EXHIBIT 99.2
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
among
KIMCO REALTY CORPORATION,
KIMCO ACQUISITION REAL ESTATE INVESTMENT TRUST
and
MID-ATLANTIC REALTY TRUST
Dated as of June 18, 2003
TABLE OF CONTENTS
Page
----
ARTICLE 1 - The Merger.................................................... 1
1.1 The Merger............................................... 1
1.2 The Closing.............................................. 2
1.3 Effective Time........................................... 2
ARTICLE 2 - Charter and Bylaws Of The Surviving Entity.................... 2
2.1 Charter.................................................. 2
2.2 Bylaws................................................... 2
ARTICLE 3 - Trustees and Officers Of The Surviving Entity................. 2
3.1 Trustees ................................................ 2
3.2 Officers ................................................ 2
ARTICLE 4 - Effects of the Merger; Exchange of Certificates............... 3
4.1 Conversion of the MART Common Shares .................... 3
4.2 Effect on Shares of Beneficial Interest of Merger Sub ... 4
4.3 Exchange of Certificates Representing MART Common Shares. 4
4.4 Return of Exchange Fund ................................. 5
4.5 Withholding of Tax ...................................... 5
ARTICLE 5 - Representations and Warranties of MART ....................... 5
5.1 Existence; Good Standing; Authority; Compliance With Law. 6
5.2 Authorization, Validity and Effect of Agreements ........ 6
5.3 Capitalization .......................................... 7
5.4 Subsidiaries ............................................ 8
5.5 Other Interests ......................................... 9
5.6 No Violation ............................................ 9
5.7 SEC Documents ........................................... 9
5.8 Litigation .............................................. 10
5.9 Absence of Certain Changes or Events .................... 10
5.10 Taxes ................................................... 11
5.11 Books and Records ....................................... 14
5.12 Properties .............................................. 15
5.13 Leases .................................................. 16
5.14 Options to Purchase/Brokerage ........................... 18
5.15 Environmental Matters ................................... 18
5.16 Employee Benefit Plans. ................................. 20
5.17 Labor Matters ........................................... 21
5.18 No Brokers .............................................. 21
5.19 Opinion of Financial Advisor ............................ 21
5.20 Kimco Share Ownership ................................... 21
5.21 Related Party Transactions .............................. 21
(i)
5.22 Contracts and Commitments ..................................... 21
5.23 Development Rights ............................................ 22
5.24 Status of Options to Purchase Real Property and Other
Agreements to Purchase or Sell Real Property .................. 22
5.25 Vote Required ................................................. 22
5.26 No Statutory Dissenters' Rights ............................... 22
5.27 Definition of MART's Knowledge ................................ 22
5.28 Insurance ..................................................... 22
5.29 Rule 16b-3 .................................................... 23
5.30 Disclosure Controls and Procedures ............................ 23
5.31 HSR Act Filings ............................................... 23
ARTICLE 6 - Representations and Warranties of Kimco ...................... 23
6.1 Existence; Good Standing; Authority ........................... 23
6.2 Authorization, Validity and Effect of Agreements .............. 23
6.3 No Violation .................................................. 24
6.4 Litigation .................................................... 24
6.5 Definition of Kimco's Knowledge ............................... 24
6.6 Availability of Funds ......................................... 24
6.7 No Brokers .................................................... 25
6.8 MART Share Ownership .......................................... 25
6.9 HSR Act Filings ............................................... 25
ARTICLE 7 - Covenants .................................................... 25
7.1 Acquisition Proposals ......................................... 25
7.2 Conduct of Business ........................................... 27
7.3 Preparation of the Proxy Statement; Meeting of Shareholders ... 32
7.4 Filings; Other Action ......................................... 33
7.5 Inspection of Records ......................................... 34
7.6 Publicity ..................................................... 34
7.7 Further Action. ............................................... 34
7.8 Expenses ...................................................... 35
7.9 Indemnification ............................................... 35
7.10 Certain Benefits .............................................. 37
7.11 Employment and Benefit Matters ................................ 38
7.12 Environmental Matters ......................................... 38
7.13 REIT Status ................................................... 39
7.14 Internal Restructuring ........................................ 39
7.15 Transactions Relating to MART LP .............................. 39
ARTICLE 8 - Conditions ................................................... 39
8.1 Conditions to Each Party's Obligation to Effect the Merger .... 39
8.2 Conditions to Obligation of MART to Effect the Merger ......... 40
8.3 Conditions to Obligation of Kimco to Effect the Merger ........ 40
ARTICLE 9 - Termination .................................................. 42
9.1 Termination ................................................... 42
(ii)
9.2 Effect of Termination........................................ 43
9.3 Payment of Termination Amount or Expenses.................... 46
9.4 Extension; Waiver............................................ 48
ARTICLE 10 - General Provisions............................................ 48
10.1 Nonsurvival of Representations, Warranties and Agreements.... 48
10.2 Notices...................................................... 48
10.3 Assignment; Binding Effect; Benefit.......................... 49
10.4 Entire Agreement............................................. 50
10.5 Confidentiality.............................................. 50
10.6 Amendment.................................................... 50
10.7 Governing Law; Jurisdiction and Venue........................ 50
10.8 Counterparts................................................. 51
10.9 Headings..................................................... 51
10.10 Interpretation............................................... 51
10.11 Waivers...................................................... 51
10.12 Severability................................................. 51
10.13 Enforcement of Agreement..................................... 51
10.14 Certain Definitions.......................................... 52
10.15 Alternative Structure........................................ 52
EXHIBITS
Exhibit A - Form of Voting Agreement
Exhibit B - Budget
Exhibit C - Pro Forma Budget
Exhibit D - Term Sheet Concerning Exchange Offer and Restated and Amended
Agreement of Limited Partnership of MART LP
Exhibit E - Form of Opinion of Gordon, Feinblatt, Rothman, Hoffberger
& Hollander LLC
(iii)
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and
entered into as of June 18, 2003, among Kimco Realty Corporation, a Maryland
corporation ("Kimco"), Kimco Acquisition Real Estate Investment Trust, a
Maryland real estate investment trust ("Merger Sub") and Mid-Atlantic Realty
Trust, a Maryland real estate investment trust ("MART").
RECITALS
A. The Board of Directors of Kimco and the Board of Trustees of MART
each have determined that a business combination between Kimco and MART is in
the best interests of their respective companies and shareholders, and
accordingly have agreed to effect the merger provided for herein upon the terms
and subject to the conditions set forth herein.
B. The Board of Trustees of MART has received a fairness opinion from
its financial advisor relating to the transactions contemplated hereby that the
Merger Consideration (as defined below) is fair from a financial point of view
to the holders of MART Common Shares, as more fully described herein.
C. Kimco and MART intend and agree that, for federal income tax
purposes, the Merger (as defined in Section 1.1) will be treated as a taxable
sale of assets by MART to Merger Sub, followed immediately by a taxable
liquidation of MART under Section 331 of the Internal Revenue Code of 1986, as
amended.
D. As a condition to the willingness of Kimco to enter into this
Agreement, the trustees and executive officers of MART have entered into a
Voting Agreement, dated as of the date hereof, with Kimco (the "Voting
Agreement"), in the form attached as Exhibit A hereto, pursuant to which each
such trustee and executive officer has agreed, among other things, to vote his
or her shares of beneficial interest of MART in favor of the approval of this
Agreement and the transactions contemplated hereby, upon the terms and subject
to the conditions set forth in the Voting Agreement.
E. Kimco, Merger Sub and MART desire to make certain representations,
warranties and agreements in connection with the Merger.
NOW, THEREFORE, in consideration of the foregoing, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto hereby agree as follows:
ARTICLE 1 - The Merger
1.1 The Merger. Subject to the terms and conditions of this Agreement, at the
Effective Time (as defined in Section 1.3 hereof), MART shall be merged with and
into Merger Sub in accordance with this Agreement and the separate existence of
MART shall thereupon cease (the "Merger"). Merger Sub shall be the surviving
entity in the Merger (sometimes
hereinafter referred to as the "Surviving Entity"). The Merger shall have the
effects specified in Section 8-501.1(o) of the Maryland REIT Law (the "MRL")
(the MRL and the Maryland General Corporation Law ("MGCL") together shall be
referred to herein as the "Maryland Law").
1.2 The Closing. Subject to the terms and conditions of this Agreement, the
closing of the Merger (the "Closing") shall take place (a) at the offices of
Goodwin Procter LLP, 599 Lexington Avenue, New York, New York, at 10:00 a.m.,
local time, on the later of September 15, 2003 and the first business day
immediately following the day on which the last of the conditions set forth in
Article 8 shall be fulfilled or waived in accordance herewith or (b) at such
other time, as the parties may agree in writing; but in no event later than the
Termination Date (as defined in Section 9.1 hereof). The date on which the
Closing occurs is hereinafter referred to as the "Closing Date."
1.3 Effective Time. If all the conditions to the Merger set forth in
Article 8 shall have been fulfilled or waived in accordance herewith and this
Agreement shall not have been terminated as provided in Article 9, the parties
hereto shall cause Articles of Merger satisfying the requirements of Maryland
Law to be properly executed, verified and delivered for filing in accordance
with Maryland Law on the Closing Date. The Merger shall become effective upon
the acceptance for record of the Articles of Merger by the State Department of
Assessments and Taxation of Maryland in accordance with Maryland Law or at such
later time which the parties hereto shall have agreed upon and designated in
such filing in accordance with Maryland Law as the effective time of the Merger
(the "Effective Time").
ARTICLE 2 - Charter and Bylaws Of The Surviving Entity
2.1 Charter. The Declaration of Trust of Merger Sub in effect immediately
prior to the Effective Time shall be the charter of the Surviving Entity, unless
and until duly amended in accordance with applicable law.
2.2 Bylaws. The Bylaws of Merger Sub in effect immediately prior to the
Effective Time shall be the bylaws of the Surviving Entity, unless and until
duly amended in accordance with applicable law.
ARTICLE 3 - Trustees and Officers Of The Surviving Entity
3.1 Trustees. The trustees of Merger Sub immediately prior to the Effective
Time shall be the trustees of the Surviving Entity as of the Effective Time. In
addition, one individual currently serving as a Trustee of MART (to be selected
by Kimco in its sole discretion with written notice to MART prior to the
closing, subject to the consent of the nominee) shall be appointed to the Board
of Directors of Kimco, effective as of the Effective Time, for a term expiring
at the next annual meeting of stockholders in 2004, and will be nominated by the
Board of Directors of Kimco for election at the next annual meeting of
stockholders in 2004, otherwise to hold office in accordance with the charter
and bylaws of Kimco.
3.2 Officers. The officers of Merger Sub immediately prior to the Effective
Time shall be the officers of the Surviving Entity as of the Effective Time.
2
ARTICLE 4 - Effects of the Merger; Exchange of Certificates
4.1 Conversion of the MART Common Shares.
(a) At the Effective Time, each common share of beneficial interest, par
value $.01 per share, of MART (the "MART Common Shares") issued and outstanding
immediately prior to the Effective Time (other than those MART Common Shares to
be canceled pursuant to Section 4.1(c)) shall, by virtue of the Merger and
without any action on the part of MART, Merger Sub, Kimco or the holders of any
of the securities of any of these entities, be converted into the right to
receive $21.00 in cash, without interest, plus, in the event the Closing occurs
after September 15, 2003, an amount per share equal to the product of (i) $1.24
divided by 365, multiplied by (ii) the number of days that have elapsed
following September 15, 2003 and prior to the Closing Date (the "Merger
Consideration").
(b) As a result of the Merger and without any action on the part of the
holder thereof, at the Effective Time, all MART Common Shares shall cease to be
outstanding, shall be canceled and retired and shall cease to exist and each
holder of a certificate representing any MART Common Shares (a "Certificate")
shall thereafter cease to have any rights with respect to such MART Common
Shares, except the right to receive the Merger Consideration upon the surrender
of such Certificate.
(c) Each MART Common Share issued and held in MART's treasury at the
Effective Time, if any, and each MART Common Share held by Kimco, Merger Sub or
any other wholly-owned Subsidiary of Kimco at the Effective Time, if any, by
virtue of the Merger, shall cease to be outstanding, shall be canceled and
retired and shall cease to exist and no payment of any consideration shall be
made with respect thereto.
(d) In connection with the Merger, each outstanding option (collectively,
the "MART Options") to purchase MART Common Shares granted under MART's 1993
Omnibus Share Plan or its 1995 Stock Option Plan (together, the "MART Option
Plans"), which has not been exercised by the Effective Time, including those
MART Options that are not fully vested and exercisable as of the Effective Time,
shall, at the Effective Time, be converted into a right to receive at Effective
Time, as consideration therefor, cash in an amount equal to the product of (i)
the number of MART Common Shares receivable upon exercise of such MART Option
and (ii) the excess, if any, of $21.00 over the exercise price per share
provided for in such MART Option, which cash payment shall be treated as
compensation and shall be net of any applicable Tax (as defined in Section 5.10
hereof), which cash amount shall not exceed $2,300,000 in the aggregate; it
being understood that no MART Options shall continue to vest following the
Effective Time. Notwithstanding the foregoing, if the exercise price per share
provided for in any MART Option equals or exceeds $21.00, no cash shall be paid
with regard to such MART Option to the holder of such MART Option. MART shall
take all actions necessary to ensure that no MART Options are granted after the
date hereof and that all MART Options are terminated as of the Effective Time.
The MART Common Shares described in Section 5.3(a) of the MART Disclosure Letter
as restricted shares shall vest in full immediately prior to the Effective Time
so as to no longer be subject to any forfeiture or vesting requirements and all
such MART Common Shares shall be considered outstanding shares for all purposes
of this Agreement, including receipt of the Merger Consideration.
3
(e) Promptly following the date hereof, the MART Board of Trustees shall
suspend the MART Dividend Reinvestment Plan and Stock Purchase Plan (the "MART
DRSPP"). After the date hereof, MART will not issue any MART Common Shares under
the MART DRSPP.
(f) As of the Effective Time, the MART Board of Trustees shall have
authorized the amendment of the MART Non-Employee Trustee Deferred Compensation
Plan (the "Deferred Compensation Plan") to cease any further deferrals into the
deferred stock unit accounts. At the Effective Time, each outstanding stock unit
in the Deferred Compensation Plan shall be automatically converted to the Merger
Consideration and such amount shall be credited to the deferred money account in
the Deferred Compensation Plan. The Deferred Compensation Plan and its related
trust will remain in effect after the Effective Time.
4.2 Effect on Shares of Beneficial Interest of Merger Sub. As of the
Effective Time, all shares of beneficial interest of Merger Sub then outstanding
shall, by virtue of the Merger and without any action on the part of MART,
Merger Sub, Kimco or the holders of any of the securities of these entities, be
converted into an aggregate number of shares of beneficial interest of the
Surviving Entity equal to the number of MART Common Shares and MART Options
issued and outstanding immediately prior to the Effective Time.
4.3 Exchange of Certificates Representing MART Common Shares.
(a) Prior to the Effective Time, Kimco shall deposit, or shall cause to be
deposited, with an exchange agent selected by Kimco and reasonably satisfactory
to MART on or prior to the Effective Time (the "Exchange Agent"), for the
benefit of the holders of MART Common Shares and for exchange in accordance with
this Article 4, cash in an amount sufficient to pay the Merger Consideration
(such cash being hereinafter referred to as the "Exchange Fund") payable
pursuant to Section 4.1 and this Section 4.3 in exchange for outstanding MART
Common Shares and MART Options.
(b) Promptly after the Effective Time, Kimco shall cause the Exchange Agent
to mail to each holder of record of a Certificate or Certificates (i) a letter
of transmittal which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall be in such form and have such other
provisions as Kimco may reasonably specify and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for the Merger
Consideration. Upon surrender of a Certificate for cancellation to the Exchange
Agent together with such letter of transmittal, duly executed and completed in
accordance with the instructions thereto, the holder of such Certificate shall
be entitled to receive in exchange therefor the Merger Consideration, pursuant
to Section 4.1(a) hereof, and the Certificate so surrendered shall forthwith be
canceled. In the event of a transfer of ownership of MART Common Shares which is
not registered in the transfer records of MART, the Merger Consideration may be
paid to such a transferee if the Certificate representing such MART Common
Shares is presented to the Exchange Agent, accompanied by all documents required
to evidence and effect such transfer and to evidence that any applicable stock
transfer taxes have been paid. The Exchange Fund shall be used for no purpose
other than the payment of the Merger Consideration.
4
(c) At and after the Effective Time, there shall be no transfers on the
stock transfer books of MART of the MART Common Shares which were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Entity, they shall be canceled and
exchanged for the Merger Consideration in accordance with this Section 4.3.
4.4 Return of Exchange Fund. Any portion of the Exchange Fund (including
the proceeds of any investments thereof) that remains unclaimed by the former
shareholders of MART six months after the Effective Time shall be delivered to
Kimco. Any former shareholders of MART who have not theretofore complied with
this Article 4 shall thereafter look only to Kimco for payment of the Merger
Consideration. None of Kimco, Merger Sub, MART, the Exchange Agent or any other
Person shall be liable to any former holder of MART Common Shares for any amount
properly delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws. In the event any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
Person claiming such Certificate to be lost, stolen or destroyed and, if
required by the Surviving Entity, the posting by such Person of a bond in such
reasonable amount as the Surviving Entity may direct as indemnity against any
claim that may be made against it with respect to such Certificate, the Exchange
Agent or the Surviving Entity will pay in exchange for such lost, stolen or
destroyed Certificate the Merger Consideration.
4.5 Withholding of Tax. The Surviving Entity or the Exchange Agent shall be
entitled to deduct and withhold from the Merger Consideration such amount as the
Surviving Entity, or any affiliate of the Surviving Entity, or the Exchange
Agent is required to deduct and withhold with respect to the making of such
payment under the Internal Revenue Code of 1986, as amended (the "Code") or any
provision of state, local or foreign tax law. To the extent that amounts are so
withheld by the Surviving Entity or the Exchange Agent, such withheld amounts
shall be treated for all purposes of this Agreement as having been paid to the
former holder of a Certificate in respect of which such deduction and
withholding was made by the Surviving Entity or the Exchange Agent. In order to
avoid withholding of tax pursuant to Section 1445 of the Code on the Merger
Consideration to be paid to a MART shareholder, the MART shareholder will be
required to deliver to Kimco a non-foreign affidavit dated as of the Closing
Date, sworn under penalties of perjury and in form and substance required under
the Treasury Regulations issued pursuant to Code Section 1445, stating that such
MART shareholder is not a "foreign person" as defined in Code Section 1445 (the
"FIRPTA Affidavit"). Withholding under Code Section 1445 and Treasury
Regulations Section 1.1445-8 at a rate of 35% (or such other rate as may apply
in the event of a change in applicable law) will be required with respect to
MART shareholders who have not timely supplied such FIRPTA Affidavit.
