STANDSTILL AGREEMENT
This STANDSTILL AGREEMENT, dated as of January 27, 2004 (this "Standstill
Agreement"), is by and among Atlantic Realty Trust, a Maryland real estate
investment trust ("ART"), on the one hand, and High Rise Capital Management,
L.P., a Delaware limited partnership ("HRCM"), High Rise Capital Advisors,
L.L.C., a Delaware limited liability company ("HRCA"), Bridge Realty Advisors,
L.L.C., a Delaware limited liability company("Bridge"), Zankel Management GP,
L.L.C., a Delaware limited liability company ("Zankel Management"), Cedar Bridge
Realty Fund, L.P., a Delaware limited partnership ("Cedar Bridge Realty"), Cedar
Bridge Institutional Fund, L.P., a Delaware limited partnership ("Cedar Bridge
Institutional"), Arthur Zankel ("Zankel") and David O'Connor ("O'Connor"), on
the other hand (each of HRCM, HRCA, Bridge, Zankel Management, Cedar Bridge
Realty, Cedar Bridge Institutional, Zankel and O'Connor are referred to herein,
collectively, as "High Rise").
RECITALS:
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WHEREAS, High Rise has filed a Schedule 13G, as amended, under the
Securities Exchange Act of 1934, as amended (the "Exchange Act") with the
Securities and Exchange Commission, indicating High Rise's ownership of common
shares of beneficial interest, par value $.01 per share, of ART (the "Shares");
WHEREAS, ART's charter limits the number of Shares that may be owned,
actually or constructively pursuant to the attribution rules set forth in
Section 544 of the Internal Revenue Code of 1986, as amended (the "Code"), as
such rules are modified by Section 856(h) of the Code or in Section 318(a) of
the Code and as such rules are modified by Section 856(d)(5) of the Code (actual
or constructive ownership of stock pursuant to such attribution rules is
hereinafter referred to as "Constructive Ownership," and the terms
"Constructively Own" and "Constructive Owner" shall have the correlative
meanings) by any person to 9.8% of the total number of Shares that are issued
and outstanding (the "Excess Share Provisions"). All Shares Constructively Owned
by any of HRCM, HRCA, Bridge, Zankel Management, Cedar Bridge Realty, Cedar
Bridge Institutional, Zankel or O'Connor that exceed, in the aggregate, 9.8% of
the total number of Shares that are issued and outstanding are referred to
herein as "Excess Shares";
WHEREAS, under the Charter, the Excess Shares are automatically transferred
to a charitable trust to be held for sale unless ART's Board of Trustees, in
accordance with the Excess Share Provisions, grants an exception to such
ownership limit provisions with respect to the Excess Shares (a "Waiver");
WHEREAS, ART, acting through its Board of Trustees, has agreed to grant an
Excess Shares Waiver on the condition that High Rise enter into this Standstill
Agreement and High Rise has agreed to comply with this condition.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Standstill.
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(a) General Standstill. High Rise hereby agrees that they shall not, and
they shall cause their Affiliated Persons (as defined below) not to directly or
indirectly through an Affiliated Person, unless specifically requested in
writing in advance by the ART board of trustees:
(i) acquire, agree to acquire, or make a public offer or proposal to
acquire, in any manner, directly or indirectly through an Affiliated Person,
ownership or control of
(A) any securities of ART ("Restricted Securities") in
excess of 14.2% of the total number of shares that are issued and outstanding,
or
(B) any subsidiary or any assets or properties of ART
or any subsidiary or division thereof, including by way of any fundamental
transaction with ART, such as a tender offer, business combination, merger or
other consolidation,
(ii) make any "solicitation" of "proxies" (as such terms are used in
the proxy rules of the Securities and Exchange Commission) to vote any voting
securities of ART,
(iii) form or join a "group" (as defined in Section 13(d)(3) of the
Exchange Act) in connection with any of the provisions of this Section 1, other
than a group consisting solely of two or more of HRCM, HRCA, Bridge, Zankel
Management, Cedar Bridge Realty, Cedar Bridge Institutional, Zankel, O'Connor
and any Affiliated Persons, and
(iv) disclose any intention, plan or arrangement inconsistent with
the provisions of this Section 1.
