THIRD AMENDED AND RESTATED
STANDSTILL AGREEMENT
This THIRD AMENDED AND RESTATED STANDSTILL AGREEMENT (the
"Standstill Agreement"), dated as of August 3, 2004, by and among Atlantic
Realty Trust, a Maryland real estate investment trust ("ART") on the one hand
and Kimco Realty Corporation, a Maryland corporation ("KRC"), Kimco Realty
Services, Inc., a Delaware corporation ("KRS"), and Milton Cooper ("Cooper") on
the other hand (each of KRC, KRS and Cooper, are referred to herein,
collectively, as "Kimco") .
RECITALS:
WHEREAS, Kimco has filed a Schedule 13D, as amended, under the
Securities Exchange Act of 1934, as amended (the "Exchange Act") with the
Securities and Exchange Commission, indicating Kimco'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 as such rules are modified by Section 856(d)(5) of the Code
(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 KRC, KRS or Cooper in excess of 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, Kimco previously requested that ART, acting through
its Board of Trustees, grant Kimco a Waiver;
WHEREAS, ART, acting through its Board of Trustees, agreed to
grant Kimco a Waiver and in connection therewith ART and Kimco entered into a
Standstill Agreement dated April 30, 1998 (the "Original Standstill Agreement")
pursuant to which Kimco and certain affiliates, agreed, among other things, not
to acquire more than 25% of the issued and outstanding shares of ART;
WHEREAS, the parties hereto amended the Original Standstill
Agreement in order to permit Kimco and certain of its affiliates to own up to
30% of the issued and outstanding shares of ART and, accordingly, increase the
size of the Excess Shares Waiver and whereas such amendment went into effect on
July 21, 2000;
WHEREAS, the parties hereto further amended the Original
Standstill Agreement pursuant to that certain Second Amended and Restated
Standstill Agreement dated as of January 31, 2003 (the "Second Amended and
Restated Standstill Agreement") in order to permit Kimco and certain of its
affiliates to own up to 33% of the issued and outstanding shares of ART and,
accordingly, increase the size of the Excess Shares Waiver;
WHEREAS, First Union Real Estate Equity and Mortgage
Investments, an Ohio Business Trust ("First Union"), beneficially owns 183,085
Shares (the "First Union Shares");
WHEREAS, Michael Ashner and Susan Ashner together beneficially
own 52,065 Shares (the "Ashner Shares");
WHEREAS, First Union desires to sell and Kimco desires to
purchase the First Union Shares;
WHEREAS, Ashner desires to sell and Kimco desires to purchase
the Ashner Shares;
WHEREAS, Kimco has requested that ART amend the Second Amended
and Restated Standstill Agreement in order to permit Kimco and certain of its
affiliates to acquire the First Union Shares and the Ashner Shares and own up to
39.61% of the issued and outstanding shares of ART and, accordingly, increase
the size of the Excess Shares Waiver; and
WHEREAS, ART, acting through its Board of Trustees, has agreed
to increase the size of the Waiver on the conditions that (i) Kimco enter into
this Third Amended and Restated Standstill Agreement and (ii) Kimco shall only
increase its ownership of shares of common stock of ART above 33% through the
purchase of the First Union Shares and the Ashner Shares in privately negotiated
transactions among Kimco on the one hand and First Union and/or Ashner on the
other hand and Kimco has agreed to comply with these conditions (the
transactions described in this clause (ii) being hereinafter referred to
collectively as the "First Union/Ashner Purchases").
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.
(a) GENERAL STANDSTILL. Kimco 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:
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(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 39.61% of the total number of shares that are issued
and outstanding; provided, however, any increase in Kimco's or their Affiliated
Person's ownership of Restricted Securities in excess of 33% of the total number
of shares that are issued and outstanding shall be limited to Restricted
Securities acquired in connection with the First Union/Ashner Purchases, 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 KRC, KRS,
Cooper 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 Kimco or its Affiliated Persons from making a
proposal to acquire any or all of the assets or properties 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, Kimco may vote its shareholdings of ART in its sole and absolute
discretion; provided, however, Kimco 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 Kimco Realty, Kimco Services or Mr. Cooper, 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 and (ii) Mr. Cooper's spouse, and any relative of Mr. Cooper or
his spouse who has the same home as Mr. Cooper and any trust in which Mr. Cooper
or his spouse has a substantial beneficial interest or as to which Mr. Cooper
serves as trustee or in a similar fiduciary capacity.