ARTICLE 5 - Representations and Warranties of MART
MART represents and warrants to Kimco and Merger Sub, except as set forth
on the disclosure letter delivered by MART to Kimco at or prior to the date
hereof (the "MART Disclosure Letter") (with specific reference to the particular
section or subsection of this Agreement to which the information in the MART
Disclosure Letter relates; provided, however that an item included on the MART
Disclosure Letter with respect to any section or subsection of
5
this Article 5 shall be deemed to relate to each other section or subsection of
this Article 5 to the extent that such relationship is reasonably inferable), as
follows:
5.1 Existence; Good Standing; Authority; Compliance With Law. MART is a
real estate investment trust duly organized, validly existing and in good
standing under the laws of the State of Maryland. MART is duly licensed or
qualified to do business as a foreign entity and is in good standing under the
laws of any other state of the United States in which the character of the
properties owned or leased by it therein or in which the transaction of its
business makes such qualification necessary, which states are listed in Section
5.1 of the MART Disclosure Letter, except where the failure to be so licensed or
qualified, individually or in the aggregate, has not had and is not likely to
have a material adverse effect on the business, results of operations,
properties, assets, liabilities (contingent or otherwise) or financial condition
of MART and the MART Subsidiaries taken as a whole (a "MART Material Adverse
Effect"). MART has all requisite real estate investment trust power and
authority to own, operate and lease its assets and properties and carry on its
business as now conducted. Each MART Subsidiary (as defined in this Section 5.1)
is a corporation, limited liability company ("LLC") or partnership duly
incorporated or organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation or organization, has the corporate, LLC or
partnership power and authority to own its properties and to carry on its
business as it is now being conducted. Each MART Subsidiary is duly qualified to
do business and is in good standing in the states listed on Section 5.4 of the
MART Disclosure Letter, which are the only states in which the ownership of its
property or the conduct of its business requires such qualification, except
where the failure to be so licensed or qualified, individually or in the
aggregate, has not had and could not reasonably be expected to have a MART
Material Adverse Effect. Neither MART nor any of the MART Subsidiaries is in
violation of any order of any court, governmental authority or arbitration board
or tribunal, or any law, ordinance, governmental rule or regulation to which
MART or any MART Subsidiary or any of their respective properties or assets is
subject, except where such violation has not had or could not reasonably be
expected to have a MART Material Adverse Effect. MART and the MART Subsidiaries
have obtained all licenses, permits and other authorizations and have taken all
actions required by applicable law or governmental regulations in connection
with their business as now conducted, except where the failure to obtain any
such license, permit or authorization or to take any such action has not had or
could not reasonably be expected to have a MART Material Adverse Effect. The
charter or other equivalent documents, bylaws, organizational documents and
partnership and joint venture agreements (and in each such case, all amendments
thereto) of MART, MART Limited Partnership, a Maryland limited partnership
("MART LP") and each joint venture in which MART or a MART Subsidiary is a party
are listed in Section 5.1 of the MART Disclosure Letter and MART has delivered
or made available to Kimco true and correct copies of the organizational
documents for each material operating MART Subsidiary (including any that own
any Property). For the purposes of this Agreement, the term "MART Subsidiary"
shall include any of the entities listed under such heading in Section 5.4 of
the MART Disclosure Letter.
5.2 Authorization, Validity and Effect of Agreements. MART has the
requisite power and authority to enter into the transactions contemplated hereby
and to execute and deliver this Agreement. The Board of Trustees of MART has, by
resolutions duly adopted by unanimous vote, approved this Agreement, the Merger
and the transactions contemplated by this Agreement and has agreed to recommend
that the holders of MART Common Shares adopt and
6
approve the Merger at the Shareholders Meeting (as defined in Section 7.3(c)
hereof), which will be held in accordance with the provisions of Section 7.3. In
connection with the foregoing, the Board of Trustees of MART has taken such
actions and votes as are necessary on its part to render the provisions of the
Maryland Control Share Acquisition Statute (Title 3, Subtitle 7 of the MGCL),
the Maryland Business Combination Statute (Title 3, Subtitle 6 of the MGCL)
inapplicable to this Agreement, the Merger and the transactions contemplated by
this Agreement. Subject only to the approval of this Agreement and the
transactions contemplated hereby by the holders of two-thirds of the outstanding
MART Common Shares, the execution by MART of this Agreement and the consummation
of the transactions contemplated by this Agreement have been duly authorized by
all requisite corporate action of MART. This Agreement constitutes the valid and
legally binding obligation of MART, enforceable against MART in accordance with
its terms, except as enforceability may be limited by bankruptcy, insolvency,
fraudulent conveyance, moratorium, or other similar laws relating to creditors'
rights generally and by general principles of equity.
5.3 Capitalization.
(a) The authorized capital shares of MART consists of 100,000,000 MART
Common Shares, of which 18,081,829 shares are issued and outstanding as of the
date hereof, and 2,000,000 preferred shares of beneficial interest, par value
$.01 per share, of which no shares are issued and outstanding. All such issued
and outstanding MART Common Shares are duly authorized, validly issued, fully
paid, nonassessable and free of preemptive rights. Except for the Convertible
Subordinated Debentures due 2003 (the "Convertible Debentures") and the units of
limited partnership interest (the "OP Units") of MART LP, MART has no
outstanding bonds, debentures, notes or other obligations the holders of which
have the right to vote (or which are convertible into or exercisable for
securities having the right to vote) with the shareholders of MART on any
matter. Section 5.3(a) of the MART Disclosure Letter indicates the name of the
holder of any such obligation and the number of MART Common Shares into which
any such obligation may be convertible or exercisable. Except for the MART
Options (all of which have been issued under the MART Option Plans), there are
not any existing options, warrants, calls, subscriptions, convertible
securities, or other rights, agreements or commitments which obligate MART to
issue, transfer or sell any shares of beneficial interest of MART. Section
5.3(a) of the MART Disclosure Letter sets forth a full list of the MART Options,
including the name of the person to whom such options have been granted, the
number of shares subject to each option and the per share exercise price for
each option. Section 5.3(a) of the MART Disclosure Letter also sets forth a full
list of the outstanding awards under the MART 1997 Restricted Share Plan,
including the name of the person to whom such restricted shares have been
granted and the number of shares. There are no agreements or understandings to
which MART or any MART Subsidiary is a party with respect to the voting of any
MART Common Shares or which restrict the transfer of any such shares, nor does
MART have knowledge of any such agreements or understandings with respect to the
voting of any such shares or which restrict the transfer of any such shares.
Except as set forth in the Agreement of Limited Partnership of MART LP (the
"MART LP Partnership Agreement") with respect to the OP Units or pursuant to
contribution agreements to which MART is a party, all of which are listed on
Section 5.3(a) of the MART Disclosure Letter (the "Contribution Agreements"),
there are no outstanding contractual obligations of MART or any MART Subsidiary
to repurchase, redeem or otherwise acquire any capital shares, partnership
interests or any other securities of MART or any MART Subsidiary.
7
All dividends which have been declared with respect to MART Common Shares prior
to the date hereof have been paid in full other than the dividend to be paid on
June 16, 2003 in an amount equal to $0.31 per share. Except as set forth on
Section 5.3(a) of the MART Disclosure Letter, neither MART nor any MART
Subsidiary is under any obligation, contingent or otherwise, by reason of any
agreement to register any of their securities under the Securities Act of 1933,
as amended (the "Securities Act"). After the Effective Time, the Surviving
Entity will have no obligation to issue, transfer or sell any capital shares or
other interests of MART or the Surviving Entity pursuant to any MART Option Plan
or any other MART Benefit Plan (as defined in Section 5.16 hereof).
(b) The sole general partner of MART LP is MART. MART owns 18,081,829 OP
Units in MART LP and is the sole General Partner, as defined in the MART LP
Partnership Agreement, and the Limited Partners, as defined in the MART LP
Partnership Agreement, collectively own 3,020,776 OP Units in MART LP. Section
5.3(b) of the MART Disclosure Letter sets forth a list of the holders of all OP
Units, such holder's most recent address and the exact number and type (e.g.,
general, limited, etc.) of OP Units held. The MART LP has no Preference Units or
Other Securities outstanding, as such terms are defined in the MART LP
Agreement. All such issued and outstanding partnership interests are duly
authorized, validly issued, fully paid, and free of preemptive rights. Except
for any right of the OP Unit holders under the MART LP Partnership Agreement or
the Contribution Agreements, there are not any existing options, warrants,
calls, subscriptions, convertible securities, or other rights, agreements or
commitments which obligate MART LP to issue, transfer or sell any partnership
interests of MART LP. Except as set forth in the MART LP Partnership Agreement
and the Contribution Agreements, there are no outstanding contractual
obligations of MART LP to repurchase, redeem or otherwise acquire any
partnership interests of MART LP. The partnership interests owned by MART and,
to the knowledge of MART, the partnership interests owned by the Limited
Partners, are subject only to the restrictions on transfer set forth in the MART
LP Partnership Agreement, the Contribution Agreements, and those imposed by
applicable laws. Except as set forth in the MART LP Partnership Agreement and
the Contribution Agreements, MART LP has not issued or granted, and is not a
party to, any commitments of any kind relating to, or any agreements or
understandings with respect to, partnership interests or any other interests in
MART LP or any securities convertible or exchangeable into partnership interests
or such other interests or securities and neither the Limited Partners nor MART
has offered to purchase the other's partnership interest or has notified the
other of an offer by a Third Party to purchase its partnership interest. All
material MART notices, consents and other written communications in the last
year between MART LP and either the Limited Partners or MART or between the
Limited Partners and MART have been delivered or made available to Kimco.
5.4 Subsidiaries. Set forth in Section 5.4 of the MART Disclosure Letter is
a list of all MART Subsidiaries and all Persons owning an interest therein. Each
of the outstanding shares of capital stock in each of the MART Subsidiaries that
is a corporation is duly authorized, validly issued, fully paid and
nonassessable. Each of the outstanding shares of capital stock of, or
partnership or other equity interests in, each of the MART Subsidiaries owned
directly or indirectly by MART is owned free and clear of all liens, pledges,
security interests, claims, options or other encumbrances and neither MART nor
any MART Subsidiary has any agreement or commitment to sell or transfer any of
such stock or interests. The following information for
8
each MART Subsidiary is set forth in Section 5.4 of the MART Disclosure Letter:
(i) its name and jurisdiction of incorporation or organization; (ii) the
jurisdictions in which such entity is qualified to conduct business; and (iii)
the percentage ownership held by MART.
5.5 Other Interests. Except for interests in the MART Subsidiaries as set
forth in Section 5.4 of the MART Disclosure Letter, neither MART nor any MART
Subsidiary owns directly or indirectly any material interest or investment
(whether equity or debt) in any corporation, partnership, joint venture, trust
or other entity (other than investments in short-term investment securities).
With respect to the ownership interests in the MART Subsidiaries set forth in
Section 5.4 of the MART Disclosure Letter, MART or the applicable MART
Subsidiary, as the case may be, is not in any material breach of any provision
of any agreement, document or contract governing such entity's rights in or to
the interests owned or held, and to the knowledge of MART, the other parties to
such agreements, documents or contracts are not in material breach of any of
their respective obligations under such agreements, documents or contracts.
5.6 No Violation. Neither the execution and delivery by MART of this
Agreement nor the consummation by MART of the transactions contemplated by this
Agreement in accordance with its terms, will: (i) conflict with or result in a
breach of any provisions of the charter, bylaws, organizational documents,
partnership agreements, or joint venture agreements of MART or any MART
Subsidiary; (ii) except as set forth in Section 5.6 of the MART Disclosure
Letter, violate, or conflict with, or result in a breach of any provision of, or
constitute a default (or an event which, with notice or lapse of time or both,
would constitute a default) under, or result in the creation of any lien,
security interest, charge or encumbrance upon any of the properties of MART or
the MART Subsidiaries under, or result in being declared void, voidable or
without further binding effect, any of the terms, conditions or provisions of
any note, bond, mortgage, indenture, deed of trust or any license, franchise,
permit, lease, contract, agreement or other instrument, commitment or obligation
to which MART or any of the MART Subsidiaries is a party, or by which MART or
any of the MART Subsidiaries or any of their properties is bound or affected,
which could reasonably be expected to have a MART Material Adverse Effect (it
being understood that no representation is being given as to whether the
consummation of the Merger will result in a breach of any financial covenants
contained in any such agreement after the Closing); or (iii) other than the
filings provided for in Article 1 of this Agreement, or required under the
Securities Exchange Act of 1934, as amended (the "Exchange Act") or the
Securities Act (collectively, the "Regulatory Filings"), require any consent,
approval or authorization of, or declaration, filing or registration with, any
governmental or regulatory authority except where the failure to obtain any such
consent, approval or authorization of, or declaration, filing or registration
with, any governmental or regulatory authority could not reasonably be expected
to have a MART Material Adverse Effect or prevent or materially delay the
consummation of the Merger.
5.7 SEC Documents. All filings by MART with the United States Securities
and Exchange Commission ("SEC"), including each (A) registration statement, (B)
annual report on Form 10-K, (C) quarterly report on Form 10-Q, (D) current
report on Form 8-K, (E) proxy statement or information statement, and (F) other
reports filed with the SEC pursuant to the requirements of the Exchange Act or
the Securities Act (in all such cases, including all exhibits, amendments and
supplements thereto), prepared by MART or any of the MART Subsidiaries since
January 1, 2002, are publicly-available on EDGAR (collectively, the "MART
Reports").
9
The MART Reports were filed with the SEC in a timely manner and constitute all
forms, reports and documents required to be filed by MART pursuant to the
Securities Act, the Exchange Act and the rules and regulations promulgated
thereunder (the "Securities Laws") since January 1, 2002. As of their respective
dates, the MART Reports (i) complied as to form in all material respects with
the applicable requirements of the Securities Laws and (ii) did not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements made therein, in the light
of the circumstances under which they were made, not misleading (except to the
extent such statements have been modified or superceded by later MART Reports).
Each of the consolidated balance sheets of MART included in or incorporated by
reference into the MART Reports (including the related notes and schedules)
fairly presents the consolidated financial position of MART and the MART
Subsidiaries as of its date and each of the consolidated statements of income,
retained earnings and cash flows of MART included in or incorporated by
reference into the MART Reports (including any related notes and schedules)
fairly presents the results of operations, retained earnings or cash flows, as
the case may be, of MART and the MART Subsidiaries for the periods set forth
therein (subject, in the case of unaudited statements, to normal year-end audit
adjustments), in each case, other than in the case of Forms 8-K furnished but
not deemed filed with the SEC, in accordance with generally accepted accounting
principles consistently applied during the periods involved, except as may be
noted therein and except, in the case of the unaudited statements, as permitted
by Form 10-Q of the SEC. Except as and to the extent set forth on the
consolidated balance sheet of MART and the MART Subsidiaries at December 31,
2002, including all notes thereto, neither MART nor any of the MART Subsidiaries
has any material liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) that would be required to be reflected on, or
reserved against in, a balance sheet of MART or in the notes thereto, prepared
in accordance with generally accepted accounting principles consistently
applied, except liabilities (i) reflected on the Forms 10-Q filed prior to the
date hereof, (ii) those liabilities arising in the ordinary course of business
since such date, and (iii) liabilities incurred in connection with the Merger.
5.8 Litigation. Except as disclosed in Section 5.8 of the MART Disclosure
Letter and except for routine litigation arising from the ordinary course of
business of MART and the MART Subsidiaries which (a) relates to any
landlord/tenant rent collection proceedings or regarding tenants with less than
10,000 square feet or (b) are adequately covered by insurance (it being
understood that litigation arising from or related in any way to Hazardous
Material (as defined in Section 5.15) shall not be considered routine
litigation), there is no suit, action or proceeding pending (in which service of
process has been received by an employee of MART or a MART Subsidiary) or, to
the knowledge of MART, threatened against or affecting MART or any MART
Subsidiary or any of their respective assets or properties nor is there any
judgment, decree, injunction, rule or order of any court, administrative or
regulatory agency or commission or other governmental authority or agency,
domestic or foreign ("Governmental Entity") or arbitrator outstanding against or
affecting MART or any MART Subsidiary which, if determined adversely, could
reasonably be expected to have a MART Material Adverse Effect, or that
individually or in the aggregate could reasonably be expected to prevent the
consummation of the Merger.
5.9 Absence of Certain Changes or Events. Except for the transactions
contemplated by this Agreement, since the date of the most recent audited
financial statements included in
10
MART Reports, MART and the MART Subsidiaries have conducted their business only
in the ordinary course and there has not been (a) any change in the business or
assets of MART which had or could be reasonably expected to have a MART Material
Adverse Effect, nor has there been any occurrence in the business or assets of
MART that with the passage of time could reasonably be expected to result in a
MART Material Adverse Effect; provided that this representation shall not be
deemed to include the impact of (A) changes in laws of general applicability or
interpretations thereof by courts or Governmental Entities, including changes in
tax statutes, regulations or rulings generally applicable to real estate
investment trusts ("REITs") within the meaning of Section 856 of the Code, (B)
changes in generally accepted accounting principles ("GAAP") or accounting
principles generally applicable to REITs, (C) the effects of compliance with and
prosecution of this Agreement on the operating performance of MART, (D) general
changes in the economy or financial markets of the United States relating to or
arising from acts of war or terrorism or other changes in the general U.S. and
global economic conditions, in either case, other than those that would have a
materially disproportionate financial effect, relative to other industry
participants, on MART and the MART Subsidiaries taken as a whole, (E) any
actions taken, or inaction or failure to act, by MART at the request or
direction, following the date of this Agreement, of Kimco and Merger Sub, or
resulting from Kimco's refusal to consent to the taking of an action otherwise
prohibited by this Agreement, (b) any authorization, declaration, setting aside
or payment of any dividend or other distribution (whether in cash, shares or
property) with respect to the MART Common Shares, other than the declaration of
a dividend of $0.31 per share payable on June 16, 2003 to shareholders of record
on May 30, 2003, (c) any split, combination or reclassification of the MART
Common Shares or any issuance or the authorization of any issuance of any other
securities in respect of, in lieu of or in substitution for, or giving the right
to acquire by exchange or exercise, shares of beneficial interest of MART or
partnership interests in MART LP or any issuance of an ownership interest in,
any MART Subsidiary, (d) any damage, destruction or loss, whether or not covered
by insurance, that has or could reasonably be expected to have a MART Material
Adverse Effect, (e) any change in accounting methods, principles or practices by
MART or any MART Subsidiary materially affecting its assets, liabilities or
business, except insofar as may have been required by a change in GAAP or (f)
any amendment of any employment, consulting, severance, retention or any other
agreement between MART or any MART Subsidiary and any officer, trustee or
director of MART or any MART Subsidiary.
5.10 Taxes.
(a) MART and each of the MART Subsidiaries has timely filed with the
appropriate taxing authority all material Tax Returns (as defined in this
Section 5.10(a)) required to be filed by it prior to the date hereof or has
timely requested extensions and any such request has been granted and has not
expired. Each such Tax Return is complete and accurate in all material respects.
