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As filed with the Securities and Exchange Commission on January 5, 1999
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported) December 31, 1998
ACADIA REALTY TRUST
(Exact name of registrant as specified in its charter)
Maryland 1-12002 23-2715194
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(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
20 Soundview Marketplace
Port Washington, New York 11050
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(Address of principal executive offices) (Zip Code)
(516) 767-8830
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(Registrant's telephone number, including area code)
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(Former name or former address, if changed since last report)
792154.3
ITEM 5. Other Events
On December 31, 1998, the Registrant entered into an agreement, among
the Registrant, Jack Wertheimer, Jr. and Marvin L. Slomowitz (the "Settlement
Agreement") with respect to certain legal actions brought by Mr. Wertheimer in
federal district court and in state court stemming from the termination of Mr.
Wertheimer's employment with the Registrant.
The Settlement Agreement provides for, among other things, (i) mutual
releases of the parties thereto, (ii) indemnification by the Registrant of Mr.
Wertheimer for actions taken by him as an officer of the Registrant (other than
fraudulent conduct), and (iii) a payment of settlement consideration as follows:
(w) $1,000,000 by December 31, 1998, (x) $900,000 on or prior to April 1, 1999,
and (y) five (5) annual payments of $200,000 each for a period of five (5) years
commencing January 10, 2000 (the "Annual Payments"). The Annual Payments will be
secured by a standby letter of credit and are subject to acceleration by Mr.
Wertheimer upon a default of the Registrant.
Mr. Wertheimer, the former President of the Registrant, filed a
complaint against the Registrant, its Trustees and the Registrant's former
in-house General Counsel and Chief Financial Officer in state court in December
1994, followed by a complaint in federal district court in November 1995. The
federal complaint, which, like the state court action, was filed in connection
with the termination of Mr. Wertheimer's employment, included a civil RICO
action in which Mr. Wertheimer alleged that the Board of Trustees conspired with
Mr. Slomowitz (the "Principal Shareholder") to terminate Mr. Wertheimer's
employment. Further, Mr. Wertheimer alleged that the defendants engaged in
securities fraud in connection with the Registrant's initial public offering,
and that the Principal Shareholder had defrauded or overcharged the Registrant
in various corporate transactions. The federal complaint sought treble damages
under RICO, as well as damages arising from Mr. Wertheimer's alleged wrongful
termination of employment, invasion of privacy, intentional infliction of
emotional distress, fraud and misrepresentation. The motions to dismiss the RICO
and tort claims filed by the Registrant and the other defendants were granted in
part and denied in part by the court in December 1996. Specifically, the court
dismissed Mr. Wertheimer's claims for wrongful discharge, fraud, negligence and
misrepresentation, but declined to dismiss the remainder of the claims at that
time. In their answer to the federal complaint, the defendants denied all
allegations of wrongdoing, and the Registrant and the Principal Shareholder also
filed counterclaims against Mr. Wertheimer alleging that Mr. Wertheimer made
material misrepresentations in connection with his hiring and breached his
employment contract and fiduciary duties to the Registrant.
On December 31, 1998, the Registrant issued a press release, a copy of
which is attached hereto as Exhibit 99.1, announcing the Settlement Agreement.
792154.3
ITEM 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits.
10.1 Settlement Agreement, dated December 31, 1998, among the Registrant,
Jack Wertheimer, Jr. and Marvin L. Slomowitz.
99.1 Press Release, dated December 31, 1998.
792154.3
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ACADIA REALTY TRUST
(Registrant)
Date: January 4, 1999 By: /s/ Kenneth F. Bernstein
-------------------------------------
Name: Kenneth F. Bernstein
Title: President
792154.3
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Exhibit 10.1
SETTLEMENT AGREEMENT AND GENERAL RELEASE
WHEREAS, the parties to this Settlement Agreement and General Release
have been involved in lawsuits in the United States District Court for the
Middle District of Pennsylvania at No. 3:CV-95-1935, captioned Jack Wertheimer,
Jr. v. Mark Centers Trust, et al. and in the Court of Common Pleas of Luzerne
County, Pennsylvania at No. 6437-C of 1994, captioned Wertheimer v. Mark Centers
Trust, et al., (the "Lawsuits");
WHEREAS, the parties to this Settlement Agreement and General Release,
without admitting any liability or fault and in order to avoid the expense and
inconvenience of further litigation, desire to settle the Lawsuits and all other
possible claims, whether related to the Lawsuits or not;
NOW, THEREFORE, on this 31st day of December, 1998, for the mutual
promises and consideration contained herein, and for other good and valuable
consideration, receipt of which is hereby acknowledged, and intending to be
legally bound, the parties agree as follows:
1. Acadia Realty Trust, formerly known as Mark Centers Trust, shall pay
to Jack Wertheimer, Jr. (i) $1,000,000 on or before December 31, 1998, (ii)
$900,000 on or before April 1, 1999, and (iii) five payments of $200,000 each on
or before January 10, 2000, January 10, 2001, January 10, 2002, January 10,
2003, and January 10, 2004 respectively. Payment shall be made by wire transfer
sent to Comerica Bank - Texas, Dallas, Texas, ABA #111000753 for credit to Jack
Wertheimer, Jr., Account No. 7833028512, Attention: Michael W. Hendrix, Vice
President or to such other accont as Wertheimer may from time to time designate
in writing.
