trust for use at the 1999 Annual Meeting of
Shareholders ("Annual Meeting") to be held at 10:00 a.m., Wednesday, May 5,
1999, at the Doubletree Hotel, 1750 Rockville Pike, Rockville, Maryland. The
close of business on March 25, 1999 has been fixed as the record date for
determining shareholders entitled to notice of and to vote at the meeting. On
that date, the Trust had common shares of beneficial interest ("Shares")
outstanding. If the proxy in the enclosed form is signed and returned, it will
be voted as specified in the proxy; if no specific voting instructions are
indicated, the proxy will be voted in favor of the four Trustees nominated, to
approve the proposal to amend and restate the Trust's declaration of trust and
in the named proxies' discretion as to other matters at the Annual Meeting.
Any proxy may be revoked by a shareholder at any time before it is voted by
written notice or by attending the Annual Meeting and voting in person.
This proxy statement contains two proposals for shareholder consideration.
For the purpose of each of the two proposals, the presence of a majority of
the outstanding Shares entitled to vote, in person or by proxy, constitutes a
quorum. As to each proposal, shareholders are entitled to cast one vote per
Share. Abstentions and broker non-votes will be counted for the purposes of
determining a quorum.
The affirmative vote of a majority of the Shares entitled to vote and
present, in person or by proxy, is required for the election of Trustees. The
affirmative vote of holders of two-thirds of the Shares outstanding and
entitled to vote is required to approve the proposal to amend and restate the
Declaration of Trust. With respect to each of the two proposals, a withheld
vote or an abstention or broker non-vote will have the effect of a vote
against the proposal.
If there are not sufficient votes to approve the proposal to amend and
restate the declaration of trust, the Annual Meeting may be postponed or
adjourned to permit further solicitation of proxies by the Trust.
This Proxy Statement and an accompanying proxy are being mailed to
shareholders on or about March 31, 1999, together with the Trust's 1998 Annual
Report, which includes certified financial statements for the year ended
December 31, 1998. The Consolidated Balance Sheets as of December 31, 1998 and
1997 and the Consolidated Statements of Operations, the Consolidated
Statements of Shareholders' Equity, the Consolidated Statements of Cash Flows,
and the Notes to Consolidated Financial Statements (each of such Statements
being for the years ended December 31, 1998, 1997 and 1996), certified and
contained in the Trust's 1998 Annual Report, are incorporated herein by
reference to that Report.
OWNERSHIP OF SHARES BY CERTAIN BENEFICIAL OWNERS
To the Trust's knowledge, based upon information available to the Trust,
beneficial owners of more than 5% of the Trust's Shares are as follows:
<TABLE>
<CAPTION>
Name and address Amount and nature Percent
of Beneficial Owner of Beneficial Ownership of Class
------------------- ----------------------- --------
<S> <C> <C>
Stichting Pensioenfonds ABP 2,367,000 5.9%
P.O. Box 2889
6401 DJ Heerlen
The Netherlands
</TABLE>
<PAGE>
PROPOSAL 1
Election of Trustees
Pursuant to Section 2.2 of the Trust's Declaration of Trust, the Trustees
are divided into three classes serving three year terms. Three Trustees,
comprising one class of Trustees, and one Trustee in a separate class, are to
be elected at the Annual Meeting. Mr. Samuel J. Gorlitz, Mr. George L. Perry
and Mr. Mark S. Ordan have been nominated for election as Trustees to hold
office until the 2002 Annual Meeting and until their successors have been
elected and shall qualify. Mr. Steven J. Guttman has been nominated for
election as Trustee to hold office until the 2001 Annual Meeting and until his
successor has been elected and shall qualify; he is being nominated for a two-
year term in order to equalize the number of Trustees in each class.
<TABLE>
<CAPTION>
Principal Occupations Trustee Term to
Name Age and Other Directorships* Since Expire
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Samuel J. Gorlitz....... 81 Founder of the Trust; President, Gorlitz 1975 2002
Associates, real estate developers.
Steven J. Guttman....... 52 President and Chief Executive Officer of 1979 2001
the Trust; Past Trustee, International
Council of Shopping Centers; Member and
Former Chairman, National Association of
Real Estate Investment Trusts Board of Gov-
ernors and Executive Committee.
Mark S. Ordan........... 39 Partner, Bethesda Retail Partners, a retail 1996 2002
venture capital firm; Former Chief Execu-
tive Officer, Chartwell Health Management
Inc.; Former Chairman, President and Chief
Executive Officer, Fresh Fields Markets,
Inc., a healthy foods supermarket; Trustee,
Vassar College; Director, Center for Sci-
ence in the Public Interest.
George L. Perry......... 65 Senior Fellow, Brookings Institution; Di- 1993 2002
rector, State Farm Life Insurance Company;
Director, State Farm Mutual Automobile Com-
pany and various mutual funds managed by
the Dreyfus Corporation.
</TABLE>
Terms of office of the five Trustees named below will continue until the
Annual Meeting in the years indicated.
<TABLE>
<CAPTION>
Principal Occupations Trustee Term to
Name Age and Other Directorships* Since Expire
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Kenneth D. Brody........ 55 Founding Partner, Winslow Partners LLC, a 1997 2000
private equity investment firm; Former
President and Chairman, Export-Import Bank
of the United States; Director, Quest Diag-
nostics, Inc.; Director, American Red
Cross.
A. Cornet de Ways 65 Director of SIPEF S.A., an international 1983 2000
Ruart.................. holding company principally of agricultural
interests; Director of Interbrew S.A., an
international brewery.
Walter F. Loeb.......... 74 President, Loeb Associates Inc., a manage- 1991 2000
ment consulting firm. Publisher, Loeb Re-
tail Letter; Director, InterTAN Inc., an
international electronics retailer; Direc-
tor, The Gymboree Corp.; Director, Mothers
Work, Inc.; Director, Wet Seal, Inc., a
women's apparel retailer; Director,
Hudson's Bay Company, a Canadian chain of
retail department stores and discount
stores; Director, The Warnaco Group, Inc.;
Retired Principal and Senior Retail Ana-
lyst, Morgan Stanley & Co., Inc.
Dennis L. Berman........ 48 General Partner, Berman Enterprises, 1989 2001
Vingarden Associates, GDR Partnerships,
builders/developers; Director, Beco Manage-
ment, office building owners/managers.
Kristin Gamble.......... 53 President, Flood, Gamble Associates, Inc., 1995 2001
an investment counseling firm; Director,
Ethan Allen Interiors, Inc., a furniture
manufacturer and retailer.
</TABLE>
- --------
* The business histories set forth in these tables cover a five-year period.
2
<PAGE>
The Board of Trustees has an Audit Committee, comprised of Messrs. Berman,
Cornet and Ordan, which independently reviews the Trust's financial statements
and coordinates its review with the Trust's independent public accountants.
The Audit Committee held four meetings in 1998. The Compensation Committee,
comprised of Mr. Brody, Mr. Loeb and Mr. Ordan, reviews and reports to the
Board on incentive plans and remuneration of officers. That committee held six
meetings in 1998. The Compensation Committee administers the Trust's Amended
and Restated 1993 Long-Term Incentive Plan (the "Amended Plan"). During 1998
the Board of Trustees held six meetings. The Board of Trustees has no standing
nominating committee.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS A VOTE FOR THE FOUR NOMINEES.
OWNERSHIP OF SHARES BY TRUSTEES AND OFFICERS
As of March 25, 1999, Trustees and executive officers as a group, and the
Trustees and named executive officers, individually, beneficially owned the
following Shares:
<TABLE>
<CAPTION>
Percentage of
Number of Shares Outstanding Shares
Name of Beneficial Owner Beneficially Owned (1) of the Trust
- --------------------------------------------------------------------------
<S> <C> <C>
Trustees and executive officers
as a group (15 individuals) 2,872,757 %
Howard S. Biel 0 0
Dennis L. Berman(2) 470,158 %
Kenneth D. Brody 9,000 under 1%
A. Cornet de Ways Ruart(3) 36,068 under 1%
Nathan P. Fishkin(4) 215,933
Kristin Gamble(5) 109,812 under 1%
Steven J. Guttman(6) 1,342,102 %
Samuel J. Gorlitz(7) 156,597 under 1%
Ron D. Kaplan(8) 326,666 under 1%
Walter F. Loeb 28,659 under 1%
Mark S. Ordan(9) 10,500 under 1%
George L. Perry 19,822 under 1%
Cecily A. Ward 76,704 under 1%
Donald C. Wood(10) 16,200 under 1%
</TABLE>
- -------
(1) The number and percentage of Shares shown in this table reflect
beneficial ownership, determined in accordance with Rule 13d-3 of the
Securities Exchange Act of 1934, including Shares which are not owned but as
to which options are outstanding and may be exercised within 60 days. Except
as noted in the following footnotes, each Trustee and named executive officer
has sole voting and investment power as to all Shares listed. Fractions are
rounded to the nearest full Share.
(2) Includes 434,875 Shares as to which Mr. Berman is Trustee under Voting
Trust Agreements for certain family members. Mr. Berman does not have
disposition rights with respect to these Shares. This number also includes
1,000 Shares owned by a partnership in which Mr. Berman is a general partner.
(3) Does not include 700 Shares owned by a corporation of which Mr. Cornet's
wife is a controlling shareholder.
(4) Includes a Performance Award of 75,000 Shares and 8,000 Restricted
Shares.
(5) Includes 94,017 Shares as to which Ms. Gamble shares investment power
for clients. Includes 1,400 Shares as to which Ms. Gamble is a Trustee of a
profit sharing plan, of which Ms. Gamble has a direct interest in 571 Shares.
(6) Includes 12,000 Shares in trust as to which Mr. Guttman shares voting
and investment power with one other trustee, 29,822 Shares held in trust for
his children and a Performance Share Award of 300,000 Shares.
(7) Includes 20,100 Shares as to which Mr. Gorlitz shares voting and
investment power. Does not include 4,954 Shares as to which Mr. Gorlitz's wife
has sole voting and investment power.
(8) Includes a Performance Share Award of 62,500 Shares and a Restricted
Share Award of 54,688 Shares. Does not include 1,799 Shares as to which Mr.
Kaplan's wife has sole voting and investment power.
(9) Includes 3,000 Shares as to which voting and investment power is shared
with Mr. Ordan's wife.
(10) Includes a Restricted Share Award of 10,000 shares.
3
<PAGE>
REMUNERATION OF EXECUTIVE OFFICERS AND TRUSTEES
The following table sets forth the summary compensation of the Chief
Executive Officer, the four other most highly paid executive officers and a
former executive officer who would have been a named officer but for the fact
that he was not serving as an executive officer of the Trust on December 31,
1998 ("executive officers" or "named officers").
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
----------------------------- ------------------
(a) (b) (c) (d) (e) (f) (g) (i)
Other Restricted
Annual Stock All Other
Salary Compensation Awards(s) Options Compensation
(A) Bonus (B) (C) (D) (E)
Name and Principal Position Year ($) ($) ($) ($) (#) ($)
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Steven J. Guttman(1) 1998 $ -- $ -- $ --- $ 980,000 -- $226,000(F)
President & Chief Executive 1997 529,000 -- -- 366,000 800,000 217,000(F)
Officer 1996 529,000 235,000 -- -- -- 229,000(F)
Howard S. Biel(2) 1998 292,000 225,000 -- -- 200,000 12,000
Senior Vice President &
Managing Director of
Development
Nathan P. Fishkin(3) 1998 250,000 125,000 -- -- 100,000 34,000(F)
Senior Vice President, 1997 200,000 165,000 -- 339,000 50,000 27,000(F)
Acquisitions 1996 159,000 150,000 -- -- -- 25,000(F)
Ron D. Kaplan(4) 1998 280,000 135,000 -- 1,609,000 -- 75,000(G)
Senior Vice President, Capital 1997 285,000 140,000 -- 490,000 100,000 72,000(G)
Markets, Chief 1996 201,000 125,000 -- -- -- 70,000(G)
Investment Officer
Cecily A. Ward 1998 155,000 55,000 -- -- 50,000 16,000(F)
Vice President, Controller 1997 140,000 100,000 -- -- -- 14,000(F)
1996 127,000 45,000 -- -- -- 13,000(F)
Donald C. Wood(5) 1998 189,000 125,000 92,000 253,000 250,000 5,000
Senior Vice President
Finance & Treasurer
</TABLE>
- --------
(1) In January 1998 Mr. Guttman received 24,534 Shares valued at $632,000 in
lieu of his 1998 cash salary of $475,000. In February 1999 Mr. Guttman
received 16,734 Shares valued at $352,000 in lieu of a cash bonus of
$265,000 for 1998. The terms of these arrangements are described below in
"Employment Agreements, Termination of Employment and Change in Control
Arrangements".
(2) Mr. Biel commenced employment with the Trust in January 1998.
(3) Mr. Fishkin ceased serving as an executive officer on October 30, 1998.
The $125,000 cash bonus for 1998 was paid in accordance with an agreement
with Mr. Fishkin which is described below in "Employment Agreements;
Termination of Employment and Change in Control Arrangements."
(4) On January 1, 1998 Mr. Kaplan was awarded a Restricted Share Award of
62,500 Shares valued at $1,609,000 which vests over an eight-year period
assuming continued service to the Trust. The terms of this arrangement are
described below in "Employment Agreements; Termination of Employment and
Change in Control Arrangements."
(5) Mr. Wood commenced employment with the Trust in May 1998. On May 7, 1998,
Mr. Wood was awarded a Restricted Share Award of 10,000 Shares, which will
vest over a five-year period, valued at $253,000. The terms of this award
are described below in "Employment Agreements; Termination of Employment
and Change in Control Arrangements."
(A) Amounts shown include amounts deferred at the election of the named
officer pursuant to plans available to substantially all employees and
pursuant to a non-qualified deferred compensation plan available to all
officers.
4
<PAGE>
(B) Mr. Wood received $82,000 for moving expenses and a $10,000 car allowance.
(C) Dividends are paid on Restricted Stock.
(D) Option exercise price is equal to the fair market value of the Shares on
the date of grant.
(E) The amounts shown in this column for the last fiscal year include the
following: (i) Mr. Guttman: $10,000--Trust paid group term life insurance;
$4,000--Trust paid annuity contract premium; $13,000-- interest that would
have been payable on interest-free loan made in connection with split-
dollar life insurance agreement; $10,000--Trust paid long-term disability
insurance premium; and $189,000--deferred compensation from forgiveness of
loans as described below in (F); (ii) Mr. Biel: $5,000--Trust paid group
term life insurance; $5,000--interest that would have been payable on
interest-free loan made in connection with split-dollar life insurance
agreement; $2,000--Trust paid long-term disability insurance premium;
(iii) Mr. Fishkin: $2,000--Trust paid group term life insurance; $5,000--
interest that would have been payable on interest-free loan made in
connection with split-dollar life insurance agreement; $4,000--Trust paid
long-term disability insurance premium; $4,000--Trust contribution to
Section 401(k) Plan and the deferred compensation Plan; $19,000--deferred
compensation from forgiveness of loans as described below in (F); (iv) Mr.
Kaplan: $1,000--Trust paid group term life insurance; $3,000--interest
that would have been payable on interest-free loan made in connection with
split-dollar life insurance agreement; $5,000--Trust contribution to
Section 401(k) Plan and the deferred compensation plan; $3,000--Trust paid
long-term disability insurance premium; $63,000--deferred compensation
from forgiveness of loans as described below in (G); (v) Ms. Ward:
$2,000--group term life insurance premium; $4,000--Trust contribution to
Section 401(k) Plan; $2,000--Trust paid long-term disability insurance
premium; and $8,000--deferred compensation from forgiveness of loans as
described below in (F); and (vi) Mr. Wood: $1,000--Trust paid group term
life insurance; $3,000--interest that would have been payable on interest-
free loan made in connection with split-dollar life insurance agreement;
$1,000--Trust paid long-term disability insurance premium.
(F) In 1991, Mr. Guttman, Mr. Fishkin and Ms. Ward were awarded the
opportunity to purchase Shares of the Trust and the Trust made available
loans for 100% of the purchase price. One-half of the loan was originally
scheduled to be forgiven, by forgiving one-sixteenth each January 31, over
an eight-year period so long as the officer was employed by the Trust. The
Trust and the named officers agreed to modify the terms of the loan so
that beginning in 1995 and each year thereafter, there will be no
forgiveness as of January 31 of each year if Funds from Operations ("FFO")
per Share increases by less than 5% during the preceding fiscal year. If
FFO per Share increases by 5% or more, one-sixteenth of the loan will be
forgiven. Beginning in 1996 and thereafter, if FFO per Share increases by
10% or more and total return to shareholders is 10% or greater during the
fiscal year, one-eighth of the loan will be forgiven on the following
January 31. However, 25% of the original principal amount of each loan is
not subject to forgiveness by the Trust. The loans were also modified
during 1994 so that they are due on January 31, 2004.
(G) On December 17, 1993, the Trust awarded Mr. Kaplan the opportunity to
purchase 40,000 Shares as of January 1, 1994 at the closing price of $25
per share on December 31, 1993. The Trust loaned Mr. Kaplan 100% of the
purchase price for a term of 12 years. Forgiveness of Mr. Kaplan's loan
is subject to the same performance measures described above in (F).
Trustee Compensation; Attendance; Legal Proceedings
Trustees' fees are paid to Trustees other than Mr. Guttman. In accordance
with the provisions of the Amended Plan, Trustees' fees are payable in cash or
Shares or a combination of both, at the election of the Trustee; the Trust
issued Shares for 53% of the Trustees' fees paid in 1998. The annual Trustee
fee for 1998 was $25,000. Each Trustee was paid the fee based on the number of
months during the year he/she served as a Trustee. The annual fee in 1998 for
service on the Compensation Committee was $2,500 and $3,000 for service
5
<PAGE>
as its Chairman. The annual fee in 1998 for service on the Audit Committee was
$2,000 and $2,500 for service as its Chairman. Committee fees were also
prorated based on the number of months of service. In accordance with the
Amended Plan, as of the date of the 1998 Annual Meeting of Shareholders, each
non-employee Trustee received an option to purchase 2,500 Shares at an
exercise price of $25.25. Pursuant to a consulting agreement, Mr. Gorlitz
provides consulting services to the Trust and is paid an annual consulting fee
of $120,000.
Employment Agreements; Termination of Employment and Change in Control
Arrangements
The Trust has an amended and restated employment agreement with Mr. Guttman
which provides, among other things, that his salary may not be decreased below
its then-current level and is increased on January 1 of each year by 50% of
any increase in the Consumer Price Index ("CPI") for the prior year and that
Mr. Guttman is eligible to receive an annual bonus, in the Board of Trustees'
discretion, of up to 120% of his salary. Mr. Guttman agreed to forgo any base
salary increase in 1999. The agreement provides for a three-year term of
employment to be automatically renewed at the end of each month unless either
party notifies the other that it has elected not to extend the term. The Trust
may terminate Mr. Guttman's employment if he is totally disabled for at least
six consecutive months, in which case Mr. Guttman is entitled to receive each
month for a three-year period the difference, if any, between the monthly
payments he receives under the disability insurance policies the Trust
maintains on his behalf and his base monthly salary. The Trust may terminate
Mr. Guttman's employment for cause (as defined in the agreement) without
payment to Mr. Guttman. Mr. Guttman may terminate his employment under certain
circumstances, including if his responsibilities are materially modified
without his written consent, a change in control occurs (as defined in the
agreement), the Trust relocates its principal office outside the Washington,
D.C. area, he is not reappointed as a member of the Trust's Board of Trustees,
a Chairman of the Trust's Board of Trustees is appointed other than Mr.
Guttman, or his employment agreement is not assumed by a successor to the
Trust. If Mr. Guttman so terminates his employment, he is entitled to receive
the compensation he would have otherwise received (including bonuses) for the
remaining term of the employment agreement. Mr. Guttman may also terminate his
employment for any other reason upon at least six months notice, in which case
the Trust's obligation to pay compensation to him ceases on the effective date
of termination.
Mr. Guttman and the Trust have entered into restricted share award
agreements (the "Restricted Share Agreements") pursuant to which Mr. Guttman
will receive (unless he elects otherwise six months in advance) Shares in lieu
of his salary for the years 1998 through 2002 and Shares in lieu of his bonus
for the years 1997 through 2001. The Shares granted pursuant to the Restricted
Share Agreements (the "Restricted Shares"), which will be 133% of the salary
and bonus levels determined by the Board of Trustees, will vest five years
after the date of grant, subject to accelerated vesting in the event of a
change in control (as defined in the Amended Plan) or the termination of Mr.
Guttman's employment due to his death, disability (as defined in his
employment agreement) or without cause (as defined in his employment
agreement). Dividends are paid on the Shares if and when awarded. If Mr.
Guttman voluntarily resigns from his employment with the Trust or his
employment is terminated for cause prior to the end of the aforementioned
five-year period, his rights to the Restricted Shares are forfeited.
The Trust has severance agreements with Mr. Kaplan, Ms. Ward, and Mr. Wood
which provide, among other things, that if the employee is terminated without
cause (as defined in the agreements), the employee will be entitled to receive
his or her salary for 18 months, and benefits for nine months. The employee
also will receive the benefits payable upon termination without cause under
certain additional circumstances, including, among other things, a demotion or
a substantial reduction in the employee's responsibilities without his or her
written consent, relocation of the Trust's principal office outside the
Washington, D.C. area, the occurrence of a change in control (as defined in
the agreements), or the decrease of the employee's base salary below a
percentage specified in each employee's severance agreement. The Trust may
terminate the employee's employment with cause without payment to the
employee. If Mr. Kaplan or Ms. Ward voluntarily resigns, they will receive
their salary and benefits for up to six months, depending upon length of
service, unless they become employed by a competing firm.
6
<PAGE>
The Trust has entered into agreements with each of the current executive
officers named in the Summary Compensation Table above other than Mr. Biel
providing that, if any of these officers leave the employment of the Trust
within six months following a change in control (generally defined to include
control of a specified percentage of the outstanding Shares), he or she will
be entitled to receive a lump sum cash payment and benefits and executive
perquisites for a period following such termination, to have the restrictions
on the exercise or receipt of any stock options or stock grants lapse and, at
the option of the officer, to have the Trust redeem all Shares owned at
termination at a formula price. The Trust intends to enter into a similar
agreement with Mr. Biel in 1999. The cash payments the officers are entitled
to receive are computed using a formula based upon the officer's salary at the
date his or her employment terminates and bonuses that were paid over the
previous three years. This amount is multiplied by a certain percentage: 299%
for Mr. Guttman; 200% for Mr. Kaplan and Mr. Wood; and 100% for Ms. Ward.
These agreements also provide that if benefits paid pursuant thereto are
determined to be subject to an excise or similar tax, the Trust will provide
the officer with such additional compensation as is necessary to place him or
her in the same after-tax position as he or she would have been had such tax
not been paid or incurred.
Mr. Biel commenced employment with the Trust in January 1998. The Trust and
Mr. Biel entered into a letter agreement in November 1997 setting forth the
terms of his employment providing, among other things, that he will receive an
annual salary of $300,000 and is eligible to receive an annual bonus of up to
75% of his salary. In addition, Mr. Biel received an option award for 200,000
Shares on the date he began his employment. The options will vest in four
equal annual installments beginning on the second anniversary of the date of
award. The option was priced at the closing price per Share on the date of
award. If his employment is terminated with cause, he will not receive any
severance payment. If his employment is terminated without cause, (i) he will
be entitled to receive his salary for up to 18 months, depending upon length
of service, and benefits for nine months, and (ii) if such termination occurs
after he has been employed by the Trust for one year, any unvested stock
options awarded to him will vest. The agreement also provides that Mr. Biel is
entitled to receive an annual stock award equal to 7.5% to 10% of the value
created in certain development projects. Value is a measure based on
capitalization of net operating income. In any year in which the stock award's
value to Mr. Biel exceeds $700,000, no bonus will be paid to him.
In September 1997 the Trust granted performance share awards ("Performance
Awards") to Mr. Guttman and Mr. Kaplan effective in January 1998 for 300,000
and 62,500 Shares ("Performance Shares"), respectively. Pursuant to the terms
of these awards, a specified number of Performance Shares will vest each year
from 1998 through 2005 if the Trust meets or exceeds the "Performance Target."
The Performance Target will have been met or exceeded based upon the
application of an annual test, which requires the FFO annual growth rate per
Share to equal or exceed seven percent (7%). No Performance Shares vested in
1998 since the Trust did not meet the "Performance Target." Any Performance
Shares which remain unvested after 2005 vest in five equal annual installments
through 2010. All Performance Shares vest in the event of a change in control
(as defined in the Performance Awards), or the termination of Mr. Guttman's or
Mr. Kaplan's employment due to disability (as defined in the Performance
Awards) or without cause (as defined in the Performance Awards). If Mr.
Guttman's or Mr. Kaplan's employment is terminated for cause, his rights to
any unvested Performance Shares are forfeited. If Mr. Guttman or Mr. Kaplan
dies or voluntarily resigns from his employment with the Trust, a pro rata
number of Performance Shares for that year will vest if the Performance Target
is met, and his rights to any future unvested Shares are forfeited.
In September 1997 the Trust granted restricted share awards ("Service
Awards") to Mr. Kaplan effective in January 1998 for an aggregate of 62,500
Shares. Pursuant to the terms of the Service Awards, an aggregate of 651
Shares vest each month over an eight-year period, subject to accelerated
vesting in the event of a change in control (as defined in the Service Awards)
or the termination of Mr. Kaplan's employment due to disability (as defined in
the Service Awards) or without cause (as defined in the Service Awards). If
Mr. Kaplan voluntarily resigns from his employment with the Trust or his
employment is terminated for cause prior to the end of the aforementioned
eight-year period, his rights to any unvested Shares are forfeited. If Mr.
Kaplan dies, the number of Shares which would have vested in the month of his
death vest and his rights to any future unvested Shares are forfeited.
7
<PAGE>
The Trust granted a restricted share award of 10,000 Shares (the "Restricted
Share Award") to Mr. Wood in May 1998 upon the commencement of his employment.
Pursuant to the terms of the Restricted Share Award, the Shares will vest in
five equal annual installments, subject to accelerated vesting if any of the
following events occur after the first anniversary of the date of grant: a
change in control or the termination of Mr. Wood's employment due to death,
disability or without cause (as such terms are defined in the Restricted Share
Award). If Mr. Wood voluntarily resigns from his employment with the Trust or
his employment is terminated for cause prior to the end of the five-year
vesting period, his rights to any unvested Shares are forfeited.
On , 1999, the Trust and Mr. Fishkin entered into an agreement pursuant
to which Mr. Fishkin's former employment relationship with the Trust ended and
he became a consultant to the Trust. Pursuant to the terms of the agreement,
Mr. Fishkin remains a director of Street Retail, Inc., a wholly owned
subsidiary of the Trust, and will provide certain real estate services to the
Trust for a term of three years. The agreement provides for an annual retainer
of $250,000, plus expenses, and payment of a bonus of $125,000 for 1998. In
addition, Mr. Fishkin will receive incentive compensation based on the square
footage leased at certain properties. Until the expiration or termination of
the agreement, Mr. Fishkin is entitled to the benefit of any outstanding stock
option awards, restricted stock agreements, share purchase loans and split-
dollar life insurance agreements (as described below) as if Mr. Fishkin were
an employee of the Trust. The agreement is terminable by the Trust with 60
days notice and by Mr. Fishkin with 90 days notice. If the agreement is
terminated prior to the expiration of its term other than for cause, Mr.
