_____________________________________________________________________________
AGREEMENT AND PLAN OF MERGER
among
Value Property Trust,
Wellsford Real Properties, Inc.
and
Wellsford Capital Corporation
Dated as of September 18, 1997
_____________________________________________________________________________
TABLE OF CONTENTS
Page
ARTICLE 1. THE MERGER. . . . . . . . . . . . . . . . . . . . . . . . . .1
1.1 The Merger. . . . . . . . . . . . . . . . . . . . . . . . . .1
1.2 The Closing . . . . . . . . . . . . . . . . . . . . . . . . .1
1.3 Effective Time. . . . . . . . . . . . . . . . . . . . . . . .2
ARTICLE 2. [INTENTIONALLY OMITTED] . . . . . . . . . . . . . . . . . . .2
ARTICLE 3. DECLARATION OF TRUST AND BYLAWS OF THE SUCCESSOR . . . . . .2
3.1 Charter . . . . . . . . . . . . . . . . . . . . . . . . . . .2
3.2 Bylaws. . . . . . . . . . . . . . . . . . . . . . . . . . . .2
ARTICLE 4. DIRECTORS AND OFFICERS OF THE SUCCESSOR . . . . . . . . . . .2
4.1 Directors . . . . . . . . . . . . . . . . . . . . . . . . . .2
4.2 Officers. . . . . . . . . . . . . . . . . . . . . . . . . . .2
ARTICLE 5. CONVERSION OF SHARES. . . . . . . . . . . . . . . . . . . . .3
5.1 Conversion of VPT Shares. . . . . . . . . . . . . . . . . . .3
5.2 Consideration Election. . . . . . . . . . . . . . . . . . . .3
5.3 Employee Stock Options. . . . . . . . . . . . . . . . . . . .5
ARTICLE 6. PAYMENT FOR SHARES. . . . . . . . . . . . . . . . . . . . . .5
6.1 Payment for VPT Shares. . . . . . . . . . . . . . . . . . . .5
6.2 Adjustments.. . . . . . . . . . . . . . . . . . . . . . . . .7
ARTICLE 7. REPRESENTATIONS AND WARRANTIES OF VPT . . . . . . . . . . . .7
7.1 Existence; Good Standing; Authority; Compliance With Law. . .7
7.2 Authorization, Validity and Effect of Agreements. . . . . . .9
7.3 Capitalization. . . . . . . . . . . . . . . . . . . . . . . .9
7.4 Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . 10
7.5 Other Interests . . . . . . . . . . . . . . . . . . . . . . 11
7.6 No Violation. . . . . . . . . . . . . . . . . . . . . . . . 11
7.7 SEC Documents . . . . . . . . . . . . . . . . . . . . . . . 11
7.8 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . 12
7.9 Absence of Certain Changes. . . . . . . . . . . . . . . . . 12
7.10 INTENTIONALLY OMITTED . . . . . . . . . . . . . . . . . . . 13
7.11 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
7.12 Books and Records . . . . . . . . . . . . . . . . . . . . . 15
7.13 Properties. . . . . . . . . . . . . . . . . . . . . . . . . 16
7.14 Environmental Matters . . . . . . . . . . . . . . . . . . . 19
7.15 No Brokers. . . . . . . . . . . . . . . . . . . . . . . . . 19
7.16 Opinion of Financial Advisor. . . . . . . . . . . . . . . . 20
7.17 Related Party Transactions. . . . . . . . . . . . . . . . . 20
7.18 Contracts and Commitments . . . . . . . . . . . . . . . . . 20
7.19 Definition of VPT's Knowledge . . . . . . . . . . . . . . . 21
7.20 ERISA; Benefit Plans. . . . . . . . . . . . . . . . . . . . 21
7.21 Anti-takeover Plan. . . . . . . . . . . . . . . . . . . . . 22
7.22 Shareholder Vote Required . . . . . . . . . . . . . . . . . 22
7.23 Undisclosed Liabilities . . . . . . . . . . . . . . . . . . 22
7.24 Insurance.. . . . . . . . . . . . . . . . . . . . . . . . . 23
7.25 Absence of Sensitive Payments . . . . . . . . . . . . . . . 23
7.26 Amendment of Registration Rights Agreement. . . . . . . . . 23
ARTICLE 8. REPRESENTATIONS AND WARRANTIES OF BUYER . . . . . . . . . . 23
8.1 Existence; Good Standing; Authority; Compliance With Law. . 23
8.2 Authorization, Validity and Effect of Agreements. . . . . . 24
8.3 No Violation. . . . . . . . . . . . . . . . . . . . . . . . 25
8.4 Financing . . . . . . . . . . . . . . . . . . . . . . . . . 25
8.5 Title Reports and Surveys Obtained by Buyer on Properties . 26
8.6 Capitalization. . . . . . . . . . . . . . . . . . . . . . . 26
8.7 Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . 26
8.8 Other Interests . . . . . . . . . . . . . . . . . . . . . . 27
