EXHIBIT 7
CUSTODY AGREEMENT
RE: SALE OF COMMON SHARES
OF
ACADIA REALTY TRUST
THIS CUSTODY AGREEMENT (this "Agreement"), made as of the 4th day of
November 2004, between Acadia Realty Trust, as Custodian (the "Custodian"), and
Yale University (the "Selling Shareholder") provides:
1. The Selling Shareholder is the owner of common shares of beneficial
interest, $.001 par value per share (the "Common Shares") of Acadia Realty
Trust, a self administered Maryland real estate investment trust (the
"Company"), and proposes to sell 954,225 Common Shares and, at the election of
the Underwriters (as defined herein), up to an aggregate of 143,134 additional
Common Shares solely to cover over-allotments (collectively, the "Shares")
pursuant to an underwriting agreement in substantially the form attached to the
Power of Attorney (as defined herein) to be entered into among the Company,
Acadia Realty Limited Partnership, certain underwriters named therein (the
"Underwriters"), the Selling Shareholder and the persons listed on Schedule B of
the underwriting agreement (the "Underwriting Agreement"). The Selling
Shareholder acknowledges and consents to changes to the form of Underwriting
Agreement attached to the Power of Attorney, provided that such changes shall
not materially and adversely affect the Selling Shareholder. Concurrently with
the execution and delivery of this Agreement, the Selling Shareholder has
executed a Power of Attorney to Xxxxxxx X. Xxxxxxxxx and Xxxxxx Xxxxxxx, and
each of them individually (the "Attorney-in-Fact"), authorizing the
Attorney-in-Fact to sell the Shares pursuant to the Underwriting Agreement.
2. The Selling Shareholder herewith delivers (i) to the Custodian for
safekeeping the certificates listed on SCHEDULE I hereto and/or (ii) a copy of
an executed DWAC Letter (as defined below), which collectively represent not
less than the number of the Shares to be sold by the Selling Shareholder
pursuant to the Underwriting Agreement. Each such certificate has been duly
endorsed in blank or is accompanied by a separate form of assignment duly
executed in blank, in either case with the signature of the holder of record
guaranteed by a bank or trust company, or by a firm having membership on the New
York Stock Exchange, in proper form to permit the transfer on the books of the
Company of the Shares represented by such certificates. The foregoing are to be
held by the Custodian pursuant to the provisions of this Agreement. With regard
to any Shares held in book-entry form or "street-name" that will be used by the
Selling Shareholder to fulfill its obligations under the Underwriting Agreement,
the Selling Shareholder shall execute and deliver to the transfer agent a
Deposit/Withdrawal at Custodian Letter ("DWAC Letter") in the form attached as
EXHIBIT 1 hereto. Upon execution of the DWAC Letter by the transfer agent, the
Shares subject to the DWAC Letter shall be deemed to be deposited with the
Custodian and shall be held by the transfer agent as a subcustodian on behalf of
the Custodian pursuant to the provisions of this Agreement and the letter of
instruction from the Company to the transfer agent, and all references herein to
the Custodian shall be deemed to include the transfer agent, as subcustodian.
3. The Selling Shareholder agrees that the Shares deposited under this
Agreement are for the benefit of and coupled with and subject to the interests
of the Underwriters, that the arrangements made by the Selling Shareholder for
such custody are to that extent irrevocable, and that the obligations of the
Selling Shareholder under this Agreement and under the Underwriting Agreement
shall not be terminated by operation of law or by termination of authority of
the Selling Shareholder, or by the death or incapacity, or liquidation or
dissolution, as applicable, of the Selling Shareholder, or by the occurrence of
any other event not provided for in the Underwriting Agreement. If the Selling
Shareholder should die or become incapacitated, or be liquidated or dissolved,
or if any such other event should occur before the delivery of the Shares as
provided in the Underwriting Agreement, certificates for the Shares to be sold
shall be delivered by the Custodian in accordance with the terms and conditions
of the Underwriting Agreement and this Agreement, as if such death, incapacity,
liquidation, dissolution or other event had not occurred, regardless of whether
the Custodian shall have received notice thereof.