Fishkin is entitled to a severance payment of up to $600,000 and to certain
other benefits, based on the timing and circumstances of the termination.
In connection with the agreement with Mr. Fishkin described above, the Trust
entered into a performance share award agreement ("Performance Share
Agreement") with him setting forth the terms of the 75,000 performance shares
("Performance Shares") awarded in January 1998. The Performance Shares are
eligible to vest from 1999-2001 based on the calculation of value created in
certain real estate projects. Any Performance Shares which remain unvested
after 2001 are forfeited. All Performance Shares vest in the event of a change
in control (as defined in the Performance Share Agreement). In the event Mr.
Fishkin's consulting arrangement is terminated due to disability or without
cause (both as defined in the Performance Share Agreement), Mr. Fishkin will
remain eligible to receive awards for value created within 24 months after the
termination. If Mr. Fishkin dies or terminates the consulting arrangement, or
if the Trust terminates the arrangement for cause, Mr. Fishkin's rights to any
unvested Performance Shares are forfeited.
The Trust has entered into split-dollar life insurance agreements with Mr.
Guttman, Mr. Kaplan, Mr. Biel, Mr. Wood and Mr. Fishkin pursuant to which the
Trust makes certain premium payments on their behalf relating to certain
insurance policies and is reimbursed for those premiums after fifteen years.
The Trust's funding obligations end, and it is entitled to immediate
reimbursement, in the event of termination of the employee's employment under
certain circumstances. The Trust's funding obligations do not end, however, in
the event of termination without cause or in connection with a change in
control of the Trust, provided in either case that the employee has been
employed by the Trust for at least five years at the time of termination.
The Amended Plan provides that all stock options granted pursuant to it
shall vest in the event of a change of control, as defined in the Amended
Plan.
The Share Purchase Plan permits the Trust to make non-recourse purchase
loans to participants to facilitate the purchase of Shares pursuant to awards
made thereunder. The Share Purchase Plan provides that a portion of the
outstanding balance of any purchase loan will be forgiven as of the date of a
change in control.
8
<PAGE>
Option Awards in 1998
The following table provides information on option awards in 1998 to the
named officers.
<TABLE>
<CAPTION>
Potential
Realizable Value at
Assumed Annual
Rates of Stock Price
Appreciation
Individual Awards for Option Term (1)
- ------------------------------------------------------------------------ --------------------
(a) (b) (c) (d) (e) (f) (g)
% of
Total
Options
Awarded to
Employees
Options in Fiscal Exercise Expiration
Name Awarded (#) Year Price ($/Sh) Date 5% ($) 10% ($)
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Steven J. Guttman....... -- -- $ -- -- $ -- $ --
Howard S. Biel.......... 200,000(2) 15% 25.875 1/2/08 8,430,000 13,423,000
Nathan P. Fishkin....... 25,000(3) 2% 24.8125 3/5/08 390,000 989,000
75,000(4) 6% 22.0620 8/5/08 1,041,000 2,637,000
Ron D. Kaplan........... -- -- -- -- -- --
Cecily A. Ward.......... 50,000(5) 4% 25.1875 1/26/08 792,000 2,007,000
Donald C. Wood.......... 250,000(6) 19% 25.25 5/6/08 3,970,000 10,060,000
</TABLE>
- --------
(1) These assumed annual rates of stock price appreciation are specified by
the SEC. No assurance can be given that such rates will be achieved.
(2) These options vest in four equal annual installments beginning on January
2, 2000.
(3) These options vest in five equal annual installments beginning on March
6, 1999.
(4) These options vest in five equal annual installments beginning on August
6, 1999.
(5) These options vest in three equal annual installments beginning on
January 26, 1999.
(6) These options vest in four equal annual installments beginning on May 6,
2000.
Aggregated Option Exercises in 1998 and December 31, 1998 Option Values
The following table provides information on option exercises in 1998 by the
named officers, and the value of each such officer's unexercised options at
December 31, 1998.
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Options at
Fiscal Year-End (#) Fiscal Year-End ($)(1)
Shares Acquired ------------------------- -------------------------
Name on Exercise (#) Value Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Steven J. Guttman....... -- $ -- 403,333 566,667 $261,250 $ --
Howard S. Biel.......... -- -- -- 200,000 -- --
Nathan P. Fishkin....... -- -- 76,666 133,334 100,625 117,225
Ron D. Kaplan........... 9,638 41,563 68,695 66,667 101,666 --
Cecily A. Ward.......... 2,000 3,250 50,000 50,000 103,125 --
Donald C. Wood.......... -- -- -- 250,000 -- --
</TABLE>
- --------
(1) Based on $23.625 per Share closing price on the NYSE on December 31, 1998.
9
<PAGE>
Long-Term Incentive Plans -- Awards in Last Fiscal Year
<TABLE>
<CAPTION>
(a) (b) (c)
Estimated Future
Payouts
under Non-Stock
Number of Shares, Units, Performance or Other Period Price-Based
Name or Other Rights(#)(A) Until Maturation or Payout Plans(#)
---- ------------------------ --------------------------- ----------------
<S> <C> <C> <C>
Steven J.
Guttman(1) 300,000 8 years 300,000
Nathan P.
Fishkin(2) 75,000 3 years Not determinable
Ron D.
Kaplan(3) 62,500 8 years 62,500
</TABLE>
(1) On January 1, 1998, Mr. Guttman was awarded a Performance Share Award of
300,000 Shares, which will vest over an eight-year period if the Trust
meets the "Performance Target" of FFO annual growth per share of seven
percent (7%), and over a shorter period if FFO annual growth per share is
nine percent (9%) or more. Any Performance Shares which remain unvested
after 2005 vest in five equal annual installments through 2010.
Performance Shares may be forfeited under certain circumstances, or may
vest on an accelerated basis under other circumstances. The Performance
Target was not met for 1998 and no Performance Shares vested. The terms of
this award are described below in "Employment Agreements, Termination of
Employment and Change in Control Arrangements."
(2) On January 26, 1998, Mr. Fishkin was awarded a Performance Share Award of
75,000 Shares. An unspecified number of Performance Shares are eligible to
vest each year from 1999 through 2001 based on the calculation of value
created in certain real estate projects. Any Performance Shares which
remain unvested after 2001 are forfeited. Performance Shares may be
forfeited under certain other circumstances, or may vest on an accelerated
basis under certain other circumstances. The terms of this award are
described in "Employment Agreements; Termination of Employment and Change
in Control Arrangements."
(3) On January 1, 1998, Mr. Kaplan was awarded a Performance Share Award of
62,500 Shares, which will vest over an eight-year period if the Trust
meets the "Performance Target" of FFO annual growth per share of seven
percent (7%), and over a shorter period if FFO annual growth per share is
nine percent (9%) or more. Any Performance Shares which remain unvested
after 2005 vest in five equal annual installments through 2010.
Performance Shares may be forfeited under certain circumstances, or may
vest on an accelerated basis under other circumstances. The Performance
Target was not met for 1998 and no Performance Shares vested. The terms of
this award are described below in "Employment Agreements, Termination of
Employment and Change in Control Arrangements."
(A) Dividends are paid on Performance Shares.
10
<PAGE>
Retirement and Disability Plans
The Trust has a retirement and disability plan for Mr. Guttman, in effect
since 1978. The agreement implementing the plan provides generally for an
annual payment after retirement at or after age 62, or at any time on
suffering a total and permanent disability, of $40,000. A lump-sum death
benefit of $40,000 will be paid to Mr. Guttman's estate. Mr. Guttman's plan
requires funding, and a $200,000 annuity contract was purchased to assist the
Trust in meeting this obligation.
The Trust has a retirement and consulting plan for Mr. Gorlitz, effective
since 1978, and amended in 1988 and 1992 to revise the annual payment. The
plan provides for an annual consultation fee payment of $120,000, until notice
of retirement is given by either Mr. Gorlitz or the Trust, at which time Mr.
Gorlitz will receive an annual retirement payment of $75,000 plus adjustments
for changes in the Consumer Price Index that occur between June 1, 1988 and
the date of Mr. Gorlitz's retirement. Thereafter the retirement payment will
be adjusted annually for changes in the Consumer Price Index, except that no
annual adjustment may exceed 10%.
Report of the Compensation Committee on Executive Compensation
In 1998, as in prior years, the Compensation Committee was responsible for
determining the level of compensation paid to the Trust's executive officers,
subject to the review and approval of the Board of Trustees. The Compensation
Committee is comprised entirely of non-employee Trustees.
Philosophy: The members of the Compensation Committee believe that the
Trust's success is largely due to the efforts of its employees and, in
particular, the leadership exercised by its executive officers. Therefore, the
Compensation Committee believes that it is important to:
. Adopt compensation programs that stress stock ownership and, thereby, tie
long-term compensation to increases in shareholder value as evidenced by
Trust Share price appreciation.
. Adopt compensation programs that enhance the Trust's ability to attract
and retain qualified executive officers while providing the financial
motivation necessary to achieve continued high levels of Trust
performance.
. Provide a mix of cash and stock-based compensation programs that are
competitive with a select group of successful real estate investment
trusts and other successful national and regional firms that the members
of the Compensation Committee believe are comparable to the Trust.
. Adjust salary, bonuses and other compensation awards commensurate with
overall corporate results.
. Implement compensation programs that emphasize teamwork, pay-for-
performance and overall corporate results.
The Compensation Committee has traditionally retained a high degree of
flexibility in structuring the Trust's compensation programs. This approach
has allowed the Compensation Committee annually to evaluate subjectively and
reward each executive officer's individual performance and contribution to the
Trust's overall financial and operational success.
Named Executive Officers (other than the Chief Executive Officer). Near the
end of each year, or early in the following year, the Compensation Committee
determines the salary to be paid to each executive officer during the
subsequent year and the bonus to be paid for the current year. Mr. Guttman
assists the Compensation
11
<PAGE>
Committee by making recommendations concerning salaries and bonuses to be paid
to executive officers, other than himself.
Mr. Guttman's recommendations and the Committee's decisions are based, in
all cases other than for Mr. Wood, upon their subjective evaluation of each
executive officer's performance and responsibilities as they relate to certain
"Performance Factors" including the productivity of the Trust's leasing
effort, the increase in funds from operations ("FFO"), the financing
transactions completed and the redevelopment and operation of the Trust's
properties. Mr. Wood's letter of employment provided for a guaranteed bonus
for 1998 of $125,000. The bonuses awarded by the Compensation Committee for
1998 consider the attainment of the Trust's operating performance in 1998 as
well as the market demand for the Trust's key employees. In general, 1998
bonuses were lower than those for 1997.
In determining the executive officers' salary and bonus levels, the
Compensation Committee also takes into account the total cash compensation
paid to executive officers with similar positions in select successful real
estate investment trusts and other national and regional companies that it
concludes possess revenues, profitability and growth that are comparable to
the Trust's (the "Survey Group"). Some of the companies in the Survey Group
are included in the National Association of Real Estate Investment Trust
equity index. The Compensation Committee's goal is to maintain the total
compensation package for executive officers at a level which is competitive
with the total compensation paid to executive officers of the companies in the
Survey Group.
It is expected that, by the end of 1999, the Compensation Committee will
have adopted new incentive compensation plans for all Trust employees aimed at
increasing objectivity of the annual bonus awards by quantifying awards based
on specific operational performance thresholds and the achievement of
individual objectives.
Chief Executive Officer. As Chief Executive Officer, Mr. Guttman is
compensated pursuant to his employment agreement discussed above and in
accordance with the performance factors discussed earlier. Mr. Guttman's
compensation package is comprised of:
. a base salary component commensurate with other non-founder chief executive
officers in the region and industry
. an annual incentive bonus awarded at the discretion of the Board of
Trustees which has historically approximated 40-60% of base pay
. a long-term performance share component which vests based on FFO
performance hurdles.
In September 1997 the Compensation Committee approved a plan to link Mr.
Guttman's compensation to shareholder value. The Compensation Committee
approved a Stock in Lieu of Salary Plan and a Stock in Lieu of Bonus Plan
pursuant to which Mr. Guttman may elect to forgo receipt of his salary and/or
bonus in cash and receive instead the number of Shares equal to 133% of his
salary and/or bonus amount divided by the closing price per Share as of
December 31 of the previous year. To implement the Stock in Lieu of Salary and
Bonus Plans, the Trust and Mr. Guttman entered into restricted share award
agreements pursuant to which Mr. Guttman will receive (unless he elects
otherwise) Shares in lieu of his salary for the years 1998 through 2002 and
Shares in lieu of his bonus for the years 1997 through 2001. The terms of
these agreements are described above in "Employment Agreements; Termination of
Employment and Change in Control Arrangements." In connection with the
approval of the Stock in Lieu of Salary and Bonus Plans, Mr. Guttman agreed
that if he elected to receive Shares in lieu of his 1998 salary, his salary
for 1998 would be $475,000, a decrease from his 1997 salary of $529,000. Mr.
Guttman's salary for 1999 remained at its 1998 level. Mr. Guttman elected to
receive Shares in lieu of cash for his 1998 salary and 1997 bonus (cash award
of $275,000) as well as his 1999 salary and 1998 bonus (cash award of
$265,000). Pursuant to these elections and the applicable restricted share
award agreements, a total of 39,055 Restricted Shares were awarded in January
1998 for his 1998 salary and 1997 bonus, and a total of 43,475 Restricted
Shares were awarded in January and February 1999 for his 1999 salary and 1998
bonus.
12
<PAGE>
Also in September 1997, the Compensation Committee awarded Mr. Guttman a
performance share award of 300,000 Shares effective January 1, 1998, as
described above in "Employment Agreements; Termination of Employment and
Change in Control Arrangements." Since FFO per Share of the Trust did not
equal or exceed 7% in 1998 on as-reported basis, no Performance Shares vested.
The Compensation Committee believes that the compensation arrangements
described above will fulfill the objective of linking Mr. Guttman's long-term
compensation directly and closely to increasing shareholder value. Increasing
Mr. Guttman's equity ownership in the Trust will align his interests with
shareholders' long-term interests because the value of Mr. Guttman's options
and restricted share and performance awards over time will increase only as
Share value increases.
Amended and Restated 1993 Long-Term Incentive Plan. In 1997, the
Compensation Committee, the Board of Trustees and the shareholders approved
revisions to the 1993 Plan to improve and modify its terms and to qualify the
1993 Plan under the performance-based compensation exception to Section 162(m)
of the Code (the 1993 Plan as amended is referred to hereafter as the Amended
Plan).
Deductibility of Executive Compensation in Excess of $1.0 Million. Section
162(m) of the Code generally disallows a federal income tax deduction to any
publicly held corporation for compensation paid in excess of $1 million in any
taxable year to an executive officer who is named in the Summary Compensation
Table. Exceptions are made for qualified performance-based compensation, among
other things. The Compensation Committee intends generally to structure its
executive awards under the Amended Plan to take advantage of this Section
162(m) exception. However, the Committee does not believe that it is
necessarily in the best interest of the Trust and its shareholders that all
compensation meet the requirements of Section 162(m) for deductibility and the
Committee may determine to award non-deductible compensation in such
circumstances as it deems appropriate. Moreover, in light of the ambiguities
and uncertainties under Section 162(m), no assurance can be given that
compensation intended by the Company to satisfy the requirements for
deductibility under Section 162(m) does in fact do so.
Kenneth D. Brody
Walter F. Loeb
Mark S. Ordan
13
<PAGE>
Compensation Committee Interlocks and Insider Participation
The Compensation Committee consists of Messrs. Brody, Loeb and Ordan. Ms.
Gamble served as a member of the Compensation Committee until May 1998. There
are no Compensation Committee interlocks and no Trust employees serve on the
Compensation Committee.
Stock Price Performance
The following stock price performance chart compares the Trust's performance
to the S&P 500 and the index of equity real estate investment trusts prepared
by the National Association of Real Estate Investment Trusts ("NAREIT"). Equity
real estate investment trusts are defined as those which derive more than 75%
of their income from equity investments in real estate assets. The NAREIT
equity index includes all tax qualified real estate investment trusts listed on
the NYSE, American Stock Exchange or the NASDAQ National Market. Stock price
performance for the past five years is not necessarily indicative of future
results. All stock price performance includes the reinvestment of dividends.
[STOCK PERFORMANCE CHART APPEARS HERE]
<TABLE>
<CAPTION>
Equity S&P 500 FRT
------- ------- -------
<S> <C> <C> <C>
Dec 1994 103.17 101.31 88.01
Dec 1995 118.92 138.23 104.46
Dec 1996 160.88 171.18 134.07
Dec 1997 193.45 228.32 135.48
Dec 1998 159.59 293.57 133.55
</TABLE>
14
<PAGE>
CERTAIN TRANSACTIONS
Pursuant to the terms of stock option plans, from 1984 through 1998 officers
and key employees have exercised options and paid for some of the Shares by
issuance of notes to the Trust. Notes accepted pursuant to the 1983 or 1985
stock option plans are for a term extending to the employee's or officer's
retirement date with interest payable quarterly at the per annum rate that is
either the lesser of (i) the Trust's current borrowing rate or (ii) the
current indicated annual dividend rate on the Shares acquired pursuant to the
option divided by the purchase price of such Shares. Notes accepted pursuant
to the Amended Plan are for a period extending to the employee's or officer's
retirement date with interest payable quarterly at the per annum rate that is
the lesser of (i) the Trust's borrowing rate on the date of exercise or (ii)
the indicated annual dividend rate on the date of exercise of the option
divided by the option price of such Shares. The stock option notes are secured
by the Shares, which will not be released until the notes are paid in full.
Pursuant to the terms of a restricted stock agreement, Mr. Guttman borrowed
$210,000, $105,000 of which was repaid in 1992. The remaining balance of
$105,000 is payable on April 15, 2001, with no interest. The note is secured
by 18,975 Shares.
In 1991, the Trust accepted notes from Trust officers in connection with the
1991 Share Purchase Plan for $5,359,922. The current balance of the notes is
$1,936,000. Up to 75% of the original principal balance of these loans may be
forgiven by the Trust if certain conditions are met. In connection with the
1991 Share Purchase Plan, the Trust has loaned officers $909,000 with which to
pay income taxes associated with the forgiveness. The interest rate on the
Share purchase loans and related tax loans is 9.39%. On January 1, 1994, the
Trust lent Mr. Kaplan $1,000,000 to purchase 40,000 Shares. The current
balance is $625,000 and he has been loaned $150,000 with which to pay income
taxes associated with the forgiveness. Up to 75% of the original principal
balance of this loan may be forgiven by the Trust if certain conditions are
met. The interest rate on his share purchase loans and related tax loans is
6.24%.
The following table sets forth the indebtedness to the Trust of the officers
as of March 25, 1999:
<TABLE>
<CAPTION>
Maximum
Outstanding Current
during Balance
Name Title 1998 of Notes
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Steven J. Guttman......... President and Chief $2,716,000 $2,490,000
Executive Officer
Nathan P. Fishkin......... Senior Vice President, 286,000 263,000
Acquisitions
Ron D. Kaplan............. Senior Vice President, 2,010,000 1,973,000
Capital Markets, Chief
Investment Officer
Cecily A. Ward............ Vice President, Controller 130,000 119,000
</TABLE>
A retail women's clothing store in which Mr. Guttman had an ownership
interest until February 1998 leases space at one of the Trust's properties.
Terms of the lease were negotiated at arms length and reflected prevailing
market conditions. Total payments in 1998 for rent, operating expenses and
real estate taxes were $90,000. From time to time the Trustees may actively
engage on their own behalf and as agents for and advisors to others in real
estate transactions, including development and financing. The Trustees have
agreed that they will not acquire an interest in any property which meets the
investment criteria of the Trust without first offering the property to the
Trust.
15
<PAGE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Trustees and executive officers of the Trust are required to file
reports of initial ownership and changes of ownership of the Trust's Shares
with the Securities and Exchange Commission and with the New York Stock
Exchange. To the Trust's best knowledge, based solely on review of copies of
such reports furnished to the Trust and written representations that no other
reports were required, the required filings of all such Trustees and executive
officers were filed timely, except that Mr. Guttman and Mr. Kaplan each filed
one report that was not filed on a timely basis; Mr. Guttman's report covered
one transaction, and Mr. Kaplan's covered two transactions. Both reports were
filed within 30 days after their due date.
PROPOSAL 2
Proposal to Reorganize the Trust under the laws of the State of Maryland by
Amending and Restating the Trust's Declaration of Trust
The Board of Trustees believes that it is in the best interests of Federal
Realty and its shareholders to reorganize the Trust as a Maryland real estate
investment trust by amending and restating the Trust's declaration of trust.
To effect this reorganization (the "Reorganization"), the Board of Trustees is
proposing to amend and restate Federal Realty's existing declaration of trust
and bylaws in their entirety (the "Reorganization Proposal").
The form of Articles of Amendment and Restatement, including the form of
amended and restated Declaration of Trust, and the form of amended and
restated Bylaws are attached to this proxy statement as Appendices A and B.
Please read these documents. They are the legal documents that govern the
Reorganization.
Effect of the Reorganization
The Reorganization will become effective upon the later of (i) the time the
Articles of Amendment and Restatement are filed with and recorded by the
District of Columbia Recorder of Deeds and (ii) the time the Restated
Declaration of Trust is filed with and accepted by the State Department of
Assessments and Taxation (the "SDAT") of the State of Maryland (the "Effective
Time"). These filings are expected to be made as soon as practicable after the
Annual Meeting. At the Effective Time:
. The declaration of trust of Federal Realty, as amended and in effect,
including the Statement of Designation relating to the Trust's Series A
Cumulative Redeemable Preferred Shares (the "Existing Declaration of
Trust"), will be further amended and restated in its entirety to read as
set forth in the Declaration of Trust attached hereto as Appendix A (the
"Restated Declaration of Trust");
. The bylaws of Federal Realty, as amended and in effect (the "Existing
Bylaws"), will be further amended and restated in their entirety to read
as set forth in the Bylaws attached hereto as Appendix B (the "Restated
Bylaws");
. Federal Realty will cease to be governed by the laws of the District of
Columbia and shall thereupon be subject to Title 8 of the Corporations
and Associations Article of the Annotated Code of Maryland, as amended
("Title 8"), a general statute governing Maryland trust REITs and
dealing with a wide variety of matters, including powers of REITs,
rights and liabilities of shareholders, certain powers of trustees, and
certain extraordinary actions, such as mergers and declaration of trust
amendments;
. All Common Shares of beneficial interest, no par value, of Federal
Realty which were issued and outstanding pursuant to the Existing
Declaration of Trust immediately prior to the Effective Time ("Common
Shares") will be reclassified and continue to exist as Common Shares of
beneficial interest, $0.01 par value per share, of Federal Realty issued
pursuant to the Restated Declaration of Trust ("New Common Shares");
. All Series A Cumulative Redeemable Preferred Shares of beneficial
interest, no par value, of Federal Realty which were issued and
outstanding pursuant to the Existing Declaration of Trust immediately
prior to the Effective Time ("Series A Preferred Shares") will be
reclassified and continue to exist as Series A Cumulative Redeemable
Preferred Shares of beneficial interest, $0.01 par value per share, of
Federal Realty issued pursuant to the Restated Declaration of Trust
("New Series A Preferred Shares");
16
<PAGE>
. All share certificates which immediately prior to the Effective Time
represented Common Shares or Series A Preferred Shares, without any
action on the part of the holder thereof, will thereafter be deemed to
represent a like number of New Common Shares or New Series A Preferred
Shares, as the case may be; and
. All options, rights, or warrants to purchase or subscribe for Common
Shares, without any action on the part of the holder thereof, will
thereafter entitle the holder to purchase or subscribe for a like number
of New Common Shares on the same terms.
The Reorganization will not result in any change in Federal Realty's name,
business, trustees, management, fiscal year, assets or liabilities, or the
location of its principal offices.
Each New Common Share or New Series A Preferred Share outstanding after the
Effective Time of the Reorganization will entitle the holder thereof to voting
rights, dividend rights and liquidation rights equivalent to the rights of a
holder of a Common Share or Series A Preferred Share prior to the Effective
Time. The Common Shares and Series A Preferred Shares are listed for trading
on the New York Stock Exchange under the symbols "FRT" and "FRTpa,"
respectively. After the Reorganization, the New Common Shares and New Series A
Preferred Shares will continue to be listed on the NYSE under the same trading
symbols. The NYSE has advised the Trust that it will consider delivery of
existing certificates representing Common Shares or Series A Preferred Shares
as constituting "good delivery" of New Common Shares or New Series A Preferred
Shares in transactions subsequent to the Effective Time.
Reasons for the Reorganization
The Reorganization is intended to permit Federal Realty to avail itself of
Title 8, the Maryland real estate investment trust statute. Title 8 contains
provisions conducive to the operations of a REIT. Federal Realty is a common
law trust under District of Columbia law and is not generally governed by a
statutory framework. The District of Columbia common law is not well developed
and very few shareholder rights are addressed. As a result, the rights of the
Federal Realty's shareholders are governed primarily by Federal Realty's
Declaration of Trust and Bylaws. Many REITs are organized under the laws of
the State of Maryland and we believe that this fact has resulted in the
development of a more comprehensive and clearer body of law and practice than
is available to common law trusts formed under District of Columbia law. In
addition, Maryland law provides statutory guidance with respect to the limited
liability of shareholders and trustees of REITs.
At the time of Federal Realty's organization in 1962, no state had statutory
provisions pertaining to the organization or operation of a real estate
investment trust and Federal Realty was headquartered in the District of
Columbia. Since that time, Federal Realty has relocated its headquarters to
Maryland, and Maryland has adopted and continues to improve statutory
provisions pertaining to the organization and operation of real estate
investment trusts. The Board of Trustees believes that Maryland law, including
Title 8, will provide specific rights and powers in connection with the
organization and operation of Federal Realty and will make clear, rights and
powers which are not expressly granted to trusts under District of Columbia
law. In addition, Maryland trust REITs are not subject to annual franchise or
similar taxes imposed by many other states on corporate or trust entities.
Currently approximately publicly owned real estate investment trusts are
believed to be organized under Maryland law. The Board of Trustees believes
that reorganization as a Maryland trust REIT should provide greater
predictability with respect to Federal Realty's affairs.
Possible Disadvantages of the Reorganization
Despite the belief of the Board of Trustees that the Reorganization is in
the best interests of the Trust and its shareholders, it should be noted that
District of Columbia and Maryland law differ in certain respects. Maryland law
may not afford shareholders the same rights as District of Columiba law. For a
comparison of shareholders' rights and the powers of management under Maryland
and District of Columbia law, see "--Comparison of Rights of Shareholders
Before and After the Reorganization."
17
<PAGE>
Comparison of Rights of Shareholders Before and After the Reorganization
Federal Realty is organized as a business trust under the laws of the
District of Columbia and will be reorganized as a trust REIT under the laws of
the State of Maryland. As a District of Columbia business trust, Federal
Realty is not governed by any statutory framework but is subject to the
following:
. the common law of the District of Columbia with respect to business
trusts, which is not well developed;
.the Existing Declaration of Trust; and
.the Existing Bylaws.