8.9 SEC Documents . . . . . . . . . . . . . . . . . . . . . . . 27
8.10 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . 28
8.11 Absence of Certain Changes. . . . . . . . . . . . . . . . . 28
8.12 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.13 Books and Records . . . . . . . . . . . . . . . . . . . . . 29
8.14 Properties. . . . . . . . . . . . . . . . . . . . . . . . . 30
8.15 Environmental Matters . . . . . . . . . . . . . . . . . . . 31
8.16 No Brokers. . . . . . . . . . . . . . . . . . . . . . . . . 31
8.17 Related Party Transactions. . . . . . . . . . . . . . . . . 31
8.18 Definition of Buyer's Knowledge . . . . . . . . . . . . . . 32
8.19 Anti-takeover Plan. . . . . . . . . . . . . . . . . . . . . 32
8.20 Undisclosed Liabilities . . . . . . . . . . . . . . . . . . 32
ARTICLE 9. COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.1 Conduct of Businesses . . . . . . . . . . . . . . . . . . . 32
9.2 New Leases and Lease Modifications. . . . . . . . . . . . . 37
9.3 Meeting of Shareholders . . . . . . . . . . . . . . . . . . 37
9.4 Filings; Other Action . . . . . . . . . . . . . . . . . . . 38
9.5 Access to Information . . . . . . . . . . . . . . . . . . . 40
9.6 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . 40
9.7 Certain Benefits. . . . . . . . . . . . . . . . . . . . . . 40
9.8 Listing Application . . . . . . . . . . . . . . . . . . . . 41
9.9 Further Action. . . . . . . . . . . . . . . . . . . . . . . 41
9.10 Indemnification and Insurance . . . . . . . . . . . . . . . 42
9.11 REIT Status.. . . . . . . . . . . . . . . . . . . . . . . . 43
9.12 Other Offers. . . . . . . . . . . . . . . . . . . . . . . . 43
9.13 Notice of Certain Events. . . . . . . . . . . . . . . . . . 44
9.14 Affiliate Letters . . . . . . . . . . . . . . . . . . . . . 45
9.15 Amendment to Registration Rights Agreement. . . . . . . . . 45
ARTICLE 10. CONDITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . 45
10.1 Conditions to Each Party's Obligation to Effect the Merger. 45
10.2 Conditions to Obligations of VPT to Effect the Merger . . . 46
10.3 Conditions to Obligation of Buyer and Merger Subsidiary to
Effect the Merger . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE 11. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . 49
11.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . 49
11.2 Effect of Termination . . . . . . . . . . . . . . . . . . . 50
11.3 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . 50
11.4 Extension; Waiver . . . . . . . . . . . . . . . . . . . . . 51
ARTICLE 12. GENERAL PROVISIONS. . . . . . . . . . . . . . . . . . . . . . 51
12.1 Nonsurvival of Representations, Warranties and Agreements . 51
12.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 51
12.3 Assignment; Binding Effect; Benefit . . . . . . . . . . . . 52
12.4 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . 53
12.5 Confidentiality . . . . . . . . . . . . . . . . . . . . . . 53
12.6 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . 53
12.7 Governing Law . . . . . . . . . . . . . . . . . . . . . . . 53
12.8 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . 53
12.9 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . 53
12.10 Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . 53
12.11 Incorporation . . . . . . . . . . . . . . . . . . . . . . . 54
12.12 Severability. . . . . . . . . . . . . . . . . . . . . . . . 54
12.13 Interpretation and Certain Definitions. . . . . . . . . . . 54
12.14 Specific Performance. . . . . . . . . . . . . . . . . . . . 54
12.15 Broker Liability Release. . . . . . . . . . . . . . . . . . 54
EXHIBIT A - Form of Affiliate Letter
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and
entered into as of September 18, 1997 among Value Property Trust, a Maryland
real estate investment trust ("VPT"), Wellsford Real Properties, Inc., a
Maryland corporation ("Buyer"), and Wellsford Capital Corporation, a Maryland
corporation and wholly-owned subsidiary of Buyer ("Merger Subsidiary").