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2. RELEASE.
(a) Kimco, on behalf of themselves and for each of their
heirs, executors, administrators, successors, and/or assigns (collectively, the
"Kimco 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, known or unknown, accrued or not accrued, which the Kimco
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 decision by ART's Board of Directors to approve, and
ART's execution and delivery of, 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. Kimco hereby acknowledges that all
amounts paid to Joel M. Pashcow, Herbert Liechtung, the members of the Special
Acquisition Committee and Wolf Block (as such terms are defined below) in
connection with the acquisition of substantially all the property and assets of
Ramco-Gershenson, Inc. and its affiliates by RPS Realty Trust ("RPS") as
described in RPS's Proxy Statement dated March 29, 1996 (the "Proxy Statement")
shall not be deemed to be a benefit for this purpose. Capitalized terms used but
not otherwise defined in this Section 2 shall have the meanings set forth in the
Proxy Statement.
3. WAIVER. Kimco 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 to Kimco a Waiver with respect to the
Excess Shares, but only with respect to Excess Shares that do not exceed 29.81%
of the total number of Shares that are currently issued and outstanding;
provided, however, that any Waiver with respect to Excess Shares that exceed
23.2% of the total number of Shares that are currently issued and outstanding is
limited for the sole purpose of acquiring the First Union Shares and the Ashner
Shares pursuant to the First Union/Ashner Purchases. Kimco understands and
agrees that ART's grant to Kimco of the Waiver 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 Kimco 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, the Excess Shares may 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
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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 Kimco set forth in Section 4 of this
Standstill Agreement ceased to be true or the ownership of Shares by Kimco
otherwise would violate any of the restrictions set forth in the ART's charter.
4. REPRESENTATIONS AND WARRANTIES OF KIMCO. Kimco hereby
jointly and severally represents and warrants to, and agrees with, ART as
follows:
(a) CAPACITY; ENFORCEABILITY. Each of the Kimco persons
executing this Standstill Agreement has full capacity and authority, and
corporate 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 incorporation of KRC or KRS,
(ii) the by-laws of KRC or KRS,
(iii) any contract or other agreement or instrument to
which Kimco is a party or by which Kimco is bound, the breach of which would
have a material adverse effect on ART or Kimco, or
(iv) any law, order, rule, regulation, writ, injunction
or decree applicable to Kimco.
(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
Kimco in connection with the execution, delivery and performance of this
Standstill Agreement or the consummation of the transactions contemplated
hereby.
(d) Excess Ownership. KRC and KRS are corporations and, to the
best of Kimco's knowledge (after due 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, Constructively Owns in excess of 9.8%
of the value of the outstanding equity interest in KRC or KRS.
(e) UPDATE OF REPRESENTATIONS. At the reasonable request of
ART from time to time, Kimco will update its representations to ART set forth in
Section 5(d).
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(f) RELATED TENANTS RENT. ART has provided to Kimco an
accurate list of its and its subsidiaries current tenants and, to the knowledge
of Kimco, the amount of annualized rents payable to ART or to its subsidiaries
by all such tenants of ART or its subsidiaries in which Kimco 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
Kimco of a current list of ART's and its subsidiaries tenants, Kimco 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, Kimco 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 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 Kimco, or
(iv) any law, order, rule, regulation, writ, injunction
or decree applicable to ART.
(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.
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6. MISCELLANEOUS PROVISIONS.
(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 Kimco addressed to:
Mr. Milton Cooper
Kimco Realty Corporation
333 New Hyde Park Road
New Hyde Park, NY 11042-0020
With a copy to:
Adam O. Emmerich, Esq.
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
If to ART addressed to:
Mr. Joel M. Pashcow Atlantic Realty
Trust 747 Third Avenue, 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
Exhibits which are a part hereof 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. Kimco 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 Kimco, 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 Kimco'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), Kimco 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.
KIMCO REALTY CORPORATION
By /s/ Glenn Cohen
-------------------------------
Name: Glenn Cohen
Title: Vice President, Treasurer
KIMCO REALTY SERVICES
By /s/ Glenn Cohen
-------------------------------
Name: Glenn Cohen
Title: Vice President, Treasurer
/s/ Milton Cooper
-----------------------------------
MILTON COOPER
ATLANTIC REALTY TRUST
By /s/ Edwin R. Frankel
-------------------------------
Name: Edwin R. Frankel
Title: Executive V.P.
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