The provisions of this Section 1 are referred to in this Standstill Agreement,
collectively, as "Restricted Activities". Notwithstanding the foregoing, nothing
in this Section 1 shall prohibit High Rise or its Affiliated Persons from making
a proposal to acquire any asset or property that ART announces an intention to
sell or is soliciting acquisition proposals from third parties.
(b) Voting Rights. Subject to the terms of this Standstill
Agreement, High Rise may vote its shareholdings of ART in its sole and absolute
discretion; provided, however, High Rise shall vote any Excess Shares in
accordance with the recommendation of the ART board of trustees.
(c) "Affiliated Person" shall mean, for the purposes of this
Standstill Agreement, (i) any corporation, limited liability company or
partnership of which HRCM, HRCA, Bridge, Zankel Management, Cedar Bridge Realty,
Cedar Bridge Institutional, Zankel or O'Connor,
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individually or in the aggregate, own a majority of the voting securities (or,
in the case of a limited liability company or partnership, a majority of the
economic interest or limited partnership interests, respectively) or serve as a
managing member or general partner, (ii) Zankel's spouse, and any relative of
Zankel or his spouse who has the same home as Zankel and any trust in which
Zankel or his spouse has a substantial beneficial interest or as to which Zankel
serves as trustee or in a similar fiduciary capacity and (iii) O'Connor's
spouse, and any relative of O'Connor or his spouse who has the same home as
O'Connor and any trust in which O'Connor or his spouse has a substantial
beneficial interest or as to which O'Connor serves as trustee or in a similar
fiduciary capacity.
2. Release. High Rise, on behalf of themselves and for each of their heirs,
executors, administrators, successors, and/or assigns (collectively, the "High
Rise Releasor"), hereby remises, releases, and forever discharges each of ART,
their direct and indirect subsidiaries, shareholders, affiliates, subdivisions,
predecessors, successors or assigns, and their present and former directors,
officers, employees, agents and attorneys and their heirs, executors,
administrators, successors, and assignees (collectively, the "ART Releasees"),
and each of them, of and from any and all claims, demands, or causes of action
whatsoever from the beginning of the world to the date present, whether
individual, class or derivative in nature, at law or in equity, whether based on
any federal, state, or foreign law or right of action, foreseen or unforeseen
matured or unmatured, know or unknown, accrued or not accrued, which the High
Rise Releasor has, had or have or can, shall, or may hereafter have against the
ART Releasees, or any of them, alleged or which could have been alleged or
arising out of or relating to the settlement and actions taken by ART and its
Board of Directors relating to the tax agreement dated May 10, 1996 by and
between Ramco- Gershenson Properties Trust (together with its subsidiaries,
"RPT") or any amounts paid by ART to RPT or to the Internal Revenue Service
pursuant to its obligations under such agreement; provided, however, that this
release shall be ineffective with respect to each ART Releasee if any person
whose vote was required to approve such decision received or stands to receive,
directly or indirectly, any benefit as a result thereof other than his or her
pro rata benefit as a securityholder of RPT.