As a Maryland trust REIT, after the Reorganization Federal Realty will be
governed by:
.Title 8;
.the Restated Declaration of Trust; and
.the Restated Bylaws.
The material differences between the applicable District of Columbia law and
Title 8 and among these various documents are summarized below. The comparison
of certain rights of the Shareholders of the Trust before and after the
Reorganization set forth below does not purport to be complete and is subject
to and qualified in its entirety by reference to the common law of the
District of Columbia, Title 8, the Restated Declaration of Trust and the
Restated Bylaws (which are attached as Appendices A and B to this proxy
statement) and also to the Existing Declaration of Trust and the Existing
Bylaws, copies of which may be obtained from the Trust by writing to the Trust
at Federal Realty Investment Trust, 1626 E. Jefferson Street, Rockville, MD
20852-4041, Attention: Corporate Secretary.
The comparison below describes District of Columbia common law, if any, and
provisions of the Existing Declaration of Trust and the Existing Bylaws, with
respect to the rights discussed, and compares them to Title 8, the Restated
Declaration of Trust and the Restated Bylaws.
18
<PAGE>
<TABLE>
<S> <C>
- ----------------------------------------- -----------------------------------------
District of Columbia Maryland
- ----------------------------------------- -----------------------------------------
AUTHORIZED SHARES OF BENEFICIAL INTEREST
The Existing Declaration of Trust The Restated Declaration of Trust
authorizes the Trust to issue an authorizes the Trust to issue up to
unlimited number of common shares and a 115,000,000 shares, of which
limited or unlimited number of shares 100,000,000 have been designated common
other than common shares upon such terms shares and 15,000,000 have been designated
and conditions and pursuant to such preferred shares. The Board of Trustees is
agreements as the Trustees may determine. authorized to increase or decrease the
authorized aggregate number of Shares
and the number of authorized shares in any
class or series without shareholder
approval.
SHAREHOLDER VOTING RIGHTS
Under the Existing Declaration of Trust, In accordance with Title 8 and under the
the affirmative vote of the holders Restated Declaration of Trust, the
of two-thirds of the shares entitled to affirmative vote of the holders of
vote on the matter is required for: two-thirds of the shares entitled to vote
on the matter is required for:
. the removal of a trustee,
. an amendment to the Existing . the removal of a trustee,
Declaration of Trust with Board of . an amendment to the Restated Declaration
Trustees approval, of Trust with Board of Trustees
. the termination of the Trust, approval,
. a merger or consolidation of . the termination of the Trust,
the Trust, or . a merger or consolidation of the Trust, or
. a sale or disposition of . a sale or disposition of substantially
substantially all of the property all of the property of the Trust.
of the Trust.
The election of trustees requires a
An amendment to the Existing plurality of all the votes cast at the
Declaration of Trust without board meeting of shareholders duly called and
approval requires the affirmative vote at which a quorum is present. The
of holders of 80% of the shares Restated Declaration of Trust does not
entitled to vote on the matter. provide for cumulative voting in the
election of trustees.
The election of trustees requires the
affirmative vote of holders of a
majority of the Shares present in person
or by proxy at an annual meeting duly
called and at which a quorum is present.
The Existing Declaration of Trust
does not provide for cumulative
voting in the election of trustees.
PRE-EMPTIVE RIGHTS
Neither the Existing Declaration of Trust Under the Restated Declaration of Trust,
nor the Existing Bylaws provides for except as provided by the Board of
pre-emptive rights. Trustees or set forth in the terms of any
classified or reclassified shares,
no holder of shares shall have any
preemptive rights. Neither the holders of
Series A Preferred Shares nor the holders of
common shares have preemptive rights.
</TABLE>
19
<PAGE>
<TABLE>
<S> <C>
- ----------------------------------------- -----------------------------------------
District of Columbia Maryland
- ----------------------------------------- -----------------------------------------
Restrictions on Dividends and Other Distributions
Under the Existing Declaration of Trust, Title 8 does not set forth any standards
the Trustees have the right to declare and for dividends or other distribution to
pay dividends from any source from time to shareholders. The Restated Declaration of
time, but shall endeavor to pay dividends Trust allows for the Board of Trustees to
and distributions, as shall be necessary authorize the Trust to pay to shareholders
for the Trust to qualify as a real estate dividends or distributions in cash, assets
investment trust under the Internal Revenue or securities of the trust or from any
Code. other source. The Trust may pay any
dividend or make any other distribution to
the shareholders as authorized in the
Restated Declaration of Trust and by the
Board of Trustees if, after giving effect
to the dividend or distribution, the Trust
would be able to pay its debts as they
become due in the usual course of its
business. The Restated Declaration of Trust
requires the Board of Trustees to endeavor
to authorize and cause the Trust to pay
such dividends and distributions as may be
necessary for the trust to qualify as a
REIT under the Code.
</TABLE>
Dissenting Shareholder's Appraisal Rights
<TABLE>
<S> <C>
Neither the Existing Declaration of Trust Title 8 does not provide appraisal rights
nor the Existing Bylaws provides for to shareholders of a Maryland REIT if the
appraisal rights. Maryland REIT's shares, such as the Trust's
shares, are listed on a national securities
exchange. Neither the Restated Declaration
of Trust nor the Restated Bylaws provides
for appraisal rights.
</TABLE>
Board of Trustees
<TABLE>
<S> <C>
Under the Existing Declaration of Trust, Under the Restated Declaration of Trust,
Trustees are to be elected in three classes Trustees are to be elected in three classes
for staggered, three-year terms. The total for staggered, three-year terms. The
number of Trustees shall be at least three initial number of Trustees shall be nine
(3) and not more than fifteen (15). but may be increased or decreased pursuant
Trustees shall be competent individuals at to the Restated Bylaws.
least 21 years of age.
</TABLE>
Removal of Trustees
<TABLE>
<S> <C>
Pursuant to the Existing Declaration of Under the Restated Declaration of Trust,
Trust, Trustees may be removed the shareholders of the Trust may remove a
trustee only with cause and upon the
affirmative vote of the holders of not less
than two-thirds of the shares entitled to
vote on the matter.
. with or without cause, at a shareholders
meeting called for that purpose
--by two-thirds of the Shares then
outstanding and entitled to vote if such
removal is approved by a vote of not
less than two-thirds of the Trustees; or
--by at least 80% of the Shares then
outstanding if two-thirds of the
Trustees do not approve such removal; or
.with cause by the vote of all the other
Trustees.
</TABLE>
20
<PAGE>
<TABLE>
<S> <C>
- ----------------------------------------- -----------------------------------------
District of Columbia Maryland
- ----------------------------------------- -----------------------------------------
Vacancies on the Board of Trustees
The Existing Declaration of Trust provides Title 8 does not address vacancies in a
that, subject to the provisions of any board of trustees. The Restated Bylaws
class or series of Shares at the time provide that any vacancy (including a
outstanding, any vacancy may be filled by a vacancy created by an increase in the
majority of the remaining Trustees or by number of trustees) in the Board of
the vote of holders of at least a majority Trustees may be filled by a majority of the
of the Shares entitled to vote on the remaining trustees. Each trustee so elected
matter and present in person or by proxy at shall serve for the unexpired term of the
any meeting of the Shareholders called for trustee he is replacing.
that purpose.
The Restated Declaration of Trust provides
The Existing Declaration of Trust provides that when six consecutive quarterly
that when six consecutive quarterly dividends payable to Series A Preferred
dividends payable to Series A Preferred Shareholders are in arrears, Series A
Shareholders are in arrears, Series A Preferred Shareholders, together with the
Preferred Shareholders, together with the holders of shares of every other series of
holders of shares of every other series of Parity Shares (as defined therein), voting
Parity Shares (as defined therein), voting as a single class regardless of series,
as a single class regardless of series, shall be entitled to elect two additional
shall be entitled to elect two additional Trustees to serve on the Board of Trustees.
Trustees to serve on the Board of Trustees.
</TABLE>
Annual Meetings of Shareholders
<TABLE>
<S> <C>
Under the Existing Declaration of Trust and The Restated Bylaws provide that an annual
the Existing Bylaws an annual meeting of meeting of shareholders for the election of
shareholders shall be held on such date as trustees and the transaction of any
designated by the Trustees, each year, business within the powers of the Trust
after the delivery of the annual report. shall be held in the month of May of each
The Existing Bylaws provide procedures year, after the delivery of the annual
which must be followed relating to annual report. Failure to hold such a meeting does
meetings, including the requirement that not invalidate the Trust's existence or
nominations for elections to the Board of affect any otherwise valid acts of the
Trustees and new business proposals shall Trust. The Restated Bylaws provide
be delivered to the secretary at the procedures which must be followed relating
principal executive offices of the Trust to annual meetings, including the
not less than 60 days nor more than 90 days requirement that nominations for elections
prior to the anniversary date of the to the Board of Trustees and new business
preceding year's annual meeting. To be proposals shall be delivered to the
timely, a shareholder's notice shall set secretary at the principal executive
forth: offices of the Trust not later than the
close of business on the 90th day nor
earlier than the close of business on the
120th day prior to the first anniversary of
the preceding year's annual meeting;
provided, however, that in the event that
the date of the annual meeting is advanced
by more than 30 days or delayed by more
than 60 days from such anniversary date or
if the Trust has not previously held an
annual meeting, notice by the shareholder
to be timely must be so delivered not
earlier than the close of business on the
120th day prior to such annual meeting and
not later than the close of business on the
later of the 90th day prior to such annual
meeting or the tenth day following the day
on which public
.as to each person:
-- the name and address of the
shareholder who intends to make the
nomination and of the person or persons
to be nominated;
-- a representation that the shareholder
is a holder of record of shares of the
Trust entitled to vote at such meeting
and intends to appear in person or by
proxy at the meeting to nominate the
person or persons specified in the
notice;
-- a description of all arrangements or
understandings between the shareholder
and each nominee and any other person or
persons (naming such person or persons);
</TABLE>
21
<PAGE>
<TABLE>
<S> <C>
- ----------------------------------------- -----------------------------------------
District of Columbia Maryland
- ----------------------------------------- -----------------------------------------
. as to any other business that the announcement of the date of such meeting is
shareholder proposes to bring before the first made by the Trust. In no event shall
meeting: the public announcement of a postponement
or adjournment of an annual meeting to a
later date or time commence a new time
period for the giving of a shareholder's
notice as described above. Such
shareholder's notice shall set forth
-- a brief description of the business
desired to be brought before the
meeting,
-- the reasons for conducting such
business at the meeting and
-- any material interest in such . as to each person whom the shareholder
business of such shareholder and of the proposes to nominate for election or
beneficial owner, if any, on whose reelection as a Trustee all information
behalf the proposal is made; and relating to such person that is required
to be disclosed in solicitations of
proxies for election of Trustees in an
election contest, or is otherwise
required, in each case pursuant to
Regulation 14A under the Securities
Exchange Act of 1934, as amended (the
"Exchange Act") (including such person's
written consent to being named in the
proxy statement as a nominee and to
serving as a Trustee if elected);
. as to the shareholder giving the notice
and the beneficial owner, if any, on
whose behalf the nomination or proposal
is made,
-- the name and address of such
shareholder, as they appear on the
Trust's books, and of such beneficial
owner and
-- the number of each class of shares of . as to any other business that the
the Trust which are owned beneficially shareholder proposes to bring before the
and of record by such shareholder and meeting, a brief description of the
such beneficial owner. business desired to be brought before
the meeting, the reasons for conducting
such business at the meeting and any
material interest in such business of
such shareholder and of the beneficial
owner, if any, on whose behalf the
proposal is made; and
. as to the shareholder giving the notice
and the beneficial owner, if any, on
whose behalf the nomination or proposal
is made:
--the name and address of such
shareholder, as they appear on the
Trust's books, and of such beneficial
owner, and
--the number of each class of shares of
the Trust which are owned beneficially
and of record by such shareholder and
such beneficial owner.
In the event that the number of Trustees to
be elected to the Board of Trustees is
increased and there is no public
announcement by the Trust naming all of the
nominees for Trustee or specifying the size
of the increased Board of Trustees at least
70 days prior to the first anniversary of
the preceding year's annual meeting, a
shareholder's notice shall also be
considered timely, but only with
</TABLE>
22
<PAGE>
<TABLE>
<S> <C>
- ----------------------------------------- -----------------------------------------
District of Columbia Maryland
- ----------------------------------------- -----------------------------------------
respect to nominees for any new positions
created by such increase, if it shall be
delivered to the secretary at the principal
executive offices of the Trust not later
than the close of business on the tenth day
following the day on which such public
announcement is first made by the Trust.
</TABLE>
Special Meetings of Shareholders
<TABLE>
<S> <C>
Pursuant to the Existing Declaration of Title 8 does not address special meetings
Trust, special meetings of Shareholders may of shareholders. The Restated Bylaws
be called by the Trustees, or upon the provide that a special meeting of
written request of Shareholders holding not shareholders may be called by the
less than 25% of the outstanding Shares President, one-third of the trustees or
entitled to vote at such meeting. The upon the written request of the holders of
Bylaws provide procedures which must be shares entitled to cast not less than
followed for both the request for a special twenty-five percent of all of the votes
meeting by shareholders and the conduct of entitled to be cast at such a meeting. The
the special meeting, including the Restated Bylaws provide procedures which
requirement that nominations for elections must be followed for both the request for a
to the Board of Trustees must be delivered special meeting by shareholders and the
to the secretary not later than the 10th conduct of the special meeting, including
day following the day on which notice of the requirement that nominations for
such meeting is first given to elections to the Board of Trustees and new
shareholders. business proposals must be delivered to the
secretary not earlier than the close of
business on the 120th day prior to the
special meeting and not later than the
close of business on the later of the 90th
day prior to the special meeting or the
10th day following the day on which public
announcement is first made of the special
meeting.
</TABLE>
Shareholders Action by Written Consent
<TABLE>
<S> <C>
The Existing Declaration of Trust provides Title 8 does not address actions by written
that any action by Shareholders may be consent of shareholders. The Restated
taken without a meeting, if a majority of Declaration of Trust provides that any
Shares entitled to vote on the matter (or action by shareholders may be taken without
such larger proportion of Shares as shall a meeting if a majority of Shares entitled
be required to take such action) consent to to vote on the matter (or such larger
the action in writing and the written proportion of Shares as shall be required
consents are filed with the records of the to take such action) consent to the action
meetings of Shareholders. Such consent in writing and the written consents are
shall have the effect of a vote taken at a filed with the records of the meeting of
meeting of Shareholders. Shareholders.
</TABLE>
Amendments to Declaration of Trust and Bylaws
<TABLE>
<S> <C>
The Existing Declaration of Trust provides Under Title 8, an amendment to a
that certain specific sections of the declaration of trust must be approved by at
Existing Declaration of Trust may be least a majority of the board of trustees
amended at a meeting called for such and the affirmative vote of the holders of
purpose: two-thirds of the shares entitled to vote
on such matter unless otherwise provided in
the declaration of trust. The Restated
Declaration of Trust provides for
amendments to the Restated Declaration of
Trust by the affirmative vote of the
holders of a majority of the shares
entitled to vote on the matter if the
. by the affirmative vote of at least two-
thirds of the Shares then outstanding
and entitled to vote, if the Trustees
approved or recommended the amendment,
or
</TABLE>
23
<PAGE>
<TABLE>
<S> <C>
- ----------------------------------------- -----------------------------------------
District of Columbia Maryland
- ----------------------------------------- -----------------------------------------
. by 80% or more of the shares then
outstanding and entitled to vote absent
Trustee approval or recommendation.
All other sections of the Existing trustees have unanimously approved a
Declaration of Trust may be amended: shareholder vote on the matter. The Board
of Trustees has the authority to increase
the authorized shares of the trust without
the approval of the shareholders.
. at a meeting called for the purpose, by The Restated Declaration of Trust provides
a two-thirds vote of the Shares then that the Trustees may amend the Restated
outstanding and entitled to vote; or Declaration of Trust, in the manner
provided by Title 8, without any actions by
the Shareholders, to qualify as a REIT
under the Code or under Title 8 and as
otherwise provided in the Declaration of
Trust.
. without a meeting, by the written The Restated Bylaws provide that the Board
consent signed by the majority of the of Trustees has the exclusive power to
Trustees and by two-thirds or more of adopt, amend or repeal any provision of the
such outstanding Shares. bylaws and to make new bylaws.
The Existing Declaration of Trust also
gives the Trustees the power to amend the
Existing Declaration of Trust without the
vote or consent of any Shareholders
. to the extent they deem necessary to
qualify the Trust as a real estate
investment trust under the Internal
Revenue Code, or
. to conform the Existing Declaration of
Trust to the requirements of applicable
federal or state laws or regulations.
Generally, the Existing Bylaws may be
amended, modified or repealed by a vote of
two-thirds or more of the Trustees.
</TABLE>
Limit on Share Ownership
<TABLE>
<S> <C>
The Existing Declaration of Trust prohibits Title 8 does not limit share ownership. The
any Person (as defined therein) from owning Restated Declaration of Trust prohibits the
greater than 9.8% in fair market value of ownership by any person of greater than
the Trust's Shares outstanding at any time. 9.8% in value of the aggregate of the
The Trustees may authorize a single Person outstanding equity shares and 9.8% (in
(as defined therein) to own up to a maximum value or in number of shares, whichever is
of 20% in fair market value of outstanding more restrictive) of the aggregate number
Shares. The share ownership limit does not of the outstanding common shares. Subject
prohibit the completion of a tender offer to certain exceptions and requirements, the
for all of the outstanding Shares, provided Board of Trustees, in its sole discretion,
that the consideration offered is in cash may exempt a Person from the Aggregate
or voting securities of a public company Share Ownership Limit and the Common Share
and the offer is approved by the Trustees Ownership Limit, as the case may be, and
or 80% of the Shareholders. may establish or increase an Excepted
Holder Limit for such Person.
</TABLE>
24
<PAGE>
<TABLE>
<S> <C>
- ----------------------------------------- -----------------------------------------
District of Columbia Maryland
- ----------------------------------------- -----------------------------------------
Certain Business Combinations
Under the Existing Declaration of Trust, Under the Maryland General Corporation Law,
certain "business combinations" (including as amended ("MGCL"), as applicable to real
certain mergers, consolidations, estate investment trusts formed under Title
dispositions of assets and issuances of 8, certain "business combinations"
securities) between the Trust and any (including certain mergers, asset transfers
person who beneficially owns 9.8% of the and issuances of equity securities) between
outstanding Shares entitled to vote require a Maryland REIT and any person who
the affirmative vote of the holders of 80% beneficially owns 10% or more of the voting
of the Shares then outstanding and entitled power of the trust's shares or certain
to vote on the matter, unless the affiliates or associates (as defined in the
consideration received by shareholders in MGCL) of the trust (an "Interested
the business combination satisfies certain Shareholder") or an affiliate thereof are
fair price conditions and certain other prohibited for five years after the most
conditions are satisfied. recent date on which the Interested
Shareholder becomes an Interested
. Shareholder. Thereafter, any such business
combination must be recommended by the
board of trustees and approved by two
super-majority shareholder votes unless,
among other conditions, the trust's common
shareholders receive a minimum price (as
defined in the MGCL) for their shares and
the consideration is received in cash or in
the same form as previously paid by the
Interested Shareholder for its common
shares. These provisions do not apply,
however, to business combinations that are
approved or exempted by the board of
trustees before the Interested Shareholder
becomes an Interested Shareholder.
</TABLE>
Control Share Acquisitions
<TABLE>
<S> <C>
Neither the Existing Declaration of Trust The MGCL, as applicable to Maryland REITs,
nor the Existing Bylaws contain provisions provides that "control shares" of a
governing acquisitions of control shares. Maryland REIT acquired in a "control share
acquisition" have no voting rights except
to the extent approved by a vote of two-
thirds of the votes entitled to be cast on
the matter, excluding shares of beneficial
interest owned by the acquiror, by officers
or by trustees who are employees of the
trust. "Control Shares" are voting shares
of beneficial interest which, if aggregated
with all other such shares of beneficial
interest previously acquired by the
acquiror, or in respect of which the
acquiror is able to exercise or direct the
exercise of voting power (except solely by
virtue of a revocable proxy), would entitle
the acquiror to exercise voting power in
electing trustees within one of the
following ranges of voting power:
.one-fifth or more but less than one-third,
</TABLE>
25
<PAGE>
<TABLE>
<S> <C>
- ----------------------------------------- -----------------------------------------
District of Columbia Maryland
- ----------------------------------------- -----------------------------------------
.one-third or more but less than a
majority, or
.a majority or more of all voting power.
Control shares do not include shares the
acquiring person is then entitled to vote
as a result of having previously obtained
shareholder approval. A "control share
acquisition" means the acquisition of
control shares, subject to certain
exceptions.
A person who has made or proposes to make a
control share acquisition, upon
satisfaction of certain conditions
(including an undertaking to pay expenses),
may compel the board of trustees of the
trust to call a special meeting of
shareholders to be held within 50 days of
demand to consider the voting rights of the
shares. If no request for a meeting is
made, the trust may itself present the
question at any shareholders meeting.
If voting rights are not approved at the
meeting or if the acquiring person does not
deliver an acquiring person statement as
required by the statute, then, subject to
certain conditions and limitations, the
trust may redeem any or all of the control
shares (except those for which voting
rights have previously been approved) for
fair value determined, without regard to
the absence of voting rights for the
control shares, as of the date of the last
control share acquisition by the acquiror
or of any meeting of shareholders at which
the voting rights of such shares are
considered and not approved. If voting
rights for control shares are approved at a
shareholders meeting and the acquiror
becomes entitled to vote a majority of the
shares entitled to vote, all other
shareholders may exercise appraisal rights.
The fair value of the shares as determined
for purposes of such appraisal rights may
not be less than the highest price per
share paid by the acquiror in the control
share acquisition.
The control share acquisition statute does
not apply (a) to shares acquired in a
merger, consolidation or share exchange if
the trust is a party to the transaction or
(b) to acquisitions approved or exempted by
the declaration of trust or bylaws of the
trust.
The Restated Bylaws contain a provision
exempting from the control share
acquisition statute any and all
</TABLE>
26
<PAGE>
<TABLE>
<S> <C>
- ----------------------------------------- -----------------------------------------
District of Columbia Maryland
- ----------------------------------------- -----------------------------------------
acquisitions by any person of the Trust's
shares of beneficial interest. There can be
no assurance that such provision will not
be amended or eliminated at any time in the
future.
</TABLE>
Limitation of Trustees' and Officers' Liability
<TABLE>
<S> <C>
The Existing Declaration of Trust provides The Maryland REIT Law permits a Maryland
that the Trustees, officers, employees or REIT to include in its Declaration of Trust
agents of the Trust shall not be personally a provision limiting the liability of its
liable to the Trust or to any Shareholder, trustees and officers to the trust and its
Trustee, officer, employee or agent of the shareholders for money damages except for
Trust or to any other Person except arising liability resulting from (a) actual receipt
from such person's bad faith, willful mis- of an improper benefit or profit in money,
conduct, gross negligence or reckless dis- property or services or (b) active and
regard of his or her duties or for his or deliberate dishonesty established by a
her failure to act in good faith in the final judgment as being material to the
reasonable belief that his or her action cause of action. The Declaration of Trust
was in the best interests of the Trust. of the Trust contains such a provision
Trustees, officers, employees or agents of which eliminates such liability to the
the Trust shall not be subject to any per- maximum extent permitted by the Maryland
sonal liability whatsoever, in tort, con- REIT Law.
tract or otherwise, to the Trust or to any
other person in connection with Trust Prop-
erty or the affairs of the Trust.
</TABLE>
Limitation of Shareholder Liability
<TABLE>
<S> <C>
The Existing Declaration of Trust provides Pursuant to Title 8, a shareholder of a
that no Shareholder shall be liable for any Maryland REIT may not be held personally
debt, claim, demand, judgment or obligation liable for the obligations of the Maryland
of any kind of, against or with respect to REIT unless the shareholder acts with bad
the Trust by reason of being a Shareholder, faith, with willful misfeasance or gross
nor shall any Shareholder be subject to any negligence. Title 8 permits a Maryland
personal liability whatsoever, in tort, REIT's declaration of trust to expand or
contract or otherwise, to any Person in limit the liability of the Maryland REIT's
connection with the Trust Property or the shareholders except for liability resulting
affairs of the Trust. from (a) actual receipt of an improper
benefit or profit in money, property or
services or (b) active and deliberate
dishonesty established by a final
judgmentas being material to the cause of
action. The Restated Declaration of Trust
provides that no shareholder shall be
liable for and debt, claim, demand,
judgment or obligation of any kind, against
or with respect to the Trust by reason of
his being a shareholder.
</TABLE>
Indemnification of Trustees and Officers
<TABLE>
<S> <C>
The Existing Declaration of Trust provides The Restated Declaration of Trust
that the Trust shall indemnify and hold authorizes the Trust, to the maximum extent
harmless each of its Trustees, officers, permitted by Maryland law, to obligate
employees and agents (including those who itself to indemnify and to pay or reimburse
serve at its request as directors, officers reasonable expenses in advance of final
or trustees of another organization in disposition of a proceeding to (a) any
which it has any interest as a shareholder, present or former trustee or officer or (b)
creditor or other-wise) any individual
</TABLE>
27
<PAGE>
<TABLE>
<S> <C>
- ----------------------------------------- -----------------------------------------
District of Columbia Maryland
- ----------------------------------------- -----------------------------------------
against, and reimburse such indemnified who, while a trustee of the Trust and at
Person for, any claim, liability or expense the request of the Trust, serves or has
in connection with the defense or served another real estate investment
disposition of any action, suit or other trust, corporation, partnership, joint
proceeding by the Trust or any other Person venture, trust, employee benefit plan or
whether civil, administrative or criminal, any other enterprise as a trustee,
pending or threatened by reason of being or director, officer or partner of such real
having been a Trustee, officer, employee or estate investment trust, corporation,
agent of the Trust and so long as certain partnership, joint venture, trust, employee
notice requirements are met and he, she, or benefit plan or other enterprise from and
it was not guilty of bad faith, gross against any claim or liability to which
negligence, willful misconduct, or reckless such person may become subject or which
disregard of duty or failure to act in good such person may incur by reason of such
faith in the reasonable belief that such status. The Bylaws of the Trust obligate
action was in the best interest of the it, to the maximum extent permitted by
Trust. In the event of any settlement of Maryland law, to indemnify and to pay or
any claim, liability or expense as to any reimburse reasonable expenses in advance of
matter, no indemnification or reimbursement final disposition of a proceeding to (a)
shall be provided to any Trustee, officer, any present or former trustee or officer
employee or agent of the Trust if a who is made a party to the proceeding by
determination is made by (i) a majority reason of his service in that capacity or
vote of the Trustees who were not parties (b) any individual who, while a trustee or
to such action, suit or proceeding, or (ii) officer of the Trust and at the request of
a written opinion of the Trust's legal the Trust, serves or has served another
counsel, that such matter arose out of or real estate investment trust, corporation,
was based upon the willful misconduct, bad partnership, joint venture, trust, employee
faith, gross negligence or reckless benefit plan or any other enterprise as a
disregard of duty of such Trustee, officer, trustee, director, officer or partner of
employee or agent or his failure to act in such real estate investment trust,
good faith in reasonable belief that his corporation, partnership, joint venture,
action was in the best interests of the trust, employee benefit plan or other
Trust. enterprise and who is made a party to the
proceeding by reason of his service in that
capacity, against any claim or liability to
which he may become subject by reason of
such status. The Declaration of Trust and
Bylaws also permit the Trust to indemnify
and advance expenses to any person who
served a predecessor of the Trust in any of
the capacities described above and to any
employee or agent of the Trust or a
predecessor of the Trust. The Bylaws
require the Trust to indemnify a trustee or
officer who has been successful, on the
merits or otherwise, in the defense of any
proceeding to which he is made a party by
reason of his service in that capacity.