2. Acadia Realty Trust also agrees to defend, indemnify, and hold
harmless Wertheimer from and for any loss or liability resulting from claims
threatened or brought against Wertheimer based on (i) any act or omission
committed by Wertheimer related to his employment with Mark Centers Trust or
term on the Board of Trustees or (ii) relating to any claims referenced in the
Lawsuits, including but not limited to claims for abuse of process, malicious
prosecution, wrongful use of civil proceedings, or shareholder derivative claims
or governmental proceedings.
3. If any of the payments due under this Agreement is not received by
Wertheimer on or before its respective due date, then Wertheimer may, at his
option, deliver notice of nonpayment to Acadia Realty Trust as set forth in
paragraph 4 below. If the missed payment is not received within three (3)
business days following the date on which the notice of nonpayment is received
by Acadia, then every installment not yet paid shall be accelerated and shall
become immediately due and payable and counsel for Wertheimer may appear for
Acadia and have the Prothonotary of the Court of Common Pleas of Luzerne County,
Pennsylvania enter judgment by confession against Acadia.
THIS PARAGRAPH SETS FORTH A WARRANT OF AUTHORITY FOR AN ATTORNEY TO
CONFESS JUDGMENT AGAINST ACADIA REALTY TRUST. IN GRANTING THIS WARRANT OF
AUTHORITY TO CONFESS JUDGMENT AGAINST ACADIA REALTY TRUST, ACADIA REALTY TRUST
HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, AND, ON THE ADVICE OF THE
SEPARATE COUNSEL OF ACADIA REALTY TRUST, UNCONDITIONALLY WAIVES ANY AND ALL
RIGHTS ACADIA REALTY TRUST
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HAS OR MAY HAVE TO PRIOR NOTICE AND AN OPPORTUNITY FOR HEARING UNDER THE
RESPECTIVE CONSTITUTIONS AND LAWS OF THE UNITED STATES AND THE COMMONWEALTH OF
PENNSYLVANIA.
Upon the occurrence of a default of this Agreement and Acadia Realty
Trust's failure to cure such Default after notice, Acadia hereby irrevocably
authorizes and empowers any attorney of any Court of record in the Commonwealth
of Pennsylvania to appear for and to enter and confess judgment against Acadia
Realty Trust, at any time or times and as of any term, for the principal amount
of this Agreement, with or without declaration and without stay of execution,
together with interest and costs including reasonable actual attorney's fees.
The authority granted to Wertheimer to confess judgment shall not be exhausted
by one exercise but shall continue until Acadia Realty Trust has paid all sums
required to be paid by Acadia Realty Trust under this Agreement.
4. Notices of nonpayment shall be sent by facsimile transmission and by
a national overnight courier, such as UPS or Federal Express, to Kenneth F.
Bernstein, Acadia Realty Trust, 805 Third Avenue, 9th Floor, New York, NY 10022,
fax no. (212) 421-2341 and Robert Masters, Esquire, Acadia Realty Trust, 20
Soundview Marketplace, Port Washington, NY 11050, fax no. (516) 767-8834. Acadia
will notify Wertheimer in writing of any change in the persons to whom or
addresses to which notices of nonpayment are to be sent. Such notice from Acadia
shall be sent by facsimile transmission and national overnight carrier to
Wertheimer at 4605 Arcady Avenue, Dallas, Texas 75209, fax no. (214) 559-9949
and Raymond Wendolowski, Esquire, Koff, Wendolowski, Ferguson & Mangan, P.C., 22
East Union Street, Suite 115, Wilkes-Barre, Pennsylvania 18701, fax no. (570)
825-1299.