All real property and personal property Taxes have been properly reflected in
the statements of operations of MART and the MART Subsidiaries, and have been
paid prior to the imposition of any penalty. All other material Taxes (as
defined in this Section 5.10(a)) owed by MART or any of the MART Subsidiaries
have been paid or accrued, except for Taxes being contested in good faith and
for which adequate reserves have been taken. Neither MART nor any of the MART
Subsidiaries has executed or filed with the Internal Revenue Service (the "IRS")
or any other taxing authority any agreement now in effect extending the period
for assessment or collection of any material Tax. Except as set forth in Section
5.10(a) of the
11
MART Disclosure Letter, neither MART nor any of the MART Subsidiaries is a party
to any pending action or proceedings by any taxing authority for assessment or
collection of any material Tax, and no claim for assessment or collection of any
material Tax has been asserted against it. True and complete copies of all
federal, state and local income or franchise Tax Returns filed by MART and each
of the MART Subsidiaries with respect to taxable years commencing on or after
January 1, 1997 have been delivered to Kimco or made available to
representatives of Kimco prior to the date hereof. To the knowledge of MART, no
claim has been made in writing or, to the knowledge of MART or any of the MART
Subsidiaries, by an authority in a jurisdiction where MART or any of the MART
Subsidiaries does not file Tax Returns that it is or may be subject to taxation
by that jurisdiction. There is no dispute or claim concerning any material Tax
liability of MART or any of the MART Subsidiaries, (i) claimed or raised by any
taxing authority in writing or (ii) as to which MART or any of the MART
Subsidiaries has knowledge. No issues have been raised in writing in any
examination by any taxing authority with respect to MART or any of the MART
Subsidiaries which, by application of similar principles, reasonably could be
expected to result in a material deficiency or increase in Tax for any other
period not so examined. Section 5.10(a) of the MART Disclosure Letter lists all
federal and state income Tax Returns filed with respect to MART and all the MART
Subsidiaries for taxable periods commencing on or after January 1, 1997 that
have been audited, and indicates those Tax Returns, if any, that currently are
the subject of audit. For the purpose of this Agreement, (i) the term "Tax" or
"Taxes" shall mean any federal, state, local, or foreign income, gross receipts,
license, payroll, employment, excise, severance, windfall profits, environmental
(including taxes under Section 59A of the Code), franchise, profits,
withholding, social security (or similar), unemployment, disability, real
property, personal property, sales, use, transfer, rollback, registration, value
added, alternative or add-on minimum, estimated, or other tax of any kind
whatsoever, including any interest, penalty, or addition thereto, whether
disputed or not, and shall include any amounts payable pursuant to any tax
sharing agreement or with respect to which any relevant entity is liable as a
successor, pursuant to contract or by operation of law; and (ii) the term "Tax
Return" shall mean any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
(b) MART (i) intends to be taxed as a REIT through the Closing Date and has
complied (and will comply) with all applicable provisions of the Code relating
to a REIT, through the Closing Date, (ii) has operated, and intends to continue
to operate, in such a manner as to qualify as a REIT for 2002 and through the
Closing, and (iii) has not taken or omitted to take any action which would
reasonably be expected to result in a challenge to its status as a REIT during
such time period, and, to the knowledge of MART, no such challenge is pending or
threatened, provided that MART makes no representation that it will satisfy the
distribution requirements of Section 857 or Section 4981 of the Code for its tax
year that includes the Closing Date and provided further, that the
representations made in this Section 5.10(b) shall not apply to the extent that
MART fails to qualify as a REIT solely as a result of actions taken by Kimco
after the Closing Date.
(c) MART, for all taxable years commencing with its short taxable year
ended December 31, 1993 through December 31, 2001, was eligible to and did
validly elect to be taxed as a REIT for federal income tax purposes and at all
times thereafter continued such election and continued to be so eligible to be
taxed as a REIT for federal income tax purposes. Provided the
12
Closing occurs on or after September 15, 2003, any disposition of the assets of
MART and or any of its Subsidiaries will not be subject to rules similar to
Section 1374 of the Code as a result of an election under IRS Notice 88-19, or
under temporary or final regulations under Section 337(d) of the Code, or
otherwise. MART has no earnings and profits accumulated in any "non-REIT year"
within the meaning of Section 857(a)(2) of the Code.
(d) Since January 1, 2001, MART has incurred no material liability for
Taxes under Section 857(b), 860(c) or 4981 of the Code, including without
limitation any Tax arising from a prohibited transaction described in Section
857(b)(6) of the Code or any tax arising from "redetermined rents, redetermined
deductions and excess interest" described in Section 857(b)(7) of the Code, and
neither MART nor any of the MART Subsidiaries has incurred any material
liability for Taxes other than in the usual, regular and ordinary course of
business. To the knowledge of MART, no event has occurred and no condition or
circumstance exists which presents a material risk that any material Tax
described in the preceding sentence will be imposed upon MART or the MART
Subsidiaries.
(e) MART and each of the MART Subsidiaries have withheld and paid all
material Taxes required to have been withheld and/or paid in connection with
amounts paid or owing to any employee, former employee, independent contractor,
creditor, stockholder, or other third party.
(f) MART has no class of outstanding stock that is not regularly traded on
an established securities market under Section 1445(b)(6) of the Code (except
for the Convertible Debentures).
(g) Commencing with its short taxable year ended December 31, 1993, MART
has not owned, directly or indirectly, an interest in any Subsidiary other than
(i) a "qualified REIT subsidiary" within the meaning of Section 856(i)(2) of the
Code, (ii) a "taxable REIT subsidiary" within the meaning of Section 856(l) of
the Code, or (iii) a partnership, any other "flow through" entity or any entity
disregarded for federal income tax purposes.
(h) Each MART Subsidiary that is treated as an association taxed as a
corporation for federal income tax purposes is and has been since its
acquisition either a "qualified REIT subsidiary" within the meaning of Section
856(i)(2) of the Code or a "taxable REIT subsidiary" within the meaning of
Section 856(l) of the Code.
(i) MART LP, each MART Subsidiary organized as a partnership and each other
partnership or other "flowthrough" entity in which MART directly or indirectly
owns any interest that files Tax Returns as a partnership for federal income tax
purposes (the "Partnerships") is classified as a partnership for federal income
tax purposes, and neither the Partnerships, MART nor any of the Subsidiaries of
MART has taken a position inconsistent with such treatment with regard to any
Tax. Other than the Partnerships, MART does not own, directly or indirectly, any
material interest in any joint venture, partnership, or other arrangement or
contract that could reasonably be expected to be treated as a partnership for
federal income tax purposes. MART LP has the right to make or to require each
Partnership that is classified as a partnership for federal income tax purposes
to make, in the manner provided in Section 1.754-1(b) of the Treasury
Regulations, an election under Section 754 of the Code (and any
13
corresponding elections under state or local tax law) to adjust the basis of its
property as provided in Sections 734(b) and 743(b) of the Code, or such an
election has already been made and not rescinded by any such Partnerships.
(j) Neither MART nor any of the MART Subsidiaries has made any election, or
is required, to treat any asset of any Subsidiary as owned by another person for
tax purposes (other than by reason of a Subsidiary being a "qualified REIT
subsidiary" or a "disregarded entity" for federal income tax purposes and any
comparable provision of state, local or foreign law and except with respect to
assets beneficially owned by a Subsidiary and record title to which is held by
another entity).
(k) Neither MART nor any of the MART Subsidiaries has requested, received
or is subject to any written ruling of a taxing authority related to Taxes or
has entered into any written and legally binding agreement with a taxing
authority relating to Taxes.
(l) Other than the Tax Protection Agreements (as defined below), neither
MART nor any of its Subsidiaries (i) is a party to or is otherwise subject to
any Tax allocation or sharing agreement and (ii) has any liability for the Taxes
of another person under law, by contract or otherwise.
(m) A true, complete and correct copy of each Tax Protection Agreement has
been delivered to Kimco. In this Agreement, "Tax Protection Agreements" shall
mean any agreement to which MART or any MART Subsidiary is a party pursuant to
which (a) any liability to holders of OP Units relating to Taxes may arise,
whether or not as a result of the consummation of the transactions contemplated
by this Agreement; (b) in connection with the deferral of income Taxes of a
holder of OP Units, MART, MART LP or their respective Subsidiaries or the
Partnerships have agreed to (i) maintain a minimum level of debt or continue a
particular debt, (ii) retain or not dispose of assets for a period of time that
has not since expired, (iii) make or refrain from making Tax elections, (iv)
operate (or refrain from operating) in a particular manner, and/or (v) only
dispose of assets in a particular manner; and/or (c) limited partners of a
Partnership have guaranteed debt of such Partnership or any other Partnership or
agreed to indemnify another person for a liability of or that relates to a
Partnership.
(n) Neither MART nor any MART Subsidiary is a party to any so-called "tax
increment financing" or similar agreement and none of the MART Properties (as
defined in Section 5.12 hereof) are located within or subject to any tax
increment financing or other special tax district.
(o) To the knowledge of MART, none of the MART Properties are currently, or
if developed would be, subject to any so-called "change in use taxes." Except as
set forth in Section 5.10(o) of the MART Disclosure Letter, no MART Properties
have any tax exemptions, payments in lieu of taxes or tax abatements with
respect to payment of real property taxes.
5.11 Books and Records.
(a) The books of account and other financial records of MART and each of
the MART Subsidiaries are true, complete and correct in all material respects.
14
(b) The minute books and other records of MART and each of the MART
Subsidiaries have been made available to Kimco, contain in all material respects
accurate records of all meetings and accurately reflect in all material respects
all other corporate action of the shareholders, trustees and directors and any
committees of the Board of Trustees of MART and each of the MART Subsidiaries.
5.12 Properties. All of the real estate properties owned by MART and each
of the MART Subsidiaries are set forth in Section 5.12 of the MART Disclosure
Letter. Except as set forth in Section 5.12 of the MART Disclosure Letter, MART
and each MART Subsidiary owns fee simple title to or has a valid leasehold
interest in each of the real properties identified in the MART Disclosure Letter
(the "MART Properties"), free and clear of liens, mortgages or deeds of trust,
claims against title, charges which are liens, security interests or other
encumbrances on title (collectively, "Encumbrances") and the MART Properties are
not subject to any rights of way, written agreements, laws, ordinances and
regulations affecting building use or occupancy, or reservations of an interest
in title (collectively, "Property Restrictions"), except for (u) real estate
taxes and special assessments (v) leases and reciprocal easement agreements, (w)
inchoate liens imposed for construction work in progress pursuant to Budgets and
Pro Forma Budgets (each as defined herein) or incurred in the ordinary course of
business (x) Property Restrictions imposed or promulgated by law or any
governmental body or authority with respect to real property, including zoning
regulations, that do not (i) materially adversely affect the current use of the
property, (ii) materially detract from the value of or materially interfere with
the current use of the property, (iii) materially detract from the value of or
materially interfere with the planned use of any land held for development or
properties being developed or expanded, or (iv) affect the ability to rebuild
after a casualty, to the same density, any property currently in existence and
(y) Encumbrances and Property Restrictions disclosed on existing title reports
or surveys (in either case copies of which title reports and surveys have been
delivered or made available to Kimco or as would be disclosed on current title
reports received prior to the date hereof or surveys except, in each case as
would not have a material adverse effect on the value of any of the MART
Properties, individually or in the aggregate. Except as could not reasonably be
expected to have a MART Material Adverse Effect, valid policies of title
insurance have been issued insuring MART's or the applicable MART Subsidiary's
fee simple or leasehold title to each of the MART Properties listed in Section
5.12 of the MART Disclosure Letter, and to the knowledge of MART such policies
are in full force and effect and no claim has been made against any such policy
and MART has no knowledge of any facts or circumstances which would constitute
the basis for such a claim. To the knowledge of MART, except for the Properties
Under Development (as defined below), (i) no certificate, permit or license from
any governmental authority having jurisdiction over any of the MART Properties
or any agreement, easement or other right which is necessary to permit the
lawful use and operation of the buildings and improvements on any of the MART
Properties or which is necessary to permit the lawful use and operation of all
driveways, roads, parking areas, out lots, and other means of egress and ingress
to and from any of the MART Properties (a "REA Agreement") has not been obtained
and is not in full force and effect, and there is no pending threat of
modification or cancellation of any of the same and the MART Properties are in
full compliance with all governmental permits, licenses and certificates except,
in each case as would not have a material adverse effect on the value of any of
the MART Properties, individually or in the aggregate; or (ii) no written notice
of any violation of any federal, state or municipal law, ordinance, order,
regulation or requirement affecting any portion of any of the MART Properties
has been issued by any
15
governmental authority and none of the MART Properties are in violation of any
such federal, state or municipal law, order, ordinance, regulation or
requirement, including, without limitation, the Americans with Disabilities Act,
except for such violations that would not have a material adverse effect on the
value of any of the MART Properties, individually or in the aggregate. To the
knowledge of MART, each Property Under Development has obtained all
certificates, permits and licenses which are required to be obtained and MART
has no reason to believe that any future certificate, permit or license required
for the lawful use and operation of the improvements being constructed thereon
will not be issued in the ordinary course of business. No REA Agreements or
other easements (other than customary utility easements which can be obtained in
the ordinary course of business) are required from third parties for any
Property Under Development which has not already been obtained. There are no
tenant improvement projects, development and redevelopment projects or
acquisition and construction projects currently in process at any MART
Properties the cost of which is (i) not included in the MART 2003 budget (the
"Budget") attached as Exhibit B hereto or the pro forma of the Development and
Redevelopment Projects (the "Pro Forma Budget") attached as Exhibit C hereto or
(ii) in excess of $50,000 in any case or in excess of $150,000 in the aggregate.
Within 5 business days following the date hereof, MART covenants to provide
tenant improvement projects, development and redevelopment projects and
acquisition and construction projects currently in process at any of the MART
Properties. To the knowledge of MART, the use and occupancy of each of the MART
Properties complies in all material respects with all applicable codes and
zoning laws and regulations, and MART has no knowledge of any pending or
threatened proceeding or action that will in any manner affect the size of, use
of, improvements on, construction on, or access to any of the MART Properties,
with such exceptions as are not material and do not interfere with the use made
and proposed to be made of such MART Properties. Neither MART nor any of the
MART Subsidiaries has received any notice to the effect that (A) any betterment
assessments have been levied against, or any condemnation, taking, eminent
domain or similar action or rezoning proceedings are pending or threatened with
respect to any of the MART Properties or (B) any zoning, building or similar
law, code, ordinance, order or regulation is or will be violated by the
continued maintenance, operation or use of any buildings or other improvements
on any of the MART Properties or by the continued maintenance, operation or use
of the parking areas. Except as set forth in Section 5.12 of the MART Disclosure
Letter, to the knowledge of MART, there are no facts or circumstances under
which the owner of real estate (other than MART) can cause MART to materially
breach or be in material default under any material lease or material REA
Agreement.
5.13 Leases.
(a) Section 5.13 of the MART Disclosure Letter sets forth a true, accurate
and complete rent roll for each of the MART Properties (the "Rent Roll") as of
May 31, 2003. Except as noted in Section 5.13 of the MART Disclosure Letter, to
MART's knowledge, there is no violation of any cotenancy, exclusive or
restriction listed in such Section 5.13.
(b) MART has previously delivered or made available to Kimco a true,
complete and correct copy of all leases, tenancies or other agreements for all
or any portion of the MART Properties listed on the Rent Roll, all amendments,
modifications, assignments, subleases to which MART or any MART Subsidiary has
consented and supplements thereto and
16
all guarantees with respect thereto (each, a "MART Lease" and collectively, the
"MART Leases").
(c) Except as noted in Section 5.13 of the MART Disclosure Letter, each of
the MART Leases is valid and subsisting and in full force and effect and has not
been amended, modified or supplemented. To the knowledge of MART, other than as
set forth in the MART Leases, no tenant under a MART Lease has the right to
terminate such lease prior to the scheduled expiration thereof. Except as set
forth in Section 5.13 of the MART Disclosure Schedule neither MART nor any MART
Subsidiary has received any written notice from any tenant which leases more
than 10,000 square feet of any intention to vacate.
(d) To the knowledge of MART no tenant under a MART Lease has provided
written notice to MART or any MART Subsidiary of any offset, defense or claim
against rent payable by it or other performance of obligations due from it under
its lease.
(e) Except as set forth in Section 5.13 of the MART Disclosure Letter, no
tenant under a MART Lease is in material default under any material provision of
its lease, and no such tenant is in arrears in the performance of any monetary
obligation required of it under its lease. Except as set forth in Section 5.13
of the MART Disclosure Letter, MART is not aware of any facts or circumstances
which with the passage of time and/or notice would constitute a default by any
tenant under a lease.
(f) Except as set forth in Section 5.13 of the MART Disclosure Letter, MART
has received no written notice stating that any tenant leasing in excess of
10,000 square feet under a MART Lease is insolvent or that any such tenant is
unable to perform any or all of its material obligations under its lease.
(g) No tenant under any of the MART Leases, or any guarantor, has asserted
any claim of which MART or any MART Subsidiary has received written notice which
would materially affect the collection of rent from such tenant and neither MART
nor any MART Subsidiary has received written notice of any material default or
breach on the part of MART or any MART Subsidiary under any of the MART Leases
which has not been cured within the applicable cure period.
(h) Except as provided in the Budget or the Pro Forma Budget, there are no
tenant improvement costs or leasing commissions associated with leases of 10,000
square feet or more of any of the MART Properties which have not yet been
reduced to a written lease. Within five (5) business days following the date
hereof, MART covenants to provide Section 5.13(h) of the MART Disclosure Letter,
setting forth a list of all written commitments made by MART or any MART
Subsidiary to enter into leases of 10,000 square feet or more of any of the MART
Properties or any portion thereof which has not yet been reduced to a written
lease, including a description of the right of any third party broker to any
outstanding brokerage or other commission incidental thereto and all other
financial terms, all in reasonable detail. Section 5.13 of the MART Disclosure
Letter also sets forth a complete list of all brokerage or other commissions
owed in whole or part by MART or any of the MART Subsidiaries. MART has provided
true and correct copies of all such written commitments to Kimco.
17
(i) To the knowledge of MART, all leases of 10,000 square feet or more
pursuant to which MART or any MART Subsidiary, as lessee, leases real or
personal property are valid and effective in accordance with their respective
terms, and there is not, under any of such leases, any material existing default
or any event which with notice or lapse of time or both would constitute such a
default, nor do any of such leases contain any provision which would preclude
the Surviving Entity or a MART Subsidiary from occupying and using the leased
premises for the same purposes and upon substantially the same rental and other
terms as are applicable to the occupation and current use by MART and the MART
Subsidiaries.
(j) No tenants have been granted options to purchase or rights of first
refusal or rights of first offer under their applicable leases or otherwise
which would require consent or be triggered by the Merger.
5.14 Options to Purchase/Brokerage. Except as set forth in the MART Leases,
no tenant under any of the MART Leases is entitled to any purchase option,
concessions, allowances, abatements, set offs, rebates or refunds or has prepaid
any rents or other charges for more than one month. Except as provided in the
Budget or the Pro Forma Budget for 2003 or, with respect to any subsequent
years, there are no brokerage, leasing commission or other compensation in
excess of $100,000 in the aggregate which would be due or payable to any Person,
firm, corporation or other entity with respect to or on account of any of the
MART Leases or any extensions or renewals thereof on and after the Effective
Time and MART covenants to provide, within five (5) business days of the date
hereof, Section 5.22 of the MART Disclosure Letter setting forth a list of all
such items (without giving effect to the exceptions in the initial clause of
this sentence).
5.15 Environmental Matters
(a) For purposes of this Agreement, (x) "Environmental Law" means any Law
of any Governmental Entity relating to human health, safety or protection of the
environment, and (y) "Hazardous Material" means (A) any petroleum or petroleum
products, radioactive materials, asbestos-containing materials, urea
formaldehyde foam insulation, and transformers and other equipment that contain
dielectric fluid containing greater than 50 parts per million polychlorinated
biphenyls ("PCBs"); (B) any chemicals, materials, substances or wastes which are
defined as or included in the definition of "hazardous substances," "hazardous
wastes," "hazardous materials," "extremely hazardous wastes," "restricted
hazardous wastes," "toxic substances," "toxic pollutants" or words of similar
import, under any applicable Environmental Law.