The Maryland REIT Law permits a Maryland
REIT to indemnify and advance expenses to
its trustees, officers, employees and
agents to the same extent as permitted by
the MGCL for directors and officers of
Maryland corporations. The MGCL permits a
corporation to indemnify its present and
former directors and officers, among
others, against judgments, penalties,
fines, settlements and
</TABLE>
28
<PAGE>
<TABLE>
<S> <C>
- ----------------------------------------- -----------------------------------------
District of Columbia Maryland
- ----------------------------------------- -----------------------------------------
reasonable expenses actually incurred by
them in connection with any proceeding to
which they may be made a party by reason of
their service in those or other capacities
unless it is established that (a) the act
or omission of the director or officer was
material to the matter giving rise to the
proceeding and (i) was committed in bad
faith or (ii) was the result of active and
deliberate dishonesty, (b) the director or
officer actually received an improper
personal benefit in money, property or
services or (c) in the case of any criminal
proceeding, the director or officer had
reasonable cause to believe that the act or
omission was unlawful. However, under the
MGCL, a Maryland corporation may not
indemnify for an adverse judgment in a suit
by or in the right of the corporation or
for a judgment of liability on the basis
that personal benefit was improperly
received, unless in either case a court
orders indemnification and then only for
expenses. In addition, the MGCL permits a
corporation to advance reasonable expenses
to a director or officer upon the
corporation's receipt of (a) a written
affirmation by the director or officer of
his good faith belief that he has met the
standard of conduct necessary for
indemnification by the corporation and (b)
a written undertaking by him or on his
behalf to repay the amount paid or
reimbursed by the corporation if it shall
ultimately be determined that the standard
of conduct was not met.
</TABLE>
Indemnification of Shareholders
<TABLE>
<S> <C>
The Existing Declaration of Trust provides The Restated Declaration of Trust provides
that the Trust, upon prompt notice, shall for the indemnification of Shareholders of
indemnify Shareholders against all claims, the Trust against all liabilities incurred
liabilities and expenses, including amounts by virtue of being a shareholder.
paid in satisfaction of judgments or in
settlement or as fines and penalties, and
attorneys' fees, reasonably incurred by him
in connection with the defense or
disposition of any action, suit or other
proceeding by the Trust or any other
Person, whether civil, administrative or
criminal, in which he may be involved or
with which he may be threatened, while in
such capacity or thereafter, by reason of
his being or having been a Shareholder.
</TABLE>
29
<PAGE>
<TABLE>
<S> <C>
- ----------------------------------------- -----------------------------------------
District of Columbia Maryland
- ----------------------------------------- -----------------------------------------
Inspection of Books and Records
Under the Existing Bylaws, any person who Title 8 provides a right to inspect and
is a record owner of 10% or more of the copy a Maryland REIT's books of account and
outstanding Shares may upon demand inspect stock ledger to persons who have been
the share register, the books of accounts shareholders for more than six months and
and the minutes of the proceedings of the own at least 5% of any class of a Maryland
Trust's shareholders and its Trustees. REIT's outstanding shares. In addition, any
shareholder of a Maryland REIT has a right
Demand of inspection other than a to inspect the bylaws, minutes of the
shareholder's meeting shall be made in shareholder's meetings, annual statements
writing and delivered to the Trust. of affairs and voting trust agreements and
to request that the REIT provide a sworn
statement showing all stock and securities
issued and all consideration received by
the Maryland REIT within the preceeding
12 months.
</TABLE>
Interested Trustee Transactions
<TABLE>
<S> <C>
Generally, the Existing Declaration of Title 8 does not address interested trustee
Trust prohibits contracts or transactions transactions. Pursuant to the Restated
for the transfer of property (including Declaration of Trust, the Trust may enter
loans) in which one or more of the Trustees into any contract or transaction of any
holds beneficially a majority equity kind with any person including any trustee,
interest. officer, employee or agent of the trust or
any person affiliated with a trustee,
However, the Existing Declaration of Trust officer, employee or agent of the trust,
permits such interested trustee whether or not any of them has a financial
transactions provided that a majority of interest in such transaction.
the disinterested Trustees (a) ratifies or
authorizes the transaction, after
disclosure of any such affiliation or
interest by a Trustee, and (b) determines
that the transaction was or is on terms
fair and reasonable to the Trust and its
Shareholders.
Trustees shall not be entitled to receive
any commission or other remuneration,
directly or indirectly, in connection with
the purchase or sale by the Trust of any
Real Property, unless an independent
appraisal of such real property is done by
the Trust.
</TABLE>
30
<PAGE>
<TABLE>
<S> <C>
- ----------------------------------------- -----------------------------------------
District of Columbia Maryland
- ----------------------------------------- -----------------------------------------
RESTRICTIONS ON INVESTMENTS
Under the Existing Declaration of Trust and Under Title 8 a Maryland REIT must hold at
the Existing Bylaws, the Trust shall not: least 75 percent of the value of its assets
. invest in commodities, foreign in real estate assets, government
currencies (except in the ordinary securities, cash and cash items, including
course of business); receivables, and a Maryland REIT may not
. contract for the sale of real property use or apply land for farming, agriculture,
over a certain limit; horticulture or similar purposes.
. engage in short sales;
. engage in trading, underwriting or
distributing securities;
. hold property primarily for the sale to
customers in the ordinary course of
business;
. invest more than 10% of the total value
of the Trust property in unimproved non-
income-producing real property or
mortgage loans securing such property;
. invest more than 10% of the total value
of the Trust property in junior mortgage
loans;
. knowingly invest in equity securities of
entities engaged in activities
prohibited by the Trust;
. invest in bullion;
. issue certain debt securities;
. invest in real property subject to
mortgages or other encumbrance to other
than a bank, insurance company, pension
fund, institutional lender or
corporation engaged in the business of
mortgage investments; and
. invest in any mortgage on unimproved
real property or in any mortgage other
than a first mortgage not in a greater
percentage of value as confirmed by an
independent appraiser, than permitted
under local law to a savings and loan
institution.
</TABLE>
31
<PAGE>
Certain Federal Income Tax Consequences of the Reorganization
The following summary of certain federal income tax consequences of the
Reorganization is for general information only, and shall not be considered as
tax or investment advice. The summary is based upon the Internal Revenue Code
of 1986, as amended (the "Code"), applicable Treasury regulations thereunder,
and interpretations of the Code and such regulations by the Courts and the
Internal Revenue Service (the "IRS"), all as they are in effect and exist as
of the date hereof. There can be no assurance that future legislative,
judicial and administrative changes or interpretations will not adversely
effect the accuracy of the statements and conclusions set forth herein. Any
such changes or interpretations could be applied retroactively and,
accordingly, could cause the tax consequences to vary substantially from the
consequences described below. No ruling from the IRS or opinion from counsel
with respect to the matters discussed herein has been requested. There is no
assurance that the IRS would agree with the conclusions set forth in this
discussion.
Shareholders are urged to consult their tax advisors as to the particular tax
consequences to them of the Reorganization, including the applicability of any
state, local or foreign tax laws, changes in applicable tax laws and any
pending or proposed legislation.
The Reorganization will constitute a reorganization under section 368 of the
Code. Pursuant to the Reorganization, holders of Shares will be treated as
having exchanged their Shares for New Shares. Holders of Shares will not
recognize gain or loss for federal income tax purposes solely as a result of
this deemed exchange. For federal income tax purposes, a holder's aggregate
basis in the New Shares will equal such holder's adjusted basis in the Shares
deemed to be exchanged therefor and such holder's holding period for the New
Shares will include such holder's holding period in the Shares deemed
exchanged therefor.
Likewise, the Trust will not recognize any gain or loss for federal income
tax purposes as a result of the Reorganization.
Anti-Takeover Effects of the Reorganization
Certain provisions of Maryland law, the Restated Declaration of Trust and
the Restated Bylaws could have the effect of delaying, deferring or preventing
a takeover or other transaction in which holders of some, or a majority, of
the Common Shares might receive a premium over the then prevailing market
price or which such holders might believe to be in their best interests. For
example, after the effective date of the Reorganization, shareholders will not
have the power to remove trustees, except for cause. In addition, after the
Reorganization is effective, Federal Realty will become subject to the
Maryland business combination and control share acquisition statutes and any
new legislation that may be adopted from time to time in Maryland, which may
have anti-takeover effects. New legislation has been proposed in Maryland that
could have the effect of delaying, deferring or preventing a takeover of a
Maryland REIT. If adopted in its present form, the proposed legislation would,
among other things, (1) validate shareholder rights plans and the "just say
no" defense, (2) establish a presumption that directors' or trustees' action
satisfies their statutory standards of conduct, (3) clarify that the Unocal
decision of the Delaware Supreme Court is not the law in Maryland, (4) clarify
that the board has the sole power to establish various procedures for special
shareholders meetings, (5) validate certain advance notice bylaws, and (6)
permit directors or trustees to consider the effect on non-shareholder
constituencies of potential change of control transactions. Whether or in what
form the proposed legislation may be adopted cannot be predicted. See "--
Comparison of Rights of Shareholders Before and After the Reorganization."
Required Vote
The affirmative vote of holders of two-thirds of the outstanding Common
Shares is required to approve the Reorganization Proposal. The Board of
Trustees does not believe that any vote of holders of the Series A Preferred
Shares is required to approve the Reorganization Proposal because it does not
materially and adversely affect the voting powers, rights or preferences of
such holders.
No Dissenters' Appraisal Rights
Shareholders do not have dissenters' appraisal rights in connection with the
Reorganization.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS A VOTE "FOR" APPROVAL OF THE
REORGANIZATION PROPOSAL.
32
<PAGE>
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
Grant Thornton LLP has been selected as independent public accountants for
the Trust for the current year, and examined the Trust's financial statements
for the year ended December 31, 1998. Grant Thornton LLP also provided limited
reviews of the Trust's quarterly financial information and assisted in
connection with certain other filings with the Securities and Exchange
Commission.
A representative of Grant Thornton LLP will be present at the Annual Meeting
and will have the opportunity to make a statement and answer appropriate
questions from shareholders.
ANNUAL REPORT
A COPY OF THE TRUST'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER
31, 1998, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, WILL BE MAILED
WITHOUT CHARGE TO SHAREHOLDERS UPON REQUEST. REQUESTS SHOULD BE ADDRESSED TO
THE TRUST, 1626 EAST JEFFERSON STREET, ROCKVILLE, MARYLAND 20852, ATTENTION:
MS. KATHY KLEIN, VICE PRESIDENT--CORPORATE COMMUNICATIONS. THE FORM 10-K
INCLUDES CERTAIN EXHIBITS, WHICH WILL BE PROVIDED ONLY UPON PAYMENT OF A FEE
COVERING THE TRUST'S REASONABLE EXPENSES.
SOLICITATION OF PROXIES, SHAREHOLDER PROPOSALS AND OTHER MATTERS
The cost of this solicitation of proxies will be borne by the Trust. In
addition to the use of the mails, Trust officials may solicit proxies in
person and by telephone, telegraph or facsimile, and may request brokerage
houses and other custodians, nominees and fiduciaries to forward soliciting
materials to the beneficial owners of Shares. In addition, the Trust has
retained D.F. King & Co., Inc. to assist in soliciting proxies and to provide
proxy materials to banks, brokerage firms, nominees, fiduciaries and other
custodians. For such services, the Trust will pay to D.F. King a fee of
approximately $ , plus expenses.
Proposals of shareholders intended to be presented at the 2000 Annual
Meeting must be received by the Trust no later than December 2, 1999 to be
considered for inclusion in the Trust's proxy statement and form of proxy
relating to such meeting.
The Trustees know of no other business to be presented at the Annual
Meeting. If other matters properly come before the meeting, the persons named
as proxies will vote on them in accordance with their best judgment.
You are urged to complete, sign, date and return your proxy promptly to make
certain your Shares will be voted at the Annual Meeting. For your convenience
in returning the proxy, an addressed envelope is enclosed, requiring no
additional postage if mailed in the United States.
For the Trustees,
Nancy J. Herman
Vice President--General
Counsel and Secretary
YOUR PROXY IS IMPORTANT WHETHER YOU OWN FEW OR MANY SHARES.
PLEASE SIGN, DATE AND MAIL IT TODAY.
33
<PAGE>
APPENDIX A
ARTICLES OF
AMENDMENT AND RESTATEMENT
OF
DECLARATION OF TRUST
OF
FEDERAL REALTY INVESTMENT TRUST
Federal Realty Investment Trust, an unincorporated business trust having its
principal place of business at 1626 East Jefferson Street, Rockville, Maryland
20852 (the "Trust") hereby certifies that:
FIRST: The Trust was formed pursuant to a Declaration of Trust first made in
the District of Columbia on May 25, 1962, filed in the office of, and recorded
by, the Recorder of Deeds, Washington, D.C., which declaration of trust was
thereafter amended and restated in its entirety on May 24, 1984, pursuant to a
Third Amended and Restated Declaration of Trust of Federal Realty Investment
Trust, filed in the office of, and recorded by, the Recorder of Deeds,
Washington, D.C.
SECOND: Upon the later of (i) the time these Articles of Amendment and
Restatement are filed with and recorded by the District of Columbia Recorder
of Deeds and (ii) the time the Restated Declaration of Trust is filed with and
accepted by the State Department of Assessments and Taxation of the State of
Maryland (the "Effective Time"):
(1) The declaration of trust of the Trust, as amended and in effect,
including the Statement of Designation relating to the Trust's Series A
Cumulative Redeemable Preferred Shares (the "Existing Declaration of
Trust"), shall be further amended and restated in its entirety to read
as set forth in the Declaration of Trust attached hereto as Exhibit A
(the "Restated Declaration of Trust");
(2) The Trust shall cease to be governed by the laws of the District of
Columbia and shall thereupon be subject to Title 8 of the Corporations
and Associations Article of the Annotated Code of Maryland;
(3) All Common Shares of beneficial interest, no par value, of the Trust
which were issued and outstanding pursuant to the Existing Declaration
of Trust immediately prior to the Effective Time ("Common Shares")
shall be reclassified and continue to exist as Common Shares of
beneficial interest, $0.01 par value per share, of the Trust issued
pursuant to the Restated Declaration of Trust ("New Common Shares");
(4) All Series A Cumulative Redeemable Preferred Shares of beneficial
interest, no par value, of the Trust which were issued and outstanding
pursuant to the Existing Declaration of Trust immediately prior to the
Effective Time ("Series A Preferred Shares") shall be reclassified and
continue to exist as Series A Cumulative Redeemable Preferred Shares
of beneficial interest, $0.01 par value per share, of the Trust issued
pursuant to the Restated Declaration of Trust and("New Series A
Preferred Shares");
(5) All share certificates theretofore representing Common Shares or
Series A Preferred Shares, without any action on the part of the
holder thereof, shall thereafter represent a like number of New Common
Shares or New Series A Preferred Shares, as the case may be; and
(6) All options, rights, or warrants to purchase or subscribe for Common
Shares, without any action on the part of the holder thereof, shall
thereafter entitle the holder to purchase or subscribe for a like
number of New Common Shares on the same terms.
THIRD: The terms of these Articles of Amendment and Restatement were duly
advised, authorized and approved by the Trust in the manner and by the vote
required under the Existing Declaration of Trust. On , 1999, the
Board of Trustees duly adopted a resolution setting forth the terms of these
Articles
<PAGE>
of Amendment and Restatement, declaring the advisability thereof, and
directing that such Articles of Amendment and Restatement be submitted for
approval by the shareholders of the Trust. On , 1999, the
shareholders of the Trust approved and authorized the terms of these Articles
of Amendment and Restatement by the affirmative vote of holders of more than
two-thirds of the issued and outstanding shares entitled to vote, at a duly
held meeting of shareholders.
IN WITNESS WHEREOF, FEDERAL REALTY INVESTMENT TRUST has caused these
Articles of Amendment and Restatement to be signed in its name and on its
behalf by its Chief Executive Officer and attested to by its Secretary on the
day of , 1999.
FEDERAL REALTY INVESTMENT TRUST
By: _________________________________
Steven J. Guttman
Chief Executive Officer
ATTEST:
_____________________________________
Nancy J. Herman, Secretary
A-2
<PAGE>
EXHIBIT A TO
APPENDIX A
FEDERAL REALTY INVESTMENT TRUST
DECLARATION OF TRUST
Dated , 1999
This DECLARATION OF TRUST is made as of the date set forth above by the
undersigned Trustee (as defined herein) and amends and restates the Third
Amended and Restated Declaration of Trust of Federal Realty Investment Trust.
ARTICLE I
NAME
The name of the Trust (as hereinafter defined) is:
Federal Realty Investment Trust
Under circumstances in which the Board of Trustees of the Trust (the "Board
of Trustees" or "Board") determines that the use of the name of the Trust is
not practicable, the Trust may use any other designation or name for the
Trust.
ARTICLE II
FORMATION
The Trust (the "Trust") is a real estate investment trust within the meaning
of Title 8 of the Corporations and Associations Article of the Annotated Code
of Maryland ("Title 8"). The Trust shall not be deemed to be a general
partnership, limited partnership, joint venture, joint stock company or a
corporation but nothing herein shall preclude the Trust from being treated for
tax purposes as an association under the Internal Revenue Code of 1986, as
amended (the "Code").
ARTICLE III
PURPOSES AND POWERS
Section 3.1 Purposes. The purposes for which the Trust has been formed are
to invest in and to acquire, hold, develop, redevelop, manage, administer,
control, lease and dispose of interests in property, including, without
limitation or obligation, engaging in business as a real estate investment
trust under the Code.
Section 3.2 Powers. The Trust has all of the powers granted to real estate
investment trusts by Title 8 and all other powers set forth in the Declaration
of Trust which are not inconsistent with law and are appropriate to promote
and attain the purposes set forth in the Declaration of Trust.
ARTICLE IV
RESIDENT AGENT
The name of the resident agent of the Trust in the State of Maryland is CSC
Lawyers Incorporating Service Company, whose post office address is 11 E.
Chase Street, Baltimore, Maryland 21202. The resident agent is a resident of
the State of Maryland. The Trust may have such offices or places of business
within or outside the State of Maryland as the Board of Trustees may from time
to time determine.
A-3
<PAGE>
ARTICLE V
BOARD OF TRUSTEES
Section 5.1 Powers. Subject to any express limitations contained in the
Declaration of Trust or in the Bylaws, (a) the business and affairs of the
Trust shall be managed under the direction of the Board of Trustees and (b)
the Board shall have full, exclusive and absolute power, control and authority
over any and all property of the Trust. The Board may take any action as in
its sole judgment and discretion is necessary or appropriate to conduct the
business and affairs of the Trust. The Declaration of Trust shall be construed
with the presumption in favor of the grant of power and authority to the
Board. Any construction of the Declaration of Trust or determination made in
good faith by the Board concerning its powers and authority hereunder shall be
conclusive. The enumeration and definition of particular powers of the
Trustees included in the Declaration of Trust or in the Bylaws shall in no way
be construed or deemed by inference or otherwise in any manner to exclude or
limit the powers conferred upon the Board or the Trustees under the general
laws of the State of Maryland or any other applicable laws.
The Board, without any action by the shareholders of the Trust, shall have
and may exercise, on behalf of the Trust, without limitation, the power to
terminate the status of the Trust as a real estate investment trust under the
Code; to determine that compliance with any restriction or limitations on
ownership and transfers of shares of the Trust's beneficial interest set forth
in Article VII of the Declaration of Trust is no longer required in order for
the Trust to qualify as a REIT; to adopt, amend and repeal Bylaws; to elect
officers in the manner prescribed in the Bylaws; to solicit proxies from
holders of shares of beneficial interest of the Trust; and to do any other
acts and deliver any other documents necessary or appropriate to the foregoing
powers.
Section 5.2 Number and Classification. Upon acceptance for record of this
Declaration of Trust, the number of Trustees (hereinafter the "Trustees") is
nine, which number may be increased or decreased pursuant to the Bylaws of the
Trust. Except for Trustees elected solely by holders of one or more series of
Preferred Shares, the Trustees shall be elected at every third annual meeting
of shareholders in the manner provided in the Bylaws or, in order to fill any
vacancy on the Board of Trustees, in the manner provided in the Bylaws. The
names and classes of the Trustees who shall serve until the annual meeting of
shareholders at which their class comes up for reelection (as provided herein)
and until their successors are duly elected and qualify are:
<TABLE>
<CAPTION>
Name Class
---- -----
<S> <C>
Samuel J. Gorlitz I
Mark S. Ordan I
George L. Perry I
Kenneth D. Brody II
A. Cornet de Ways Ruart II
Walter F. Loeb II
Dennis L. Berman III
Kristin Gamble III
Steven J. Guttman III
</TABLE>
These Trustees may increase the number of Trustees and fill any vacancy,
whether resulting from an increase in the number of Trustees or otherwise, on
the Board of Trustees in the manner provided in the Bylaws. It shall not be
necessary to list in the Declaration of Trust the names and addresses of any
Trustees hereinafter elected.
Class I Trustees shall hold office initially for a term expiring at the
annual meeting of shareholders in 1999, Class II Trustees shall hold office
initially for a term expiring at the annual meeting of shareholders in 2000
and Class III Trustees shall hold office initially for a term expiring at the
annual meeting of shareholders in 2001, with the Trustees of each class to
hold office until their successors are duly elected and qualify. At each
annual meeting of shareholders, the successors to the class of Trustees whose
term expires at such meeting shall be elected to hold office for a term
expiring at the annual meeting of shareholders held in the third year
following the year of their election and until their successors are duly
elected and qualify.
A-4
<PAGE>
Section 5.3 Resignation or Removal. Any Trustee may resign by written notice
to the Board, effective upon execution and delivery to the Trust of such
written notice or upon any future date specified in the notice. Subject to the
rights of holders of one or more classes or series of Preferred Shares to
elect or remove one or more Trustees, a Trustee may be removed at any time,
with cause, at a meeting of the shareholders, by the affirmative vote of the
holders of not less than two-thirds of the Shares then outstanding and
entitled to vote generally in the election of Trustees. For purposes of this
Declaration, "cause", with respect to the removal of any Trustee, shall mean
only (i) conviction of a felony, (ii) declaration of unsound mind by order of
a court, (iii) gross dereliction of duty, (iv) conviction of any crime
involving moral turpitude, (v) commission of an act that constitutes
intentional misconduct or a knowing violation of law if such action in either
event results both in an improper substantial personal benefit to such Trustee
and a material injury to the Trust or (vi) a unanimous determination by the
remaining Trustees that "cause" exists for the removal of the Trustee.
ARTICLE VI
SHARES OF BENEFICIAL INTEREST
Section 6.1 Authorized Shares. The beneficial interest of the Trust shall be
divided into shares of beneficial interest (the "Shares"). The Trust has
authority to issue 100,000,000 common shares of beneficial interest, $.01 par
value per share ("Common Shares"), and 15,000,000 preferred shares of
beneficial interest, $.01 par value per share ("Preferred Shares"), of which
4,000,000 shares are Series A Cumulative Redeemable Preferred Shares (the
"Series A Preferred Shares"). If shares of one class are classified or
reclassified into shares of another class of shares pursuant to this Article
VI, the number of authorized shares of the former class shall be automatically
decreased and the number of shares of the latter class shall be automatically
increased, in each case by the number of shares so classified or reclassified,
so that the aggregate number of shares of beneficial interest of all classes
that the Trust has authority to issue shall not be more than the total number
of shares of beneficial interest set forth in the second sentence of this
paragraph. The Board of Trustees, without any action by the shareholders of
the Trust, may amend the Declaration of Trust from time to time to increase or
decrease the aggregate number of Shares or the number of Shares of any class
or series that the Trust has authority to issue.
Section 6.2 Common Shares. Subject to the provisions of Article VII, each
Common Share entitles the holder thereof to one vote on each matter upon which
holders of Common Shares are entitled to vote. The Board of Trustees may
reclassify any unissued Common Shares from time to time in one or more classes
or series of Shares.
Section 6.3 Preferred Shares. The Board of Trustees may classify any
unissued Preferred Shares and reclassify any previously classified but
unissued Preferred Shares of any series from time to time, in one or more
series of Shares.
Section 6.4 Series A Preferred Shares
Section 6.4.1 Number of Shares. The number of shares of Series A Preferred
Shares is 4,000,000.
Section 6.4.2 Definitions. In this Section 6.4, the following terms shall
have the following meanings herein:
(a) "Board of Trustees" shall mean the Board of Trustees of the Trust or any
committee authorized by the Board of Trustees to perform any of its
responsibilities with respect to the Series A Preferred Shares.
(b) "Business Day" shall mean any day other than a Saturday, Sunday or day
on which state or federally chartered banking institutions in New York City,
New York are not required to be open.
(c) "Call Date" shall have the meaning set forth in Section 6.4.6(b).
(d) "Capital Gains Amount" shall have the meaning set forth in Section
6.4.3(d).
(e) "Dividend Payment Date" shall mean the last calendar day (or, if such
day is not a Business Day, the next Business Day thereafter) of each January,
April, July and October, commencing on October 31, 1997.
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(f) "Dividend Periods" shall mean quarterly dividend periods commencing on
February 1, May 1, August 1 and November 1 of each year and ending on and
including the day of the next succeeding Dividend Payment Date (other than the
initial Dividend Period, which shall commence on the Issue Date, and other
than the Dividend Period during which any Series A Preferred Shares shall be
redeemed pursuant to Section 6.4.6, which shall end on and include the Call
Date with respect to the Series A Preferred Shares being redeemed).
(g) "Fully Junior Shares" shall mean the Common Shares and any other class
or series of shares of beneficial interest of the Trust now or hereafter
issued and outstanding over which the Series A Preferred Shares has preference
or priority in both (i) the payment of dividends and (ii) the distribution of
assets on any liquidation, dissolution or winding up of the Trust.
(h)"Issue Date" shall mean the first date on which the pertinent Series A
Preferred Shares are issued and sold.
(i) "Junior Shares" shall mean the Common Shares and any other class or
series of shares of beneficial interest of the Trust now or hereafter issued
and outstanding over which the Series A Preferred Shares has preference or
priority in the payment of dividends or in the distribution of assets on any
liquidation, dissolution or winding up of the Trust.
(j) "Parity Shares" shall have the meaning set forth in Section 6.4.8(b).
(k) "Preferred Shares" shall mean the preferred shares of the Trust, $.01
par value per share.
(l) "Series A Preferred Shares" shall have the meaning set forth in Section
6.1.