3. Waiver. High Rise acknowledges its understanding that, as set forth in
the Recitals to this Standstill Agreement, ownership of the Shares is subject to
the Excess Share Provisions. Subject to the terms and conditions of this
Standstill Agreement, ART grants (i) to Cedar Bridge Realty and Cedar Bridge
Institutional a Waiver with respect to the Excess Shares held directly and
Constructively Owned by them and (ii) to HRCM, HRCA, Bridge, Zankel Management,
Zankel and O'Connor a Waiver with respect to the Excess Shares Constructively
Owned by them in respect of the direct ownership of Shares by Cedar Bridge
Realty and Cedar Bridge Institutional. Notwithstanding the foregoing, the
Waivers granted herein shall be effective only with respect to Excess Shares
that in the aggregate do not exceed 4.4% of the total number of Shares that are
currently issued and outstanding. High Rise understands and agrees that ART's
grant of the Waivers herein is conditioned upon the continuing accuracy of the
representations and warranties set forth in Section 4 of this Standstill
Agreement and upon such Waiver otherwise not causing ART to fail to qualify as a
REIT for income tax purposes, and High Rise further understands and agrees that,
subject to the Waiver, if any such Excess Share Provisions are hereafter
violated by it or if any of such representations and warranties cease to be true
(determined without qualifications of knowledge or best knowledge), the Excess
Shares may
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be automatically transferred to a trust for the benefit of a charitable
beneficiary (as set forth in the Excess Share Provisions) and that, if so
transferred, the applicable shareholder's ownership rights in such Excess Shares
will be terminated. ART agrees that the remedies provided in its charter shall
be the sole remedies available to ART in the event that any of the
representations and warranties of High Rise set forth in Section 4 of this
Standstill Agreement ceased to be true (determined without qualifications of
knowledge or best knowledge) or the ownership of Shares by High Rise otherwise
would violate any of the restrictions set forth in ART's charter.
4. Representations and Warranties of High Rise. High Rise hereby jointly
and severally represents and warrants to, and agrees with, ART as follows:
(a) Capacity; Enforceability. Each of the High Rise persons executing this
Standstill Agreement has full capacity and authority, and limited partnership or
limited liability company authority and capacity, as the case may be, to execute
and deliver this Standstill Agreement. This Standstill Agreement has been duly
and validly executed and delivered by and on behalf of each of them and
constitutes a valid obligation of each of them, enforceable in accordance with
its terms, except to the extent such enforceability may be limited by applicable
insolvency, bankruptcy, reorganization or similar laws affecting the enforcement
of creditors' rights generally and by general equity principles.
(b) No Conflict. The performance of this Standstill Agreement and the
consummation of the transactions contemplated hereby will not result in a breach
or violation of any of the terms or provisions of, or constitute a default
under:
(i) the certificate of formation or limited partnership
agreement of HRCM, Cedar Bridge Realty or Cedar Bridge Institutional,
(ii) the certificate of formation or limited liability company
agreement of HRCA, Bridge or Zankel Management,
(iii) any contract or other agreement or instrument to which
High Rise is a party or by which High Rise is bound, the breach of which would
have a material adverse effect on ART or High Rise, or
(iv) any law, order, rule, regulation, writ, injunction or
decree applicable to High Rise.
(c) Governmental Approvals. No consent, authorization or approval of,
exemption by, or filing with, any domestic governmental or administrative
authority, or any court, is required to be obtained or made by High Rise in
connection with the execution, delivery and performance of this Standstill
Agreement or the consummation of the transactions contemplated hereby.
(d) Excess Ownership. HRCM, HRCA, Bridge, Zankel Management, Cedar Bridge
Realty and Cedar Bridge Institutional are limited liability companies or limited
partnerships, as the case may be, and, to the best of High Rise's knowledge
(after due
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investigation), no person or entity which would be treated as an individual for
purposes of Section 542(a)(2) of the Code, as modified by Section 856(h) of the
Code, would Constructively Own in excess of 9.8% of the value of ART if HRCM,
HRCA, Bridge, Zankel Management, Cedar Bridge Realty or Cedar Bridge
Institutional were to acquire the Excess Shares pursuant to the Waiver.
(e) Update of Representations. At the reasonable request of ART from time
to time, High Rise will update its representations to ART set forth in Section
4(d).
(f) Related Tenants Rent. ART has provided to High Rise an accurate list of
its and its subsidiaries current tenants and, to the knowledge of High Rise, the
amount of annualized rents payable to ART or to its subsidiaries by all such
tenants of ART or its subsidiaries in which High Rise owns 10 percent or more of
the stock or other ownership interest computed in accordance with the
attribution rules of Code Section 318(a), as modified by Code Section 856(d)(5)
("Related Tenants") (such as to exclude such rents from the term "rents from
real property" by reason of Section 856(d)(2)(B) of the Code) do not exceed
$25,000. At the reasonable request of ART from time to time and upon receipt by
High Rise of a current list of ART's and its subsidiaries tenants, High Rise
will update its representation with respect to its then ownership interests (if
any) in such tenants of ART or its subsidiaries and provide ART with such
information concerning rents payable by Related Tenants as ART may reasonably
request in connection with maintaining ART's status as a REIT.