(b) To the knowledge of MART, except as disclosed on the environmental
audits/reports made available to Kimco, and except as disclosed in Section
5.15(b) of the MART Disclosure Letter or on any environmental report obtained by
Kimco, or except as has not had or is not reasonably expected to have a MART
Material Adverse Effect:
(i) All property presently owned, operated or leased by MART or any
MART Subsidiaries, and all facilities and operations thereon, are in
material compliance with all applicable Environmental Laws. Neither MART
nor any MART Subsidiary (1) has entered into or is subject to or been
subject to any judgment, consent decree,
18
compliance order, or administrative order with respect to any environmental
or health and safety matter or received any request for information,
notice, claim, demand letter, administrative inquiry, or formal or informal
complaint or claim with respect to any environmental or health and safety
matter or the enforcement of any Environmental Law; (2) are parties to any
proceeding of any Governmental Entity regarding any alleged failure by MART
or any MART Subsidiary to comply with applicable Environmental Laws; and
(3) has any reason to believe that any of the items enumerated in parts (1)
and (2) of this sentence are reasonably expected.
(ii) Neither MART nor any MART Subsidiary has transported or arranged
for the transportation of any Hazardous Material to any location which is
the subject of any pending action, suit or proceeding that could reasonably
be expected to result in claims against MART or any MART Subsidiary related
to such Hazardous Material for clean-up costs, remedial work, damages to
natural resources or personal injury claims, including, but not limited to,
claims under the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, and the rules and regulations
promulgated thereunder ("CERCLA") and, to the knowledge of MART, there is
no reasonable basis for such claim.
(iii) No Hazardous Materials have been or are threatened to be
spilled, released, discharged, or disposed of at any site presently or
formerly owned, operated, leased, or used by MART or any MART Subsidiary,
or, to the knowledge of MART are present in the soil, sediment, water, or
groundwater at any such site. No property now or previously owned or
operated by MART or any MART Subsidiary is listed or proposed for listing
on the National Priorities List promulgated pursuant to CERCLA or on any
similar state list of sites.
(iv) MART and the MART Subsidiaries have not entered into any
agreements to provide indemnification to any third party purchaser pursuant
to Environmental Laws in relation to any property or facility previously
owned or operated by MART or a MART Subsidiary.
(v) MART has provided to Kimco (in addition to assessments, analyses
and reports prepared at the request of Kimco) copies of all documents,
records, and information in the possession of MART and the MART
Subsidiaries concerning any material environmental or health or safety
matter relevant to MART or any of the MART Subsidiaries, whether generated
by MART, the MART Subsidiaries, or others, including without limitation,
environmental audits, environmental risk assessments, site assessments, and
reports, correspondence, permits, licenses, approvals, consents, and other
authorizations related to environmental or health and safety matters issued
by any Governmental Entity, except for such reports that contain
information regarding the environmental condition of any such property that
has been superceded by information contained in a subsequently dated report
that has been provided to Kimco.
19
5.16 Employee Benefit Plans.
(a) All employee benefits plans (within the meaning of Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"))
and other benefit arrangements, including cash bonus or incentive plans,
covering employees of MART and the MART Subsidiaries, other than any
multiemployer plan (within the meaning of Section 3(37) of ERISA) (the
"MART Benefit Plans") are listed in Section 5.16(a) of the MART Disclosure
Letter. True and complete copies of the MART Benefit Plans have been
provided or made available to Kimco. To the extent applicable, the MART
Benefit Plans have been administered in all material respects in accordance
with their terms and comply, in all material respects, with the applicable
requirements of ERISA and the Code. No MART Benefit Plan is covered by
Title IV of ERISA or Section 412 of the Code. No MART Benefit Plan nor MART
or any MART Subsidiary has incurred any liability or penalty under Section
4975 of the Code or Section 502(i) of ERISA. There are no pending or, to
the knowledge of MART, anticipated claims against or otherwise involving
any of the MART Benefit Plans and no suit, action, governmental
administrative proceeding, or other litigation (excluding claims for
benefits incurred in the ordinary course of MART Benefit Plan activities)
has been brought against or, to the knowledge of MART, threatened with
respect to any such MART Benefit Plan. Except as otherwise required by
Sections 601 through 608 of ERISA, Section 4980B of the Code and applicable
state laws, or as disclosed in Section 5.16(a) of the MART Disclosure
Letter, MART does not maintain or contribute to any plan or arrangement
which provides or has any liability to provide life insurance, medical or
other employee welfare benefits or severance to any employee or former
employee upon his retirement or termination of employment and MART has
never represented, promised or contracted (whether in oral or written form)
to any employee or former employee that such benefits would be provided.
MART or any MART Subsidiary may amend or terminate any MART Benefit Plan at
any time without incurring any liability thereunder. Section 5.16(a) of the
MART Disclosure Letter also sets forth the amount payable to each executive
officer and trustee of MART pursuant to the MART Benefit Plans in
connection with the transactions contemplated herein. Except as set forth
in Section 5.16(a) of the MART Disclosure Letter, the execution of, and
performance of the transactions contemplated in, this Agreement will not
(either alone or upon the occurrence of any additional subsequent events
directly related to the transaction contemplated herein) (i) constitute an
event under any MART Benefit Plan that will or may result in any payment
(whether of severance pay or otherwise), acceleration, forgiveness of
indebtedness, vesting, distribution, increase in benefits or obligations to
fund benefits with respect to any employee, trustee, director or consultant
of MART or any MART Subsidiary pursuant to any MART Benefit Plan or (ii)
result in the triggering or imposition of any restrictions or limitations
on the right of MART or Kimco to amend or terminate any MART Benefit Plan.
(b) Neither MART nor any MART Subsidiary contributes to or has any
liability to contribute to a multiemployer plan. All contributions have
been made as required by the terms of each of the plans listed in Sections
5.16(a) of the MART Disclosure Letter and the terms of any related
collective bargaining agreements and neither MART nor any MART Subsidiary
has any knowledge or received any notice that any such plan is in
reorganization, that increased contributions are required to avoid a
reduction in plan benefits or the imposition of any excise tax, that any
such plan is or has been funded at a rate less than required under Section
412 of the Code, or that any such plan is insolvent.
20
5.17 Labor Matters. Neither MART nor any MART Subsidiary is a party to, or
bound by, any collective bargaining agreement, contract or other agreement or
understanding with a labor union or labor union organization. There is no unfair
labor practice or labor arbitration proceeding pending or, to the knowledge of
MART, threatened against MART or any of the MART Subsidiaries, except for any
such proceeding which have not had or could not reasonably be expected to have a
MART Material Adverse Effect. To the knowledge of MART, there are no
organizational efforts with respect to the formation of a collective bargaining
unit presently being made or threatened involving employees of MART or any of
the MART Subsidiaries.
5.18 No Brokers. Neither MART nor any of the MART Subsidiaries has entered
into any contract, arrangement or understanding with any Person or firm which
may result in the obligation of such entity or Kimco to pay any finder's fees,
brokerage or agent's commissions or other like payments in connection with the
negotiations leading to this Agreement or the consummation of the transactions
contemplated hereby, except that MART has retained Wachovia Securities, LLC
("Wachovia") as its financial advisors, the arrangements with which have been
disclosed in writing to Kimco prior to the date hereof. Other than the foregoing
arrangements and Kimco's arrangement with UBS Warburg, MART is not aware of any
claim for payment of any finder's fees, brokerage or agent's commissions or
other like payments in connection with the negotiations leading to this
Agreement or the consummation of the transactions contemplated hereby.
5.19 Opinion of Financial Advisor. The Board of Trustees of MART has
received the opinion of Wachovia, to the effect that, as of the date hereof, the
Merger Consideration is fair from a financial point of view to the holders of
MART Common Shares. MART shall promptly deliver a copy of the written opinion of
Wachovia to Kimco. It is agreed and understood that such opinion is for the sole
benefit of MART's Board of Trustees and may not be relied upon by Kimco (except
by operation of law following the Effective Time) or any other person.
5.20 Kimco Share Ownership. Neither MART nor any of the MART Subsidiaries
owns any shares of the common stock, par value $.01 per share, of Kimco (the
"Kimco Common Stock") or other securities convertible into any shares of Kimco
Common Stock.
5.21 Related Party Transactions. Except as set forth in Section 5.21 of the
MART Disclosure Letter, there are no arrangements, agreements and contracts
entered into by MART or any of the MART Subsidiaries (which are or will be in
effect as of or after the date of this Agreement) with any Person who is an
officer, trustee, director or affiliate of MART or any of the MART Subsidiaries
that are required to be disclosed under the Securities Laws.
5.22 Contracts and Commitments. Section 5.22 of the MART Disclosure Letter
sets forth a list of (i) all notes, debentures, bonds and other evidence of
indebtedness which are secured or collateralized by mortgages, deeds of trust or
other security interests in the MART Properties or personal property of MART and
each of the MART Subsidiaries and (ii) each material commitment, contractual
obligation, borrowing, capital expenditure or transaction (each, a "Commitment")
entered into by MART or any of the MART Subsidiaries which may result in total
payments by or liability of MART or any MART Subsidiary in excess of $25,000
other than those Commitments (a) that have been reflected on the Budget or Pro
Forma Budget, or (b) entered into in the ordinary course of business consistent
with past practice that do not
21
extend beyond the first anniversary of the Closing Date or are terminable at the
option of MART without penalty and, in the aggregate, do not represent payments
or liabilities in excess of $50,000 per annum. A list of the foregoing is set
forth in Section 5.22 of the MART Disclosure Letter and the copies of such
documents, which have previously been provided or made available to Kimco and
its counsel, are true and correct. None of MART or any of the MART Subsidiaries
has received any notice of a default that has not been cured under any of the
documents described in clause (i) above or is in default respecting any payment
obligations thereunder beyond any applicable grace periods except where such
default has not had or could not reasonably be expected to have a MART Material
Adverse Effect. All joint venture agreements to which MART or any of the MART
Subsidiaries is a party are set forth in Section 5.4 of the MART Disclosure
Letter and neither MART nor any of the MART Subsidiaries is in default with
respect to any obligations, which individually or in the aggregate are material,
thereunder. Section 5.22 of the MART Disclosure Letter contains a list of the
name, address, telephone number and other relevant contact information for all
secured lenders of MART or any MART Subsidiary.
5.23 Development Rights. All Properties currently under development or
material construction by MART or the MART Subsidiaries and all properties for
which MART or any of the MART Subsidiaries has entered into a commitment for
acquisition, development or commencement of material construction prior to the
Effective Time are listed in Section 5.23 of the MART Disclosure Letter (each, a
"Property Under Development" and collectively, the "Properties Under
Development"). All material agreements relating to such acquisition, development
and construction are listed in Section 5.23 of the MART Disclosure Letter.
5.24 Status of Options to Purchase Real Property and Other Agreements to
Purchase or Sell Real Property(a) . Except for the current development projects
in Urbana, Maryland and Dover, Delaware, or as set forth in Section 5.24 of the
MART Disclosure Letter, there are no options of MART or any of the MART
Subsidiaries to purchase real property, rights of first refusal or other
agreements to purchase or sell any real property.
5.25 Vote Required. The affirmative vote of the holders of two-thirds of
the outstanding MART Common Shares is the only vote required to approve the
Merger.
5.26 No Statutory Dissenters' Rights. No statutory dissenters' or appraisal
rights shall be available with respect to the Merger or the transactions
described on Exhibit D.
5.27 Definition of MART's Knowledge. As used in this Agreement, the phrase
"to the knowledge of MART" (or words of similar import) means the actual
knowledge of F. Patrick Hughes, Paul F. Robinson, Deborah R. Cheek, Eugene T.
Grady and M. J. Brooke Webster after due inquiry.
5.28 Insurance. Section 5.28 of the MART Disclosure Letter sets forth a
description of insurance maintained by MART. Neither MART nor any of the MART
Subsidiaries has received any written notice of cancellation or termination with
respect to any existing material insurance policy of MART or any of the MART
Subsidiaries.
22
5.29 Rule 16b-3. MART has taken, or will take prior to the Effective Time,
all necessary action, including (without limitation) causing its Board of
Trustees to adopt resolutions authorizing and approving the Merger, this
Agreement and the other transactions contemplated hereby to exempt such
transactions under Rule 16b-3 of the Exchange Act from the provisions of Section
16(b) of the Exchange Act.
5.30 Disclosure Controls and Procedures. MART has, within the 90 days
preceding the date of the last filed MART Report, conducted an evaluation of the
effectiveness of MART's disclosure controls and procedures, as required by Rule
13a-15 under the Exchange Act, and has reported its conclusions as required
under the Exchange Act.
5.31 HSR Act Filings. Neither the execution of this Agreement nor the
consummation of the Merger requires any filing under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act").
ARTICLE 6 - REPRESENTATIONS AND WARRANTIES OF KIMCO
Kimco represents and warrants to MART as follows:
6.1 Existence; Good Standing; Authority. Kimco is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Maryland. Merger Sub is a real estate investment trust duly organized,
validly existing and in good standing under the laws of the State of Maryland.
Kimco has all requisite corporate power and authority to own, operate, lease and
encumber its properties and carry on its business as now conducted. For purposes
of this Agreement, the term "Kimco Subsidiary" means Merger Sub and each other
Subsidiary of Kimco. Merger Sub was formed solely for the purpose of engaging in
the transactions contemplated hereby and has not engaged in any business
activities or conducted any operations other than in connection with the
transaction contemplated hereby.
6.2 Authorization, Validity and Effect of Agreements. Kimco has the
requisite corporate power and authority to enter into the transactions
contemplated hereby and to execute and deliver this Agreement and the ancillary
agreements to which it is a party. Merger Sub has the requisite limited
liability company power and authority to enter into the transactions
contemplated hereby and to execute and deliver this Agreement and the ancillary
agreements to which it is a party. The Board of Directors of Kimco and the
trustees of Merger Sub have taken all necessary action to approve the
consummation of the transactions contemplated by this Agreement. The execution
by Kimco of this Agreement, the ancillary agreements and the consummation of the
transactions contemplated by this Agreement and the ancillary agreements have
been duly authorized by all requisite corporate action on the part of Kimco. The
execution by Merger Sub of this Agreement, the ancillary agreements and the
consummation of the transactions contemplated by this Agreement and the
ancillary agreements have been duly authorized by all requisite real estate
investment trust action on the part of Merger Sub. This Agreement constitutes,
and the ancillary agreements to which Kimco or Merger Sub, as the case may be,
will become a party (when executed and delivered pursuant hereto) will
constitute, the valid and legally binding obligations of each of Kimco and
Merger Sub, as the case may be, enforceable in accordance with their respective
terms except as enforceability may be limited by
23
bankruptcy, insolvency, fraudulent conveyance, moratorium, or other similar laws
relating to creditors' rights generally and by general principles of equity.
6.3 No Violation. Except as set forth in Section 6.3 of the disclosure
letter delivered at or prior to the execution hereof to MART (the "Kimco
Disclosure Letter"), neither the execution and delivery by Kimco of this
Agreement or the ancillary agreements nor the consummation by Kimco of the
transactions contemplated by this Agreement and the ancillary agreements in
accordance with their terms, will: (i) conflict with or result in a breach of
any provision of the charter or bylaws or other organizational documents of
Kimco or Merger Sub; (ii) violate, or conflict with, or result in a breach of
any provision of, or constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) under, or result in the
termination or in a right of termination or cancellation of, or accelerate the
performance required by, or result in the creation of any lien, security
interest, charge or encumbrance upon any of the properties of Kimco or Merger
Sub under, or result in being declared void, voidable, or without further
binding effect, any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, deed of trust or any license, franchise, permit, lease,
contract, agreement or other instrument, commitment or obligation to which Kimco
or Merger Sub is a party, or by which Kimco or Merger Sub is bound or affected,
except for any of the foregoing matters which, individually or in the aggregate,
could not reasonably be expected to have a material adverse effect on the
business, results of operations, properties, assets, liabilities (contingent or
otherwise) or financial condition of Kimco and the Kimco Subsidiaries taken as a
whole (a "Kimco Material Adverse Effect"); or (iii) other than the Regulatory
Filings, require any consent, approval or authorization of, or declaration,
filing or registration with, any governmental or regulatory authority except
where the failure to obtain any such consent, approval or authorization of, or
declaration, filing or registration with, any governmental or regulatory
authority could not reasonably be expected to have a Kimco Material Adverse
Effect or prevent or materially delay the consummation of the transactions
contemplated by this Agreement.
6.4 Litigation. There is no suit, action or proceeding pending (in which
service of process has been received by an employee of Kimco or a Kimco
Subsidiary) or, to the knowledge of Kimco threatened in writing against or
affecting Kimco or any Kimco Subsidiary that, individually or in the aggregate,
could reasonably be expected to prevent the consummation of any of the
transactions contemplated by this Agreement, nor is there any judgment, decree,
injunction, rule or order of any court of Governmental Entity or arbitrator
outstanding against Kimco or any of the Kimco Subsidiaries having, or which,
insofar as reasonably can be foreseen, in the future would have, such effect.
6.5 Definition of Kimco's Knowledge. As used in this Agreement, the phrase
"to the knowledge of Kimco" (or words of similar import) means the actual
knowledge of Michael Flynn and Jeff Olson after due inquiry.
6.6 Availability of Funds. Kimco has and will have available to it at the
Effective Time, sources of capital sufficient to pay the aggregate Merger
Consideration and to pay any other amounts payable by it or Merger Sub pursuant
to this Agreement.
24
6.7 No Brokers. Neither Kimco nor any of the Kimco Subsidiaries has entered
into any contract, arrangement or understanding with any Person or firm which
may result in the obligation of such entity or MART to pay any finder's fees,
brokerage or agent's commissions or other like payments in connection with the
negotiations leading to this Agreement or the consummation of the transactions
contemplated hereby, except that Kimco has retained UBS Warburg as its financial
advisors. Other than the foregoing arrangements and MART's arrangement with
Wachovia, Kimco is not aware of any claim for payment of any finder's fees,
brokerage or agent's commissions or other like payments in connection with the
negotiations leading to this Agreement or the consummation of the transactions
contemplated hereby.
6.8 MART Share Ownership. Neither Kimco nor any of the Kimco Subsidiaries
owns any MART Common Shares or other securities convertible into any MART Common
Shares.
6.9 HSR Act Filings. Neither the execution of this Agreement nor the
consummation of the Merger requires any filing under the HSR Act.