4. The Selling Shareholder hereby authorizes and directs the Custodian as
follows:
(a) The Custodian shall hold for safekeeping and deliver the
certificates deposited with it hereunder pursuant to the terms of this Agreement
and the Underwriting Agreement when so directed by the Attorney-in-Fact and make
such other appropriate arrangements for safekeeping of such certificates;
(b) At any time after receipt of the certificates deposited with it
pursuant to this Agreement, the Custodian shall permit the Company's transfer
agent to examine them, together with any related stock powers, certificates of
qualification or other documents, so as to satisfy the transfer agent that the
Custodian holds the Shares in deliverable and transferable form;
(c) The Custodian shall continue to hold the initial certificates for
the Shares, the stock powers, and other related documents referred to in
subsection (b) of this Section 4 and, within the period required by Section 2 of
the Underwriting Agreement and otherwise subject to the provisions of the
Underwriting Agreement, shall cause to be issued new certificates for the Shares
and shall deliver the certificates for the Shares and related papers, upon
payment therefor in accordance with the pricing information shown on the cover
page of the final Prospectus and the Underwriting Agreement, to such person or
persons as the Custodian shall have been directed to do, in writing, by
Citigroup Global Markets Inc., acting on behalf of the Underwriters, in
accordance with the Underwriting Agreement;
(d) The Custodian shall, on behalf of the Selling Shareholder,
acknowledge receipt of the proceeds from the sale of the Shares and, if
necessary or as contemplated by Section 5 below, deposit the proceeds
attributable to the Shares in one or more special accounts or escrow
arrangements or accounts; and
(e) The Custodian shall promptly return to the Selling Shareholder
new certificates for the unsold balance, if any, of the Shares covered by the
accompanying certificates or direct the transfer agent, as subcustodian, to
transfer to such Selling Shareholder's account at the broker-dealer from which
any Shares in book-entry form or "street name" were transferred.
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5. Upon completion of the sale of the Shares to the Underwriters pursuant
to the terms of the Underwriting Agreement, the Custodian is authorized and
directed to pay immediately to the Selling Shareholder the proceeds from the
sale of the Shares net of (i) the Underwriters' discount, (ii) the Selling
Shareholder's proportionate share of the costs and expenses of the Offering as
set forth in Section 4 of the Underwriting Agreement, and (iii) any withholding
taxes required to be withheld by the Company for federal income tax purposes,
and after such payment the Custodian shall have no further responsibility
hereunder.
6. If the Underwriting Agreement shall not be fully executed and
delivered or if it shall be terminated pursuant to its terms, or if the Shares
are not purchased and paid for by the Underwriters on or before November 15,
2004, the Custodian is directed (A) to return promptly to the Selling
Shareholder (i) the certificates and related stock powers deposited by it with
the Custodian hereunder or (ii) if such certificates have been reissued in
accordance with Section 2 of the Underwriting Agreement, new certificates
registered in such name or names as the Custodian shall have been directed, in
writing, by the Selling Shareholder and (B) to direct the transfer agent, as
subcustodian, to return any Shares in book-entry form or "street name" to the
Selling Shareholder's account at such broker-dealer from which such Shares were
transferred. Upon the return of such certificates and/or return of such Shares,
the Custodian shall have no further responsibility hereunder.
7. Until payment in full for the Shares has been made by the Underwriters
according to the terms of the Underwriting Agreement, the Selling Shareholder
shall remain the owner of the Shares (subject to the interests of the
Underwriters under the Underwriting Agreement and this Agreement) and shall have
the right to vote and to receive all dividends and distributions with respect to
such Shares. Until the Custodian is obligated to return the certificates
deposited hereunder (or reissue certificates) pursuant to Section 6 hereof, the
Selling Shareholder agrees not to give, sell, further pledge, hypothecate,
otherwise transfer, or contract with respect to all or any part of the Shares,
or any interests therein, except in accordance with the Underwriting Agreement.
8. The Selling Shareholder hereby certifies that it has full right, power
and authority to enter into this Agreement, the aforementioned Power of Attorney
and the Underwriting Agreement, and to sell the Shares to be sold pursuant to
the Underwriting Agreement, and that, except as otherwise set forth in this
Agreement, at the time of delivery to the Custodian it has valid and marketable
title to the Shares, free and clear of all liens, encumbrances, mortgages,
pledges and charges.
9. The Custodian's execution of this Agreement shall evidence its
acknowledgment of receipt of the certificates designated on Schedule I hereto
and shall constitute the acceptance by the Custodian of the authorizations and
duties herein contained and the agreement of the Custodian to carry out and
perform its duties under this Agreement.
10. It is understood that the Custodian is authorized to accept this
Agreement and to take any and all actions hereunder as the Custodian shall, in
its discretion, deem necessary or appropriate, and that the Custodian assumes no
responsibility or liability to the undersigned or to
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any person other than as provided for in this Agreement. The Custodian shall act
hereunder as a custodian only and is not responsible or liable in any manner
whatsoever for the sufficiency, correctness, genuineness or validity of the
Shares delivered to the Custodian or for the form or execution thereof, or for
the identity or authority of any person executing or depositing such Shares.