(m) "Set apart for payment" shall be deemed to include, without any action
other than the following, the recording by the Trust in its accounting ledgers
of any accounting or bookkeeping entry which indicates, pursuant to a
declaration of dividends or other distribution by the Board of Trustees, the
allocation of funds to be so paid on any series or class of shares of
beneficial interest of the Trust; provided, however, that if any funds for any
class or series of Junior Shares or Fully Junior Shares or any class or series
of shares of beneficial interest ranking on a parity with the Series A
Preferred Shares as to the payment of dividends are placed in a separate
account of the Trust or delivered to a disbursing, paying or other similar
agent, then "set apart for payment" with respect to the Series A Preferred
Shares shall mean placing such funds in such separate account or delivering
such funds to a disbursing, paying or other similar agent.
(n) "Total Dividends" shall have the meaning set forth in Section 6.4.3(d).
(o) "Transfer Agent" means American Stock Transfer & Trust Company, or such
other agent or agents of the Trust as may be designated by the Board of
Trustees or their designee as the transfer agent, registrar and dividend
disbursing agent for the Series A Preferred Shares.
Section 6.4.3 Dividends.
(a) The holders of Series A Preferred Shares shall be entitled to receive,
when, as and if authorized by the Board of Trustees out of funds legally
available for that purpose, cumulative, preferential dividends payable in cash
at the rate of $1.9875 per annum per share. Such dividend shall begin to
accrue and shall be fully cumulative from the Issue Date, whether or not in
any Dividend Period or Periods there shall be funds of the Trust legally
available for the payment of such dividends, and shall be payable quarterly,
when, as and if authorized by the Board of Trustees, in arrears on Dividend
Payment Dates, commencing on the first Dividend Payment Date after the Issue
Date. Such dividends shall be payable in arrears to the holders of record of
Series A Preferred Shares, as they appear on the stock records of the Trust at
the close of business on the record date, not more than 50 nor less than 10
days preceding the relevant Dividend Payment Date, as shall be fixed by the
Board of Trustees. Accrued and unpaid dividends for any past Dividend Periods
may be declared and paid on any date and for such interim periods, without
reference to any regular Dividend Payment Date, to holders of record on such
date, not exceeding 50 days preceding the payment date thereof, as may be
fixed by the Board of Trustees. Any dividend payment made on the Series A
Preferred Shares shall first be credited against the earliest accrued but
unpaid dividend due with respect to the Series A Preferred Shares which
remains payable.
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(b) The amount of dividends referred to in Section 6.4.3(a) payable for each
full Dividend Period for the Series A Preferred Shares shall be computed by
dividing the annual dividend rate by four, except that the amount of dividends
payable for the initial Dividend Period, and for any Dividend Period shorter
than a full Dividend Period, for the Series A Preferred Shares shall be
computed on the basis of the actual number of days in such Dividend Period.
Holders of Series A Preferred Shares shall not be entitled to any dividends,
whether payable in cash, property or shares of stock, in excess of cumulative
dividends, as herein provided, on the Series A Preferred Shares. No interest,
or sum of money in lieu of interest, shall be payable in respect of any
dividend payment or payments on the Series A Preferred Shares that may be in
arrears.
(c) Dividends on Series A Preferred Shares will accrue whether or not the
Trust has earnings, whether or not there are funds legally available for the
payment of such dividends and whether or not such dividends are declared.
(d) If, for any taxable year, the Trust elects to designate as "capital gain
dividends" (as defined in Section 857 of the Code) any portion (the "Capital
Gains Amount") of the total dividends (within the meaning of the Code) paid or
made available for the year to holders of all classes of shares of beneficial
interest (the "Total Dividends"), then the portion of the Capital Gains Amount
that shall be allocated to holders of Series A Preferred Shares shall be in
the same portion that the Total Dividends paid or made available to the
holders of Series A Preferred Shares for the year bears to the Total
Dividends.
(e) So long as any Series A Preferred Shares are outstanding, no dividends,
except as described in the immediately following sentence, shall be declared
or paid or set apart for payment on any class or series of Parity Shares for
any period unless full cumulative dividends have been or contemporaneously are
declared and paid or declared and a sum sufficient for the payment thereof set
apart for such payment on the Series A Preferred Shares for all Dividend
Periods terminating on or prior to the dividend payment date for such class or
series of Parity Shares. When dividends are not paid in full or a sum
sufficient for such payment is not set apart, as aforesaid, all dividends
declared upon Series A Preferred Shares and all dividends declared upon any
other class or series of Parity Shares shall be declared ratably in proportion
to the respective amounts of dividends accumulated and unpaid on the Series A
Preferred Shares and accumulated and unpaid on such Parity Shares.
(f) So long as any Series A Preferred Shares are outstanding, no dividends
(other than dividends or distributions paid solely in shares of, or options,
warrants or rights to subscribe for or purchase shares of, Fully Junior
Shares) shall be declared or paid or set apart for payment or other
distribution declared or made upon Junior Shares or Fully Junior Shares, nor
shall any Junior Shares or Fully Junior Shares be redeemed, purchased or
otherwise acquired (other than a redemption, purchase or other acquisition of
Common Shares made for purposes of any employee incentive or benefit plan of
the Trust or any subsidiary) for any consideration (or any moneys be paid to
or made available for a sinking fund for the redemption of any such shares) by
the Trust, directly or indirectly (except by conversion into or exchange for
shares of Fully Junior Shares), unless in each case (i) the full cumulative
dividends on all outstanding Series A Preferred Shares and any other Parity
Shares of the Trust shall have been or contemporaneously are declared and paid
or declared and set apart for payment for all past Dividend Periods with
respect to the Series A Preferred Shares and all past dividend periods with
respect to such Parity Shares and (ii) sufficient funds shall have been or
contemporaneously are declared and paid or declared and set apart for the
payment of the dividend for the current Dividend Period with respect to the
Series A Preferred Shares and the current dividend period with respect to such
Parity Shares.
(g) No dividends on Series A Preferred Shares shall be authorized by the
Board of Trustees or paid or set apart for payment by the Trust at such time
as the terms and provisions of any agreement of the Trust, including any
agreement relating to its indebtedness, prohibits such authorization, payment
or setting apart for payment or provides that such authorization, payment or
setting apart for payment would constitute a breach thereof or a default
thereunder, or if such authorization or payment shall be restricted or
prohibited by law.
Section 6.4.4 Liquidation Rights.
(a) In the event of any liquidation, dissolution or winding up of the Trust,
whether voluntary or involuntary, before any payment or distribution of the
assets of the Trust (whether capital or surplus) shall be made to or
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set apart for the holders of Junior Shares, the holders of the Series A
Preferred Shares shall be entitled to receive Twenty Five Dollars ($25.00) per
share of Series A Preferred Shares plus an amount equal to all dividends
(whether or not earned or declared) accrued and unpaid thereon to the date of
final distribution to such holders; but such holders shall not be entitled to
any further payment. If, upon any liquidation, dissolution or winding up of
the Trust, the assets of the Trust, or proceeds thereof, distributable among
the holders of the Series A Preferred Shares shall be insufficient to pay in
full the preferential amount aforesaid and liquidating payments on any other
shares of any class or series of Parity Shares, then such assets, or the
proceeds thereof, shall be distributed among the holders of the Series A
Preferred Shares and any such other Parity Shares ratably in accordance with
the respective amounts that would be payable on such Series A Preferred Shares
and any such other Parity Shares if all amounts payable thereon were paid in
full. For the purposes of this Section 6.4.4, (i) a consolidation or merger of
the Trust with one or more corporations, real estate investment trusts, or
other entities, (ii) a sale, lease or transfer of all or substantially all of
the Trust's assets, or (iii) a statutory share exchange shall not be deemed to
be a liquidation, dissolution or winding up, voluntary or involuntary, of the
Trust.
(b) Subject to the rights of the holders of shares of any series or class of
beneficial interest ranking on a parity with or prior to the Series A
Preferred Shares upon liquidation, dissolution or winding up, upon any
liquidation, dissolution or winding up of the Trust, after payment shall have
been made in full to the holders of the Series A Preferred Shares, as provided
in this Section 6.4.4, any other series or class of Junior Shares or Fully
Junior Shares shall, subject to the respective terms and provisions (if any)
applying thereto, be entitled to receive any and all assets remaining to be
paid or distributed, and the holders of the Series A Preferred Shares shall
not be entitled to share therein.
Section 6.4.5 Conversion. The Series A Preferred Shares are not convertible
or exchangeable for any other property or securities of the Trust.
Section 6.4.6 Redemption at the Option of the Trust.
(a) The Series A Preferred Shares shall not be redeemable by the Trust prior
to October 6, 2002. On and after October 6, 2002, the Trust, at its option,
may redeem the Series A Preferred Shares, in whole or in part at any time or
from time to time, at a redemption price of Twenty-Five Dollars ($25.00) per
share of Series A Preferred Shares, plus the amounts indicated in Section (b).
(b) Upon any redemption of the Series A Preferred Shares pursuant to this
Section 6.4.6, the Trust shall pay all accrued and unpaid dividends, if any,
thereon ending on or prior to the date of such redemption (the "Call Date"),
without interest. If the Call Date falls after a dividend payment record date
and prior to the corresponding Dividend Payment Date, then each holder of
Series A Preferred Shares at the close of business on such dividend payment
record date shall be entitled to the dividend payable on such shares on the
corresponding Dividend Payment Date notwithstanding the redemption of such
shares before such Dividend Payment Date. Except as provided above, the Trust
shall make no payment or allowance for unpaid dividends, whether or not in
arrears, on shares of Series A Preferred Shares called for redemption.
(c) If full cumulative dividends on the Series A Preferred Shares and any
other class or series of Parity Shares of the Trust have not been declared and
paid or declared and set apart for payment, the Series A Preferred Shares or
Parity Shares may not be redeemed under this Section 6.4.6 in part and the
Trust may not purchase or acquire the Series A Preferred Shares or any Parity
Shares, otherwise than pursuant to a purchase or exchange offer made on the
same terms to all holders of Series A Preferred Shares or Parity Shares, as
the case may be.
(d) Notice of the redemption of any Series A Preferred Shares under this
Section 6.4.6 shall be mailed by first-class mail to each holder of record of
Series A Preferred Shares to be redeemed at the address of each such holder as
shown on the Trust's records, not less than 30 nor more than 90 days prior to
the Call Date. Neither the failure to mail any notice required by this Section
6.4.6(d), nor any defect therein or in the mailing thereof, to any particular
holder, shall affect the sufficiency of the notice or the validity of the
proceedings for redemption with respect to the other holders. Any notice which
was mailed in the manner herein provided shall be conclusively presumed to
have been duly given on the date mailed whether or not the holder receives the
notice. Each such mailed notice shall state, as appropriate: (1) the Call
Date; (2) the number of shares of Series A
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Preferred Shares to be redeemed and, if fewer than all the shares held by such
holder are to be redeemed, the number of such shares to be redeemed from such
holder; (3) the redemption price per share; (4) the place or places at which
certificates for such shares are to be surrendered; and (5) that dividends on
the shares to be redeemed shall cease to accrue on such Call Date except as
otherwise provided herein. Notice having been mailed as aforesaid, from and
after the Call Date (unless the Trust shall fail to make available an amount
of cash necessary to effect such redemption), (i) except as otherwise provided
herein, dividends on the Series A Preferred Shares so called for redemption
shall cease to accrue, (ii) shares of such Series A Preferred Shares shall no
longer be deemed to be outstanding, and (iii) all rights of the holders
thereof as holders of Series A Preferred Shares of the Trust shall cease
(except the right to receive cash payable under such redemption, without
interest thereon, upon surrender and endorsement of their certificates if so
required and to receive any dividends payable thereon). The Trust's obligation
to provide cash in accordance with the preceding sentence shall be deemed
fulfilled if, on or before the Call Date, the Trust shall deposit with a bank
or trust company (which may be an affiliate of the Trust) that has an office
in Maryland and that has, or is an affiliate of a bank or trust company that
has, capital and surplus of at least $50,000,000, the amount of cash necessary
for such redemption, in trust, with irrevocable instructions that such cash be
applied to the redemption of the Series A Preferred Shares so called for
redemption. No interest shall accrue for the benefit of the holders of Series
A Preferred Shares to be redeemed on any cash so set aside by the Trust.
Subject to applicable escheat laws, any such cash unclaimed at the end of two
years from the Call Date shall revert to the general funds of the Trust, after
which reversion the holders of such shares so called for redemption shall look
only to the general funds of the Trust for the payment of such cash.
As promptly as practicable after the surrender in accordance with said
notice of the certificates for any such shares so redeemed (properly endorsed
or assigned for transfer, if the Trust shall so require and if the notice
shall so state), such shares shall be exchanged for any cash (without interest
thereon) for which such shares have been redeemed. If fewer than all the
outstanding Series A Preferred Shares are to be redeemed, shares to be
redeemed shall be selected by the Trust from outstanding Series A Preferred
Shares not previously called for redemption by lot or pro rata (as nearly as
may be) or by any other method determined by the Trust in its sole discretion
to be equitable. If fewer than all the Series A Preferred Shares represented
by any certificate are redeemed, then new certificates representing the
unredeemed shares shall be issued without cost to the holder thereof.
Section 6.4.7 Shares to be Retired. All Series A Preferred Shares which
shall have been issued and reacquired in any manner by the Trust shall be
restored to the status of authorized but unissued Preferred Shares, without
designation as to class or series.
Section 6.4.8 Ranking. Any class or series of shares of beneficial interest of
the Trust shall be deemed to rank:
(a) prior to the Series A Preferred Shares, as to the payment of dividends
and as to distribution of assets upon liquidation, dissolution or winding up,
if the holders of such class or series shall be entitled to the receipt of
dividends or of amounts distributable upon liquidation, dissolution or winding
up, as the case may be, in preference or priority to the holders of Series A
Preferred Shares;
(b) on a parity with the Series A Preferred Shares, as to the payment of
dividends and as to distribution of assets upon liquidation, dissolution or
winding up, whether or not the dividend rates, dividend payment dates or
redemption or liquidation prices per share thereof be different from those of
the Series A Preferred Shares, if the holders of such class or series of
shares and the Series A Preferred Shares shall be entitled to the receipt of
dividends and of amounts distributable upon liquidation, dissolution or
winding up in proportion to their respective amounts of accrued and unpaid
dividends per share or liquidation preferences, without preference or priority
one over the other ("Parity Shares");
(c) junior to the Series A Preferred Shares, as to the payment of dividends
or as to the distribution of assets upon liquidation, dissolution or winding
up, if such shares shall be Junior Shares; and
(d) junior to the Series A Preferred Shares, as to the payment of dividends
and as to the distribution of assets upon liquidation, dissolution or winding
up, if such shares shall be Fully Junior Shares.
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Section 6.4.9 Voting. If and whenever six consecutive quarterly dividends
payable on the Series A Preferred Shares or any series or class of Parity
Shares shall be in arrears (which shall, with respect to any such quarterly
dividend, mean that any such dividend has not been paid in full), whether or
not declared, the number of trustees then constituting the Board of Trustees
shall he increased by two, and the holders of Series A Preferred Shares,
together with the holders of shares of every other series of Parity Shares,
voting as a single class regardless of series, shall be entitled to elect the
two additional trustees to serve on the Board of Trustees at any annual
meeting of shareholders or special meeting held in place thereof, or at a
special meeting of the holders of the Series A Preferred Shares and the Parity
Shares called as hereinafter provided. Whenever all arrears in dividends on
the Series A Preferred Shares and the Parity Shares then outstanding shall
have been paid and dividends thereon for the current quarterly dividend period
shall have been paid or declared and set apart for payment, then the right of
the holders of the Series A Preferred Shares and the Parity Shares to elect
such additional two trustees shall immediately cease (but subject always to
the same provision for the vesting of such voting rights in the case of any
similar future arrearages in six consecutive quarterly dividends), and the
terms of office of all persons elected as trustees by the holders of the
Series A Preferred Shares and the Parity Shares shall immediately terminate
and the number of the Board of Trustees shall be reduced accordingly. At any
time after such voting rights shall have been so vested in the holders of
Series A Preferred Shares and the Parity Shares, the secretary of the Trust
may, and upon the written request of any holder of Series A Preferred Shares
(addressed to the secretary at the principal office of the Trust) shall, call
a special meeting of the holders of the Series A Preferred Shares and of the
Parity Shares for the election of the two trustees to be elected by them as
herein provided, such call to be made by notice similar to that provided in
the Bylaws of the Trust for a special meeting of the shareholders or as
required by law. If any such special meeting required to be called as above
provided shall not be called by the secretary within 20 days after receipt of
any such request, then any holder of Series A Preferred Shares may call such
meeting, upon the notice above provided, and for that purchase shall have
access to the share records of the Trust. The trustees elected at any such
special meeting shall hold office until the next annual meeting of the
shareholders or special meeting held in lieu thereof if such office shall not
have previously terminated as above provided. If any vacancy shall occur among
the trustees elected by the holders of the Series A Preferred Shares and the
Parity Shares, a successor shall be elected by the Board of Trustees, upon the
nomination of the then remaining trustee elected by the holders of the Series
A Preferred Shares and the Parity Shares or the successor of such remaining
trustee, to serve until the next annual meeting of the shareholders or special
meeting held in place thereof if such office shall not have previously
terminated as provided above.
So long as any Series A Preferred Shares are outstanding, in addition to any
other vote or consent of shareholders required by law or by the Declaration,
the affirmative vote of at least 66-2/3% of the votes entitled to be cast by
the holders of the Series A Preferred Shares and the Parity Shares, at the
time outstanding, acting as a single class regardless of series, given in
person or by proxy, either in writing without a meeting or by vote at any
meeting called for the purpose, shall be necessary for effecting or
validating:
(a) Any amendment, alteration or repeal of any of the provisions of the
Declaration that materially and adversely affects the voting powers, rights or
preferences of the holders of the Series A Preferred Shares or the Parity
Shares; provided, however, that the amendment of the provisions of the
Declaration so as to authorize or create or to increase the authorized amount
of shares of any class of any Fully Junior Shares or Junior Shares that are
not senior in any respect to the Series A Preferred Shares, or any shares of
any class ranking on a parity with the Series A Preferred Shares or the Parity
Shares, shall not be deemed to materially adversely affect the voting powers,
rights or preferences of the holders of Series A Preferred Shares; and
provided further, that if any such amendment, alteration or repeal would
materially and adversely affect any voting powers, rights or preferences of
the Series A Preferred Shares or another series of Parity Shares that are not
enjoyed by some or all of the other series otherwise entitled to vote in
accordance herewith, the affirmative vote of at least 66-2/3% of the votes
entitled to be cast by the holders of all series similarly affected, similarly
given, shall be required in lieu of the affirmative vote of at least 66-2/3%
of the votes entitled to be cast by the holders of the Series A Preferred
Shares and the Parity Shares otherwise entitled to vote in accordance
herewith; or
(b) A share exchange that affects the Series A Preferred Shares, a
consolidation with or merger of the Trust into another entity, or a
consolidation with or merger of another entity into the Trust, unless in each
such case
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each share of Series A Preferred Shares (i) shall remain outstanding without a
material and adverse change to its terms and rights or (ii) shall be converted
into or exchanged for preferred stock of the surviving entity having
preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends, qualifications and terms or conditions of
redemption thereof identical to that of a share of Series A Preferred Shares
(except for changes that do not materially and adversely affect the holders of
the Series A Preferred Shares); or
(c) The authorization or creation of, or the increase in the authorized
amount of, any shares of any class, or any security convertible into shares of
any class, ranking prior to the Series A Preferred Shares in the distribution
of assets on any liquidation, dissolution or winding up of the Trust or in the
payment of dividends; provided, however, that no such vote of the holders of
Series A Preferred Shares shall be required if, at or prior to the time when
such amendment, alteration or repeal is to take effect, or when the issuance
of any such shares or convertible securities is to be made, as the case may
be, provision is made for the redemption of all Series A Preferred Shares at
the time outstanding.
For purposes of the foregoing provisions of this Section 6.4.9, each share
of Series A Preferred Shares shall have one vote per share, except that when
shares of any other series of Preferred Shares shall have the right to vote
with the Series A Preferred Shares as a single class on any matter, then the
Series A Preferred Shares and such other series shall have with respect to
such matters one vote per $25.00 of stated liquidation preference. Except as
otherwise required by applicable law or as set forth herein, the Series A
Preferred Shares shall not have any relative, participating, optional or other
special voting rights and powers, and the consent of the holders thereof shall
not be required for the taking of any corporate action.
Section 6.4.10 Record Holders. The Trust and the Transfer Agent may deem and
treat the record holder of any Series A Preferred Shares as the true and
lawful owner thereof for all purposes, and neither the Trust nor the Transfer
Agent shall be affected by any notice to the contrary.
Section 6.4.11 Sinking Fund. The Series A Preferred Shares shall not be
entitled to the benefits of any retirement or sinking fund.
Section 6.5 Classified or Reclassified Shares. Prior to issuance of
classified or reclassified Shares of any class or series, the Board of
Trustees by resolution shall (a) designate that class or series to distinguish
it from all other classes and series of Shares; (b) specify the number of
Shares to be included in the class or series; (c) set, subject to the
provisions of Article VII and subject to the express terms of any class or
series of Shares outstanding at the time, the preferences, conversion or other
rights, voting powers, restrictions, limitations as to dividends or other
distributions, qualifications and terms and conditions of redemption for each
class or series; and (d) cause the Trust to file articles supplementary with
the State Department of Assessments and Taxation of Maryland (the "SDAT"). Any
of the terms of any class or series of Shares set pursuant to clause (c) of
this Section 6.5 may be made dependent upon facts ascertainable outside the
Declaration of Trust (including the occurrence of any event, including a
determination or action by the Trust or any other person or body) and may vary
among holders thereof, provided that the manner in which such facts or
variations shall operate upon the terms of such class or series of Shares is
clearly and expressly set forth in the articles supplementary filed with the
SDAT.
Section 6.6 Authorization by Board of Share Issuance. The Board of Trustees
may authorize the issuance from time to time of Shares of any class or series,
whether now or hereafter authorized, or securities or rights convertible into
Shares of any class or series, whether now or hereafter authorized, for such
consideration (whether in cash, property, past or future services, obligation
for future payment or otherwise) as the Board of Trustees may deem advisable
(or without consideration in the case of a Share split or Share dividend),
subject to such restrictions or limitations, if any, as may be set forth in
the Declaration of Trust or the Bylaws of the Trust.
Section 6.7 Dividends and Distributions. The Trust may pay any dividend or
make any other distribution to the shareholders as authorized in the
Declaration or by the Board of Trustees if, after giving effect to the
dividend or distribution, the Trust would be able to pay its debts as they
become due in the usual course of its business. The Board of Trustees may from
time to time authorize the trust to pay to shareholders such dividends or
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distributions in cash or other assets of the Trust or in securities of the
Trust or from any other source as the Board of Trustees in its discretion
shall determine. The Board of Trustees shall endeavor to authorize the Trust
to pay such dividends and distributions as shall be necessary for the Trust to
qualify as a real estate investment trust under the Code; however,
shareholders shall have no right to any dividend or distribution unless and
until authorized by the Board and declared by the Trust. The exercise of the
powers and rights of the Board of Trustees pursuant to this Section 6.7 shall
be subject to the provisions of any class or series of Shares at the time
outstanding. Notwithstanding any other provision in the Declaration of Trust,
no determination shall be made by the Board of Trustees nor shall any
transaction be entered into by the Trust which would cause any Shares or other
beneficial interest in the Trust not to constitute "transferable shares" or
"transferable certificates of beneficial interest" under Section 856(a)(2) of
the Code or which would cause any distribution to constitute a preferential
dividend as described in Section 562(c) of the Code.
Section 6.8 General Nature of Shares. All Shares shall be personal property
entitling the shareholders only to those rights provided in the Declaration of
Trust. The shareholders shall have no interest in the property of the Trust
and shall have no right to compel any partition, division, dividend or
distribution of the Trust or of the property of the Trust. The death of a
shareholder shall not terminate the Trust. The Trust is entitled to treat as
shareholders only those persons in whose names Shares are registered as
holders of Shares on the beneficial interest ledger of the Trust.
Section 6.9 Fractional Shares. The Trust may, without the consent or
approval of any shareholder, issue fractional Shares, eliminate a fraction of
a Share by rounding up or down to a full Share, arrange for the disposition of
a fraction of a Share by the person entitled to it, or pay cash for the fair
value of a fraction of a Share.
Section 6.10 Declaration and Bylaws. All shareholders are subject to the
provisions of the Declaration of Trust and the Bylaws of the Trust.
Section 6.11 Divisions and Combinations of Shares. Subject to an express
provision to the contrary in the terms of any class or series of beneficial
interest hereafter authorized, the Board of Trustees shall have the power to
divide or combine the outstanding Shares of any class or series of beneficial
interest, without a vote of shareholders, so long as the number of Shares
combined into one Share in any such combination or series of combinations
within any period of twelve months is not greater than five.
ARTICLE VII
RESTRICTION ON TRANSFER AND OWNERSHIP OF SHARES
Section 7.1 Definitions. For the purpose of this Article VII, the following
terms shall have the following meanings:
Aggregate Share Ownership Limit. The term "Aggregate Share Ownership Limit"
shall mean not more than 9.8 percent in value of the aggregate of the
outstanding Equity Shares. The value of the outstanding Equity Shares shall be
determined by the Board of Trustees in good faith, which determination shall
be conclusive for all purposes hereof.
Beneficial Ownership. The term "Beneficial Ownership" shall mean ownership
of Equity Shares by a Person, whether the interest in Equity Shares is held
directly or indirectly (including by a nominee), and shall include interests
that would be treated as owned through the application of Section 544 of the
Code, as modified by Section 856(h)(1)(B) of the Code. The terms "Beneficial
Owner," "Beneficially Owns" and "Beneficially Owned" shall have the
correlative meanings.
Business Day. The term "Business Day" shall mean any day, other than a
Saturday or Sunday, that is neither a legal holiday nor a day on which banking
institutions in New York City are authorized or required by law, regulation or
executive order to close.
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Charitable Beneficiary. The term "Charitable Beneficiary" shall mean one or
more beneficiaries of the Charitable Trust as determined pursuant to Section
7.3.6, provided that each such organization must be described in Section
501(c)(3) of the Code and contributions to each such organization must be
eligible for deduction under each of Sections 170(b)(1)(A), 2055 and 2522 of
the Code.
Charitable Trust. The term "Charitable Trust" shall mean any trust provided
for in Section 7.3.1.
Common Share Ownership Limit. The term "Common Share Ownership Limit" shall
mean not more than 9.8 percent (in value or in number of shares, whichever is
more restrictive) of the aggregate number of the outstanding Common Shares.
The number and value of outstanding Common Shares shall be determined by the
Board of Trustees in good faith, which determination shall be conclusive for
all purposes hereof.
Constructive Ownership. The term "Constructive Ownership" shall mean
ownership of Equity Shares by a Person, whether the interest in Equity Shares
is held directly or indirectly (including by a nominee), and shall include
interests that would be treated as owned through the application of Section
318(a) of the Code, as modified by Section 856(d)(5) of the Code. The terms
"Constructive Owner," "Constructively Owns" and "Constructively Owned" shall
have the correlative meanings.
Declaration of Trust. The term "Declaration of Trust" shall mean this
Declaration of Trust as accepted for record by the SDAT, and any amendments
thereto.
Equity Shares. The term "Equity Shares" shall mean Shares of all classes or
series, including, without limitation, Common Shares and Preferred Shares.