ARTICLE 7 - COVENANTS
7.1 Acquisition Proposals.
(a) Unless and until this Agreement shall have been terminated in
accordance with Article 9 hereof, MART agrees and covenants that, except as
otherwise authorized or permitted in this Section 7.1, neither it nor any MART
Subsidiary shall, nor shall they instruct or authorize any of their respective
officers, trustees, directors, affiliates, employees, agents, investment
bankers, financial advisors, attorneys, accountants, brokers, finders,
consultants or other representatives (each, a "Representative") to, directly or
indirectly, initiate, solicit, encourage or facilitate (including by way of
furnishing nonpublic information or assistance) any inquiries, proposals,
discussions or negotiations or the making of any proposal or offer (including,
without limitation, any proposal or offer to its shareholders) with respect to,
or that may reasonably be expected to lead to, any direct or indirect (i)
merger, consolidation, business combination, reorganization, recapitalization,
liquidation, dissolution or similar transaction involving MART (other than the
Merger), (ii) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition ("Transfer") of any of its assets in one or a series of transactions
that, if consummated, would result in a Transfer of 25% or more of the assets of
MART and the MART Subsidiaries taken as a whole, or (iii) any tender offer,
share exchange or exchange offer or other similar transaction or series of
related transactions that, if consummated, would relate to 25% or more of the
outstanding MART Common Shares (each, an "Acquisition Proposal") or engage in
any negotiations with any Third Party (as defined in Section 7.1(e)) with
respect to, or that may reasonably be expected to lead to, an Acquisition
Proposal, or enter into any letter of intent, agreement in principle or
agreement relating to an Acquisition Proposal; provided, however, that, subject
to MART's compliance with this Section 7.1 in its entirety, nothing contained in
this Agreement shall prohibit MART from furnishing information to, or entering
into or participating in discussions or negotiations with, any Third Party that
has made, after the date of this Agreement, an unsolicited bona fide written
Acquisition Proposal, if, and only to the extent that, prior to furnishing such
information or entering into or participating in such discussions or
negotiations: (A) the Board of Trustees of MART (the "MART Board"), after
25
consultation with and based upon the advice of its outside counsel, determines
in good faith that such action is consistent with the fiduciary duties of the
MART Board under applicable law, (B) the MART Board determines in good faith,
after consultation with and based on the advice of its independent financial
advisor, that such Acquisition Proposal would, if consummated, constitute a
Superior Proposal (as defined in Section 7.1(e) hereof), (C) MART provides
written notice to Kimco to the effect that it is furnishing information to, or
entering into or participating in discussions or negotiations with, such Person
(including, without limitation, the identity of such Person), (D) MART keeps
Kimco reasonably informed of the status of any such discussions or negotiations,
and promptly informs Kimco (but in any event, within 24 hours) of all material
developments relating thereto, including the material terms of any such proposal
made by any such Third Party and its responses thereto, and (E) MART enters into
a customary confidentiality agreement with such Third Party. Without limiting
the foregoing, it is agreed that any material violation of this Section 7.1(a)
by any Representative of MART or of a MART Subsidiary, purporting to act on
behalf of MART shall be deemed to be a violation of this Section 7.1(a). For the
sake of clarity, nothing contained in this Section 7.1(a) is intended to, or
shall be deemed to supersede or affect the provisions contained in Section
7.2(xv) hereof.
(b) MART will immediately cease and cause to be terminated any existing
discussions or negotiations with any Persons conducted heretofore with respect
to, or that could reasonably be expected to lead to, an Acquisition Proposal and
will take the necessary steps to inform each of its Representatives of the
obligations undertaken in this Section 7.1 and cause each of its Representatives
to comply with such obligations. MART will notify Kimco immediately (but in any
event within 24 hours) if it or any of its Representatives receive any
inquiries, proposals, or expressions of interest, or any request for non-public
information with respect to, or that could reasonably be expected to lead to, an
Acquisition Proposal, which notice to Kimco shall include, without limitation,
the identity of the parties, price and other material terms thereof and copies
of any proposals, expressions of interest or other related documentation.
(c) Nothing contained in this Section 7.1 shall prohibit the MART Board, in
order to comply with its fiduciary duties under applicable law, from, prior to
the Shareholders Meeting withdrawing, modifying, amending or qualifying its
recommendation of the Merger in a manner adverse to Kimco in response to an
unsolicited bona fide written Superior Proposal and recommending such a Superior
Proposal to its shareholders: (A) if, but only if, MART: (1) complies with this
Section 7.1 in its entirety, and (2) provides Kimco with at least three business
days' (or such shorter period from the time of receipt and the time of the
meeting) prior written notice of its intent to withdraw, modify, amend or
qualify its recommendation of the Merger or any of the transactions contemplated
hereby in a manner adverse to Kimco and to recommend such Superior Proposal
(which notice shall include the material terms of such Superior Proposal,
including any then-current written proposal or agreement embodying such Superior
Proposal), (B) if, in the event that, during such three business days (or such
shorter period of time), (x) Kimco fails to make a counterproposal to such
Superior Proposal, or (y) makes a counterproposal to such Superior Proposal (any
such counterproposal being referred to in this Agreement as the
"Counterproposal"), the MART Board, in good faith, after consultation with and
based upon the advice of its independent financial advisor, determines that the
Counterproposal is not at least as favorable to MART's shareholders as the
Superior Proposal from a financial point of view, taking into account all
material financial terms of such Superior Proposal, and (C) if MART shall have
terminated this Agreement in accordance with Section
26
9.1(h) and complied with Section 9.2. For the avoidance of doubt, (A) the
parties hereto acknowledge and agree that any amendment to the financial terms
or any other material term of a Superior Proposal subject to the procedures in
this Section 7.1(c) shall be treated as a new Superior Proposal for the purposes
of this Section 7.1(c) (for example, a new written notice by Kimco and a new
three business day period (or shorter period, as the case may be) is required)
and (B) the mere fact that MART enters into an agreement embodying a Superior
Proposal with a Third Party that, prior to the date hereof, had executed a
confidentiality agreement with MART will not, in and of itself, be a basis for
claiming that MART has breached this Section 7.1.
(d) Nothing in this Section 7.1 shall prohibit MART from complying with
Rule 14e-2 or Item 1012(a) of Regulation M-A promulgated under the Exchange Act
with regard to an Acquisition Proposal.
(e) For purposes of this Agreement, (i) the term "Third Party" shall mean
any Person (other than Kimco or its affiliates), or any group (as defined in
Section 13(d)(3) of the Exchange Act) of which Kimco or its affiliates is not a
part; and (ii) the term "Superior Proposal" shall mean a bona fide written
Acquisition Proposal that the MART Board determines in good faith, after
consultation with and based upon the advice of its independent financial
advisor, to be more favorable to MART's shareholders than the Merger from a
financial point of view (taking into account all financial and strategic
considerations and other relevant factors, including relevant legal, financial,
regulatory and other aspects of such proposals, and the conditions, prospects
and time required for completion of such proposal).
7.2 Conduct of Business. At all times from the execution of this Agreement
until the Effective Time, and MART:
(i) Shall, and shall cause each of the MART Subsidiaries to, use
commercially reasonable efforts to preserve intact its business
organizations and goodwill and keep available the services of its officers
and employees;
(ii) Shall, and shall cause each of the MART Subsidiaries to, consult
in good faith, cooperate and confer on a regular basis with one or more
Representatives of Kimco designated by Kimco to report operational matters
of materiality, including, but not limited to, leasing operations,
acquisition, disposition, budget and capital improvement activities of MART
and the MART Subsidiaries, in order to allow for an orderly transition
after the Effective Time, and, subject to Section 7.1, any proposals to
engage in material transactions, whether or not in the ordinary course of
business;
(iii) Shall, and shall cause each of the MART Subsidiaries to,
promptly notify Kimco of any material adverse change in the condition
(financial or otherwise), business, properties, assets, liabilities,
prospects of its business or its properties, any material governmental
complaints, investigations or hearings (or communications indicating that
the same may be contemplated), or the breach or inaccuracy of any
representation or warranty contained herein;
(iv) Shall promptly notify Kimco of any and all material
correspondence or material communications received from any equity holder
of any
27
MART Subsidiary (including providing summaries of any oral communications
with such equity holder);
(v) Shall give reasonable prior notice to Kimco (but in any event not
less than 48 hours prior to such communications) of any intended material
correspondence or material communications to any equity holder of any MART
Subsidiary;
(vi) Shall promptly deliver, or cause to be delivered, to Kimco copies
of any material correspondence received from any tenant leasing more than
20,000 square feet of space, including, without limitation, any notice of
default or request for consent to assign or sublet;
(vii) Shall, and shall cause each of the MART Subsidiaries to, use
commercially reasonable efforts to comply with all material loan documents
to which any such entity is a party and to comply with all material REA
Agreements, ground leases and other material contracts;
(viii) Shall promptly deliver, or cause to be delivered, to Kimco (i)
prior notice of at least 24 hours before any draw by MART on its revolving
line(s) of credit subject to Section 7.2(xi), (ii) on a weekly basis, a
status report detailing all activity by MART relating to its revolving
line(s) of credit and (iii) on a monthly basis, a balance sheet, a
statement of operations and a statement of cash flows, prepared internally
by MART. Further, by no later than fifteen days after the end of each
calendar month, MART shall deliver, or cause to be delivered, to Kimco (x)
a report which updates all leasing activity, (y) copies of notices of any
offers to purchase, inquiries or letters of intent relating to any property
owned by MART or any MART Subsidiary, and (z) such other information
related to the MART Properties or reports as Kimco may reasonably request;
(ix) Shall, and shall cause the MART Subsidiaries to, take all action
necessary to terminate any management contracts with Persons other than
MART or the MART Subsidiaries relating to the MART Properties;
(x) Shall, and shall cause each MART Subsidiary to, conduct its
operations and maintain its properties according to their usual, regular
and ordinary course in substantially the same manner as heretofore
conducted, subject to clauses (xi)-(xxviii) below;
(xi) Shall not, and shall cause each MART Subsidiary not to, (a)
acquire, enter into an option to acquire or exercise an option or contract
to acquire (except for the current development projects at Villages at
Urbana in Urbana, Maryland and Dover Square in Dover, Delaware under
agreements listed on Section 5.23 of the MART Disclosure Letter),
additional real property, encumber assets or commence construction of, or
enter into any agreement or commitment to develop or construct, shopping
centers or any other type of real estate projects (including, but not
limited, to options to purchase real property listed in Section 5.24 of the
MART Disclosure Letter)
28
or (b) incur additional indebtedness (including, without limitation, draw
on the revolving line of credit, prepayments or refinancings of any
existing indebtedness or amend any existing indebtedness) without the prior
written consent of Kimco (which consent shall not be unreasonably
withheld); provided, however, that MART may draw up to an aggregate
$2,000,000 on its revolving line of credit for working capital purposes as
well as such additional funds in compliance with the Pro Forma Budgets as
are necessary for completion of construction of, or acquisition of, the
projects currently under development at Villages at Urbana in Urbana,
Maryland, Dover Square in Dover, Delaware, Shrewsbury Square in Shrewsbury,
Pennsylvania, Skyline Village in Harrisonburg, Virginia, Greenbrier
Shopping Center (Phase III) in Bel Air, Maryland, Smoketown Plaza in
Woodbridge, Virginia and Lutherville Station in Lutherville, Maryland, in
any case in compliance with Section 7.2(viii) hereof;
(xii) Shall not amend its charter or bylaws, and shall cause each MART
Subsidiary not to amend its charter, bylaws, joint venture documents,
partnership agreements or equivalent documents, in each case, except as
contemplated by this Agreement;
(xiii) Shall not (A) except pursuant to the exercise of options,
warrants, conversion rights and other contractual rights existing on the
date hereof and disclosed pursuant to this Agreement, issue any of its
shares, including under the MART DRSPP effect any share split, reverse
share split, share dividend, recapitalization or other similar transaction,
(B) grant, confer or award any option, warrant, deferred stock unit,
conversion right or other right not existing on the date hereof to acquire
any of its shares of beneficial interest, (C) increase any compensation or
enter into or amend any employment agreement with any of its executive
officers or trustees, (E) grant any bonuses (x) other than in the ordinary
course of business and consistent with past practice, to any of its
employees, or (y) to any of its executive officers or trustees, or (D)
adopt any new employee benefit plan (including any stock option, stock
benefit or stock purchase plan) or amend any existing employee benefit plan
in any material respect, except for changes which are less favorable to
participants in such plans;
(xiv) Shall not (A) declare, set aside or pay any dividend or make any
other distribution or payment with respect to any of its Shares or allow
any of the MART Subsidiaries (including, without limitation, the MART LP)
to pay or make any distribution or dividend, other than corresponding
regular quarterly distributions payable to OP Unit Holders in an amount per
OP Unit not to exceed the amount payable to the shareholders of MART in
such quarter, payable at the same time as such dividends, or (B) directly
or indirectly redeem, purchase or otherwise acquire any of its shares of
beneficial interest or capital stock or partnership or other interest of
any of the MART Subsidiaries, or make any commitment for any such action,
except for the redemption of MART LP Units in accordance with the terms of
the MART LP Agreement as it may be modified by any of the Contribution
Agreements listed on Section 5.3(a) of the MART Disclosure Letter or any
Convertible Debentures in accordance with the terms of the trust indenture
dated September 9, 1993;
29
(xv) Shall not, and shall not permit any of the MART Subsidiaries to,
sell, lease or otherwise dispose of (A) any MART Property or any portion
thereof or any of the capital stock of or partnership or other interests in
any of the MART Subsidiaries or (B) except in the ordinary course of
business, any of its other assets; provided, however, that MART may enter
into bona fide leases, in arms-length transactions with third parties, on
market rates, terms and conditions, which do not violate any exclusives or
restrictions, and which do not include tenant improvement allowances or
leasing commissions in excess of $25,000; provided, further, that MART
shall promptly (but in any event within forty-eight hours) notify Kimco in
writing whenever MART enters into any such lease; provided, further MART
shall not enter into any letters of intent for leases relating to tenants
occupying more than 5,000 square feet of a MART Property or enter into
leases for space in excess of 10,000 square feet without the prior consent
of Kimco, provided that such consent shall be deemed granted if Kimco has
not responded favorably or unfavorably to a request for such a consent
within three business days of receiving the proposed letter of intent;
(xvi) Shall not, and shall not permit any of the MART Subsidiaries to,
make any loans, advances or capital contributions to, or investments in,
any other Person;
(xvii) Shall not, and shall not permit any of the MART Subsidiaries
to, pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other
than the payment, discharge or satisfaction, in the ordinary course of
business consistent with past practice or in accordance with their terms,
of liabilities reflected or reserved against in, or contemplated by, the
most recent consolidated financial statements (or the notes thereto) of
MART included in the MART Reports or incurred in the ordinary course of
business consistent with past practice or arising from the transactions
contemplated by this Agreement;
(xviii) Except as specified in the Budget and the Pro Forma Budget,
shall not, and shall not permit any of the MART Subsidiaries to, enter into
any Commitments (other than those specifically covered by other sections of
this Section 7.2) which may result in total payments or liability by or to
all such entities in excess of $50,000 per Commitment or $200,000 in the
aggregate, except for (A) the renewal of casualty and property insurance
held by MART in the ordinary course of business with coverage no less than
MART currently has and premiums at market competitive rates, and all such
policies shall include early cancellation on a pro-rated basis and be
subject to no more than a 25% minimum earned premium and (B) as may be
required in connection with the redemption of any OP Units or the
redemption of any Convertible Debentures;
(xix) Shall not, and shall not permit any of the MART Subsidiaries to,
enter into or amend or otherwise modify any agreement or arrangement with
any officer, trustee, director, consultant or affiliate of MART or any of
the MART Subsidiaries;
(xx) Shall not, without prior notification and consultation with
Kimco, terminate any employee under circumstances which would result in
severance payments to such employee or pay any severance benefits to any
employee on account of such employee's termination;
30
(xxi) Shall maintain in full force and effect fire and extended
coverage casualty insurance on the MART Properties as shown in Section 5.12
of the MART Disclosure Letter and all other insurance listed in Section
5.28 of the MART Disclosure Letter and make claims in due course, including
claims under the pollution legal liability policy for the releases at
Enchanted Forest, Wilkens and Patriot properties;
(xxii) Shall not, and shall not permit any of the MART Subsidiaries
to, forgive any existing indebtedness to MART or any MART Subsidiary,
guarantee the indebtedness of another Person, enter into any agreement to
maintain any financial statement condition of another Person or enter into
any arrangement having the economic effect of any of the foregoing or make
any investments in any other Person in excess of $50,000 in the aggregate,
other than a MART Subsidiary in the ordinary course of business;
(xxiii) Shall not, and shall not permit any of the MART Subsidiaries
to, make or rescind any election relating to Taxes (unless MART reasonably
determines, after prior consultation with Kimco, that such action is
required by applicable law or necessary to preserve MART's status as a REIT
or the partnership status of MART LP or any other MART Subsidiary which
files Tax Returns as a partnership for Federal tax purposes, or the status
of any MART Subsidiary as a "qualified REIT subsidiary" or "taxable REIT
subsidiary" as such terms are defined in Section 856 of the Code);
(xxiv) Shall not: (A) change any of its methods, principles or
practices of accounting in effect other than as required by GAAP or (B)
settle or compromise any claim, action, suit, litigation, proceeding,
arbitration, investigation, audit or controversy relating to Taxes, except
in the case of settlements or compromises relating to Taxes on real
property or sales Taxes in an amount not to exceed, individually or in the
aggregate, $100,000, or change any of its methods of reporting income or
deductions for federal income tax purposes from those employed in the
preparation of its federal income Tax Return for the taxable year ended
December 31, 2001, except as may be required by the SEC, applicable law or
GAAP;
(xxv) Subject to any existing contractual insurer requirements, shall
give Kimco the opportunity to participate in the defense of any derivative,
class action claims or other claims by securityholders of MART or any MART
Subsidiary against MART and/or its trustees arising out of or in connection
with any of the transactions contemplated by this Agreement and MART shall
not settle any such claim without the approval of Kimco, which approval
shall not be unreasonably withheld;
(xxvi) Shall not enter into or amend or otherwise modify any agreement
or arrangement with persons that are affiliates or, as of the date of this
Agreement, are officers, trustees or directors of MART or any MART
Subsidiary without prior written notice to Kimco and the approval of a
majority of the "independent" members of the Board of Trustees of MART;
(xxvii) Shall not, and shall not permit any of the MART Subsidiaries
to, except as otherwise permitted or contemplated by this Agreement,
authorize, recommend,
31
propose or announce an intention to adopt a plan of complete or partial
liquidation or dissolution of MART or any of the MART Subsidiaries; and
(xxviii) Shall not, and shall not permit any of the MART Subsidiaries
to, agree in writing or otherwise to take any action inconsistent with any
of the foregoing.
7.3 Preparation of the Proxy Statement; Meeting of Shareholders.
(a) As soon as practicable following the date of this Agreement, MART shall
prepare and file with the SEC a preliminary proxy statement (the "Proxy
Statement"). Kimco shall cooperate in the preparation of the Proxy Statement.
Each of MART and Kimco shall use its commercially reasonable efforts to have the
Proxy Statement cleared by the SEC for mailing to the MART shareholders as
promptly as practicable after such filing. MART will notify Kimco promptly
following the receipt by MART of any comments from the SEC and of any request by
the SEC for amendments or supplements to the Proxy Statement or for additional
information and will supply Kimco with copies of all correspondence between MART
or any of its Representatives and the SEC with respect to the Proxy Statement.