RECITALS
A. The Board of Trustees of VPT and the Board of Directors of Buyer
and Merger Subsidiary each have determined that a business combination
between VPT, Buyer and Merger Subsidiary is fair to and in the best interests
of their respective companies and stockholders and accordingly have agreed to
effect the merger provided for herein upon the terms and subject to the
conditions set forth herein.
B. As a condition to the willingness of Buyer, Merger Subsidiary and
VPT to enter into this Agreement, an affiliate of a stockholder of VPT has
entered into a Voting Agreement, dated as of the date hereof, with Buyer and
Merger Subsidiary (the "Voting Agreement").
NOW, THEREFORE, in consideration of the foregoing, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto hereby agree as follows:
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), Merger
Subsidiary shall be merged with and into VPT in accordance with this
Agreement and the separate corporate existence of Merger Subsidiary shall
thereupon cease (the "Merger"). VPT shall be the successor real estate
investment trust in the Merger (sometimes hereinafter referred to as the
"Successor"). The Merger shall have the effects specified in Sections 8-
501.1(n) and 3-114 of the Maryland General Corporation Law ("MGCL"). At the
election of Buyer, any wholly-owned subsidiary of Buyer may be substituted
for Merger Subsidiary as a constituent corporation in the Merger. In such
event, this Agreement shall be deemed modified to reflect the foregoing, and
if requested by Buyer, VPT agrees to execute an appropriate amendment to this
Agreement in order to reflect the foregoing.
1.2 The Closing. Subject to the terms and conditions of this
Agreement, the closing of the Merger (the "Closing") shall take place at the
offices of Robinson Silverman Pearce Aronsohn & Berman LLP, at 10:00 a.m.,
local time, on (a) the first business day immediately following the day on
which the last of the conditions set forth in Article 10 shall be fulfilled
or waived in accordance herewith, or (b) at such other time, date or place as
the parties hereto may agree. Unless the parties shall otherwise agree, the
parties shall use their reasonable best efforts to cause the Closing to occur
as soon as possible after the meeting of stockholders held pursuant to
Section 9.3. 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 10 shall have been fulfilled or waived in accordance herewith, and
this Agreement shall not have been terminated as provided in Article 11, the
parties hereto shall cause Articles of Merger satisfying the requirements of
Title 8 of the Corporations and Associations Article of the Annotated Code of
Maryland ("Title 8") and the MGCL to be properly executed, verified and
delivered for filing in accordance Title 8 and with the MGCL 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 the MGCL (but not earlier than the Closing Date)
or at such later time which the parties hereto shall have agreed upon and
designated in such filing in accordance with applicable law as the effective
time of the Merger (the "Effective Time").
2. [INTENTIONALLY OMITTED]
3. DECLARATION OF TRUST AND BYLAWS OF THE SUCCESSOR
3.1 Charter. The Declaration of Trust of VPT in effect
immediately prior to the Effective Time shall be the Declaration of Trust of
the Successor, until duly amended in accordance with applicable law.
3.2 Bylaws. The Bylaws of VPT in effect immediately prior to the
Effective Time shall be the Bylaws of the Successor, until duly amended in
accordance with applicable law.
4. DIRECTORS AND OFFICERS OF THE SUCCESSOR
4.1 Directors. The directors of Merger Subsidiary immediately
prior to the Effective Time, shall automatically become the trustees of the
Successor as of the Effective Time.
4.2 Officers. The officers of Merger Subsidiary immediately prior
to the Effective Time shall automatically become the officers of the
Successor as of the Effective Time.
5. CONVERSION OF SHARES
5.1 Conversion of VPT Shares.
(a) Except as provided in Section 5.2(a) with respect to holders
of VPT Shares who make an Election (as defined herein) and as otherwise
provided in this Section 5.1(a), at the Effective Time, each common share of
beneficial interest, par value $1.00 per share, of VPT (each a "VPT Share"
and collectively, the "VPT Shares"), issued and outstanding (other than VPT
Shares to be canceled pursuant to Section 5.1(b)) shall, at the Effective
Time, by virtue of the Merger and without any action on the part of Buyer,
Merger Subsidiary, VPT or the holder thereof, be converted into the right to
receive its pro rata portion (based on the number of VPT Shares outstanding
immediately prior to the Effective Time) of (i) $129,996,350 in cash and
(ii) 3,350,000 shares of common stock, par value $.01 per share ("Buyer
Common Stock"), of Buyer payable to the holder thereof, without interest
thereon, upon the surrender of the certificate formerly evidencing such VPT
Share. The aggregate consideration to be received by holders of VPT Shares
pursuant to this Section 5.1(a), as adjusted pursuant to Section 5.2(a), is
referred to herein as the "Merger Consideration."