Excepted Holder. The term "Excepted Holder" shall mean a shareholder of the
Trust for whom an Excepted Holder Limit is created by this Article VII or by
the Board of Trustees pursuant to Section 7.2.7.
Excepted Holder Limit. The term "Excepted Holder Limit" shall mean, provided
that the affected Excepted Holder agrees to comply with the requirements
established by the Board of Trustees pursuant to Section 7.2.7, and subject to
adjustment pursuant to Section 7.2.8, the percentage limit established by the
Board of Trustees pursuant to Section 7.2.7.
Initial Date. The term "Initial Date" shall mean the date upon which this
Declaration of Trust containing this Article VII is accepted for record by the
SDAT.
Market Price. The term "Market Price" on any date shall mean, with respect
to any class or series of outstanding Equity Shares, the Closing Price for
such Equity Shares on such date. The "Closing Price" on any date shall mean
the last sale price for such Equity Shares, regular way, or, in case no such
sale takes place on such day, the average of the closing bid and asked prices,
regular way, for such Equity Shares, in either case as reported in the
principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on the NYSE or, if such Equity Shares are not
listed or admitted to trading on the NYSE, as reported on the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which such Equity Shares are
listed or admitted to trading or, if such Equity Shares are not listed or
admitted to trading on any national securities exchange, the last quoted
price, or, if not so quoted, the average of the high bid and low asked prices
in the over-the-counter market, as reported by the National Association of
Securities Dealers, Inc. Automated Quotation System or, if such system is no
longer in use, the principal other automated quotation system that may then be
in use or, if such Equity Shares are not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in such Equity Shares selected by the Board of
Trustees or, in the event that no trading price is available for such Equity
Shares, the fair market value of Equity Shares, as determined in good faith by
the Board of Trustees, which determination shall be conclusive for all
purposes hereof.
NYSE. The term "NYSE" shall mean the New York Stock Exchange.
Person. The term "Person" shall mean an individual, corporation,
partnership, limited liability company, estate, trust (including a trust
qualified under Sections 401(a) or 501(c)(17) of the Code), a portion of a
trust permanently set aside for or to be used exclusively for the purposes
described in Section 642(c) of the Code,
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association, private foundation within the meaning of Section 509(a) of the
Code, joint stock company or other entity and also includes a group as that
term is used for purposes of Section 13(d)(3) of the Securities Exchange Act
of 1934, as amended, and a group to which an Excepted Holder Limit applies.
Prohibited Owner. The term "Prohibited Owner" shall mean, with respect to
any purported Transfer, any Person who, but for the provisions of Section
7.2.1, would Beneficially Own or Constructively Own Equity Shares, and if
appropriate in the context, shall also mean any Person who would have been the
record owner of Equity Shares that the Prohibited Owner would have so owned.
REIT. The term "REIT" shall mean a real estate investment trust within the
meaning of Section 856 of the Code.
Restriction Termination Date. The term "Restriction Termination Date" shall
mean the first day after the Initial Date on which the Board of Trustees
determines that it is no longer in the best interests of the Trust to attempt
to, or continue to, qualify as a REIT or that compliance with the restrictions
and limitations on Beneficial Ownership, Constructive Ownership and Transfers
of Equity Shares set forth herein is no longer required in order for the Trust
to qualify as a REIT.
SDAT. The term "SDAT" shall mean the State Department of Assessments and
Taxation of Maryland.
Transfer. The term "Transfer" shall mean any issuance, sale, transfer, gift,
assignment, devise or other disposition, as well as any other event that
causes any Person to acquire Beneficial Ownership or Constructive Ownership,
or any agreement to take any such actions or cause any such events, of Equity
Shares or the right to vote or receive dividends on Equity Shares, including
(a) the granting or exercise of any option (or any disposition of any option),
(b) any disposition of any securities or rights convertible into or
exchangeable for Equity Shares or any interest in Equity Shares or any
exercise of any such conversion or exchange right and (c) Transfers of
interests in other entities that result in changes in Beneficial or
Constructive Ownership of Equity Shares; in each case, whether voluntary or
involuntary, whether owned of record, Constructively Owned or Beneficially
Owned and whether by operation of law or otherwise. The terms "Transferring"
and "Transferred" shall have the correlative meanings.
Trustee. The term "Trustee" shall mean the Person unaffiliated with the
Trust and a Prohibited Owner, that is appointed by the Trust to serve as
trustee of the Charitable Trust.
Section 7.2 Equity Shares.
Section 7.2.1 Ownership Limitations. During the period commencing on the
Initial Date and prior to the Restriction Termination Date:
(a) Basic Restrictions.
(i) (1) No Person, other than an Excepted Holder, shall Beneficially Own or
Constructively Own Equity Shares in excess of the Aggregate Share Ownership
Limit, (2) no Person, other than an Excepted Holder, shall Beneficially Own or
Constructively Own Common Shares in excess of the Common Share Ownership Limit
and (3) no Excepted Holder shall Beneficially Own or Constructively Own Equity
Shares in excess of the Excepted Holder Limit for such Excepted Holder.
(ii) No Person shall Beneficially or Constructively Own Equity Shares to the
extent that such Beneficial or Constructive Ownership of Equity Shares would
result in the Trust being "closely held" within the meaning of Section 856(h)
of the Code (without regard to whether the ownership interest is held during
the last half of a taxable year), or otherwise failing to qualify as a REIT
(including, but not limited to, Beneficial or Constructive Ownership that
would result in the Trust owning (actually or Constructively) an interest in a
tenant that is described in Section 856(d)(2)(B) of the Code if the income
derived by the Trust from such tenant would cause the Trust to fail to satisfy
any of the gross income requirements of Section 856(c) of the Code).
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(iii) Notwithstanding any other provisions contained herein (but subject to
Section 7.4), any Transfer of Equity Shares (whether or not such Transfer is
the result of a transaction entered into through the facilities of the NYSE or
any other national securities exchange or automated inter-dealer quotation
system) that, if effective, would result in Equity Shares being beneficially
owned by less than 100 Persons (determined under the principles of Section
856(a)(5) of the Code) shall be void ab initio, and the intended transferee
shall acquire no rights in such Equity Shares.
(b) Transfer in Trust. If any Transfer of Equity Shares (whether or not such
Transfer is the result of a transaction entered into through the facilities of
the NYSE or any other national securities exchange or automated inter-dealer
quotation system) occurs which, if effective, would result in any Person
Beneficially Owning or Constructively Owning Equity Shares in violation of
Section 7.2.1(a)(i) or (ii),
(i) then that number of Equity Shares the Beneficial or Constructive
Ownership of which otherwise would cause such Person to violate Section
7.2.1(a)(i) or (ii)(rounded to the nearest whole share) shall be automatically
transferred to a Charitable Trust for the benefit of a Charitable Beneficiary,
as described in Section 7.3, effective as of the close of business on the
Business Day prior to the date of such Transfer, and such Person shall acquire
no rights in such Equity Shares; or
(ii) if the transfer to the Charitable Trust described in clause (i) of this
sentence would not be effective for any reason to prevent the violation of
Section 7.2.1(a)(i) or (ii), then the Transfer of that number of Equity Shares
that otherwise would cause any Person to violate Section 7.2.1(a)(i) or (ii)
shall be void ab initio, and the intended transferee shall acquire no rights
in such Equity Shares.
Section 7.2.2 Remedies for Breach. If the Board of Trustees or any duly
authorized committee thereof shall at any time determine in good faith that a
Transfer or other event has taken place that results in a violation of Section
7.2.1 or that a Person intends to acquire or has attempted to acquire
Beneficial or Constructive Ownership of any Equity Shares in violation of
Section 7.2.1 (whether or not such violation is intended), the Board of
Trustees or a committee thereof shall take such action as it deems advisable
to refuse to give effect to or to prevent such Transfer or other event,
including, without limitation, causing the Trust to redeem Equity Shares,
refusing to give effect to such Transfer on the books of the Trust or
instituting proceedings to enjoin such Transfer or other event; provided,
however, that any Transfers or attempted Transfers or other events in
violation of Section 7.2.1 shall automatically result in the transfer to the
Charitable Trust described above, and, where applicable, such Transfer (or
other event) shall be void ab initio as provided above irrespective of any
action (or non-action) by the Board of Trustees or a committee thereof.
Section 7.2.3 Notice of Restricted Transfer. Any Person who acquires or
attempts or intends to acquire Beneficial Ownership or Constructive Ownership
of Equity Shares that will or may violate Section 7.2.1(a), or any Person who
would have owned Equity Shares that resulted in a transfer to the Charitable
Trust pursuant to the provisions of Section 7.2.1(b), shall immediately give
written notice to the Trust of such event, or in the case of such a proposed
or attempted transaction, give at least 15 days prior written notice, and
shall provide to the Trust such other information as the Trust may request in
order to determine the effect, if any, of such Transfer on the Trust's status
as a REIT.
Section 7.2.4 Owners Required To Provide Information. From the Initial Date
and prior to the Restriction Termination Date:
(a) every owner of more than five percent (or such lower percentage as
required by the Code or the Treasury Regulations promulgated thereunder) of
the outstanding Equity Shares, within 30 days after the end of each taxable
year, shall give written notice to the Trust stating the name and address of
such owner, the number of Equity Shares and other Equity Shares Beneficially
Owned and a description of the manner in which such shares are held. Each such
owner shall provide to the Trust such additional information as the Trust may
request in order to determine the effect, if any, of such Beneficial Ownership
on the Trust's status as a REIT and to ensure compliance with the Aggregate
Share Ownership Limit.
(b) each Person who is a Beneficial or Constructive Owner of Equity Shares
and each Person (including the shareholder of record) who is holding Equity
Shares for a Beneficial or Constructive Owner shall provide to the
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Trust such information as the Trust may request, in good faith, in order to
determine the Trust's status as a REIT and to comply with requirements of any
taxing authority or governmental authority or to determine such compliance.
Section 7.2.5 Remedies Not Limited. Subject to Section 5.1 of the
Declaration of Trust, nothing contained in this Section 7.2 shall limit the
authority of the Board of Trustees to take such other action as it deems
necessary or advisable to protect the Trust and the interests of its
shareholders in preserving the Trust's status as a REIT.
Section 7.2.6 Ambiguity. In the case of an ambiguity in the application of
any of the provisions of this Section 7.2, Section 7.3 or any definition
contained in Section 7.1, the Board of Trustees shall have the power to
determine the application of the provisions of this Section 7.2 or Section 7.3
with respect to any situation based on the facts known to it. In the event
Section 7.2 or 7.3 requires an action by the Board of Trustees and the
Declaration of Trust fails to provide specific guidance with respect to such
action, the Board of Trustees shall have the power to determine the action to
be taken so long as such action is not contrary to the provisions of Sections
7.1, 7.2 or 7.3.
Section 7.2.7 Exceptions.
(a) Subject to Section 7.2.1(a)(ii), the Board of Trustees, in its sole
discretion, may exempt a Person from the Aggregate Share Ownership Limit and
the Common Share Ownership Limit, as the case may be, and may establish or
increase an Excepted Holder Limit for such Person if:
(i) the Board of Trustees obtains such representations and undertakings from
such Person as are reasonably necessary to ascertain that no individual's
Beneficial or Constructive Ownership of such Equity Shares will violate
Section 7.2.1(a)(ii);
(ii) such Person does not and represents that it will not own, actually or
Constructively, an interest in a tenant of the Trust (or a tenant of any
entity owned or controlled by the Trust) that would cause the Trust to own,
actually or Constructively, more than a 9.9% interest (as set forth in Section
856(d)(2)(B) of the Code) in such tenant and the Board of Trustees obtains
such representations and undertakings from such Person as are reasonably
necessary to ascertain this fact (for this purpose, a tenant from whom the
Trust (or an entity owned or controlled by the Trust) derives (and is expected
to continue to derive) a sufficiently small amount of revenue such that, in
the opinion of the Board of Trustees, rent from such tenant would not
adversely affect the Trust's ability to qualify as a REIT, shall not be
treated as a tenant of the Trust); and
(iii) such Person agrees that any violation or attempted violation of such
representations or undertakings (or other action which is contrary to the
restrictions contained in Sections 7.2.1 through 7.2.6) will result in such
Equity Shares being automatically transferred to a Charitable Trust in
accordance with Sections 7.2.1(b) and 7.3.
(b) Prior to granting any exception pursuant to Section 7.2.7(a), the Board
of Trustees may require a ruling from the Internal Revenue Service, or an
opinion of counsel, in either case in form and substance satisfactory to the
Board of Trustees in its sole discretion, as it may deem necessary or
advisable in order to determine or ensure the Trust's status as a REIT.
Notwithstanding the receipt of any ruling or opinion, the Board of Trustees
may impose such conditions or restrictions as it deems appropriate in
connection with granting such exception.
(c) Subject to Section 7.2.1(a)(ii), an underwriter which participates in a
public offering or a private placement of Equity Shares (or securities
convertible into or exchangeable for Equity Shares) may Beneficially Own or
Constructively Own Equity Shares (or securities convertible into or
exchangeable for Equity Shares) in excess of the Aggregate Share Ownership
Limit, the Common Share Ownership Limit or both such limits, but only to the
extent necessary to facilitate such public offering or private placement.
(d) The Board of Trustees may only reduce the Excepted Holder Limit for an
Excepted Holder: (1) with the written consent of such Excepted Holder at any
time, or (2) pursuant to the terms and conditions of the
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agreements and undertakings entered into with such Excepted Holder in
connection with the establishment of the Excepted Holder Limit for that
Excepted Holder. No Excepted Holder Limit shall be reduced to a percentage
that is less than the Common Share Ownership Limit.
Section 7.2.8 Increase in Aggregate Share Ownership and Common Share
Ownership Limits. The Board of Trustees may from time to time increase the
Common Share Ownership Limit and the Aggregate Share Ownership Limit.
Section 7.2.9 Legend. Each certificate for Equity Shares issued after the
effective date of this Declaration as accepted for record by the SDAT shall
bear substantially the following legend:
The shares represented by this certificate are subject to restrictions on
Beneficial and Constructive Ownership and Transfer for the purpose of the
Trust's maintenance of its status as a Real Estate Investment Trust (a
"REIT") under the Internal Revenue Code of 1986, as amended (the "Code").
Subject to certain further restrictions and except as expressly provided in
the Trust's Declaration of Trust, (i) no Person may Beneficially or
Constructively Own Common Shares of the Trust in excess of 9.8 percent (in
value or number of shares) of the outstanding Common Shares of the Trust
unless such Person is an Excepted Holder (in which case the Excepted Holder
Limit shall be applicable); (ii) no Person may Beneficially or
Constructively Own Equity Shares of the Trust in excess of 9.8 percent of
the value of the total outstanding Equity Shares of the Trust, unless such
Person is an Excepted Holder (in which case the Excepted Holder Limit shall
be applicable); (iii) no Person may Beneficially or Constructively Own
Equity Shares that would result in the Trust being "closely held" under
Section 856(h) of the Code or otherwise cause the Trust to fail to qualify
as a REIT; and (iv) no Person may Transfer Equity Shares if such Transfer
would result in Equity Shares of the Trust being owned by fewer than 100
Persons. Any Person who Beneficially or Constructively Owns or attempts to
Beneficially or Constructively Own Equity Shares which cause or will cause
a Person to Beneficially or Constructively Own Equity Shares in excess or
in violation of the above limitations must immediately notify the Trust. If
any of the restrictions on transfer or ownership are violated, the Equity
Shares represented hereby will be automatically transferred to a Trustee of
a Charitable Trust for the benefit of one or more Charitable Beneficiaries.
In addition, upon the occurrence of certain events, attempted Transfers in
violation of the restrictions described above may be void ab initio. All
capitalized terms in this legend have the meanings defined in the Trust's
Declaration of Trust, as the same may be amended from time to time, a copy
of which, including the restrictions on transfer and ownership, will be
furnished to each holder of Equity Shares of the Trust on request and
without charge.
Instead of the foregoing legend, the certificate may state that the Trust
will furnish a full statement about certain restrictions on transferability to
a shareholder on request and without charge.
Section 7.3 Transfer of Equity Shares in Trust.
Section 7.3.1 Ownership in Trust. Upon any purported Transfer or other event
described in Section 7.2.1(b) that would result in a transfer of Equity Shares
to a Charitable Trust, such Equity Shares shall be deemed to have been
transferred to the Trustee as trustee of a Charitable Trust for the exclusive
benefit of one or more Charitable Beneficiaries. Such transfer to the Trustee
shall be deemed to be effective as of the close of business on the Business
Day prior to the purported Transfer or other event that results in the
transfer to the Charitable Trust pursuant to Section 7.2.1(b). The Trustee
shall be appointed by the Trust and shall be a Person unaffiliated with the
Trust and any Prohibited Owner. Each Charitable Beneficiary shall be
designated by the Trust as provided in Section 7.3.6.
Section 7.3.2 Status of Shares Held by the Trustee. Equity Shares held by
the Trustee shall be issued and outstanding Equity Shares of the Trust. The
Prohibited Owner shall have no rights in the shares held by the Trustee. The
Prohibited Owner shall not benefit economically from ownership of any shares
held in trust by the Trustee, shall have no rights to dividends or other
distributions and shall not possess any rights to vote or other rights
attributable to the shares held in the Charitable Trust.
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Section 7.3.3 Dividend and Voting Rights. The Trustee shall have all voting
rights and rights to dividends or other distributions with respect to Equity
Shares held in the Charitable Trust, which rights shall be exercised for the
exclusive benefit of the Charitable Beneficiary. Any dividend or other
distribution paid prior to the discovery by the Trust that Equity Shares have
been transferred to the Trustee shall be paid with respect to such Equity
Shares to the Trustee upon demand and any dividend or other distribution
authorized but unpaid shall be paid when due to the Trustee. Any dividends or
distributions so paid over to the Trustee shall be held in trust for the
Charitable Beneficiary. The Prohibited Owner shall have no voting rights with
respect to shares held in the Charitable Trust and, subject to Maryland law,
effective as of the date that Equity Shares have been transferred to the
Trustee, the Trustee shall have the authority (at the Trustee's sole
discretion) (i) to rescind as void any vote cast by a Prohibited Owner prior
to the discovery by the Trust that Equity Shares have been transferred to the
Trustee and (ii) to recast such vote in accordance with the desires of the
Trustee acting for the benefit of the Charitable Beneficiary; provided,
however, that if the Trust has already taken irreversible trust action, then
the Trustee shall not have the authority to rescind and recast such vote.
Notwithstanding the provisions of this Article VII, until the Trust has
received notification that Equity Shares have been transferred into a
Charitable Trust, the Trust shall be entitled to rely on its share transfer
and other shareholder records for purposes of preparing lists of shareholders
entitled to vote at meetings, determining the validity and authority of
proxies and otherwise conducting votes of shareholders.
Section 7.3.4 Sale of Shares by Trustee. Within 20 days of receiving notice
from the Trust that Equity Shares have been transferred to the Charitable
Trust, the Trustee of the Charitable Trust shall sell the shares held in the
Charitable Trust to a person, designated by the Trustee, whose ownership of
the shares will not violate the ownership limitations set forth in Section
7.2.1(a). Upon such sale, the interest of the Charitable Beneficiary in the
shares sold shall terminate and the Trustee shall distribute the net proceeds
of the sale to the Prohibited Owner and to the Charitable Beneficiary as
provided in this Section 7.3.4. The Prohibited Owner shall receive the lesser
of (1) the price paid by the Prohibited Owner for the shares or, if the
Prohibited Owner did not give value for the shares in connection with the
event causing the shares to be held in the Charitable Trust (e.g., in the case
of a gift, devise or other such transaction), the Market Price of the shares
on the day of the event causing the shares to be held in the Charitable Trust
and (2) the price per share received by the Trustee from the sale or other
disposition of the shares held in the Charitable Trust. Any net sales proceeds
in excess of the amount payable to the Prohibited Owner shall be immediately
paid to the Charitable Beneficiary. If, prior to the discovery by the Trust
that Equity Shares have been transferred to the Trustee, such shares are sold
by a Prohibited Owner, then (i) such shares shall be deemed to have been sold
on behalf of the Charitable Trust and (ii) to the extent that the Prohibited
Owner received an amount for such shares that exceeds the amount that such
Prohibited Owner was entitled to receive pursuant to this Section 7.3.4, such
excess shall be paid to the Trustee upon demand.
Section 7.3.5 Purchase Right in Shares Transferred to the Trustee. Equity
Shares transferred to the Trustee shall be deemed to have been offered for
sale to the Trust, or its designee, at a price per share equal to the lesser
of (i) the price per share in the transaction that resulted in such transfer
to the Charitable Trust (or, in the case of a devise or gift, the Market Price
at the time of such devise or gift) and (ii) the Market Price on the date the
Trust, or its designee, accepts such offer. The Trust shall have the right to
accept such offer until the Trustee has sold the shares held in the Charitable
Trust pursuant to Section 7.3.4. Upon such a sale to the Trust, the interest
of the Charitable Beneficiary in the shares sold shall terminate and the
Trustee shall distribute the net proceeds of the sale to the Prohibited Owner.
Section 7.3.6 Designation of Charitable Beneficiaries. By written notice to
the Trustee, the Trust shall designate one or more nonprofit organizations to
be the Charitable Beneficiary of the interest in the Charitable Trust such
that (i) Equity Shares held in the Charitable Trust would not violate the
restrictions set forth in Section 7.2.1(a) in the hands of such Charitable
Beneficiary and (ii) each such organization must be described in Section
501(c)(3) of the Code and contributions to each such organization must be
eligible for deduction under each of Sections 170(b)(1)(A), 2055 and 2522 of
the Code.
Section 7.4 NYSE Transactions. Nothing in this Article VII shall preclude
the settlement of any transaction entered into through the facilities of the
NYSE or any other national securities exchange or automated inter-
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dealer quotation system. The fact that the settlement of any transaction
occurs shall not negate the effect of any other provision of this Article VII
and any transferee in such a transaction shall be subject to all of the
provisions and limitations set forth in this Article VII.
Section 7.5 Enforcement. The Trust is authorized specifically to seek
equitable relief, including injunctive relief, to enforce the provisions of
this Article VII.
Section 7.6 Non-Waiver. No delay or failure on the part of the Trust or the
Board of Trustees in exercising any right hereunder shall operate as a waiver
of any right of the Trust or the Board of Trustees, as the case may be, except
to the extent specifically waived in writing.
ARTICLE VIII
SHAREHOLDERS
Section 8.1 Meetings. There shall be an annual meeting of the shareholders,
to be held on proper notice at such time (after the delivery of the annual
report) and convenient location as shall be determined by or in the manner
prescribed in the Bylaws, for the election of the Trustees, if required, and
for the transaction of any other business within the powers of the Trust.
Except as otherwise provided in the Declaration of Trust, special meetings of
shareholders may be called in the manner provided in the Bylaws. If there are
no Trustees, the officers of the Trust shall promptly call a special meeting
of the shareholders entitled to vote for the election of successor Trustees.
Any meeting may be adjourned and reconvened as the Trustees determine or as
provided in the Bylaws.
Section 8.2 Voting Rights. Subject to the provisions of any class or series
of Shares then outstanding, the shareholders shall be entitled to vote only on
the following matters: (a) election of Trustees as provided in Section 5.2 and
the removal of Trustees as provided in Section 5.3; (b) amendment of the
Declaration of Trust as provided in Article X; (c) termination of the Trust as
provided in Section 12.2; (d) to the extent required by Title 8, merger or
consolidation of the Trust, or the sale or disposition of substantially all of
the property of the Trust, as provided in Article XI; and (e) such other
matters with respect to which the Board of Trustees has adopted a resolution
declaring that a proposed action is advisable and directing that the matter be
submitted to the shareholders for approval or ratification. Except with
respect to the foregoing matters, no action taken by the shareholders at any
meeting shall in any way bind the Board of Trustees.
Section 8.3 Preemptive and Appraisal Rights. Except as may be provided by
the Board of Trustees in setting the terms of classified or reclassified
Shares pursuant to Section 6.5, or as may otherwise be provided by contract,
no holder of Shares shall, as such holder, (a) have any preemptive right to
purchase or subscribe for any additional Shares of the Trust or any other
security of the Trust which it may issue or sell or (b), except as expressly
required by Title 8, have any right to require the Trust to pay him the fair
value of his Shares in an appraisal or similar proceeding.
Section 8.4 Extraordinary Actions. Except as specifically provided in
Section 5.3 (relating to removal of Trustees) and in Section 10.3,
notwithstanding any provision of law permitting or requiring any action to be
taken or authorized by the affirmative vote of the holders of a greater number
of votes, any such action shall be effective and valid if taken or approved by
the affirmative vote of holders of Shares entitled to cast a majority of all
the votes entitled to be cast on the matter.
Section 8.5 Board Approval. The submission of any action to the shareholders
for their consideration shall first be approved by the Board of Trustees.
Section 8.6 Action By Shareholders without a Meeting. Any action by
Shareholders may be taken without a meeting, if a majority of Shares entitled
to vote on the matter (or such larger proportion of Shares as shall be
required to take such action) consent to the action in writing and the written
consents are filed with the records of the meetings of Shareholders.
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ARTICLE IX
LIABILITY LIMITATION, INDEMNIFICATION
AND TRANSACTIONS WITH THE TRUST
Section 9.1 Limitation of Shareholder Liability. No shareholder shall be
liable for any debt, claim, demand, judgment or obligation of any kind of,
against or with respect to the Trust by reason of his being a shareholder, nor
shall any shareholder be subject to any personal liability whatsoever, in
tort, contract or otherwise, to any person in connection with the property or
the affairs of the Trust by reason of his being a shareholder.
Section 9.2 Limitation of Trustee and Officer Liability. To the maximum
extent that Maryland law in effect from time to time permits limitation of the
liability of trustees and officers of a real estate investment trust, no
Trustee or officer of the Trust shall be liable to the Trust or to any
shareholder for money damages. Neither the amendment nor repeal of this
Section 9.2, nor the adoption or amendment of any other provision of the
Declaration of Trust inconsistent with this Section 9.2, shall apply to or
affect in any respect the applicability of the preceding sentence with respect
to any act or failure to act which occurred prior to such amendment, repeal or
adoption. In the absence of any Maryland statute limiting the liability of
trustees and officers of a Maryland real estate investment trust for money
damages in a suit by or on behalf of the Trust or by any shareholder, no
Trustee or officer of the Trust shall be liable to the Trust or to any
shareholder for money damages except to the extent that (a) the Trustee or
officer actually received an improper benefit or profit in money, property or
services, for the amount of the benefit or profit in money, property or
services actually received; or (b) a judgment or other final adjudication
adverse to the Trustee or officer is entered in a proceeding based on a
finding in the proceeding that the Trustee's or officer's action or failure to
act was the result of active and deliberate dishonesty and was material to the
cause of action adjudicated in the proceeding.