MART will provide Kimco with the opportunity to review and provide comments on
drafts of any letters, memoranda or other correspondence to the SEC prepared by
MART in connection with the Proxy Statement a reasonable time prior to such
letters, memoranda or other correspondence being submitted to the SEC, and will
in good faith consider such comments, and MART will provide Kimco with the
opportunity to participate in any substantive telephone calls between MART, or
any of its Representatives, and the SEC concerning the Proxy Statement. MART
agrees that the Proxy Statement will comply in all material respects with all
applicable requirements of the Securities Laws. MART shall agree to date the
Proxy Statement as of the approximate date of mailing to its shareholders and
shall use its commercially reasonable efforts to cause the Proxy Statement to be
mailed to its shareholders at the earliest practicable date. Whenever any event
occurs which is required to be set forth in an amendment or supplement to the
Proxy Statement, (i) Kimco or MART, as the case may be, shall, promptly upon
obtaining knowledge of such event, inform the other of such occurrences, (ii)
MART shall prepare and file with the SEC any such amendment or supplement to the
Proxy Statement, in cooperation with Kimco, with indication of such satisfaction
not to be unreasonably withheld or delayed, (iii) each of MART and Kimco shall
use its commercially reasonable efforts to have any such amendment or supplement
cleared for mailing, to the extent necessary, to MART shareholders as promptly
as practicable after such filing and (iv) MART shall use its commercially
reasonable efforts to have any such amendment or supplement mailed to its
shareholders at the earliest practicable date.
(b) MART agrees that the Proxy Statement and each amendment or supplement
thereto at the time of mailing thereof and at the time of the Shareholders
Meeting (as defined in Section 7.3(c) hereof), will not include an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided, however,
that the foregoing shall not apply to the extent that any such untrue statement
of a material fact or omission to state a material fact was made by MART in
reliance upon and in conformity with information concerning Kimco furnished in
writing to MART by Kimco for use in the Proxy Statement. Kimco agrees that the
information concerning it and provided by it for inclusion in the Proxy
Statement and each amendment or supplement thereto, at the time of mailing
thereof
32
and at the time of the Shareholders Meeting, will not include an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(c) Subject to the provisions of Section 7.1 hereof, (i) MART will take all
action necessary in accordance with applicable law and its charter and bylaws to
convene a meeting of its shareholders (the "Shareholders Meeting") as promptly
as practicable to consider and vote upon the approval of the Merger (and no
other Acquisition Proposal will be considered at such Shareholders Meeting),
(ii) the Board of Trustees of MART shall recommend and declare advisable that
its shareholders approve the Merger and the transactions contemplated hereby and
MART shall include such recommendation in the Proxy Statement; (iii) prior to
the Effective Time, neither the Board of Trustees of MART nor any committee
thereof shall, except in compliance with Section 7.1 hereof, withdraw or modify
the approval or recommendation by such Board of Trustees. MART shall use its
commercially reasonable efforts to timely mail the Proxy Statement to MART's
shareholders and to take all such other actions necessary or desirable to obtain
such approval; (iv) except to the extent required by law, MART shall not (x)
change or otherwise take any action after the mailing of the Proxy Statement
that would result in a change of the date specified in the Proxy Statement for
the Shareholders Meeting or (y) otherwise take any action that would postpone or
delay the Shareholders Meeting; provided, however, that MART may adjourn the
Shareholders Meeting in the event a quorum is not present or proxies
representing sufficient votes to approve the Merger have not been received by
the time of the Shareholders Meeting, such adjournment not to exceed ten days,
and during which time MART shall use its commercially reasonable efforts to
obtain a quorum and the requisite vote for approval of the Merger.
(d) The trustees and executive officers of MART shall have,
contemporaneously with the execution of this Agreement, executed the Voting
Agreements, covering all MART Common Shares beneficially owned, for which such
person has voting power, pursuant to which each such trustee and executive
officer shall agree, among other things, to vote his or her MART Common Shares
in favor of the approval of this Agreement and the transactions contemplated
hereby, upon the terms and subject to the conditions set forth in the Voting
Agreement.
7.4 Filings; Other Action. Subject to the terms and conditions herein
provided, MART and Kimco shall: (a) use commercially reasonable efforts to
cooperate with one another in (i) determining which filings are required to be
made prior to the Effective Time with, and which consents, approvals, permits or
authorizations are required to be obtained prior to the Effective Time from,
governmental or regulatory authorities of the United States, the several states
and foreign jurisdictions and any third parties in connection with the execution
and delivery of this Agreement, and the ancillary agreements and the
consummation of the transactions contemplated by such agreements and (ii) timely
making all such filings and timely seeking all such consents, approvals, permits
or authorizations; (b) use commercially reasonable efforts to obtain in writing
any consents required from third parties to effectuate the Merger, such consents
to be in reasonably satisfactory form to MART and Kimco; and (c) use
commercially reasonable efforts to take, or cause to be taken, all other actions
and do, or cause to be done, all other things necessary to consummate and make
effective the transactions contemplated by this Agreement and the ancillary
agreements.
33
7.5 Inspection of Records. From the date hereof to the Effective Time, MART
shall allow designated officers and representatives of Kimco reasonable access
during normal business hours to the records and files, correspondence, audits
and properties, as reasonably requested by Kimco, as well as to all information
relating to commitments, contracts, titles and financial position, or otherwise
pertaining to the business and affairs, of MART and the MART Subsidiaries, as
reasonably requested by Kimco. All such information shall be kept confidential
by Kimco in accordance with Section 10.5 hereof.
7.6 Publicity. Kimco and MART shall consult with each other before issuing
any press release or otherwise making any public statements with respect to this
Agreement or any transaction contemplated herein and shall not issue any such
press release or make any such public statement without the prior consent of the
other party, which consent shall not be unreasonably withheld or delayed;
provided, however, that a party may, without the prior consent of the other
party, issue such press release or make such public statement as may be required
by law or the rules of the NYSE if it has used its commercially reasonable
efforts to consult with the other party and to obtain such party's consent but
has been unable to do so in a timely manner.
7.7 Further Action.
(a) Each party hereto shall perform such further acts and execute such
documents as may reasonably be required to effect the Merger. Without limiting
the foregoing, upon Kimco's request, within a reasonable time before, or at the
Closing, MART shall (x) cooperate with Kimco to address corporate, partnership
or limited liability company recordkeeping or maintenance matters relating to
the MART Subsidiaries including, without limitation, dissolving, reinstating or
bringing into good standing any MART Subsidiary upon the reasonable request of
Kimco, and (y) execute and deliver such deeds, affidavits, certificates,
indemnities or other documents necessary for Kimco to obtain endorsements to
existing title insurance policies or new title insurance policies which (i)
ensure that Kimco (or its designee) is the record owner of the MART Properties,
subject only to the Encumbrances, (ii) contain a so-called "non-imputation"
endorsement (such non-imputation endorsement ensuring that Kimco will not be
charged with the imputed knowledge of MART, the MART Subsidiaries and affiliates
thereof) and (iii) satisfy so-called "Schedule B-1" or other requirements for
the issuance of any such title policies and delete exceptions which relate to
indebtedness which has been satisfied or Property Restrictions which do not
properly relate to the applicable MART Property. In connection with the Closing,
MART, each MART Subsidiary, Kimco and Merger Sub shall use their respective
commercially reasonable efforts to execute and deliver to Kimco such deeds,
bills of sale, assignments, certificates and affidavits as are required to
effectuate the consummation of the transactions described herein.
(b) At Kimco's request and cost, MART shall (i) cooperate with Kimco and
the Kimco Subsidiaries in seeking to obtain tenant estoppels, REA Agreement
estoppels, surveys, title commitments and/or policies, engineering reports,
environmental reports, payoff letters and/or lender estoppels and appraisals
with respect to the MART Properties, and (ii) provide Kimco reasonable access to
the MART Properties, tenants therein, and ground lessors thereof and all
documents and information regarding the MART Properties as may be necessary to
evaluate MART's compliance with Environmental Laws and the presence or release
of
34
Hazardous Materials. Notwithstanding the foregoing, Kimco's receipt of the items
described in the foregoing sentence shall not in any manner be deemed a
condition to Closing.
(c) At Kimco's request and cost, MART shall cooperate with Kimco in
connection with any request to lenders and ground lessors for such consents
(including any consents of lenders and ground lessors required to transfer to
Kimco the property subject to the loan documents (the "Loan Documents") and the
ground leases, as the case may be) and estoppels as Kimco may reasonably request
in connection with the Merger. Notwithstanding the foregoing, Kimco's receipt of
the items described in the foregoing sentence shall not in any manner be deemed
a condition to closing except as set forth in Section 8.3(e) hereof and Section
8.3(e) of the MART Disclosure Letter. Kimco shall pay all fees and costs, if
any, related to MART's applying for any lender's consent to the assignment and
assumption of any of the Loan Documents or any other consent, estoppel,
amendment or modifications related thereto, together with fees and costs, if
any, charged by the lenders in connection with the Closing relating to obtaining
any consent, estoppel, amendment or modification.
7.8 Expenses. Except as otherwise provided herein, subject to the
provisions of Article 9, all costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such expenses. All costs and expenses for professional services
rendered pursuant to the transactions contemplated by this Agreement including,
but not limited to, investment banking and legal services, will be paid by each
party incurring such services.
7.9 Indemnification.
(a) Kimco and Merger Sub (the "Indemnifying Parties" and each, an
"Indemnifying Party") agree that all rights to indemnification now existing in
favor of the trustees or officers of MART and the trustees, directors or
officers of the MART Subsidiaries, including, without limitation, MART LP (the
"Indemnified Parties" and, each, an "Indemnified Party") as provided in their
respective organizational documents in effect as of the date hereof with respect
to matters occurring at or prior to the Effective Time shall survive the Merger
and shall continue in full force and effect for a period of six years after the
Effective Time and, at the Effective Time, shall become the joint and several
obligations of the Indemnifying Parties. During such period, the Indemnifying
Parties shall not amend, repeal or otherwise modify such provisions for
indemnification in any manner that would materially and adversely affect the
rights thereunder of individuals who at any time prior to the Effective Time
were trustees or officers of MART or trustees, directors or officers of any MART
Subsidiary in respect of actions or omissions occurring at or prior to the
Effective Time (including, without limitation, the transactions contemplated by
this Agreement), (unless such modification is required by law); provided,
however, that in the event any claim or claims are asserted or made either prior
to the Effective Time or within such six-year period, all rights to
indemnification in respect of any such claim or claims shall continue until
disposition of any and all such claims.
(b) Promptly (but in any event within ten business days) upon learning of
the commencement of any action, suit demand, proceeding or investigation or the
assertion of any claim or liability with respect to which an Indemnified Party
may be entitled to indemnification (a "Potentially Indemnifiable Action"), such
Indemnified Party shall notify the Indemnifying
35
Parties in writing of such Potentially Indemnifiable Action and the relevant
facts and circumstances with respect thereto, together with a copy of such claim
and all legal pleadings relating thereto; provided, however, that the failure to
provide such notice shall not affect the obligations of the Indemnifying Parties
except to the extent such failure to notify prejudices the Indemnifying Parties'
ability to defend such Potentially Indemnifiable Action. The Indemnifying
Parties shall have, at the sole cost of the Indemnifying Parties, the right at
any time to elect to assume control of the defense of any Potentially
Indemnifiable Action with counsel selected by the Indemnifying Parties and
reasonably acceptable to the Indemnified Party (it being agreed that Latham &
Watkins LLP and Goodwin Procter LLP shall be deemed acceptable); provided,
however, that an Indemnified Party shall, at such party's expense, be permitted
to participate in such defense with counsel selected by the Indemnified Party,
which counsel shall be reasonably acceptable to the Indemnifying Parties.
Notwithstanding the foregoing, if the Indemnified Parties have reasonably
concluded (upon the advice of counsel to the Indemnified Parties) that (i) there
may reasonably be legal defenses available to them that are different from or in
addition to or inconsistent with those available to the Indemnifying Parties, or
(ii) there is any conflict of interest between the Indemnifying Parties and any
Indemnified Party, such Indemnified Party shall be permitted to participate in
the defense of such Potentially Indemnifiable Action with counsel selected by
such Indemnified Party, which counsel shall be reasonably acceptable to the
Indemnifying Parties, and the Indemnifying Parties shall pay the reasonable fees
and expenses of such counsel, subject to receiving reasonable documentation of
such fees and expenses. Notwithstanding any other provision of this Section
7.9(b) or the organizational documents of MART and the MART Subsidiaries, the
Indemnifying Parties shall not be obligated to pay or reimburse fees and
expenses of more than one counsel for all Indemnified Parties in a single
Potentially Indemnifiable Action, unless any Indemnified Party has reasonably
concluded (upon the advice of counsel to such Indemnified Party) that (i) there
may reasonably be legal defenses available to it that are different from or in
addition to or inconsistent with those available to the other Indemnified
Parties, or (ii) there is any conflict of interest between any Indemnified Party
and the other Indemnified Parties, in each case of which, the Indemnifying
Parties shall be obligated to pay the reasonable fees and expenses of additional
counsel or counsels for each such Indemnified Party with different, additional
or inconsistent defenses or conflicting interests. In the event the Indemnifying
Parties assume control of the defense of a Potentially Indemnifiable Action as
provided in this Section 7.9, no compromise or settlement of such action may be
effected by the Indemnifying Parties without the Indemnified Party's consent
unless (A) there is no finding or admission of any violation by the Indemnified
Party of any law, statute, rule, regulation, order or requirement of any
Governmental Entity, and (B) the sole relief provided is monetary damages that
are paid in full by the Indemnifying Parties. In connection with any Potentially
Indemnifiable Action, the Indemnifying Parties and the Indemnified Parties shall
cooperate with each other and provide each other with access to relevant books
and records in their possession. Notwithstanding anything to the contrary set
forth in this Agreement or the organizational documents of MART and the MART
Subsidiaries, the Indemnifying Parties (i) shall not be liable for any
settlement effected without their prior written consent, and (ii) shall not have
any obligation hereunder to any Indemnified Party to the extent that a court of
competent jurisdiction shall determine in a final and non-appealable order that
such indemnification is prohibited by applicable law. In addition, the
Indemnifying Parties shall pay or reimburse, in advance of final disposition of
a proceeding, reasonable expenses incurred by an Indemnified Party provided that
the Indemnifying Parties shall have received (i) a
36
written affirmation by the Indemnified Party of his good faith belief that he
has met the applicable standard of conduct necessary for indemnification by the
Indemnifying Parties as authorized by the applicable indemnification provision
and (ii) a written undertaking by or on his behalf to repay the amount paid or
reimbursed by the Indemnifying Parties if it shall ultimately be determined that
the applicable standard of conduct was not met. Except as otherwise expressly
provided in this Section 7.9, any indemnification or payment or reimbursement of
the expenses permitted by this Section 7.9 shall be furnished pursuant to the
MART Declaration of Trust, Bylaws and other organizational documents in effect
on the date hereof and otherwise in accordance with the procedures provided for
indemnification and payment or reimbursement of expenses under Section 2-418 of
the MGCL for directors of Maryland corporations. In the event of a final and
non-appealable determination by a court that any payment of expenses is
prohibited by applicable law, the Indemnified Party shall promptly refund to the
Indemnifying Parties the amount of all such expenses theretofore advanced
pursuant hereto.
(c) At or prior to the Effective Time, Kimco shall purchase directors' and
executive officers' liability insurance policy coverage for MART's trustees and
executive officers for a period of six years following the Effective Time, which
will provide the trustees and executive officers with coverage on, subject to
the following sentence, terms no less favorable to such trustees and executive
officers as currently provided by MART. In fulfilling its obligations under the
preceding sentence, Kimco shall not be required to pay aggregate premiums in
excess of 150% of the amount paid by MART in its last full fiscal year (which
premiums are hereby represented and warranted by MART to be $95,000 (provided
that if the premium of such coverage exceeds such amount, Kimco shall be
obligated to obtain a policy with the greatest dollar amount of coverage
available for such amount). MART shall have the right to reasonably review and
approve any such policy, which approval shall not be unreasonably withheld.
(d) This Section 7.9 is intended for the irrevocable benefit of, and to
grant third party rights to, the indemnified parties and their respective heirs
and shall be binding on all successors of Kimco. Each of the Indemnified Parties
shall be entitled to enforce the covenants contained in this Section 7.9.
7.10 Certain Benefits. Except for (i) normal increases in the ordinary
course of business that are consistent with past practices and cost increases of
third party providers necessary to maintain benefits at current levels that, in
the aggregate, do not result in a material increase in benefits or compensation
expense to MART or any of the MART Subsidiaries, (ii) as set forth in Section
5.16 of the MART Disclosure Letter, or (iii) as expressly provided in this
Agreement, MART will not, and will not permit any of the MART Subsidiaries to,
adopt or amend (except as may be required by law) any bonus, profit sharing,
compensation, severance, termination, stock option, pension, retirement,
deferred compensation, employment or other employee benefit agreements, trusts,
plans, funds or other arrangements for the benefit or welfare of any trustee,
director, officer or employee that increase in any manner the compensation,
retirement, welfare or fringe benefits of any trustee, director, officer or
employee or pay any benefit not required by any existing plan or arrangement
(including without limitation the granting of stock options, restricted stock or
deferred stock units) or take any action or grant any benefit not expressly
required under the terms of any existing agreements, trusts, plans, funds or
37
other such arrangements or enter into any contract, agreement, commitment or
arrangement to do any of the foregoing.
7.11 Employment and Benefit Matters
(a) Provision of Benefits. As soon as practicable after the Effective Time,
Kimco agrees to provide the employees of MART and the MART Subsidiaries (the
"MART Employees") who remain employed after the Effective Time with at least the
types and levels of employee benefits (including employee contribution levels)
maintained by Kimco for similarly-situated employees of Kimco. Kimco will treat,
and cause the applicable benefit plans to treat, the service of MART Employees
with MART or the MART Subsidiaries attributable to any period before the
Effective Time as service rendered to Kimco for purposes of eligibility to
participate, vesting and for other appropriate benefits including, but not
limited to, applicability of minimum waiting periods for participation, but not
for benefit accrual (including minimum pension amount) or eligibility for
severance benefits or retiree welfare benefit plans. Without limiting the
foregoing, Kimco shall not treat any MART Employee as a "new" employee for
purposes of any exclusions or waiting periods under any health or similar plan
of Kimco for a pre-existing medical condition if such MART Employee was enrolled
in a health plan of MART on the Effective Date.
(b) Compensation Agreements. Following the Effective Time, Kimco shall
honor in accordance with their existing terms all written employment, change in
control, and other compensation agreements, policies and arrangements disclosed
in Section 5.16(a) of the MART Disclosure Letter. As of the Effective Time, MART
shall pay (i) the benefits owed to the participants under MART's Cash Bonus
Plan, and (ii) the termination amounts owed to each of F. Patrick Hughes and
Paul F. Robinson pursuant to their respective employment agreements with MART in
the event each resigns from his employment or such employment is terminated at
the Effective Time. Kimco agrees to honor any existing obligation to pay
terminated MART employees for properly accrued vacation in accordance with MART
policy in connection with their termination. In the event any employees of MART
entitled to participate in MART's Development/Redevelopment Bonus Plan, as
described in Section 5.16(a) to the MART Disclosure Letter, are terminated by
Kimco prior to the completion of a development or redevelopment project, Kimco
agrees to pay any such employees the bonus such employees would have been
entitled to under the Development/Redevelopment Bonus Plan described in Section
5.16(a) to the MART Disclosure Letter as if such project had been completed as
of the employment termination date.
(c) Continuation of Employment. No provision of this Section 7.11 shall
create any third party beneficiary rights in any employee or former employee
(including any beneficiary or dependent thereof) of MART or any MART Subsidiary
in respect of continued employment (or resumed employment) with Kimco. No
provision of this Agreement shall constitute a limitation on the rights to
amend, modify or terminate after the Effective Time any such plans or
arrangements of MART or any MART Subsidiary.