At the Effective Time, all such VPT Shares shall no longer be
outstanding and shall automatically be canceled and retired and shall cease
to exist, and each holder of a certificate evidencing any such VPT Shares
shall cease to have any rights with respect thereto, except the right to
receive its pro rata share (based on the number of VPT Shares held by such
holder in relation to all outstanding VPT Shares, in each case, immediately
prior to the Effective Time) of the Merger Consideration, without interest.
(b) Each VPT Share held by Buyer or by any direct or indirect
subsidiary of VPT or Buyer immediately prior to the Effective Time shall, at
the Effective Time, by virtue of the Merger and without any action on the
part of the holder thereof, be canceled and retired and cease to exist and no
payment shall be made with respect thereto.
5.2 Consideration Election.
(a) Notwithstanding the provisions of Section 5.1(a), each person
who, on the Election Date (as hereinafter defined), is a record holder of VPT
Shares (other than those VPT Shares to be canceled pursuant to Section
5.1(b)) will be entitled, with respect to all but not less than all of the
VPT Shares held by such holder, to make an election (an "Election") as
specified in such holder's Form of Election (as defined in Section 5.2(b)) to
maximize either the amount of cash ("Cash Electing Shares") or the amount of
Buyer Common Stock ("Stock Electing Shares") to be received from Buyer in
exchange for such holder's VPT Shares following the Effective Time. Any
holder of VPT Shares who does not make an Election in accordance with the
provisions of this Agreement shall receive the Merger Consideration in
accordance with Section 5.1. The actual amount of cash and Buyer Common
Stock to be received by a holder of VPT Shares who has made an Election shall
be adjusted on a pro rata basis to the extent possible to reflect the
holders' respective Elections to maximize the amount of Merger Consideration
to consist of either cash or Buyer Common Stock (subject to the aggregate
limitations on the amount of cash and Buyer common Stock which constitute the
aggregate Merger Consideration as provided herein). For purposes of
determining the allocation of the Merger Consideration amongst the Cash
Electing Shares and the Stock Electing Shares (and for no other purpose,
except as otherwise specifically provided for herein), a share of Buyer
Common Stock shall be valued (the "Buyer Valuation Price") at the average
closing price per share of such shares on the American Stock Exchange (or
such other national securities exchange or automated quotation system which
is then the principal place of listing or quotation of shares of Buyer Common
Stock ("AMEX")) for the ten (10) trading days immediately preceding the
Closing Date.
Notwithstanding anything to the contrary contained herein, if after
giving effect to the allocation of the Merger Consideration (as defined
below) for the VPT Shares as provided in Section 5.1 and the provisions of
this Section 5.2, the number of shares of Buyer Common Stock to be held by a
holder of VPT Shares or a "group" (within the meaning of Section 13(d) of the
Exchange Act) of such holders would be greater than twenty-five percent (25%)
of the outstanding shares of Buyer Common Stock on the Closing Date (the "25%
Threshold"), the allocation of cash and shares of Buyer Common Stock which
would have been paid to holders of VPT Shares in accordance with their
Elections and the provisions of this Section 5.2 shall be adjusted on a pro
rata basis so that no holder of VPT Shares will exceed the 25% Threshold.
(b) Buyer shall prepare a form of election, which form shall be
subject to the reasonable approval of VPT (the "Form of Election"), and Buyer
shall cause the Exchange Agent (as hereinafter defined) to mail such Form of
Election with the transmittal letter referenced in Section 6.2(b) to the
record holders of VPT Shares as of the Effective Time, which Form of Election
shall be used by each record holder of VPT Shares who wishes to make an
Election with respect to all VPT Shares held by such holder. Buyer will use
its reasonable best efforts to make the Form of Election and the transmittal
letter available to all persons who become holders of VPT Shares during the
period between the Effective Time and the Election Date referred to below.
Any such holder's Election shall have been properly made only if the Exchange
Agent shall have received at its designated office, by 5:00 p.m., New York
City time, on the Election Date, a Form of Election properly completed and
signed and accompanied by certificates for the VPT Shares to which such Form
of Election relates, duly endorsed in blank or otherwise in form acceptable
for transfer on the books of Buyer (or by an appropriate guarantee of
delivery of such certificates as set forth in such Form of Election from a
firm which is a member of a registered national securities exchange or of the
National Association of Securities Dealers, Inc. or a commercial bank or
trust company having an office or correspondent in the United States,
provided such certificates are in fact delivered to the Exchange Agent within
three AMEX trading days after the date of execution of such guarantee of
delivery). As used herein, the "Election Date" means the 7th business day
following the date on which the Forms of Election are mailed to the former
holders of VPT Shares or such other date, agreed upon by Buyer and VPT, which
date shall be announced by Buyer, in a news release delivered to Dow Jones
News Service, as the last day on which Forms of Election will be accepted,
which date shall be at least five business days following the date of such
news release.