Section 9.3 Indemnification. The Trust shall have the power, to the maximum
extent permitted by Maryland law in effect from time to time, to obligate
itself to indemnify, and to pay or reimburse reasonable expenses in advance of
final disposition of a proceeding to, (a) any individual who is a present or
former shareholder, Trustee or officer of the Trust or (b) any individual who,
while a Trustee of the Trust and at the request of the Trust, serves or has
served as a director, officer, partner, trustee, employee or agent of another
real estate investment trust, corporation, partnership, joint venture, trust,
employee benefit plan or any other enterprise from and against any claim or
liability to which such person may become subject or which such person may
incur by reason of such status. The Trust shall have the power, with the
approval of its Board of Trustees, to provide such indemnification and
advancement of expenses to a person who served a predecessor of the Trust in
any of the capacities described in (a) or (b) above and to any employee or
agent of the Trust or a predecessor of the Trust.
Section 9.4 Transactions Between the Trust and its Trustees, Officers,
Employees and Agents. Subject to any express restrictions in the Declaration
of Trust or adopted by the Trustees in the Bylaws or by resolution, the Trust
may enter into any contract or transaction of any kind with any person,
including any Trustee, officer, employee or agent of the Trust or any person
affiliated with a Trustee, officer, employee or agent of the Trust, whether or
not any of them has a financial interest in such transaction.
ARTICLE X
AMENDMENTS
Section 10.1 General. The Trust reserves the right from time to time to make
any amendment to the Declaration of Trust, now or hereafter authorized by law,
including any amendment altering the terms or contract rights, as expressly
set forth in the Declaration of Trust, of any Shares. All rights and powers
conferred by the Declaration of Trust on shareholders, Trustees and officers
are granted subject to this reservation. An amendment to the Declaration of
Trust (a) shall be signed and acknowledged by at least a majority of the
Trustees, or an officer duly authorized by at least a majority of the
Trustees, (b) shall be filed for record as provided in Section 13.5 and (c)
shall become effective as of the later of the time the SDAT accepts the
amendment for record or the time established in the amendment, not to exceed
30 days after the amendment is accepted for record. All references to the
Declaration of Trust shall include all amendments thereto.
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Section 10.2 By Trustees. The Trustees may amend the Declaration of Trust
from time to time, in the manner provided by Title 8, without any action by
the shareholders, to qualify as a real estate investment trust under the Code
or under Title 8 and as otherwise provided in the Declaration of Trust.
Section 10.3 By Shareholders.
(a) Except as otherwise provided in the Declaration of Trust and in
subsection (b) of this Section 10.3, any amendment to the Declaration of Trust
shall be valid only if approved by the affirmative vote of two-thirds of all
votes entitled to be cast on the matter.
(b) Any amendment to the Declaration of Trust which has been unanimously
approved by the Board of Trustees shall require only the affirmative vote of a
majority of all votes entitled to be cast on the matter.
ARTICLE XI
MERGER, CONSOLIDATION OR SALE OF TRUST PROPERTY
Subject to the provisions of any class or series of Shares at the time
outstanding, the Trust may (a) merge the Trust with or into another entity or
merge another entity into the Trust, (b) consolidate the Trust with one or
more other entities into a new entity or (c) sell, lease, exchange or
otherwise transfer all or substantially all of the property of the Trust. Any
such action must be approved by the Board of Trustees and, after notice to all
shareholders entitled to vote on the matter, by the affirmative vote of two-
thirds of all the votes entitled to be cast on the matter.
ARTICLE XII
DURATION AND TERMINATION OF TRUST
Section 12.1 Duration. The Trust shall continue perpetually unless
terminated pursuant to Section 12.2 or pursuant to any applicable provision of
Title 8.
Section 12.2 Termination.
(a) Subject to the provisions of any class or series of Shares at the time
outstanding, after approval by a majority of the entire Board of Trustees, the
Trust may be terminated at any meeting of shareholders, by the affirmative
vote of two-thirds of all the votes entitled to be cast on the matter. Upon
the termination of the Trust:
(i) The Trust shall carry on no business except for the purpose of winding
up its affairs.
(ii) The Trustees shall proceed to wind up the affairs of the Trust and all
of the powers of the Trustees under the Declaration of Trust shall continue,
including the powers to fulfill or discharge the Trust's contracts, collect
its assets, sell, convey, assign, exchange, transfer or otherwise dispose of
all or any part of the remaining property of the Trust to one or more persons
at public or private sale for consideration which may consist in whole or in
part of cash, securities or other property of any kind, discharge or pay its
liabilities and do all other acts appropriate to liquidate its business.
(iii) After paying or adequately providing for the payment of all
liabilities, and upon receipt of such releases, indemnities and agreements as
they deem necessary for their protection, the Trust may distribute the
remaining property of the Trust among the shareholders so that after payment
in full or the setting apart for payment of such preferential amounts, if any,
to which the holders of any Shares at the time outstanding shall be entitled,
the remaining property of the Trust shall, subject to any participating or
similar rights of Shares at the time outstanding, be distributed ratably among
the holders of Common Shares at the time outstanding.
(b) After termination of the Trust, the liquidation of its business and the
distribution to the shareholders as herein provided, a majority of the
Trustees shall execute and file with the Trust's records a document certifying
that the Trust has been duly terminated, and the Trustees shall be discharged
from all liabilities and duties hereunder, and the rights and interests of all
shareholders shall cease.
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ARTICLE XIII
MISCELLANEOUS
Section 13.1 Governing Law. The Declaration of Trust is executed by the
undersigned Trustees and delivered in the State of Maryland with reference to
the laws thereof, and the rights of all parties and the validity, construction
and effect of every provision hereof shall be subject to and construed
according to the laws of the State of Maryland without regard to conflicts of
laws provisions thereof.
Section 13.2 Reliance by Third Parties. Any certificate shall be final and
conclusive as to any person dealing with the Trust if executed by the
Secretary or an Assistant Secretary of the Trust or a Trustee, and if
certifying to: (a) the number or identity of Trustees, officers of the Trust
or shareholders; (b) the due authorization of the execution of any document;
(c) the action or vote taken, and the existence of a quorum, at a meeting of
the Board of Trustees or shareholders; (d) a copy of the Declaration of Trust
or of the Bylaws as a true and complete copy as then in force; (e) an
amendment to the Declaration of Trust; (f) the termination of the Trust; or
(g) the existence of any fact relating to the affairs of the Trust. No
purchaser, lender, transfer agent or other person shall be bound to make any
inquiry concerning the validity of any transaction purporting to be made by
the Trust on its behalf or by any officer, employee or agent of the Trust.
Section 13.3 Severability.
(a) The provisions of the Declaration of Trust are severable, and if the
Board of Trustees shall determine, with the advice of counsel, that any one or
more of such provisions (the "Conflicting Provisions") are in conflict with
the Code, Title 8 or other applicable federal or state laws, the Conflicting
Provisions, to the extent of the conflict, shall be deemed never to have
constituted a part of the Declaration of Trust, even without any amendment of
the Declaration of Trust pursuant to Article X and without affecting or
impairing any of the remaining provisions of the Declaration of Trust or
rendering invalid or improper any action taken or omitted prior to such
determination. No Trustee shall be liable for making or failing to make such a
determination. In the event of any such determination by the Board of
Trustees, the Board shall amend the Declaration of Trust in the manner
provided in Section 10.2.
(b) If any provision of the Declaration of Trust shall be held invalid or
unenforceable in any jurisdiction, such holding shall apply only to the extent
of any such invalidity or unenforceability and shall not in any manner affect,
impair or render invalid or unenforceable such provision in any other
jurisdiction or any other provision of the Declaration of Trust in any
jurisdiction.
Section 13.4 Construction. In the Declaration of Trust, unless the context
otherwise requires, words used in the singular or in the plural include both
the plural and singular and words denoting any gender include all genders. The
title and headings of different parts are inserted for convenience and shall
not affect the meaning, construction or effect of the Declaration of Trust. In
defining or interpreting the powers and duties of the Trust and its Trustees
and officers, reference may be made by the Trustees or officers, to the extent
appropriate and not inconsistent with the Code or Title 8, to Titles 1 through
3 of the Corporations and Associations Article of the Annotated Code of
Maryland. In furtherance and not in limitation of the foregoing, in accordance
with the provisions of Title 3, Subtitles 6 and 7, of the Corporations and
Associations Article of the Annotated Code of Maryland, the Trust shall be
included within the definition of "corporation" for purposes of such
provisions.
Section 13.5 Recordation. The Trust was formerly governed by the laws of the
District of Columbia pursuant to a Declaration of Trust, dated May 25, 1962,
as subsequently amended. This Declaration of Trust has been filed with and
accepted for record by the SDAT and any amendment hereto shall be filed with
and accepted for record with the SDAT and may also be filed or recorded in
such other places as the Trustees deem appropriate, but failure to file for
record the Declaration of Trust or any amendment hereto in any office other
than in the SDAT shall not affect or impair the validity or effectiveness of
the Declaration of Trust or any amendment hereto. A restated Declaration of
Trust shall, upon filing, be conclusive evidence of all amendments contained
therein and may thereafter be referred to in lieu of the original Declaration
of Trust and the various amendments thereto.
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Section 13.6 Share Certificates. Certificates for Shares of beneficial
interest issued prior to the date of acceptance for record of this Declaration
of Trust by the SDAT shall continue to represent shares after such date.
This Declaration of Trust is executed by the Trustees and delivered in the
State of Maryland with reference to the laws thereof, and the rights of all
parties and the validity, construction and effect of every provision hereof
shall be subject to and construed according to the laws of the State of
Maryland without regard to conflicts of laws provisions thereof.
IN WITNESS WHEREOF, this Declaration of Trust has been executed on this
day of , 1999 by the undersigned Trustees, who acknowledge that this document
is their act, that to the best of their knowledge, information, and belief,
the matters and facts set forth herein are true in all material respects and
that this statement is made under the penalties for perjury.
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APPENDIX B
FEDERAL REALTY INVESTMENT TRUST
BYLAWS
ARTICLE I
OFFICES
Section 1. PRINCIPAL OFFICE. The principal office of the Trust shall be
located at such place or places as the Trustees may designate.
Section 2. ADDITIONAL OFFICES. The Trust may have additional offices at such
places as the Board of Trustees may from time to time determine or the
business of the Trust may require.
ARTICLE II
MEETINGS OF SHAREHOLDERS
Section 1. PLACE. All meetings of shareholders shall be held at the
principal executive office of the Trust or at such other place within the
United States as shall be stated in the notice of the meeting.
Section 2. ANNUAL MEETING. An annual meeting of the shareholders for the
election of Trustees and the transaction of any business within the powers of
the Trust shall be held during the month of May of each year, after the
delivery of the annual report, referred to in Section 12 of this Article II,
at a convenient location and on proper notice, on a date and at the time set
by the Trustees, beginning with the year 1999. Failure to hold an annual
meeting does not invalidate the Trust's existence or affect any otherwise
valid acts of the Trust.
Section 3. SPECIAL MEETINGS. The president or one-third of the Trustees may
call special meetings of the shareholders. Special meetings of shareholders
shall also be called by the secretary upon the written request of the holders
of shares entitled to cast not less than a twenty-five percent of all the
votes entitled to be cast at such meeting. Such request shall state the
purpose of such meeting and the matters proposed to be acted on at such
meeting. The secretary shall inform such shareholders of the reasonably
estimated cost of preparing and mailing notice of the meeting and, upon
payment by such shareholders to the Trust of such costs, the secretary shall
give notice to each shareholder entitled to notice of the meeting. Unless
requested by shareholders entitled to cast a majority of all the votes
entitled to be cast at such meeting, a special meeting need not be called to
consider any matter which is substantially the same as a matter voted on at
any meeting of the shareholders held during the preceding twelve months.
Section 4. NOTICE. Not less than ten nor more than 90 days before each
meeting of shareholders, the secretary shall give to each shareholder entitled
to vote at such meeting and to each shareholder not entitled to vote who is
entitled to notice of the meeting written or printed notice stating the time
and place of the meeting and, in the case of a special meeting or as otherwise
may be required by any statute, the purpose for which the meeting is called,
either by mail or by presenting it to such shareholder personally or by
leaving it at his residence or usual place of business. If mailed, such notice
shall be deemed to be given when deposited in the United States mail addressed
to the shareholder at his post office address as it appears on the records of
the Trust, with postage thereon prepaid.
Section 5. SCOPE OF NOTICE. Any business of the Trust may be transacted at
an annual meeting of shareholders without being specifically designated in the
notice, except such business as is required by any statute to be stated in
such notice. No business shall be transacted at a special meeting of
shareholders except as specifically designated in the notice.
Section 6. ORGANIZATION. At every meeting of the shareholders, the Chief
Executive Officer, if there be one, shall conduct the meeting or, in the case
of vacancy in office or absence of the Chief Executive Officer, one
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of the following officers present shall conduct the meeting in the order
stated: the President, the Executive Officers (as defined in Article V,
Section 6) in their order of rank and seniority, or a Chairman chosen by the
shareholders entitled to cast a majority of the votes which all shareholders
present in person or by proxy are entitled to cast, shall act as Chairman, and
the Secretary, or, in his absence, an assistant secretary, or in the absence
of both the Secretary and assistant secretaries, a person appointed by the
Chief Executive Officer shall act as Secretary.
Section 7. QUORUM. At any meeting of shareholders, the presence in person or
by proxy of shareholders entitled to cast a majority of all the votes entitled
to be cast at such meeting shall constitute a quorum; but this section shall
not affect any requirement under any statute or the Declaration of Trust for
the vote necessary for the adoption of any measure. The shareholders entitled
to vote at such meeting, present in person or by proxy, shall have the power
to adjourn the meeting from time to time to a date not more than 120 days
after the original record date without notice other than announcement at the
meeting. At such adjourned meeting at which a quorum shall be present, any
business may be transacted which might have been transacted at the meeting as
originally notified.
Section 8. VOTING. A plurality of all the votes cast at a meeting of
shareholders duly called and at which a quorum is present shall be sufficient
to elect a Trustee. Each share may be voted for as many individuals as there
are Trustees to be elected and for whose election the share is entitled to be
voted. A majority of the votes cast at a meeting of shareholders duly called
and at which a quorum is present shall be sufficient to approve any other
matter which may properly come before the meeting, unless more than a majority
of the votes cast is required herein or by statute or by the Declaration of
Trust. Unless otherwise provided in the Declaration of Trust, each outstanding
share, regardless of class, shall be entitled to one vote on each matter
submitted to a vote at a meeting of shareholders.
Section 9. PROXIES. A shareholder may cast the votes entitled to be cast by
the shares owned of record by him either in person or by proxy executed by the
shareholder or by his duly authorized agent in any manner allowed by law. Such
proxy shall be filed with the secretary of the Trust before or at the time of
the meeting. No proxy shall be valid after eleven months from the date of its
execution, unless otherwise provided in the proxy.
Section 10. VOTING OF SHARES BY CERTAIN HOLDERS. Shares of the Trust
registered in the name of a corporation, partnership, trust or other entity,
if entitled to be voted, may be voted by the president or a vice president, a
general partner or trustee thereof, as the case may be, or a proxy appointed
by any of the foregoing individuals, unless some other person who has been
appointed to vote such shares pursuant to a bylaw or a resolution of the
governing board of such corporation or other entity or agreement of the
partners of the partnership presents a certified copy of such bylaw,
resolution or agreement, in which case such person may vote such shares. Any
trustee or other fiduciary may vote shares registered in his name as such
fiduciary, either in person or by proxy.
Shares of the Trust directly or indirectly owned by it shall not be voted at
any meeting and shall not be counted in determining the total number of
outstanding shares entitled to be voted at any given time, unless they are
held by it in a fiduciary capacity, in which case they may be voted and shall
be counted in determining the total number of outstanding shares at any given
time.
The Trustees may adopt by resolution a procedure by which a shareholder may
certify in writing to the Trust that any shares registered in the name of the
shareholder are held for the account of a specified person other than the
shareholder. The resolution shall set forth the class of shareholders who may
make the certification, the purpose for which the certification may be made,
the form of certification and the information to be contained in it; if the
certification is with respect to a record date or closing of the share
transfer books, the time after the record date or closing of the share
transfer books within which the certification must be received by the Trust;
and any other provisions with respect to the procedure which the Trustees
consider necessary or desirable. On receipt of such certification, the person
specified in the certification shall be regarded as, for the purposes set
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forth in the certification, the shareholder of record of the specified shares
in place of the shareholder who makes the certification.
Notwithstanding any other provision contained herein or in the Declaration
of Trust or these Bylaws, Title 3, Subtitle 7 of the Corporations and
Associations Article of the Annotated Code of Maryland (or any successor
statute) shall not apply to any acquisition by any person of shares of
beneficial interest of the Trust. This section may be repealed, in whole or in
part, at any time, whether before or after an acquisition of control shares
and, upon such repeal, may, to the extent provided by any successor bylaw,
apply to any prior or subsequent control share acquisition.
Section 11. INSPECTORS. At any meeting of shareholders, the chairman of the
meeting may appoint one or more persons as inspectors for such meeting. Such
inspectors shall ascertain and report the number of shares represented at the
meeting based upon their determination of the validity and effect of proxies,
count all votes, report the results and perform such other acts as are proper
to conduct the election and voting with impartiality and fairness to all the
shareholders.
Each report of an inspector shall be in writing and signed by him or by a
majority of them if there is more than one inspector acting at such meeting.
If there is more than one inspector, the report of a majority shall be the
report of the inspectors. The report of the inspector or inspectors on the
number of shares represented at the meeting and the results of the voting
shall be prima facie evidence thereof.
Section 12. REPORTS TO SHAREHOLDERS.
(a) The Trustees shall submit to the shareholders at or before the annual
meeting of shareholders a report of the business and operations of the
Trust during such fiscal year, containing a balance sheet and a statement
of income and surplus of the Trust, accompanied by the certification of an
independent certified public accountant, and such further information as
the Trustees may determine is required pursuant to any law or regulation
to which the Trust is subject. Within the earlier of 20 days after the
annual meeting of shareholders or 120 days after the end of the fiscal
year of the Trust, the Trustees shall place the annual report on file at
the principal office of the Trust and with any governmental agencies as
may be required by law and as the Trustees may deem appropriate.
(b) Not later than 45 days after the end of each of the first three quarterly
periods of each fiscal year, the Trustees shall deliver or cause to be
delivered an interim report to the shareholders containing unaudited
financial statements for such quarter and for the period from the
beginning of the fiscal year to the end of such quarter, and such further
information as the Trustees may determine is required pursuant to any law
or regulation to which the Trust is subject.
Section 13. NOMINATIONS AND PROPOSALS BY SHAREHOLDERS.
(a) Annual Meetings of Shareholders. (1) Nominations of persons for election
to the Board of Trustees and the proposal of business to be considered by
the shareholders may be made at an annual meeting of shareholders (i)
pursuant to the Trust's notice of meeting, (ii) by or at the direction of
the Trustees or (iii) by any shareholder of the Trust who was a
shareholder of record both at the time of giving of notice provided for in
this Section 13(a) and at the time of the annual meeting, who is entitled
to vote at the meeting and who complied with the notice procedures set
forth in this Section 13(a).
(2) For nominations or other business to be properly brought before an annual
meeting by a shareholder pursuant to clause (iii) of paragraph (a) (1) of
this Section 13, the shareholder must have given timely notice thereof in
writing to the secretary of the Trust and such other business must
otherwise be a proper matter for action by shareholders. To be timely, a
shareholder's notice shall be delivered to the secretary at the principal
executive offices of the Trust not later than the close of business on the
90th day nor earlier than the close of business on the 120th day prior to
the first anniversary of the preceding year's annual meeting; provided,
however, that in the event that the date of the annual meeting is advanced
by more than 30 days
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or delayed by more than 60 days from such anniversary date or if the Trust
has not previously held an annual meeting, notice by the shareholder to be
timely must be so delivered not earlier than the close of business on the
120th day prior to such annual meeting and not later than the close of
business on the later of the 90th day prior to such annual meeting or the
tenth day following the day on which public announcement of the date of
such meeting is first made by the Trust. In no event shall the public
announcement of a postponement or adjournment of an annual meeting to a
later date or time commence a new time period for the giving of a
shareholder's notice as described above. Such shareholder's notice shall
set forth (i) as to each person whom the shareholder proposes to nominate
for election or reelection as a Trustee all information relating to such
person that is required to be disclosed in solicitations of proxies for
election of Trustees in an election contest, or is otherwise required, in
each case pursuant to Regulation 14A under the Securities Exchange Act of
1934, as amended (the "Exchange Act") (including such person's written
consent to being named in the proxy statement as a nominee and to serving
as a Trustee if elected); (ii) as to any other business that the
shareholder proposes to bring before the meeting, a brief description of
the business desired to be brought before the meeting, the reasons for
conducting such business at the meeting and any material interest in such
business of such shareholder and of the beneficial owner, if any, on whose
behalf the proposal is made; and (iii) as to the shareholder giving the
notice and the beneficial owner, if any, on whose behalf the nomination or
proposal is made, (x) the name and address of such shareholder, as they
appear on the Trust's books, and of such beneficial owner and (y) the
number of each class of shares of the Trust which are owned beneficially
and of record by such shareholder and such beneficial owner.
(3) Notwithstanding anything in the second sentence of paragraph (a) (2) of
this Section 13 to the contrary, in the event that the number of Trustees
to be elected to the Board of Trustees is increased and there is no public
announcement by the Trust naming all of the nominees for Trustee or
specifying the size of the increased Board of Trustees at least 70 days
prior to the first anniversary of the preceding year's annual meeting, a
shareholder's notice required by this Section 13(a) shall also be
considered timely, but only with respect to nominees for any new positions
created by such increase, if it shall be delivered to the secretary at the
principal executive offices of the Trust not later than the close of
business on the tenth day following the day on which such public
announcement is first made by the Trust.
(b) Special Meetings of Shareholders. Only such business shall be conducted at
a special meeting of shareholders as shall have been brought before the
meeting pursuant to the Trust's notice of meeting. Nominations of persons
for election to the Board of Trustees may be made at a special meeting of
shareholders at which Trustees are to be elected (i) pursuant to the
Trust's notice of meeting, (ii) by or at the direction of the Board of
Trustees or (iii) provided that the Board of Trustees has determined that
Trustees shall be elected at such special meeting, by any shareholder of
the Trust who was a shareholder of record both at the time of giving of
notice provided for in this Section 13(b) and at the time of the special
meeting, who is entitled to vote at the meeting and who complied with the
notice procedures set forth in this Section 13(b). In the event the Trust
calls a special meeting of shareholders for the purpose of electing one or
more Trustees to the Board of Trustees, any such shareholder may nominate
a person or persons (as the case may be) for election to such position as
specified in the Trust's notice of meeting, if the shareholder's notice
containing the information required by paragraph (a) (2) of this Section
13 shall be delivered to the secretary at the principal executive offices
of the Trust not earlier than the close of business on the 120th day prior
to such special meeting and not later than the close of business on the
later of the 90th day prior to such special meeting or the tenth day
following the day on which public announcement is first made of the date
of the special meeting and of the nominees proposed by the Trustees to be
elected at such meeting. In no event shall the public announcement of a
postponement or adjournment of a special meeting to a later date or time
commence a new time period for the giving of a shareholder's notice as
described above.
(c) General. (1) Only such persons who are nominated in accordance with the
procedures set forth in this Section 13 shall be eligible to serve as
Trustees and only such business shall be conducted at a meeting of
shareholders as shall have been brought before the meeting in accordance
with the procedures set forth in
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this Section 13. The chairman of the meeting shall have the power and duty
to determine whether a nomination or any business proposed to be brought
before the meeting was made or proposed, as the case may be, in accordance
with the procedures set forth in this Section 13 and, if any proposed
nomination or business is not in compliance with this Section 13, to declare
that such nomination or proposal shall be disregarded.
(2) For purposes of this Section 13, "public announcement" shall mean
disclosure in a press release reported by the Dow Jones News Service,
Associated Press or comparable news service or in a document publicly filed
by the Trust with the Securities and Exchange Commission pursuant to
Section 13, 14 or 15(d) of the Exchange Act.
(3) Notwithstanding the foregoing provisions of this Section 13, a shareholder
shall also comply with all applicable requirements of state law and of the
Exchange Act and the rules and regulations thereunder with respect to the
matters set forth in this Section 13. Nothing in this Section 13 shall be
deemed to affect any rights of shareholders to request inclusion of
proposals in, nor the right of the Trust to omit a proposal from, the
Trust's proxy statement pursuant to Rule 14a-8 under the Exchange Act.
Section 14. INFORMAL ACTION BY SHAREHOLDERS.
(a) Any action by Shareholders may be taken without a meeting, if a majority
of Shares entitled to vote on the matter (or such larger proportion of
Shares as shall be required to take such action) consent to the action in
writing and the written consents are filed with the records of the meetings
of Shareholders.
(b) In order that the Trust may determine the shareholders entitled to consent
to action in writing without a meeting, the Board of Trustees may fix a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the Board of Trustees, and
which date shall not be more than 10 days after the date upon which the
resolution fixing the record date is adopted by the Board of Trustees. Any
shareholder of record seeking to have the shareholders authorize or take
action by written consent shall, by written notice to the Secretary of the
Trust, request the Board of Trustees to fix a record date. The Board of
Trustees shall promptly, but in all events within ten (10) days of the date
on which such a request is received, adopt a resolution fixing the record
date. If no record date has been fixed by the Board of Trustees within ten
(10) days of the date on which such a request is received and no prior
action by the Board of Trustees is required by applicable law, the record
date for determining shareholders entitled to consent to action in writing
without a meeting shall be the first date on which a signed written consent
setting forth the action taken or proposed to be taken is delivered to the
Trust by delivery to its registered office in the State of Maryland, its
principal place of business, or an officer or agent of the Trust having
custody of the book in which proceedings of shareholders meetings are
recorded, in each case to the attention of the Secretary of Trust. Delivery
shall be by hand or by certified or registered mail, return receipt
requested. If no record date has been fixed by the Board of Trustees within
ten (10) days of the date on which such a request is received and prior
action by the Board of Trustees is required by applicable law, the record
date for determining shareholders entitled to consent to action in writing
without a meeting shall be at the close of business on the date on which
the Board of Trustees adopts the resolution taking such prior action.
Section 15. VOTING BY BALLOT. Voting on any question or in any election may
be viva voce unless the presiding officer shall order or any shareholder shall
demand that voting be by ballot.
ARTICLE III
TRUSTEES
Section 1. GENERAL POWERS; QUALIFICATIONS; TRUSTEES HOLDING OVER. The
business and affairs of the Trust shall be managed under the direction of its
Board of Trustees. A Trustee shall be an individual at least 21 years of age
who is not under legal disability. In case of failure to elect Trustees at an
annual meeting of the shareholders, the Trustees holding over shall continue to
direct the management of the business and affairs of the Trust until their
successors are elected and qualify.
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Section 2. NUMBER. At any regular meeting or at any special meeting called
for that purpose, a majority of the entire Board of Trustees may establish,
increase or decrease the number of Trustees.
Section 3. ANNUAL AND REGULAR MEETINGS. An annual meeting of the Trustees
shall be held immediately after and at the same place as the annual meeting of
shareholders, no notice other than this Bylaw being necessary. The Trustees
may provide, by resolution, the time and place, either within or without the
State of Maryland, for the holding of regular meetings of the Trustees without
other notice than such resolution.
Section 4. SPECIAL MEETINGS. Special meetings of the Trustees may be called
by or at the request of the chairman of the board or the president or by a
majority of the Trustees then in office. The person or persons authorized to
call special meetings of the Trustees may fix any place, either within or
without the State of Maryland, as the place for holding any special meeting of
the Trustees called by them.