7.12 Environmental Matters. MART and Kimco shall cooperate and keep each
other informed in a timely manner regarding any communications to or filings
with any Governmental Entity regarding any environmental matters or conditions
at the MART Properties and MART
38
shall not submit any written communication or filing to any such Governmental
Entity without the prior written consent of Kimco, which consent shall not be
unreasonably withheld.
7.13 REIT Status. From and after the date hereof until the Closing, MART
will:
(a) comply with all applicable laws, rules and regulations of the Code
relating to a REIT, and will not take any action or fail to take any action
which would reasonably be expected to, alone or in conjunction with any other
factors, result in the loss of its status as a REIT for federal income tax
purposes (it being understood that the failure to pay a dividend to
shareholders, as required by this agreement, shall not be deemed a breach of
this Section 7.13 hereof) and provided further, that in the event MART
reasonably believes that it is required to take any other action in order to
comply with this Section 7.13 and that such action is inconsistent with any
other obligation or restriction imposed upon MART under this Agreement, MART
shall so notify Kimco and MART shall not be deemed in breach of this Agreement
by virtue of the inconsistent obligation or restriction if it has obtained the
prior consent of Kimco (which shall not be unreasonably withheld or delayed);
and
(b) not enter into any new, or materially modify any existing Tax
Protection Agreements.
7.14 Internal Restructuring. As soon as reasonably practicable following
the date hereof, MART shall cause MART to form separate Maryland business trusts
(in form and substance agreed to or acceptable to Kimco) and to convey and
contribute all of its right, title and interest in and to any and all real
property owned of record by it, to such respective newly-formed business trusts
in exchange for all of the outstanding shares of beneficial interest thereof. At
least five business days prior to the Closing Date, MART shall contribute all of
the beneficial interests in the newly-formed business trusts to MART LP. The
actions described in this Section 7.14, in the aggregate, shall be hereinafter
referred to as the "Restructuring."
7.15 Transactions Relating to MART LP. At or about the time of the mailing
of the Proxy Statement, the Exchange Offer (as described in Exhibit D) shall be
commenced. Neither the commencement nor the completion of the Exchange Offer (as
described in Exhibit D) shall be a condition to either party's obligation to
consummate the Merger. The terms and conditions of Exhibit D shall be
incorporated herein by reference.
ARTICLE 8 - Conditions
8.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each party to effect the Merger and the other
transactions contemplated herein shall be subject to the fulfillment at or prior
to the Effective Time of the following conditions, any or all of which may be
waived, in whole or in part by the parties hereto, to the extent permitted by
applicable law:
(a) This Agreement and the transactions contemplated hereby shall have been
approved by the requisite vote of shareholders of MART.
39
(b) None of the parties hereto shall be subject to any temporary
restraining order, ruling or preliminary or permanent injunction or other order
of a court of competent jurisdiction or other legal restraint or prohibition
(excluding for these purposes, orders, rulings, injunctions, restraints or
prohibtions arising out of or relating to derivative, class action or other
claims by security holders of MART) which prohibits, prevents, materially delays
or impairs the consummation of the transactions contemplated by this Agreement.
(c) All required Governmental Approvals, if any, shall have been obtained.
8.2 Conditions to Obligation of MART to Effect the Merger. The obligation
of MART to effect the Merger shall be subject to the fulfillment at or prior to
the Closing Date of the following conditions, unless waived by MART:
(a) Each of the representations and warranties of Kimco and Merger Sub
contained in this Agreement qualified as to materiality or Kimco Material
Adverse Effect shall be true and correct in all respects and the representations
and warranties of Kimco and Merger Sub contained in this Agreement that are not
so qualified shall be true and correct in all material respects, in each case as
of the Closing Date as though made on and as of the Closing Date except to the
extent any such representation or warranty is expressly limited by its terms to
another date or time, and MART shall have received a certificate, dated the
Closing Date, signed on behalf of Kimco by the Chief Executive Officer of Kimco
to the foregoing effect.
(b) Kimco and Merger Sub shall have performed or complied in all material
respects with all agreements and covenants required by this Agreement to be
performed or complied with by them on or prior to the Closing Date, and MART
shall have received a certificate, dated the Closing Date, signed on behalf of
Kimco by the Chief Executive Officer of Kimco to the foregoing effect.
8.3 Conditions to Obligation of Kimco to Effect the Merger. The obligations
of Kimco to effect the Merger shall be subject to the fulfillment at or prior to
the Closing Date of the following conditions, unless waived by Kimco:
(a) Each of the representations and warranties of MART contained in this
Agreement qualified as to materiality or MART Material Adverse Effect shall be
true and correct in all respects and the representations and warranties of MART
contained in this Agreement that are not so qualified shall be true and correct
in all material respects, in each case as of the Closing Date as though made on
and as of the Closing Date except to the extent any such representation or
warranty is expressly limited by its terms to another date or time, and Kimco
shall have received a certificate, dated the Closing Date, signed on behalf of
MART by the Chief Executive Officer of MART to the foregoing effect.
(b) MART shall have performed or complied in all material respects with all
agreements and covenants required by this Agreement to be performed or complied
with by it on or prior to the Closing Date, and Kimco shall have received a
certificate, dated the Closing Date, signed on behalf of MART by the Chief
Executive Officer of MART to the foregoing effect.
(c) At closing, Kimco shall have received the opinion of Gordon, Feinblatt,
Rothman, Hoffberger & Hollander LLC, in the form attached hereto as Exhibit E,
regarding the
40
qualification of MART as a REIT under the Code and the treatment of MART LP and
all MART Subsidiaries (which are organized as partnerships or limited liability
companies or which file tax returns as partnerships) as partnerships and not as
associations taxable as corporations or publicly-traded partnerships for federal
income tax purposes since the acquisition of such MART Subsidiaries by MART. For
purposes of such opinion, Gordon, Feinblatt, Rothman, Hoffberger & Hollander LLC
may rely on (in addition to customary assumptions and representations for
opinions of this type) assumptions to the effect that (A) MART will satisfy its
REIT distribution requirements for its current taxable year (as a result of the
Merger or otherwise), and (B) no action will be taken following the Merger that
is inconsistent with MART's status as a REIT for any period prior to the Merger.
(d) From the date of this Agreement through the Effective Time, there shall
not have occurred any change concerning or other event affecting MART or any of
the MART Subsidiaries, that has had or could reasonably be expected to have a
MART Material Adverse Effect and Kimco shall have received a certificate, dated
the Closing Date, signed on behalf of MART by the Chief Executive Officer of
MART to the foregoing effect. For purposes of this Section 8.3(d), a MART
Material Adverse Effect will not be deemed to include the impact of (A) changes
in laws of general applicability or interpretations thereof by courts or
Governmental Entities, including changes in tax statutes, regulations or rulings
generally applicable to REITs, (B) changes in GAAP or accounting principles
generally applicable to REITs, (C) the effects of compliance with and
prosecution of this Agreement on the operating performance of MART, (D) general
changes in the economy or financial markets of the United States relating to or
arising from acts of war or terrorism or other changes in the general U.S. and
global economic conditions, in either case, other than those that would have a
materially disproportionate financial effect, relative to other industry
participants, on MART and the MART Subsidiaries taken as a whole, (E) any
actions taken, or inaction or failure to act, by MART at the request or
direction, following the date of this Agreement, of Kimco and Merger Sub, or
resulting from Kimco's refusal to consent to the taking of an action otherwise
prohibited by this Agreement.
(e) The consents set forth in Section 8.3(e) of the MART Disclosure Letter
(including those consents required from the lenders listed in such section of
the MART Disclosure Letter) shall have been obtained in form and substance
reasonably satisfactory to Kimco subject to the limitations described in Section
8.3(e) of the MART Disclosure Letter.
(f) MART shall have consummated the Restructuring.
(g) MART shall have caused each officer, trustee or other employee who has
an outstanding loan from, or other debt obligations to, MART or any MART
Subsidiary, for any purpose, to repay such loan.
(h) MART shall have delivered to Kimco a payoff letter with respect to any
indebtedness listed on Section 8.3(h) of the MART Disclosure Letter.
(i) None of the parties hereto shall be subject to any temporary
restraining order, ruling or preliminary or permanent injunction or other order
of competent jurisdiction or other legal restraint or prohibition arising out of
or relating to derivative, class action or other
41
claims by security holders of MART, which prohibits, prevents, materially delays
or impairs the consummation of the transactions contemplated by this Agreement.
ARTICLE 9 - Termination
9.1 Termination. This Agreement may be terminated and abandoned at any time
prior to the Effective Time, whether before or after approval and adoption of
this Agreement by the shareholders of MART:
(a) by mutual written consent of the parties duly authorized by the Board
of Directors of Kimco and the Board of Trustees of MART;
(b) by either Kimco or MART, if any United States federal or state court of
competent jurisdiction or other Governmental Entity shall have issued a
judgment, injunction, order, decree or ruling or taken any other action
restraining, enjoining or otherwise prohibiting the Merger and such judgment,
injunction, order, decree, ruling or other action shall have become final and
non-appealable; provided, however, that this right shall not be available to any
party whose failure to comply with the terms of this Agreement has been the
cause of, or materially contributed to, such action;
(c) by Kimco upon a breach of any representation, warranty, covenant or
agreement on the part of MART set forth in this Agreement, or if any
representation or warranty of MART shall have become untrue, in either case such
that the conditions set forth in Section 8.3(a) or Section 8.3(b), as the case
may be, would be incapable of being satisfied or cured by the Termination Date
(as defined below);
(d) by MART upon a breach of any representation, warranty, covenant or
agreement on the part of Kimco or Merger Sub set forth in this Agreement, or if
any representation or warranty of Kimco or Merger Sub shall have become untrue,
in either case such that the conditions set forth in Section 8.2(a) or Section
8.2(b), as the case may be, would be incapable of being satisfied or cured by
the Termination Date;
(e) by Kimco if (i) the Board of Trustees of MART shall have failed to
make, or shall have withdrawn, modified, amended or qualified its approval of,
or recommendation of the Merger or any of the transactions contemplated hereby
in a manner adverse to Kimco, or shall have failed to include the recommendation
of its Board of Trustees that the shareholders of MART approve the Merger in the
Proxy Statement; or (ii) the Board of Trustees of MART shall have (x)
recommended that the shareholders of MART accept or approve an Acquisition
Proposal, or (y) failed to recommend that the shareholders of MART reject or not
accept an Acquisition Proposal that has been made public (or MART or its Board
shall have resolved to do such) within seven (7) business days of such
Acquisition Proposal having been made public;
(f) by either Kimco or MART if the Merger shall have failed to receive the
requisite vote for approval by the shareholders of MART upon the holding of a
duly convened Shareholders Meeting or adjournment thereof;
42
(g) by either Kimco or MART, if the Merger shall not have been consummated
on or before the Termination Date; provided, however, that a party may not
terminate this Agreement pursuant to this Section 9.1(g) if the party seeking
such termination is in material breach of any term of this Agreement; or
(h) by MART, if prior to the Effective Time, the Board of Trustees of MART,
in accordance with Section 7.1(c) hereof, shall have withdrawn, modified,
amended or qualified its recommendation of the Merger in a manner adverse to
Kimco and recommended that the MART shareholders approve or accept a Superior
Proposal, provided that (i) MART and the Board of Trustees of MART shall have
complied with Section 7.1 in all respects, and (ii) MART shall, concurrently
with such termination, pay Kimco the Termination Amount and the Break-Up
Expenses, as required by Section 9.2.
The right of any party hereto to terminate this Agreement pursuant to this
Section 9.1 shall remain operative and in full force and effect regardless of
any investigation made by or on behalf of any party hereto, any Person
controlling any such party or any of their respective Representatives, whether
prior to or after the execution of this Agreement. For the purposes of this
Agreement, the "Termination Date" shall mean December 15, 2003.
9.2 Effect of Termination.
(a) In the event of the termination and abandonment of this Agreement
pursuant to Section 9.1 hereof, this Agreement shall immediately become void and
have no effect, all rights and obligations of any party hereto shall cease
except for agreements contained in Section 10.5 and neither party shall have any
liability to the other parties or any of their affiliates, directors, trustees,
officers or shareholders; provided, however, that nothing herein shall relieve
any party from the obligation to make payments to another party as required
pursuant to this Article 9.
(b) If (A) Kimco terminates this Agreement pursuant to (x) Section 9.1(c)
as a result of a willful breach by MART, (y) Section 9.1(e), or (z) Section
9.1(f) in circumstances in which the Board of Trustees of MART failed to make,
or withdrew, modified, amended or qualified its approval or recommendation of
the Merger in a manner adverse to Kimco, or (B) MART terminates this Agreement
pursuant to Section 9.1(h), then in any such event MART shall pay to Kimco an
amount in cash equal to (i) $15,500,000 (the "Termination Amount") in addition
to (ii) any Kimco Break-Up Expenses (as defined in Section 9.2(c) hereof) that
may be payable by MART to Kimco pursuant to Section 9.2(c), subject to the
provisions of Section 9.3.
(c) If (A) Kimco terminates this Agreement pursuant to (x) Section 9.1(c)
as a result of a material breach (including, without limitation, a willful
breach) by MART, (y) Section 9.1(e), or (z) Section 9.1(f) in circumstances in
which the Board of Trustees of MART failed to make, or withdrew, modified,
amended or qualified its approval or recommendation of the Merger in a manner
adverse to Kimco; (B) MART terminates this Agreement pursuant to Section 9.1(h),
or (C) if either party terminates this Agreement pursuant to Section 9.1(g) in
circumstances in which the only condition to Closing in Article VIII hereof that
has not been satisfied or waived as of the Termination Date is Section 8.3(i),
then in any such event, MART shall pay all of Kimco's out-of-pocket costs and
expenses incurred in connection with this
43
Agreement and the transactions contemplated hereby, including, without
limitation, fees and disbursements of accountants, attorneys and investment
bankers in an amount not to exceed the lesser of the actual amount of such costs
and expenses incurred and $2,500,000 (all such expenses, "Kimco Break-Up
Expenses"), subject to the provisions of Section 9.3.
(d) If (A) prior to MART's Shareholders Meeting, an Acquisition Proposal
has been received by MART or a Person has publicly disclosed an Acquisition
Proposal or an intent or desire to make an Acquisition Proposal and (B) at any
time prior to the twelve month anniversary of the termination of this Agreement
by either party pursuant to Section 9.1(f), MART enters into a letter of intent,
agreement in principle or agreement relating to an Acquisition Proposal with a
Person other than Kimco or MART's Board of Trustees recommends or resolves to
recommend that MART' shareholders approve an Acquisition Proposal with a Person
other than Kimco, then upon the consummation of such transaction, MART shall pay
to Kimco the Termination Amount and the Kimco Break-Up Expenses in accordance
with the provisions of Section 9.3, which amount shall be reduced by any monies
previously paid by MART to Kimco pursuant to Section 9.2(c). At any time prior
to the twelve month anniversary of the termination of this Agreement, MART shall
not enter into any letter of intent, agreement in principle or agreement
relating to an Acquisition Proposal with a Person other than Kimco unless such
letter of intent, agreement in principle or agreement provides that such Person
shall, upon the consummation of the transaction contemplated thereby, pay any
Termination Amount and any Kimco Break-Up Expenses due Kimco under this Section
9.2(d) in accordance with the provisions of this Article 9.
(e) If MART terminates this Agreement pursuant to Section 9.1(d), as a
result of a material breach by Kimco (including, without limitation, a willful
breach), then Kimco shall pay all of MART's out-of-pocket costs and expenses
incurred in connection with this Agreement and the transaction contemplated
hereby, including, without limitation, fees and disbursements of accountants,
attorneys and investment bankers in an amount not to exceed the lesser of the
actual amount of such costs and expenses incurred and $2,500,000 (the "MART
Break-Up Expenses" and, together with the Kimco Break-Up Expenses, the "Break-Up
Expenses"), subject to the provisions of Section 9.3.
(f) If required under this Section 9.2, the payment of the Break-Up
Expenses and, if applicable, the Termination Amount, shall be paid in
immediately available funds within two (2) business days after the date of the
event giving rise to the obligation to make such payment; provided that, in
connection with a termination pursuant to Section 9.1(h), the Termination Amount
and Break-Up Expenses shall be paid concurrently with such termination as
contemplated by Section 9.1(h) and, in the case of payment of the Termination
Amount pursuant to Section 9.2(d), the Termination Amount shall be paid upon the
consummation of such transaction as contemplated in such Section 9.2(d). The
parties acknowledge and agree that the provisions for payment of the Termination
Amount and/or the Break-Up Expenses are an integral part of the transactions
contemplated by this Agreement and are included herein in order to induce the
parties to enter into this Agreement and to reimburse the parties for incurring
the costs and expenses related to entering into this Agreement and consummating
the transactions contemplated by this Agreement. Notwithstanding anything to the
contrary set forth in this Agreement, if either party fails to pay promptly the
Termination Amount and/or Break-Up Expenses due under this Section 9.2, the
defaulting party shall reimburse the other party on
44
demand for all costs and expenses (including legal fees and expenses) incurred
in connection with any action, including any legal action, taken to collect
payment of such amounts, together with interest on the amount of any unpaid fee
at the publicly announced prime rate of Citibank, N.A. plus two percent per
annum, compounded quarterly, from the date such fee was required to be paid.
(g) Notwithstanding anything to the contrary in this Agreement, Kimco
expressly acknowledges and agrees that, with respect to any termination of this
Agreement in circumstances where the Termination Amount and/or Kimco Break-Up
Expenses are payable in accordance with this Section 9.2, the payment of the
Kimco Break-Up Expenses, and, if applicable, the Termination Amount, shall
constitute liquidated damages with respect to any claim for damages or any other
claim which Kimco would otherwise be entitled to assert against MART or any of
the MART Subsidiaries or any of their respective assets, or against any of their
respective trustees, directors, officers, employees, partners, managers, members
or shareholders, with respect to this Agreement and the transactions
contemplated hereby and shall constitute the sole and exclusive remedy available
to Kimco. The parties hereto expressly acknowledge and agree that, in light of
the difficulty of accurately determining actual damages with respect to the
foregoing upon any termination of this Agreement in circumstances where the
Kimco Break-Up Expenses, and, if applicable, the Termination Amount, are payable
in accordance with this Section 9.2, the right to such payments: (i) constitute
a reasonable estimate of the damages that will be suffered by reason of any such
proposed or actual termination of this Agreement, and (ii) shall be in full and
complete satisfaction of any and all damages arising as a result of the
foregoing. Except for nonpayment of the amounts set forth in this Section 9.2,
Kimco hereby agrees that, upon any termination of this Agreement in
circumstances where the Kimco Break-Up Expenses, and, if applicable, the
Termination Amount, are payable in accordance with this Section 9.2, in no event
shall Kimco (A) seek to obtain any recovery or judgment against MART or any MART
Subsidiary or any of their respective assets, or against any of their respective
trustees, directors, officers, employees, partners, managers, members or
shareholders, or (B) be entitled to seek or obtain any other damages of any
kind, including, without limitation, consequential, indirect or punitive
damages.