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5. Simultaneously with execution of this Agreement, Acadia shall
establish an escrow fund in the amount of $1,000,000 with Battle Fowler LLP as
escrow agent. The escrow fund will collateralize Acadia's obligation to make the
$900,000 payment on April 1, 1999 and the five $200,000 payments and will be
released upon presentation to Wertheimer of a mutually acceptable standby
irrevocable letter of credit to secure the payments that have not yet been made
at the time the letter of credit is provided. The irrevocable letter of credit
shall either have a termination date, or be renewable for a period, coextensive
with the payment obligations hereunder and shall specify a draw down procedure
identical to the payment procedure set forth in Paragraph 4 and Schedule A of
the Escrow Agreement attached hereto as Exhibit A. Additional terms applicable
to the escrow fund are set forth in the Escrow Agreement attached hereto as
Exhibit A. The irrevocable letter of credit shall be obtained from a domestic
commercial bank with a deposit base of at least $500 million. Wertheimer shall
pay the costs or fees associated with obtaining the irrevocable letter of credit
up to a maximum of 1.5% of the amount of the letter of credit. In the event that
the costs or fees associated with obtaining the letter of credit exceed 1.5% of
the letter of credit amount, then Acadia will pay the excess costs or fees if it
still intends to provide a letter of credit. Upon request of Acadia, Wertheimer
agrees to provide to Escrow Agent a written acknowledgment of receipt of the
mutually agreeable irrevocable letter of credit.
6. In the event of a change in control at Acadia, then every
installment not yet paid under this Agreement shall be accelerated and shall
become immediately due and payable. For purposes of this Agreement, change in
control means the sale or disposition of a majority of Acadia's outstanding
capital stock, property, assets or business; or a third
4
person including a "group" as used in Section 13(d)(3) of the Securities
Exchange Act of 1934 (the "Exchange Act"), becomes the beneficial owner,
directly or indirectly, of 51% or more of the combined voting power of Acadia's
outstanding voting securities; or the consolidation of Acadia with or merger
into any other entity on a basis whereby Acadia is not the surviving entity; or
the consolidation of Acadia as a result of an unaffiliated entity being reverse
merged into Acadia whereby control is changed pursuant to the definitions of
this paragraph.
7. Wertheimer hereby releases and discharges Acadia Realty Trust (f/k/a
Mark Centers Trust), Marvin L. Slomowitz, Marcia Corporation, Lawrence Longua,
Bernhardt Denmark, Harvey Shanus, Joseph Castle II, John Vincent Weber, Marvin
Levine, Steven Pomerantz, and Joshua Kane (collectively, "Defendants") and each
of their past, present, and future employees, representatives, attorneys,
agents, predecessors, subsidiaries, divisions, affiliates, directors, officers,
shareholders, successors, and assigns, from all claims or causes of action --
known or unknown, suspected or unsuspected, and whether involved in the Lawsuits
or not, and including but not limited to all claims for attorneys' fees and
costs -- which against Defendants he ever had, now has or hereafter may have,
arising out of or based on any event from the beginning of the world to the date
of this Settlement Agreement and General Release.
8. Wertheimer covenants, agrees, and represents that he has not and
will not file or otherwise initiate any type of proceeding with a governmental
agency based on the subject matter of the Lawsuits.
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9. Acadia Realty Trust, formerly known as Mark Centers Trust, and
Marvin L. Slomowitz, in his individual capacity, hereby release and discharge
Wertheimer and his representatives, agents, attorneys, successors, and assigns
from all claims or causes of action -- known or unknown, suspected or
unsuspected, and whether involved in the Lawsuits or not, and including, but not
limited to all claims for attorneys' fees and costs -- which against Wertheimer
they ever had, now have or hereafter may have, arising out of or based on any
event from the beginning of the world to the date of this Settlement Agreement
and General Release. Acadia will use reasonable efforts to secure full and
complete general releases for Wertheimer from each of the other Defendants.
10. While agreeing to compromise and settle this Lawsuit, the parties
deny liability to each other. It is understood and agreed that by entering into
this Settlement Agreement and General Release, the parties in no way admit any
liability to each other. Nothing in this Agreement shall constitute precedent or
evidence in another proceeding, with the exception that this Agreement shall be
admissible evidence in any proceeding to enforce the terms hereof.
11. Promptly upon execution of this Agreement, counsel for the parties
shall file with the Courts the documents necessary to obtain the dismissal of
the Lawsuits with prejudice.
12. Wertheimer, on the one hand, and Acadia Realty Trust and Slomowitz,
on the other, each agree that they will not make disparaging remarks about the
other or publicize any statements or opinions concerning Wertheimer's experience
as an officer of Mark Centers Trust.