Section 5. NOTICE. Notice of any special meeting shall be given by written
notice delivered personally, telegraphed, facsimile-transmitted or mailed to
each Trustee at his business or residence address. Personally delivered or
telegraphed notices shall be given at least two days prior to the meeting.
Notice by mail shall be given at least five days prior to the meeting.
Telephone or facsimile-transmission notice shall be given at least 24 hours
prior to the meeting. If mailed, such notice shall be deemed to be given when
deposited in the United States mail properly addressed, with postage thereon
prepaid. If given by telegram, such notice shall be deemed to be given when
the telegram is delivered to the telegraph company. Telephone notice shall be
deemed given when the Trustee is personally given such notice in a telephone
call to which he is a party. Facsimile-transmission notice shall be deemed
given upon completion of the transmission of the message to the number given
to the Trust by the Trustee and receipt of a completed transmission report
confirming delivery. Neither the business to be transacted at, nor the purpose
of, any annual, regular or special meeting of the Trustees need be stated in
the notice, unless specifically required by statute or these Bylaws.
Section 6. QUORUM. A majority of the Trustees shall constitute a quorum for
transaction of business at any meeting of the Trustees, provided that, if less
than a majority of such Trustees are present at said meeting, a majority of
the Trustees present may adjourn the meeting from time to time without further
notice, and provided further that if, pursuant to the Declaration of Trust or
these Bylaws, the vote of a majority of a particular group of Trustees is
required for action, a quorum must also include a majority of such group.
The Trustees present at a meeting which has been duly called and convened
may continue to transact business until adjournment, notwithstanding the
withdrawal of enough Trustees to leave less than a quorum.
Section 7. VOTING. The action of the majority of the Trustees present at a
meeting at which a quorum is present shall be the action of the Trustees,
unless the concurrence of a greater proportion is required for such action by
applicable statute.
Section 8. TELEPHONE MEETINGS. Trustees may participate in a meeting by
means of a conference telephone or similar communications equipment if all
persons participating in the meeting can hear each other at the same time.
Participation in a meeting by these means shall constitute presence in person
at the meeting.
Section 9. INFORMAL ACTION BY TRUSTEES. Any action required or permitted to
be taken at any meeting of the Trustees may be taken without a meeting, if a
consent in writing to such action is signed by each Trustee and such written
consent is filed with the minutes of proceedings of the Trustees.
Section 10. VACANCIES. If for any reason any or all the Trustees cease to be
Trustees, such event shall not terminate the Trust or affect these Bylaws or
the powers of the remaining Trustees hereunder (even if fewer than 3 Trustees
remain). Any vacancy (including a vacancy created by an increase in the number
of Trustees) shall be filled, at any regular meeting or at any special meeting
called for that purpose, by a majority of the Trustees. Any individual so
elected as Trustee shall serve for the unexpired term of the Trustee he is
replacing.
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Section 11. COMPENSATION; FINANCIAL ASSISTANCE.
(a) Compensation. Trustees shall not receive any stated salary for their
services as Trustees but, by resolution of the Trustees, may receive
compensation per year and/or per meeting and/or per visit to real property
owned or to be acquired by the Trust and for any service or activity they
performed or engaged in as Trustees. Trustees may be reimbursed for
expenses of attendance, if any, at each annual, regular or special meeting
of the Trustees or of any committee thereof; and for their expenses, if
any, in connection with each property visit and any other service or
activity performed or engaged in as Trustees; but nothing herein contained
shall be construed to preclude any Trustees from serving the Trust in any
other capacity and receiving compensation therefor.
(b) Financial Assistance to Trustees. The Trust may lend money to, guarantee
an obligation of or otherwise assist a Trustee or a trustee of its direct
or indirect subsidiary. The loan, guarantee or other assistance may be
with or without interest, unsecured, or secured in any manner that the
Board of Trustees approves, including a pledge of Shares.
Section 12. REMOVAL OF TRUSTEES. The shareholders may, at any time, remove
any Trustee in the manner provided in the Declaration of Trust.
Section 13. LOSS OF DEPOSITS. No Trustee shall be liable for any loss which
may occur by reason of the failure of the bank, trust company, savings and
loan association, or other institution with whom moneys or shares have been
deposited.
Section 14. SURETY BONDS. Unless required by law, no Trustee shall be
obligated to give any bond or surety or other security for the performance of
any of his duties.
Section 15. RELIANCE. Each Trustee, officer, employee and agent of the Trust
shall, in the performance of his duties with respect to the Trust, be fully
justified and protected with regard to any act or failure to act in reliance
in good faith upon the books of account or other records of the Trust, upon an
opinion of counsel or upon reports made to the Trust by any of its officers or
employees or by the adviser, accountants, appraisers or other experts or
consultants selected by the Trustees or officers of the Trust, regardless of
whether such counsel or expert may also be a Trustee.
Section 16. INTERESTED TRUSTEE TRANSACTIONS. Section 2-419 of the Maryland
General Corporation Law (the "MGCL") shall be available for and apply to any
contract or other transaction between the Trust and any of its Trustees or
between the Trust and any other trust, corporation, firm or other entity in
which any of its Trustees is a trustee or director or has a material financial
interest.
Section 17. CERTAIN RIGHTS OF TRUSTEES, OFFICERS, EMPLOYEES AND AGENTS. The
Trustees shall have no responsibility to devote their full time to the affairs
of the Trust. Any Trustee or officer, employee or agent of the Trust (other
than a full-time officer, employee or agent of the Trust), in his personal
capacity or in a capacity as an affiliate, employee, or agent of any other
person, or otherwise, may have business interests and engage in business
activities similar or in addition to those of or relating to the Trust.
ARTICLE IV
COMMITTEES
Section 1. NUMBER, TENURE AND QUALIFICATIONS. The Trustees may appoint from
among its members an Executive Committee, an Audit Committee, a Compensation
Committee and other committees, composed of two or more Trustees, to serve at
the pleasure of the Trustees.
Section 2. POWERS. The Trustees may delegate to committees appointed under
Section 1 of this Article any of the powers of the Trustees, except as
prohibited by law.
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Section 3. MEETINGS. In the absence of any member of any such committee, the
members thereof present at any meeting, whether or not they constitute a
quorum, may appoint another Trustee to act in the place of such absent member.
Notice of committee meetings shall be given in the same manner as notice for
special meetings of the Board of Trustees.
One-third, but not less than two, of the members of any committee shall be
present in person at any meeting of such committee in order to constitute a
quorum for the transaction of business at such meeting, and the act of a
majority present shall be the act of such committee. The Board of Trustees may
designate a chairman of any committee, and such chairman or any two members of
any committee may fix the time and place of its meetings unless the Board
shall otherwise provide. In the absence or disqualification of any member of
any such committee, the members thereof present at any meeting and not
disqualified from voting, whether or not they constitute a quorum, may
unanimously appoint another Trustee to act at the meeting in the place of such
absent or disqualified members.
Each committee shall keep minutes of its proceedings and shall report the
same to the Board of Trustees at the next succeeding meeting, and any action
by the committee shall be subject to revision and alteration by the Board of
Trustees, provided that no vested or contractual rights of third persons shall
be affected by any such revision or alteration.
Section 4. TELEPHONE MEETINGS. Members of a committee of the Trustees may
participate in a meeting by means of a conference telephone or similar
communications equipment if all persons participating in the meeting can hear
each other at the same time. Participation in a meeting by these means shall
constitute presence in person at the meeting.
Section 5. INFORMAL ACTION BY COMMITTEES. Any action required or permitted
to be taken at any meeting of a committee of the Trustees may be taken without
a meeting, if a consent in writing to such action is signed by each member of
the committee and such written consent is filed with the minutes of
proceedings of such committee.
Section 6. VACANCIES. Subject to the provisions hereof, the Board of
Trustees shall have the power at any time to change the membership of any
committee, to fill all vacancies, to designate alternate members to replace
any absent or disqualified member or to dissolve any such committee.
ARTICLE V
OFFICERS
Section 1. GENERAL PROVISIONS. The officers of the Trust shall include a
president, a secretary and a treasurer and may include a chief executive
officer, a chief operating officer, a chief financial officer, one or more
vice presidents, one or more assistant secretaries and one or more assistant
treasurers. In addition, the Trustees may from time to time appoint such other
officers with such powers and duties as they shall deem necessary or
desirable. The officers of the Trust shall be elected at such intervals as the
Trustees may determine. Each officer shall hold office until his successor is
elected and qualifies or until his death, resignation or removal in the manner
hereinafter provided. Any two or more offices except president and vice
president may be held by the same person. In their discretion, the Trustees
may leave unfilled any office except that of president and secretary. Election
of an officer or agent shall not of itself create contract rights between the
Trust and such officer or agent.
Section 2. REMOVAL AND RESIGNATION. Any officer or agent of the Trust may be
removed at any time by the affirmative vote of two-thirds of the full Board of
Trustees taken at any regular or special meeting of the Trustees if in their
judgment the best interests of the Trust would be served thereby, but such
removal shall be without prejudice to the contract rights, if any, of the
person so removed. Any officer of the Trust may resign at any time by giving
written notice of his resignation to the Trustees, the chairman of the board,
the president or the secretary. Any resignation shall take effect at any time
subsequent to the time specified therein or, if the time when it shall become
effective is not specified therein, immediately upon its receipt. The
acceptance of a resignation shall not be necessary to make it effective unless
otherwise stated in the resignation. Such resignation shall be without
prejudice to the contract rights, if any, of the Trust.
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Section 3. VACANCIES. A vacancy in any office may be filled by the Trustees
for the balance of the term.
Section 4. CHIEF EXECUTIVE OFFICER. The Trustees may designate a chief
executive officer from among the elected officers. The chief executive officer
shall have responsibility for implementation of the policies of the Trust, as
determined by the Trustees, and for the administration of the business affairs
of the Trust. The chief executive officer shall preside over the meetings of
the Trustees and of the shareholders at which he shall be present.
Section 6. PRESIDENT. In the absence of the chief executive officer, the
president shall preside over the meetings of the Trustees and of the
shareholders at which he shall be present. In the absence of a designation of
a chief executive officer by the Trustees, the president shall be the chief
executive officer and shall be ex officio a member of all committees that may,
from time to time, be constituted by the Trustees. The president may execute
any deed, mortgage, bond, contract or other instrument, except in cases where
the execution thereof shall be expressly delegated by the Trustees or by these
Bylaws to some other officer or agent of the Trust or shall be required by law
to be otherwise executed; and in general shall perform all duties incident to
the office of president and such other duties as may be prescribed by the
Trustees from time to time.
Section 7. EXECUTIVE OFFICERS. In the absence of the president or in the
event of a vacancy in such office, the executive officer (or in the event
there be more than one executive officer, the executive officers in the order
designated at the time of their election or, in the absence of any
designation, then in the order of their election) shall perform the duties of
the president and when so acting shall have all the powers of and be subject
to all the restrictions upon the president; and shall perform such other
duties as from time to time may be assigned to him by the president or by the
Trustees. The Trustees may designate one or more executive officers for
particular areas of responsibility.
Section 8. SECRETARY. The secretary shall (a) keep the minutes of the
proceedings of the shareholders, the Trustees and committees of the Trustees
in one or more books provided for that purpose; (b) see that all notices are
duly given in accordance with the provisions of these Bylaws or as required by
law; (c) be custodian of the trust records and of the seal of the Trust; (d)
keep a register of the post office address of each shareholder which shall be
furnished to the secretary by such shareholder; (e) have general charge of the
share transfer books of the Trust; and (f) in general perform such other
duties as from time to time may be assigned to him by the chief executive
officer, the president or by the Trustees.
Section 9. TREASURER. The treasurer shall have the custody of the funds and
securities of the Trust and shall keep full and accurate accounts of receipts
and disbursements in books belonging to the Trust and shall deposit all moneys
and other valuable effects in the name and to the credit of the Trust in such
depositories as may be designated by the Trustees.
He shall disburse the funds of the Trust in accordance with the authority
granted by the Trustees, taking proper vouchers for such disbursements, and
shall render to the president and Trustees, whenever they may require it, an
account of all his transactions as treasurer and of the financial condition of
the Trust.
If required by the Trustees, he shall give the Trust a bond in such sum and
with such surety or sureties as shall be satisfactory to the Trustees for the
faithful performance of the duties of his office and for the restoration to
the Trust, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, moneys and other property of whatever
kind in his possession or under his control belonging to the Trust.
Section 12. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. The assistant
secretaries and assistant treasurers, in general, shall perform such duties as
shall be assigned to them by the secretary or treasurer, respectively, or by
the president or the Trustees. The assistant treasurers shall, if required by
the Trustees, give bonds for the faithful performance of their duties in such
sums and with such surety or sureties as shall be satisfactory to the
Trustees.
Section 13. SALARIES. The salaries and other compensation of the officers
shall be fixed from time to time by the Trustees and no officer shall be
prevented from receiving such salary or other compensation by reason of the
fact that he is also a Trustee.
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ARTICLE VI
CONTRACTS, LOANS, CHECKS AND DEPOSITS
Section 1. CONTRACTS. The Trustees may authorize any officer or agent to
enter into any contract or to execute and deliver any instrument in the name
of and on behalf of the Trust and such authority may be general or confined to
specific instances. Any agreement, deed, mortgage, lease or other document
executed by one or more of the Trustees or by an authorized person shall be
valid and binding upon the Trustees and upon the Trust when authorized or
ratified by action of the Trustees.
Section 2. CHECKS AND DRAFTS. All checks, drafts or other orders for the
payment of money, notes or other evidences of indebtedness issued in the name
of the Trust shall be signed by such officer or agent of the Trust in such
manner as shall from time to time be determined by the Trustees.
Section 3. DEPOSITS. All funds of the Trust not otherwise employed shall be
deposited from time to time to the credit of the Trust in such banks, trust
companies or other depositories as the Trustees may designate. If the Trustees
fail to designate a depository, the Chief executive Officer may do so.
ARTICLE VII
SHARES
Section 1. CERTIFICATES. Each shareholder shall be entitled to a certificate
or certificates which shall represent and certify the number of shares of each
class of beneficial interests held by him in the Trust. Each certificate shall
be signed by the chief executive officer, the president or an executive
officer and countersigned by the secretary or an assistant secretary or the
treasurer or an assistant treasurer and may be sealed with the seal, if any,
of the Trust. The signatures may be either manual or facsimile. Certificates
shall be consecutively numbered; and if the Trust shall, from time to time,
issue several classes of shares, each class may have its own number series. A
certificate is valid and may be issued whether or not an officer who signed it
is still an officer when it is issued. Each certificate representing shares
which are restricted as to their transferability or voting powers, which are
preferred or limited as to their dividends or as to their allocable portion of
the assets upon liquidation or which are redeemable at the option of the
Trust, shall have a statement of such restriction, limitation, preference or
redemption provision, or a summary thereof, plainly stated on the certificate.
In lieu of such statement or summary, the Trust may set forth upon the face or
back of the certificate a statement that the Trust will furnish to any
shareholder, upon request and without charge, a full statement of such
information.
Section 2. TRANSFERS. Certificates shall be treated as negotiable and title
thereto and to the shares they represent shall be transferred by delivery
thereof to the same extent as those of a Maryland stock corporation. Upon
surrender to the Trust or the transfer agent of the Trust of a share
certificate duly endorsed or accompanied by proper evidence of succession,
assignment or authority to transfer, the Trust shall issue a new certificate
to the person entitled thereto, cancel the old certificate and record the
transaction upon its books.
The Trust shall be entitled to treat the holder of record of any share or
shares as the holder in fact thereof and, accordingly, shall not be bound to
recognize any equitable or other claim to or interest in such share or shares
on the part of any other person, whether or not it shall have express or other
notice thereof, except as otherwise provided by the laws of the State of
Maryland.
Notwithstanding the foregoing, transfers of shares of beneficial interest of
the Trust will be subject in all respects to the Declaration of Trust and all
of the terms and conditions contained therein.
Section 3. REPLACEMENT CERTIFICATE. Any officer designated by the Trustees
may direct a new certificate to be issued in place of any certificate
previously issued by the Trust alleged to have been lost, stolen or destroyed
upon the making of an affidavit of that fact by the person claiming the
certificate to be lost, stolen or destroyed. When authorizing the issuance of
a new certificate, an officer designated by the Trustees may, in his
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or
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destroyed certificate or the owner's legal representative to advertise the
same in such manner as he shall require and/or to give bond, with sufficient
surety, to the Trust to indemnify it against any loss or claim which may arise
as a result of the issuance of a new certificate.
Section 4. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE. The Trustees
may set, in advance, a record date for the purpose of determining shareholders
entitled to notice of or to vote at any meeting of shareholders or determining
shareholders entitled to receive payment of any dividend or the allotment of
any other rights, or in order to make a determination of shareholders for any
other proper purpose. Such date, in any case, shall not be prior to the close
of business on the day the record date is fixed and shall be not more than 90
days and, in the case of a meeting of shareholders not less than ten days,
before the date on which the meeting or particular action requiring such
determination of shareholders of record is to be held or taken.
In lieu of fixing a record date, the Trustees may provide that the share
transfer books shall be closed for a stated period but not longer than 20
days. If the share transfer books are closed for the purpose of determining
shareholders entitled to notice of or to vote at a meeting of shareholders,
such books shall be closed for at least ten days before the date of such
meeting.
If no record date is fixed and the share transfer books are not closed for
the determination of shareholders, (a) the record date for the determination
of shareholders entitled to notice of or to vote at a meeting of shareholders
shall be at the close of business on the day on which the notice of meeting is
mailed or the 30th day before the meeting, whichever is the closer date to the
meeting; and (b) the record date for the determination of shareholders
entitled to receive payment of a dividend or an allotment of any other rights
shall be the close of business on the day on which the resolution of the
Trustees, declaring the dividend or allotment of rights, is adopted.
When a determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided in this section, such determination
shall apply to any adjournment thereof, except when (i) the determination has
been made through the closing of the transfer books and the stated period of
closing has expired or (ii) the meeting is adjourned to a date more than 120
days after the record date fixed for the original meeting, in either of which
case a new record date shall be determined as set forth herein.
Section 5. STOCK LEDGER. The Trust shall maintain at its principal office or
at the office of its counsel, accountants or transfer agent, an original or
duplicate share ledger containing the name and address of each shareholder and
the number of shares of each class held by such shareholder.
Section 6. FRACTIONAL SHARES; ISSUANCE OF UNITS. The Trustees may issue
fractional shares or provide for the issuance of scrip, all on such terms and
under such conditions as they may determine. Notwithstanding any other
provision of the Declaration of Trust or these Bylaws, the Trustees may issue
units consisting of different securities of the Trust. Any security issued in
a unit shall have the same characteristics as any identical securities issued
by the Trust, except that the Trustees may provide that for a specified period
securities of the Trust issued in such unit may be transferred on the books of
the Trust only in such unit.
ARTICLE VIII
ACCOUNTING YEAR
The Trustees shall have the power, from time to time, to fix the fiscal year
of the Trust by a duly adopted resolution.
ARTICLE IX
DISTRIBUTIONS
Section 1. AUTHORIZATION. Dividends and other distributions upon the shares
of beneficial interest of the Trust may be authorized and declared by the
Trustees, subject to the provisions of law and the Declaration of Trust.
Dividends and other distributions may be paid in cash, property or shares of
the Trust, subject to the provisions of law and the Declaration of Trust.
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Section 2. CONTINGENCIES. Before payment of any dividends or other
distributions, there may be set aside out of any funds of the Trust available
for dividends or other distributions such sum or sums as the Trustees may from
time to time, in their absolute discretion, think proper as a reserve fund for
contingencies, for equalizing dividends or other distributions, for repairing
or maintaining any property of the Trust or for such other purpose as the
Trustees shall determine to be in the best interest of the Trust, and the
Trustees may modify or abolish any such reserve in the manner in which it was
created.
ARTICLE X
INVESTMENT POLICY
Subject to the provisions of the Declaration of Trust, the Board of Trustees
may from time to time adopt, amend, revise or terminate any policy or policies
with respect to investments by the Trust as it shall deem appropriate in its
sole discretion.
ARTICLE XI
SEAL
Section 1. SEAL. The Trustees may authorize the adoption of a seal by the
Trust. The seal shall have inscribed thereon the name of the Trust and the
year of its formation. The Trustees may authorize one or more duplicate seals
and provide for the custody thereof.
Section 2. AFFIXING SEAL. Whenever the Trust is permitted or required to
affix its seal to a document, it shall be sufficient to meet the requirements
of any law, rule or regulation relating to a seal to place the word "(SEAL)"
adjacent to the signature of the person authorized to execute the document on
behalf of the Trust.
ARTICLE XII
INDEMNIFICATION AND ADVANCE OF EXPENSES
To the maximum extent permitted by Maryland law in effect from time to time,
the Trust shall indemnify (a) any Trustee, officer or shareholder or any
former Trustee, officer or shareholder (including among the foregoing, for all
purposes of this Article XII and without limitation, any individual who, while
a Trustee, officer or shareholder and at the express request of the Trust,
serves or has served another real estate investment trust, corporation,
partnership, joint venture, trust, employee benefit plan or any other
enterprise as a director, officer, shareholder, partner or trustee of such
real estate investment trust, corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise) who has been successful, on the
merits or otherwise, in the defense of a proceeding to which he was made a
party by reason of service in such capacity, against reasonable expenses
incurred by him in connection with the proceeding, (b) any Trustee or officer
or any former Trustee or officer against any claim or liability to which he
may become subject by reason of such status unless it is established that (i)
his act or omission was material to the matter giving rise to the proceeding
and was committed in bad faith or was the result of active and deliberate
dishonesty, (ii) he actually received an improper personal benefit in money,
property or services or (iii) in the case of a criminal proceeding, he had
reasonable cause to believe that his act or omission was unlawful and (c) each
shareholder or former shareholder against any claim or liability to which he
may become subject by reason of such status. In addition, the Trust shall,
without requiring a preliminary determination of the ultimate entitlement to
indemnification, pay or reimburse, in advance of final disposition of a
proceeding, reasonable expenses incurred by a Trustee, officer or shareholder
or former Trustee, officer or shareholder made a party to a proceeding by
reason such status, provided that, in the case of a Trustee or officer, the
Trust shall have received (i) a written affirmation by the Trustee or officer
of his good faith belief that he has met the applicable standard of conduct
necessary for indemnification by the Trust as authorized by these Bylaws and
(ii) a written undertaking by or on his behalf to repay the amount paid or
reimbursed by the Trust if it shall ultimately be determined that the
applicable standard of conduct was not met. The Trust may, with the approval
of its Trustees, provide such indemnification or payment or reimbursement of
expenses to any
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Trustee, officer or shareholder or any former Trustee, officer or shareholder
who served a predecessor of the Trust and to any employee or agent of the
Trust or a predecessor of the Trust. Neither the amendment nor repeal of this
Article, nor the adoption or amendment of any other provision of the
Declaration of Trust or these Bylaws inconsistent with this Article, shall
apply to or affect in any respect the applicability of this Article with
respect to any act or failure to act which occurred prior to such amendment,
repeal or adoption.
Any indemnification or payment or reimbursement of the expenses permitted by
these Bylaws shall be furnished in accordance with the procedures provided for
indemnification or payment or reimbursement of expenses, as the case may be,
under Section 2-418 of the MGCL for directors of Maryland corporations. The
Trust may provide to Trustees, officers and shareholders such other and
further indemnification or payment or reimbursement of expenses, as the case
may be, to the fullest extent permitted by the MGCL, as in effect from time to
time, for directors of Maryland corporations.
ARTICLE XIII
WAIVER OF NOTICE
Whenever any notice is required to be given pursuant to the Declaration of
Trust or Bylaws or pursuant to applicable law, a waiver thereof in writing,
signed by the person or persons entitled to such notice, whether before or
after the time stated therein, shall be deemed equivalent to the giving of
such notice. Neither the business to be transacted at nor the purpose of any
meeting need be set forth in the waiver of notice, unless specifically
required by statute. The attendance of any person at any meeting shall
constitute a waiver of notice of such meeting, except where such person
attends a meeting for the express purpose of objecting to the transaction of
any business on the ground that the meeting is not lawfully called or
convened.
ARTICLE XIV
AMENDMENT OF BYLAWS
The Trustees shall have the exclusive power to adopt, alter or repeal any
provision of these Bylaws and to make new Bylaws.
ARTICLE XV
MISCELLANEOUS
All references to the Declaration of Trust shall include any amendments
thereto.
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PROXY
FEDERAL REALTY INVESTMENT TRUST
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
The undersigned, a shareholder of Federal Realty Investment Trust (the
"Trust") hereby constitutes and appoints THOMAS F. COONEY, ESQ., RON D. KAPLAN
and CECILY A. WARD, or any of them, as the true and lawful attorneys and proxies
of the undersigned, with full power of substitution, for and in the name of the
undersigned, to vote and otherwise act at the Annual Meeting of Shareholders of
the Trust to be held at The Doubletree Hotel, 1750 Rockville Pike, Rockville,
Maryland on Wednesday, May 5, 1999 at 10:00 a.m., or at any adjournment thereof,
with respect to all of the Common Shares of Beneficial Interest of the Trust
which the undersigned would be entitled to vote with all the powers the
undersigned would possess if personally present on the following matters:
The undersigned hereby ratifies and confirms all that the aforesaid attorneys
and proxies may do hereunder.
-------------
SEE REVERSE
SIDE
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(To Be Signed on Reverse Side)
<PAGE>
Please date, sign and mail your
proxy card back as soon as possible!
Annual Meeting of Shareholders
FEDERAL REALTY INVESTMENT TRUST
May 5, 1999
[down arrow] Please Detach and Mail in the Envelope Provided [down arrow]
- --------------------------------------------------------------------------------
Please mark your
A [X] votes as in this
example
This Proxy when properly executed will be voted as directed by the undersigned
shareholder. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED "FOR" PROPOSALS
1,2 and 3.
<TABLE>
<S> <C> <C> <C>
1. To elect the following Trustees FOR WITHHELD Nominees:
for terms expiring as set forth in Samuel J. Gorlitz
the accompanying Proxy Statement. [ ] [ ] Steven J. Guttman
Mark S. Ordan
George L. Perry
For all, except as otherwise indicated. The Board of Trustees unanimously
recommends a vote FOR the four nominees:
(INSTRUCTION: To withhold authority to
vote for any individual nominee, strike
a line through the nominee's name in the list.)
</TABLE>
2. To approve the amendment and FOR AGAINST ABSTAIN
restatement of the Trust's Declaration
of Trust. [ ] [ ] [ ]
The Board of Trustees unanimously
recommends a vote FOR proposal 2.
3. To adjourn the meeting to solicit FOR AGAINST ABSTAIN
additional proxies if Proposal 2 is
not approved. [ ] [ ] [ ]
4. In their discretion, on any other
matters properly coming before the
meeting or any adjournment thereof.
SIGNATURE(S) DATE
------------------------- ------------------------- ------------
NOTE: Please sign exactly as your name(s) appear(s) hereon. If the shares are
held jointly each party must sign. If the shareholder named is a corporation,
partnership or other association, please sign its name and add your own name and
title. When signing as an attorney, executor, administrator, trustee, guardian
or in any other representative capacity, please also give your full title or
capacity.