(h) Notwithstanding anything to the contrary in this Agreement, MART
expressly acknowledges and agrees that, with respect to any termination of this
Agreement in circumstances where the MART Break-Up Expenses are payable in
accordance with this Section 9.2, the payment of the MART Break-Up Expenses
shall constitute liquidated damages with respect to any claim for damages or any
other claim which MART would otherwise be entitled to assert against Kimco or
Merger Sub or any of their respective assets, or against any of their respective
directors, officers, employees, partners, managers, members or shareholders,
with respect to this Agreement and the transactions contemplated hereby and
shall constitute the sole and exclusive remedy available to MART. The parties
hereto expressly acknowledge and agree that, in light of the difficulty of
accurately determining actual damages with respect to the foregoing upon any
termination of this Agreement in circumstances where the MART Break-Up Expenses
are payable in accordance with Section 9.2, the right to such payments (i)
constitute a reasonable estimate of the damages that will be suffered by reason
of any such proposed or actual termination of this Agreement, and (ii) shall be
in full and complete satisfaction of any and all damages arising as a result of
the foregoing. Except for nonpayment of the amounts set forth in this Section
9.2, MART hereby agrees that, upon any termination of this Agreement in
45
circumstances where the MART Break-Up Expenses are payable in accordance with
this Section 9.2, in no event shall MART (A) seek to obtain any recovery or
judgment against Kimco or any of the Kimco Subsidiaries or any of their
respective assets, or against any of their respective directors, officers,
employees, partners, managers, members or stockholders, or (B) be entitled to
seek or obtain any other damages of any kind, including, without limitation,
consequential, indirect or punitive damages.
(i) Notwithstanding any provision to the contrary herein, the aggregate
amount of the Termination Amount or Kimco Break-Up Expenses, as the case may be,
pursuant to this Section 9.2 shall be subject to the limitations set forth in
Section 9.3.
9.3 Payment of Termination Amount or Expenses.
(a) In the event that MART is obligated to pay Kimco the Termination Amount
and/or the Kimco Break-Up Expenses pursuant to Section 9.2 (the "Kimco Section
9.2 Amount"), MART shall pay to Kimco from the applicable Kimco Section 9.2
Amount deposited into escrow in accordance with the next sentence, an amount
equal to the lesser of (m) the Kimco Section 9.2 Amount and (n) the sum of (1)
the maximum amount that can be paid to Kimco without causing Kimco to fail to
meet the requirements of Sections 856(c)(2) and (3) of the Code determined as if
the payment of such amount did not constitute income described in Sections
856(c)(2)(A)-(H) or 856(c)(3)(A)-(I) of the Code ("Qualifying Income"), as
determined by Kimco's independent certified public accountants, plus (2) in the
event Kimco receives either (X) a letter from Kimco's counsel indicating that
Kimco has received a ruling from the IRS described in Section 9.3(b)(ii) or (Y)
an opinion from Kimco's outside counsel as described in Section 9.3(b)(ii), an
amount equal to the Kimco Section 9.2 Amount less the amount payable under
clause (1) above. To secure MART's obligation to pay these amounts, MART shall
deposit into escrow an amount in cash equal to the Kimco Section 9.2 Amount with
an escrow agent selected by Kimco and on such terms (subject to Section 9.3(b))
as shall be agreed upon by Kimco and the escrow agent. The payment or deposit
into escrow of the Kimco Section 9.2 Amount pursuant to this Section 9.3(a)
shall be made within two (2) business days of the event which gives rise to the
payment of the Kimco Section 9.2 Amount by wire transfer or bank check.
Notwithstanding anything to the contrary in this Agreement, if MART shall not
have paid the Kimco Section 9.2 Amount within the period set forth in the
preceding sentence, Kimco shall also be entitled to receive interest on such
Kimco Section 9.2 Amount, commencing on the date that the Kimco Section 9.2
Amount became due, at a rate per annum equal to the publicly announced prime
rate of Citibank, N.A. plus two percent per annum, compounded quarterly, from
the date such fee was required to be paid.
(b) The escrow agreement described in Section 9.3(a) shall provide that the
Kimco Section 9.2 Amount in escrow or any portion thereof shall not be released
to Kimco unless the escrow agent receives any one or combination of the
following: (i) a letter from Kimco's independent certified public accountants
indicating the maximum amount that can be paid by the escrow agent to Kimco
without causing Kimco to fail to meet the requirements of Sections 856(c)(2) and
(3) of the Code determined as if the payment of such amount did not constitute
Qualifying Income or a subsequent letter from Kimco's accountants revising that
amount, in which case the escrow agent shall release such amount to Kimco, or
(ii) a letter from Kimco's counsel indicating that Kimco received a ruling from
the IRS holding that the receipt by
46
Kimco of the Kimco Section 9.2 Amount would either constitute Qualifying Income
or would be excluded from gross income within the meaning of Sections 856(c)(2)
and (3) of the Code (or alternatively, Kimco's outside counsel has rendered a
legal opinion to the effect that the receipt by Kimco of the Kimco Section 9.2
Amount would either constitute Qualifying Income or would be excluded from gross
income within the meaning of Sections 856(c)(2) and (3) of the Code), in which
case the escrow agent shall release the remainder of the Kimco Section 9.2
Amount to Kimco. MART agrees to amend this Section 9.3 at the request of Kimco
in order to (x) maximize the portion of the Kimco Section 9.2 Amount that may be
distributed to Kimco hereunder without causing Kimco to fail to meet the
requirements of Sections 856(c)(2) and (3) of the Code, (y) improve Kimco's
chances of securing a favorable ruling described in this Section 9.3(b) or (z)
assist Kimco in obtaining a favorable legal opinion from its outside counsel as
described in this Section 9.3(b). The escrow agreement shall also provide that
any portion of the Kimco Section 9.2 Amount held in escrow for five years shall
be released by the escrow agent to MART. MART shall not be a party to such
escrow agreement and shall not bear any cost of or have liability resulting from
the escrow agreement.
(c) In the event that Kimco is obligated to pay MART the MART Break-Up
Expenses pursuant to Section 9.2 (the "MART Section 9.2 Amount"), Kimco shall
pay to MART from the applicable MART Section 9.2 Amount deposited into escrow in
accordance with the next sentence, an amount equal to the lesser of (m) the MART
Section 9.2 Amount and (n) the sum of (1) the maximum amount that can be paid to
MART without causing MART to fail to meet the requirements of Sections 856(c)(2)
and (3) of the Code determined as if the payment of such amount did not
constitute Qualifying Income, as determined by MART's independent certified
public accountants, plus (2) in the event MART receives either (X) a letter from
MART's counsel indicating that MART has received a ruling from the IRS described
in Section 9.3(d)(ii) or (Y) an opinion from MART's outside counsel as described
in Section 9.3(d)(ii), an amount equal to the MART Section 9.2 Amount less the
amount payable under clause (1) above. To secure Kimco's obligation to pay these
amounts, Kimco shall deposit into escrow an amount in cash equal to the MART
Section 9.2 Amount with an escrow agent selected by MART and on such terms
(subject to Section 9.3(d)) as shall be agreed upon by MART and the escrow
agent. The payment or deposit into escrow of the MART Section 9.2 Amount
pursuant to this Section 9.3(c) shall be made within two (2) business days of
the event which gives rise to the payment of the MART Section 9.2 Amount by wire
transfer or bank check. Notwithstanding anything to the contrary in this
Agreement, if MART shall not have paid the MART Section 9.2 Amount within the
period set forth in the preceding sentence, MART shall also be entitled to
receive interest on such MART Section 9.2 Amount, commencing on the date that
the MART Section 9.2 Amount became due, at a rate per annum equal to the
publicly announced prime rate of Citibank, N.A. plus two percent per annum,
compounded quarterly, from the date such fee was required to be paid.
(d) The escrow agreement described in Section 9.3(c) shall provide that the
MART Section 9.2 Amount in escrow or any portion thereof shall not be released
to MART unless the escrow agent receives any one or combination of the
following: (i) a letter from MART's independent certified public accountants
indicating the maximum amount that can be paid by the escrow agent to MART
without causing MART to fail to meet the requirements of Sections 856(c)(2) and
(3) of the Code determined as if the payment of such amount did not constitute
Qualifying Income or a subsequent letter from MART's accountants revising that
47
amount, in which case the escrow agent shall release such amount to MART, or
(ii) a letter from MART's counsel indicating that MART received a ruling from
the IRS holding that the receipt by MART of the MART Section 9.2 Amount would
either constitute Qualifying Income or would be excluded from gross income
within the meaning of Sections 856(c)(2) and (3) of the Code (or alternatively,
MART's outside counsel has rendered a legal opinion to the effect that the
receipt by MART of the MART Section 9.2 Amount would either constitute
Qualifying Income or would be excluded from gross income within the meaning of
Sections 856(c)(2) and (3) of the Code), in which case the escrow agent shall
release the remainder of the MART Section 9.2 Amount to MART. Kimco agrees to
amend this Section 9.3 at the request of MART in order to (x) maximize the
portion of the MART Section 9.2 Amount that may be distributed to MART hereunder
without causing MART to fail to meet the requirements of Sections 856(c)(2) and
(3) of the Code, (y) improve MART's chances of securing a favorable ruling
described in this Section 9.3(b) or (z) assist MART in obtaining a favorable
legal opinion from its outside counsel as described in this Section 9.3(b). The
escrow agreement shall also provide that any portion of the MART Section 9.2
Amount held in escrow for five years shall be released by the escrow agent to
Kimco. Kimco shall not be a party to such escrow agreement and shall not bear
any cost of or have liability resulting from the escrow agreement.
9.4 Extension; Waiver. At any time prior to the Effective Time, any party
hereto, by action taken by its Board of Directors, Board of Trustees or Manager,
may, to the extent legally allowed, (a) extend the time for the performance of
any of the obligations or other acts of the other parties hereto (it being
understood that Merger Sub and Kimco may not extend the time for each others'
obligations), (b) waive any inaccuracies in the representations and warranties
made to such party contained herein or in any document delivered pursuant hereto
and (c) waive compliance with any of the agreements or conditions for the
benefit of such party contained herein. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party.
ARTICLE 10 - GENERAL PROVISIONS
10.1 Nonsurvival of Representations, Warranties and Agreements. None of the
representations, warranties, covenants and agreements in this Agreement or any
exhibit, schedule or instrument delivered pursuant to this Agreement shall
survive beyond the Effective Time, except for those covenants and agreements
contained therein that by their terms apply or are to be performed in whole or
in part after the Effective Time and this Article 10.
10.2 Notices. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be delivered
personally, sent by overnight courier (providing proof of delivery) to the
parties or sent by telecopy (providing confirmation of transmission) at the
following addresses or telecopy numbers (or at such other address or telecopy
number for a party as shall be specified by like notice):
If to Kimco or Merger Sub:
Kimco Realty Corporation
3333 New Hyde Park Road
New Hyde Park, NY 11042
48
Fax No. (516) 869-2533
Attn: Michael Pappagallo
Bruce Rubenstein, Esq.
With copies to:
Goodwin Procter LLP
Exchange Place
Boston, MA 02109
Fax No. (617) 523-1231
Attn: Gilbert G. Menna, P.C.
If to MART:
Mid-Atlantic Realty Trust
170 West Ridgely Road
Suite 210
Lutherville, MD 21093
Fax No. (410) 859-5685
Attn: Paul F. Robinson
With copies to:
Gordon, Feinblatt, Rothman, Hoffberger & Hollander LLC
The Garrett Building
233 East Redwood Street
Baltimore, MD 21202
Fax No. (410) 576-4246
Attn: Abba David Poliakoff, Esq.
and
Hunton & Williams
Riverfront Plaza, East Tower
951 East Byrd Street
Richmond, VA 23219-4074
Fax No. (804) 788-8218
Attn: David C. Wright, Esq.
or to such other address as any party shall specify by written notice so given,
and such notice shall be deemed to have been delivered as of the date so
delivered.
10.3 Assignment; Binding Effect; Benefit. Neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties; provided, however, that Merger Sub may
assign any of its rights under this Agreement to another subsidiary of Kimco
(specifying that such subsidiary shall take the place of Merger Sub as a
constituent party to the Merger) provided Kimco and Merger Sub shall remain
obligated
49
hereunder in all respects. Subject to the preceding sentence, this Agreement
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective successors and assigns. Notwithstanding anything contained in
this Agreement to the contrary, except for the provisions of Section 7.9 hereof,
nothing in this Agreement, expressed or implied, is intended to confer on any
Person other than the parties hereto or their respective heirs, successors,
executors, administrators and assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
10.4 Entire Agreement. The MART Disclosure Letter and all Exhibits and
Schedules attached hereto or thereto and referred to herein or therein are
hereby incorporated herein and made a part hereof for all purposes as if fully
set forth herein. This Agreement, the Exhibits attached hereto, the MART
Disclosure Letter and any documents delivered by the parties in connection
herewith constitute the entire agreement among the parties with respect to the
subject matter hereof and supersede all prior agreements and understandings
among the parties with respect thereto. No addition to or modification of any
provision of this Agreement shall be binding upon any party hereto unless made
in writing and signed by all parties hereto.
10.5 Confidentiality.
(a) Each of MART and Kimco will hold, and will cause its respective
officers, employees, accountants, counsel, financial advisors and other
representatives and affiliates to hold, any nonpublic information in confidence
to the extent required by, and in accordance with, and will comply with the
provisions of the letter agreement between MART and Kimco dated as of January 8,
2003.
(b) Notwithstanding anything herein to the contrary, any party to this
Agreement (and any employee, representative, or other agent of any party to this
Agreement) may disclose to any and all Persons, without limitation of any kind,
the tax treatment and tax structure of the transactions contemplated by this
Agreement and all materials of any kind (including opinions or other tax
analyses) that are provided to it relating to such tax treatment and tax
structure. However, any such information relating to the tax treatment or tax
structure is required to be kept confidential to the extent necessary to comply
with any applicable federal or state Securities Laws.
10.6 Amendment. This Agreement may be amended by the parties hereto, by
action taken by their respective Boards of Directors or Trustees, as applicable,
at any time before or after approval of matters presented in connection with the
Merger by the shareholders of MART, but after any such shareholder approval, no
amendment shall be made which (i) alters the amount or changes the form of the
Merger Consideration, or (ii) by law requires the further approval of
shareholders without, in either case, obtaining shareholder approval. This
Agreement may not be amended except by an instrument in writing signed on behalf
of each of the parties hereto.
10.7 Governing Law; Jurisdiction and Venue. This Agreement shall be
governed by and construed in accordance with the laws of the State of Maryland
without regard to its rules of conflict of laws. Each of MART and Kimco hereby
irrevocably and unconditionally consents to submit to the exclusive jurisdiction
of the courts of the State of Maryland and of the United States of America
located in the State of Maryland (the "Maryland Courts") for any litigation
50
arising out of or relating to this Agreement and the transactions contemplated
hereby (and agrees not to commence any litigation relating thereto except in
such courts), waives any objection to the laying of venue of any such litigation
in the Maryland Courts and agrees not to plead or claim in any Maryland Court
that such litigation brought therein has been brought in any inconvenient forum.
Each of the parties hereto agrees, (a) to the extent such party is not otherwise
subject to service of process in the State of Maryland, to appoint and maintain
an agent in the State of Maryland as such party's agent for acceptance of legal
process, and (b) that service of process may also be made on such party by
prepaid certified mail with a proof of mailing receipt validated by United
States Postal Service constituting evidence of valid service. Service made
pursuant to (a) or (b) above shall have the same legal force and effect as if
served upon such party personally with the State of Maryland.
10.8 Counterparts. This Agreement may be executed by the parties hereto in
separate counterparts, each of which so executed and delivered shall be an
original, but all such counterparts shall together constitute one and the same
instrument. Each counterpart may consist of a number of copies hereof each
signed by less than all, but together signed by all of the parties hereto.
10.9 Headings. Headings of the Articles and Sections of this Agreement are
for the convenience of the parties only, and shall be given no substantive or
interpretive effect whatsoever.
10.10 Interpretation. In this Agreement, unless the context otherwise
requires, words describing the singular number shall include the plural and vice
versa, and words denoting any gender shall include all genders and words
denoting natural persons shall include corporations and partnerships and vice
versa.
10.11 Waivers. Except as provided in this Agreement, no action taken
pursuant to this Agreement, including, without limitation, any investigation by
or on behalf of any party, shall be deemed to constitute a waiver by the party
taking such action of compliance with any representations, warranties, covenants
or agreements contained in this Agreement. The waiver by any party hereto of a
breach of any provision hereunder shall not operate or be construed as a waiver
of any prior or subsequent breach of the same or any other provision hereunder.
10.12 Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
10.13 Enforcement of Agreement. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement was
not performed in accordance with its specific terms or was otherwise breached.
It is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and
51
to enforce specifically the terms and provisions thereof in any Maryland Court,
this being in addition to any other remedy to which they are entitled at law or
in equity.
10.14 Certain Definitions.
(a) As used in this Agreement, the word "Subsidiary" or "Subsidiaries" when
used with respect to any party means any corporation, partnership, joint
venture, business trust or other entity, of which such party directly or
indirectly owns or controls at least a majority of the securities or other
interests having by their terms ordinary voting power to elect a majority of the
board of directors or others performing similar functions with respect to such
corporation or other organization.
(b) As used in this Agreement, the word "Person" means an individual, a
corporation, a partnership, an association, a joint-stock company, a trust, a
limited liability company, any unincorporated organization or any other entity.
(c) As used in this Agreement, the word "affiliate" shall have the meaning
set forth in Rule 12b-2 of the Exchange Act.
10.15 Alternative Structure. Notwithstanding anything to the contrary
contained in this Agreement, upon notice to MART not less than 10 business days
prior to the Shareholders' Meeting, Kimco shall be entitled to revise the
structure of the Merger so as to provide for (i) the merger of Merger Sub into
MART (with MART as the Surviving Entity), or (ii) the merger of another directly
or indirectly, wholly-owned subsidiary of Kimco, other than Merger Sub, with
MART (with either of MART or such subsidiary surviving). In addition, MART will
take such other action as may be reasonably requested by Kimco to help reduce
any adverse tax implications arising out of the transactions contemplated
hereby, provided, that, nothing in this Section 10.15 shall (a) subject the MART
shareholders to adverse tax consequences, (b) change the amount or form of
consideration to be received by the MART shareholders, (c) alter to the
detriment of the MART shareholders the benefits to be received by them
hereunder, (d) jeopardize or materially delay or impede the receipt of any
required regulatory or third Party approvals or consents or add any additional
regulatory or third party approvals or consents relating to the consummation of
the Merger, (e) impede or delay consummation of the Merger, or create any new
condition to Closing, (f) reduce the obligations of any party hereunder
including, but not limited to, Kimco's obligations to provide the Merger
Consideration and perform its other undertakings hereunder after the Effective
Time or (g) adversely affect MART or the MART Subsidiaries or otherwise increase
the obligations of MART or the MART Subsidiaries. The parties shall execute an
appropriate amendment to this Agreement and any related documents necessary to
reflect any such revised structure.
52
IN WITNESS WHEREOF, the parties have executed this Agreement and caused
the same to be duly delivered on their behalf on the day and year first written
above.
KIMCO REALTY CORPORATION
By: /s/ Michael V. Pappagallo
---------------------------
Name: Michael V. Pappagallo
Title: Vice President/Chief Financial
Officer
KIMCO ACQUISITION REAL ESTATE INVESTMENT
TRUST
By: /s/ Michael V. Pappagallo
--------------------------
Name: Michael V. Pappagallo
Title: Trustee
MID-ATLANTIC REALTY TRUST
By: /s/ F. Patrick Hughes
-----------------------
Name: F. Patrick Hughes
Title: President & Chief Executive
Officer