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13. The terms of this Agreement inure to the benefit of, and are
binding upon the heirs, successors, and assigns of the parties hereto, and
Wertheimer's right to receive payments under this Agreement is assignable to
Wertheimer's successors, assigns, and heirs.
14. Wertheimer acknowledges and agrees that he is liable for and will
pay all taxes for which he personally is responsible under federal and state law
as a result of the payments made to him under this Agreement. Wertheimer shall
defend, indemnify, and hold harmless Acadia for any claim arising from
Wertheimer's failure to pay such taxes when due.
15. The prevailing party in any lawsuit alleging a breach of this
Agreement shall be entitled to recover the reasonable attorneys' fees and costs
incurred in connection with such a lawsuit.
16. The parties to this Agreement acknowledge that they have carefully
read this Settlement Agreement and General Release and have had it explained to
them by their attorneys. They warrant and represent that they relied upon their
own judgment and that of their legal counsel regarding the proper, sufficient,
and agreed-upon consideration for the terms and provisions of this Agreement and
that no statement or representation by the other parties or their agents,
employees, officers, directors, or legal representatives has influenced or
induced them to execute this Agreement.
17. Acadia's Board of Trustees has approved the terms of this Agreement
and has authorized Acadia to enter into this Agreement.
18. This Agreement contains the complete and final agreement between
the parties regarding the settlement and compromise of the Lawsuits. No
modification or other
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change to this Agreement shall be effective unless set forth in writing duly
executed by or on behalf of the parties.
19. This Agreement is to be governed by the laws of the Commonwealth of
Pennsylvania and any lawsuit alleging a breach of this Agreement shall be filed
in, and only in, the state or federal courts located in the Commonwealth of
Pennsylvania.
20. This Agreement may be executed in counterparts and facsimile
signatures shall have the same effect as original signatures.
7a
IN WITNESS WHEREOF, and intending to be legally bound hereby, the
undersigned have hereunto set their hands on the date(s) indicated.
12/31/98 /s/ Jack Wertheimer, Jr.
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DATE JACK WERTHEIMER, JR.
ACADIA REALTY TRUST
12/30/98 By /s/ Robert Masters
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DATE ROBERT MASTERS
Senior Vice President
12/30/98 /s/ Marvin L. Slomowitz
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DATE MARVIN L. SLOMOWITZ
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EXHIBIT 99.1
[GRAPHIC OMITTED]
FOR IMMEDIATE RELEASE FOR MORE INFORMATION CONTACT:
December 31, 1998 Suzanne R. West, Investor Relations @ 212.421.8830
NEW YORK, December 31, 1998 -- Acadia Realty Trust (NYSE:AKR), a New York-based
real estate investment trust, formerly known as Mark Centers Trust ("MCT"),
announced today that it has resolved a significant litigation exposure.
The litigation stemmed from a complaint filed by a former officer of MCT who
claimed wrongful termination. The settlement of $2.9 million will be paid over a
period of six years, with a significant portion to be paid in 1998. A Company
spokesperson noted that the settlement is consistent with new management's
original underwriting in connection with its investment in MCT.
According to Kenneth F. Bernstein, Acadia's President, "Since assuming control
of MCT in August 1998, new management has implemented an aggressive turnaround
policy. We have actively sought to resolve outstanding problems, dispose of
non-core and under-performing assets, and take other essential steps to position
Acadia for superior earnings growth. The resolution of this longstanding
litigation is another tangible sign to investors that we are serious about
correcting the previous problems that limited the growth of this Company."
Acadia Realty Trust, headquartered on Long Island, NY, is a self-administered
equity real estate investment trust structured as an UPREIT, which specializes
in the operation, management, leasing, renovation and acquisition of shopping
centers and multi-family properties. The Company currently owns and operates 58
properties totaling approximately 11.5 million square feet, primarily in the
eastern half of the United States. Acadia's executive offices are located in
Manhattan.
Certain items in this press release may constitute forward-looking statements
within the meaning of the Private Litigation Reform Act of 1995 and as such may
involve known and unknown risk, uncertainties and other factors which may cause
the actual results, performances or achievements of Acadia to be materially
different from any future results, performances or achievements expressed or
implied by such forward-looking statements. Such forward-looking statements
speak only as of the date of this document. Acadia expressly disclaims any
obligation or undertaking to release publicly any updates or revisions to any
forward-looking statements contained herein to reflect any change in Acadia's
expectations with regard thereto or change in events, conditions or
circumstances on which any such statement is based.
794548.1