(c) Any Form of Election may be revoked by the stockholder
submitting it to the Exchange Agent only by written notice received by the
Exchange Agent prior to 5:00 p.m., New York City time, on the Election Date.
If a Form of Election is revoked, the certificate or certificates (or
guarantees of delivery, as appropriate) for the VPT Shares to which such Form
of Election relates shall be promptly returned to the stockholder submitting
the same to the Exchange Agent.
(d) The determination of the Exchange Agent shall be binding as to
whether or not an Election has been properly made or revoked pursuant to this
Section 5.2 with respect to VPT Shares. If the Exchange Agent determines
that any Election was not properly made with respect to VPT Shares, such
shares shall be treated by the Exchange Agent as shares that were not Cash
Electing Shares or Stock Electing Shares ("Non Electing Shares") at the
Election Date, and such shares shall be exchanged in the Merger pursuant to
Section 5.1(a). The Exchange Agent may, with the mutual agreement of Buyer
and VPT, make such rules as are consistent with this Section 5.2 for the
implementation of the Elections provided for herein as shall be necessary or
desirable fully to effect such Elections.
5.3 Employee Stock Options. As soon as practicable after the date
hereof, VPT shall take all necessary action to provide that, immediately
prior to the Closing, each holder of an outstanding option to purchase VPT
Shares (the "VPT Options") granted under VPT's 1995 Stock Option Plan, as
amended, whether or not then exercisable, shall become fully exercisable and
vested, and each VPT Option shall be canceled and the holders of VPT Options
shall be entitled to receive a cash payment from VPT equal to the product of
(a) the excess, if any, of $15.75 over the per VPT Share exercise price of
such VPT Option and (b) the number of VPT Shares subject thereto (net of any
applicable federal and state withholding tax); provided that the foregoing
shall be subject to obtaining any necessary consents of optionees ("Option
Consents") which VPT covenants and agrees to use its reasonable best efforts
to obtain.
6. PAYMENT FOR SHARES
6.1 Payment for VPT Shares.
(a) Prior to the Effective Time, Buyer shall designate United
States Trust Company of New York or such other bank or trust company as shall
be reasonably acceptable to VPT to act as Exchange Agent in connection with
the Merger (the "Exchange Agent"). At, or immediately prior to, the
Effective Time, Buyer will take all steps necessary to deposit with the
Exchange Agent for the benefit of the holders of VPT Shares the cash and a
certificate representing the shares of Buyer Common Stock necessary to make
the payments of the Merger Consideration as provided in Sections 5.1 and 5.2.
(b) Promptly after the Effective Time, the Buyer and the Successor
shall cause the Exchange Agent to mail to each person who was a record
holder, as of the Effective Time, of an outstanding certificate or
certificates which immediately prior to the Effective Time represented VPT
Shares (the "Certificates"), a form letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon proper delivery of the Certificates to the
Exchange Agent), instructions for use in effecting the surrender of the
Certificates for payment therefor and a Form of Election. Upon surrender to
the Exchange Agent of a Certificate, together with such letter of transmittal
duly executed, and any other required documents, the holder of such
Certificate shall be entitled to receive in exchange therefor such holder's
share of the Merger Consideration as calculated pursuant to Sections 5.1 and
5.2 (including (i) a certificate representing the number of whole shares of
Buyer Common Stock, if any, to which such holder shall be entitled, and (ii)
a check representing the amount of cash, if any, to which such holder shall
be entitled), and such Certificate shall forthwith be canceled. No interest
will be paid or accrued on the Merger Consideration payable upon the
surrender of the Certificates. If payment is to be made to a person other
than the person in whose name the Certificate surrendered is registered, it
shall be a condition of payment that the Certificate so surrendered shall be
properly endorsed or otherwise in proper form for transfer as determined by
the Exchange Agent, and that the person requesting such payment shall pay any
transfer, or other taxes required by reason of the payment to a person other
than the registered holder of the Certificate surrendered or establish to the
satisfaction of the Successor that such tax has been paid or is not
applicable. Until surrendered in accordance with the provisions of this
Section 6.1, each Certificate (other than Certificates representing VPT
Shares canceled pursuant to Section 5.1(b)) shall represent for all purposes
only the right to receive the Merger Consideration, without any interest
thereon. In the event of a transfer of ownership of VPT Shares which is not
registered in the stock transfer records of VPT, the amount and type of
Merger Consideration may be issued to such a transferee if the certificate
representing VPT 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.