5. Representations and Warranties of ART. ART hereby represents and
warrants to, and agrees with, High Rise as follows:
(a) Capacity; Enforceability. ART has full trust authority and capacity to
execute and deliver this Standstill Agreement. This Standstill Agreement has
been duly and validly executed and delivered by and on behalf of ART and
constitutes a valid obligation of ART, enforceable in accordance with its terms,
except to the extent such enforceability may be limited by applicable
insolvency, bankruptcy, reorganization or similar laws affecting the enforcement
of creditors' rights generally and by general equity principles.
(b) No Conflict. The performance of this Standstill Agreement and the
consummation of the transactions contemplated hereby will not result in a breach
or violation of any of the terms or provisions of, or constitute a default
under:
(i) the Amended and Restated Declaration of Trust of ART,
(ii) the by-laws of ART,
(iii) any contract or other agreement or instrument to which ART
is a party or by which ART is bound, the breach of which would have a material
adverse effect on ART or High Rise, or
(iv) any law, order, rule, regulation, writ, injunction or
decree applicable to ART.
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(c) Governmental Approvals. No consent, authorization or approval of,
exemption by, or filing with, any domestic governmental or administrative
authority, or any court, is required to be obtained or made by ART in connection
with the execution, delivery and performance of this Standstill Agreement or the
consummation of the transactions contemplated hereby.
6. Miscellaneous Provisions.
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(a) Notices. Any notice, request, instruction or other document to be given
hereunder by any party hereto to another party hereto shall be in writing, shall
be deemed to have been duly given or delivered
(i) the day following dispatch to an overnight courier service (such
as Federal Express or UPS) or
(ii) five (5) days after dispatch by certified or registered first
class mail, postage prepaid, return receipt requested, to the party to whom the
same is so given or made:
If to High Rise addressed to:
Ms. Alissa R. Fox
Chief Financial Officer
High Rise Capital Management, L.P.
535 Madison Avenue, 26th Floor
New York, NY 10022
If to ART addressed to:
Mr. Joel M. Pashcow
Atlantic Realty Trust
747 Third Avenue, 10th Floor
New York, New York 10017
With a copy to:
Peter M. Fass, Esq.
Proskauer Rose LLP
1585 Broadway
New York, New York 10036
(b) Amendment and Modification. This Standstill Agreement may be modified,
amended or supplemented only by an instrument in writing signed by or on behalf
of all of the parties hereto.
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(c) Waiver. No party may waive any right hereunder except pursuant to a
written instrument signed by the party against whom such waiver is to be
enforced. No waiver of or delay in exercising any right hereunder shall operate
as a waiver of any right hereunder.
(d) Governing Law. This Standstill Agreement shall be governed by the laws
of the State of New York, without regard to the conflicts of law principles
thereof. The parties hereby consent to personal jurisdiction in respect of any
action arising under or in connection with this Standstill Agreement instituted
in the United States District Court for the Southern District of New York or the
courts of the State of New York and to service of process upon them in the
manner set forth in subsection (a) above.
(e) Assignment. This Standstill Agreement and the rights and obligations
hereunder may not be assigned by any party hereto without the written consent of
all other parties hereto.
(f) Counterparts. This Standstill Agreement may be executed in separate
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(g) Section Headings. The section headings contained in this Standstill
Agreement are solely for the purpose of reference, are not part of the agreement
of the parties and shall not in any way affect the meaning or interpretation of
this Standstill Agreement. All references in this Standstill Agreement to
Sections are to sections of this Standstill Agreement, unless otherwise
indicated.
(h) Entire Agreement. This Standstill Agreement and the other writings,
documents, certificates, instruments and agreements specifically identified
herein contain the entire agreement between the parties with respect to the
transactions contemplated herein and supersede all previous written and oral
negotiations, commitments and understandings by or among any of the parties
hereto with respect to any of the matters contemplated under this Standstill
Agreement. There are no restrictions, promises, inducements, representations,
warranties, covenants, or undertakings, other than those expressly set forth or
referred to herein.