Except as herein expressly provided, the Custodian shall not be liable for any
error of judgment or for any act done or omitted or for any mistake of fact or
law, except for the Custodian's gross negligence, bad faith or willful
misconduct in the performance of its duties as custodian. The undersigned agrees
that the Custodian may consult with counsel for the Company, and the Custodian
shall have full and complete authorization and protection for any action taken
by it hereunder in good faith and in accordance with the opinion of such
counsel. The undersigned further agrees that the Custodian shall not be liable
to the undersigned for the delegation of its duties and obligations under this
Agreement, and the undersigned hereby authorizes the Custodian to delegate such
duties and obligations to a subcustodian which is a financial institution
reasonably selected by the Custodian or the Company's transfer agent for its
Common Shares, provided the Custodian shall be solely responsible for such
subcustodian's fees and expenses and for any indemnification of such
subcustodian.
11. The Custodian shall be entitled to act and rely upon any statement,
request, notice or instruction respecting this Agreement given by the
Attorney-in-Fact which is not manifestly in bad faith.
12. This Agreement may be altered or amended only in writing and with the
consent of all the parties hereto.
13. This Agreement may be executed in any number of counterparts, which
together shall constitute one and the same instrument.
14. This Agreement for all purposes shall be governed by and construed in
accordance with the laws of New York without regard to its conflicts of laws,
principles or rules to the extent they would require application of the laws of
another jurisdiction except such as are mandatorily applicable.
15. If any provision of this Agreement shall be held or deemed to be, or
shall in fact be, inoperative or unenforceable as applied in any particular case
or circumstance in any jurisdiction, such determination shall not affect the
validity or enforceability of the remaining provisions of this Agreement in such
jurisdiction or affect the validity or enforceability of such provision in any
other jurisdiction.
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IN WITNESS WHEREOF, each of the parties hereto has duly executed this
Agreement as of the date first above written.
YALE UNIVERSITY
By: /s/ Xxxxx X. Xxxxxxx
--------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Chief Investment Officer
Accepted as of the date hereof.
ACADIA REALTY TRUST, as Custodian
By: /s/ Xxxxxx Xxxxxxx
--------------------------------
Xxxxxx Xxxxxxx
Senior Vice President
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SCHEDULE I
NAME OF SELLING SHAREHOLDER NUMBER OF SHARES TO BE SOLD (1) CERTIFICATE NUMBER(S)
--------------------------- ------------------------------- ---------------------
Yale University 1,097,359 Not Applicable (2)
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(1) Includes up to 143,134 Common Shares that may be acquired by the
Underwriters pursuant to the Underwriters' over-allotment option to be set forth
in the Underwriting Agreement.
(2) All Shares to be sold are subject to the DWAC Letter and will be held by the
transfer agent upon issuance in certificated form.
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EXHIBIT 1--FORM OF DWAC LETTER
November 4, 2004
American Stock Transfer & Trust Company
0000 -00xx Xxxxxx
Xxxxxxxx, XX 00000
Attn: Xxxxx Xxxxxx
Tel: 000-000-0000
Fax: 000-000-0000
Re: Secondary Offering of Common Shares by Certain Shareholders of Acadia Realty
Trust
Dear Xx. Xxxxxx:
The undersigned, as a selling shareholder in the secondary offering of common
shares in Acadia Realty Trust (the "Company") scheduled to close this month,
hereby requests that American Stock Transfer & Trust Company accept a transfer
into the Deposit/Withdrawal at Custodian ("DWAC") system in the amount of [TOTAL
SHARES HELD] shares (the "Shares") from [BROKER'S NAME]. All or certain of the
Shares are being sold by the undersigned pursuant to an underwriting agreement
among the Company, certain selling shareholders named therein and Citigroup
Global Markets Inc. Pursuant to a Custody Agreement between the Company and the
undersigned and a Power of Attorney executed by the undersigned, the Company has
been appointed custodian (the "Custodian") of the Shares with the power to
effect the sale and transfer of all or certain of the Shares to the
Underwriters.
Upon the acceptance requested above, please issue one or more certificates
representing the Shares as follows:
[NAME OF SELLING SHAREHOLDER]
[ADDRESS OF SELLING SHAREHOLDER]
[SSN/EIN OF SELLING SHAREHOLDER]
Upon issuance, please retain the above certificates in your possession on behalf
of the Company as the custodian under the Custody Agreement and the Power of
Attorney for the upcoming offering. Further instructions with respect to the
Shares and these certificates will be provided by the Custodian at a later date.
Sincerely yours,
[SELLING SHAREHOLDER]
By:
Name:
Title:
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