(c) No fractional shares of Buyer Common Stock shall be issued
pursuant to this Agreement. In lieu of the issuance of any fractional shares
of Buyer Common Stock pursuant to this Agreement, each holder of VPT Shares
shall be paid an amount in cash (without interest), rounded to the nearest
cent, determined by multiplying (i) the Buyer Valuation Price by (ii) the
fractional amount of the Buyer Common Stock which such holder would otherwise
be entitled to receive under Article 5.
(d) At any time following the sixth month after the Effective
Time, the Successor shall be entitled to require the Exchange Agent to
deliver to it any funds which had been made available to the Exchange Agent
and not disbursed to holders of VPT Shares (including, without limitation,
all interest and other income received by the Exchange Agent in respect of
all funds made available to it), and thereafter such holders shall be
entitled to look to the Successor (subject to abandoned property, escheat and
other similar laws) only as general creditors thereof with respect to any
consideration set forth in Sections 5.1 and 5.2 hereof that may be payable,
without interest, upon due surrender of the Certificates held by them. If
any Certificates shall not have been surrendered prior to three years after
the Effective Time (or immediately prior to such time in which any payment in
respect hereof would otherwise escheat or become the property of any
governmental unit or agency), the payment in respect of such Certificates
shall, to the extent permitted by applicable law, become the property of the
Successor, free and clear of all claims or interest of any person previously
entitled thereto. Notwithstanding the foregoing, neither the Successor, the
Exchange Agent nor the Buyer shall be liable to any holder of a VPT Share for
any consideration set forth in Sections 5.1 and 5.2 hereof delivered in
respect of such VPT Share to a public official pursuant to any abandoned
property, escheat or other similar law.
(e) After the Effective Time there shall be no registration of
transfers of the VPT Shares on the share transfer books of the Successor
which were outstanding immediately prior to the Effective Time, and as of the
Effective Time, the share ledger of VPT shall be closed. All Merger
Consideration paid upon the surrender of Certificates in accordance with the
terms of this Article 6 shall be deemed to have been paid in full
satisfaction of all rights pertaining to the VPT shares previously evidenced
by such Certificates. After the Effective Time, the holders of VPT Shares
outstanding at the Effective Time shall cease to have any rights with respect
to such VPT Shares except as provided herein or by applicable law. If, after
the Effective Time, certificates evidencing VPT Shares are presented to the
Successor, they shall be canceled and exchanged for the Merger Consideration
as provided in this Article 6.
6.2 Adjustments. If at any time during the period between the
date of this Agreement and the Effective Time, any change in the VPT Shares
or Buyer Common Stock shall occur by reason of any reclassification,
recapitalization, stock dividend, stock split or combination, exchange or
readjustment of shares, or any stock dividend thereon with the record date
during such period, the Merger Consideration to be paid to holders of the VPT
Shares in the Merger shall be appropriately adjusted.
7. REPRESENTATIONS AND WARRANTIES OF VPT
VPT represents and warrants to Buyer as follows:
7.1 Existence; Good Standing; Authority; Compliance With Law.
(a) VPT is a real estate investment trust duly organized, validly
existing and in good standing under the laws of Maryland. VPT is duly
licensed or qualified to do business as a foreign trust 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, except where
the failure to be so licensed or qualified would not have, individually or in
the aggregate, a VPT Material Adverse Effect. For purposes of this
Agreement, the term "VPT Material Adverse Effect" means any circumstance,
change or effect that (i) is or is reasonably likely to be materially adverse
to the condition (financial or otherwise), business, assets or results of
operations of VPT and the VPT Subsidiaries (as defined below) taken as a
whole or adversely affects the ability of VPT to consummate the transactions
contemplated by this Agreement in any material respect or materially impairs
or delays VPT's ability to perform its obligations hereunder or (ii) would
constitute a violation of any criminal law or regulation except if such
violation would only have an immaterial effect on Buyer in its capacity as
the owner of the Successor or the condition (financial or otherwise),
business, assets or results of operations of VPT and the VPT Subsidiaries
taken as a whole. VPT has all requisite trust power and authority to own,
operate, lease and encumber its properties and carry on its business as now
conducted.