(i) Severability. If and to the extent that any court of competent
jurisdiction holds any provision (or any part thereof) of this Standstill
Agreement to be invalid or unenforceable, such holding shall in no way affect
the validity of the remainder of this Standstill Agreement, including any
provision, in any other jurisdiction, it being intended that all rights and
obligations of the parities hereunder shall be enforceable to the fullest extent
permitted by law; provided, however, that if the Waiver is finally determined by
a court of appropriate jurisdiction to be invalid or unenforceable, this
Agreement shall terminate.
(j) Execution. Facsimiles of executed copies of this Standstill Agreement
shall constitute originals of this Standstill Agreement.
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(k) No Third Party Beneficiaries. Nothing contained in this Standstill
Agreement shall be deemed to confer rights on any person or to indicate that
this Standstill Agreement has been entered into for the benefit of any person,
other than the parties hereto.
(l) Binding Effects. This Standstill Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors,
legal representatives and assigns.
(m) Waiver of Compliance. Any failure of any of the parties to comply with
any obligation, covenant, agreement, or condition herein may be waived by the
party or parties entitled to the benefits thereof only by a written instrument
signed by the party granting such waiver, but such a waiver or failure to insist
upon strict compliance with such obligation, covenant, agreement or condition
shall not operate as a waiver of, or estoppel with respect to, any subsequent
other failure.
(n) Further Assurances. The parties to this Standstill Agreement, without
further consideration, use all reasonable efforts to execute and deliver such
additional documents and take such other action as any party may reasonably
request to carry out the intent of this Standstill Agreement and the
transactions contemplated hereby.
(o) Equitable Principles. The parties acknowledge and agree that
irreparable damage would occur in the event any of the provisions of this
Standstill Agreement were not performed in accordance with their specific terms
or were otherwise breached. It is accordingly agreed that the parties shall be
entitled to seek an injunction to prevent any breach of the provisions of this
Standstill Agreement and to enforce specifically the terms and provisions hereof
in any court having jurisdiction, in addition to any other remedy to which they
may be entitled at law or in equity.
(p) Public Releases and Announcements. High Rise agrees that it shall
provide to ART advance copies of, or, in the case of oral announcements, advance
notice of, any public release or announcement concerning ART to be issued,
released or made by High Rise, in each case, at least one business day prior to
such release or announcement.
(q) Termination. This Agreement shall terminate upon the earlier of the
following:
(i) As set forth in Section 6(i); and
(ii) Upon reduction of High Rise's Constructive Ownership of
Shares to or below 9.8% of the total number of Shares issued and outstanding.
7. Effect of Termination. In the event of the termination of this Agreement
as set forth in Section 6(q), High Rise shall then immediately become subject to
all rules and restrictions regarding the ownership of Shares, including, without
limitation, the limitations set forth in the organization documents of ART.
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IN WITNESS WHEREOF, the undersigned have executed this Standstill
Agreement, on the date first written above.
HIGH RISE CAPITAL MANAGEMENT, L.P.
By Zankel Management GP, L.L.C., its general partner
By __________________________
Name:
Title:
HIGH RISE CAPITAL ADVISORS, L.L.C.
By __________________________
Name:
Title:
BRIDGE REALTY ADVISORS, L.L.C.
By __________________________
Name:
Title:
ZANKEL MANAGEMENT GP, L.L.C.
By __________________________
Name:
Title:
CEDAR BRIDGE REALTY FUND, L.P.
By Bridge Realty Advisors, L.L.C., its general partner
By __________________________
Name:
Title:
CEDAR BRIDGE INSTITUTIONAL FUND, L.P.
By Bridge Realty Advisors, L.L.C., its general partner
By __________________________
Name:
Title:
_____________________________
ARTHUR ZANKEL
_____________________________
DAVID O'CONNOR
ATLANTIC REALTY TRUST
By __________________________
Name:
Title:
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