(b) Each of the VPT Subsidiaries is a corporation 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 or partnership power and authority to own its properties and to
carry on its business as it is now being conducted, and is duly qualified to
do business and is in good standing in each jurisdiction in which the
ownership of its property or the conduct of its business requires such
qualification, except for jurisdictions in which such failure to be so
qualified or to be in good standing would not, individually or in the
aggregate, have a VPT Material Adverse Effect.
(c) Except as set forth in Section 7.1 of the disclosure letter
delivered at or prior to the execution hereof to Buyer, which shall refer to
the relevant sections of this Agreement (the "VPT Disclosure Letter"), the
business of VPT and the VPT Subsidiaries has been operated in compliance with
all laws, ordinances, regulations and orders of all governmental entities,
except for violations which would not have, individually or in the aggregate,
a VPT Material Adverse Effect. Notwithstanding the above, the preceding
sentence shall not be deemed a representation or warranty with respect to
Environmental Laws (as defined below), and any and all representations and
warranties of VPT with respect to the compliance with Environmental Laws are
set forth in Section 7.14 hereof. VPT and the VPT Subsidiaries have all
permits, certificates, licenses, approvals, consents and other authorizations
(collectively, "Government Approvals") of all governmental agencies,
entities, commissions, boards, bureaus, tribunals, officials or authorities,
whether Federal, state or local (collectively, "Governmental Agencies"),
required by law with respect to the operation of their businesses, except
those the absence of which would not, individually or in the aggregate, have
a VPT Material Adverse Effect or prevent or delay consummation of the Merger.
All such Government Approvals are in full force and effect, and, VPT and the
VPT Subsidiaries are in compliance in all material respects with all
conditions and requirements of the Government Approvals and with all rules
and regulations relating thereto. VPT has not received any notices of
violations of any Federal, state and local laws, regulations and ordinances
relating to its business, operations or assets or the VPT Properties (as
hereinafter defined) which, if it were determined that a violation had
occurred, would have a VPT Material Adverse Effect.
(d) The Amended and Restated Declaration of Trust, Certificates of
Incorporation or other charter documents, Bylaws, organizational documents
and partnership, shareholder, joint venture or similar agreements (and in
each such case, all amendments thereto) of VPT and each of the VPT
Subsidiaries are listed in Section 7.1 of the VPT Disclosure Letter, true and
correct copies of which have previously been delivered or made available to
Buyer and its counsel. For the purposes of this Agreement, the term "VPT
Subsidiary" shall include any of the entities listed under such heading in
Section 7.4 of the VPT Disclosure Letter.
7.2 Authorization, Validity and Effect of Agreements. VPT has the
requisite power and authority to enter into the transactions contemplated
hereby and to execute and deliver this Agreement. The Trustees of VPT have
approved this Agreement, the Merger, and the transactions contemplated by
this Agreement and have agreed to recommend that the holders of VPT Shares
adopt and approve this Agreement, the Merger, and the transactions
contemplated by this Agreement at the VPT shareholders' meeting which will be
held in accordance with the provisions of Section 9.3 hereof. In connection
with the foregoing, the Trustees of VPT have taken all necessary actions and
votes to render the provisions of Sections 3-602 and 3-701 of the MGCL
inapplicable to Buyer and Merger Subsidiary in connection with this
Agreement, the Merger, and the transactions contemplated by this Agreement.
To the knowledge of VPT, no other state takeover or similar statute or
regulation applies to the Merger or any of the transactions contemplated by
this Agreement with respect to VPT. As of the date hereof, all of the
trustees and executive officers of VPT have indicated that they presently
intend to vote all VPT Shares which they own to approve this Agreement, the
Merger, and the transactions contemplated by this Agreement at the VPT
shareholders meeting which will be held in accordance with the provisions of
Section 9.3 hereof. Subject only to the approval of this Agreement and the
transactions contemplated hereby by the holders of two-thirds of the
outstanding VPT Shares and the filing and acceptance for record of
appropriate merger documents as required by Title 8 and the MGCL, the
execution by VPT of this Agreement and the consummation of the transactions
contemplated by this Agreement have been duly authorized by all requisite
action on the part of VPT. Assuming this Agreement constitutes a valid and
binding obligation of Buyer and Merger Subsidiary, this Agreement constitutes
the valid and legally binding obligation of VPT, enforceable against VPT in
accordance with its terms, subject to applicable bankruptcy, insolvency,
moratorium or other similar laws relating to creditors' rights and general
principles of equity.
7.3 Capitalization. The Amended and Restated Declaration of Trust
of VPT ("VPT's Declaration of Trust") authorizes it to issue 20,000,000 VPT
Shares and 3,500,000 shares of preferred shares of beneficial interest, par
value $1.00 per share (the "VPT Preferred Shares"). As of the date hereof,
there are 11,226,310 VPT Shares issued and outstanding and no VPT Preferred
Shares issued and outstanding. All such outstanding shares of VPT are duly
authorized, validly issued, fully paid, nonassessable and free of preemptive
rights. Except as set forth in Section 7.3 of the VPT Disclosure Letter, VPT
has no outstanding bonds, debentures, notes or other obligations the holders
of which have or upon the happening of certain events would have the right to
vote (or which are convertible into or exercisable for securities having the
right to vote) with the shareholders of VPT on any matter. Except as set
forth in Section 7.3 of the VPT Disclosure Letter, there are no existing
options, warrants, calls, subscriptions, convertible securities, or other
rights, agreements, stock appreciation rights or similar derivative
securities or instruments or commitments which obligate VPT to issue,
transfer or sell any shares of beneficial interest of VPT or make any
payments in lieu thereof. Since January 30, 1997, VPT has not granted any
options or other rights to purchase any shares of beneficial interest of VPT.
There are no agreements or understandings to which VPT or any VPT Subsidiary
is a party with respect to the voting of any shares of beneficial interest of
VPT or which restrict the transfer of any such shares, nor does VPT 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, other
than the Voting Agreement and those set forth in VPT's Declaration of Trust
with respect to the maintenance of VPT as a real estate investment trust
under the Code (as defined below) ("REIT"). There are no outstanding
contractual obligations of VPT or any VPT Subsidiary to repurchase, redeem or
otherwise acquire any shares of beneficial interest, partnership interests or
any other securities of VPT or any VPT Subsidiary. Except as set forth in
Section 7.3 of the VPT Disclosure Letter, neither VPT nor any VPT Subsidiary
is under any obligation, contingent or otherwise, by reason of any agreement
to register any of their securities under the Securities Act. VPT has
delivered to Buyer complete and correct copies of all VPT option plans and
all forms of options issued pursuant to any VPT option plan, including all
amendments thereto. Section 7.3 of the VPT Disclosure letter contains a
complete and correct list setting forth as of the date hereof (i) the number
of options outstanding, (ii) the dates on which such options were granted,
(iii) the exercise price of each outstanding option and (iv) the amount to be
paid to each optionholder pursuant to Section 5.3(d) (without taking account
of applicable withholding taxes). Section 7.3 of the VPT Disclosure Letter
contains a list of those persons from whom VPT has received Option Consents
as of the date hereof.
7.4 Subsidiaries. Except as set forth in Section 7.4 of the VPT
Disclosure Letter, VPT owns directly or indirectly each of the outstanding
shares of capital stock or all of the partnership or other equity interests
of each of the VPT Subsidiaries. Each of the outstanding shares of capital
stock in each of the VPT Subsidiaries having corporate form is duly
authorized, validly issued, fully paid and nonassessable. Except as set
forth in Section 7.4 of the VPT Disclosure Letter, each of the outstanding
shares of capital stock of, or partnership or other equity interests in, each
of the VPT Subsidiaries owned, directly or indirectly, by VPT is owned free
and clear of all liens, pledges, security interests, claims or other
encumbrances. Except as set forth in Section 7.4 of the VPT Disclosure
Letter, there are no options, warrants, calls, subscriptions, convertible
securities, or other rights, agreements or commitments which obligate VPT or
any VPT Subsidiary to issue, transfer or sell any shares of capital stock, of
any VPT Subsidiary. The following information for each VPT Subsidiary is set
forth in Section 7.4 of the VPT Disclosure Letter: (i) its name and
jurisdiction of incorporation or organization; (ii) its authorized capital
stock or share capital or partnership or other interests; (iii) to VPT's
knowledge, the name of each stockholder or owner of a partnership or other
equity interest and the number of issued and outstanding shares of capital
stock or share capital or percentage ownership for non-corporate entities
held by it and (iv) the names of the general partners, if applicable.
7.5 Other Interests. Except for interests in the VPT Subsidiaries
as set forth in Section 7.4 of the VPT Disclosure Letter, neither VPT nor any
VPT Subsidiary owns directly or indirectly any interest or investment
(whether equity or debt) in any corporation, partnership, joint venture,
business, trust or other entity (other than investments in short-term
investment securities). VPT has provided to Buyer a complete copy of all
partnership agreements to which VPT is a party. VPT owns its interest in all
such partnerships free and clear of all liens, pledges, security interests,
claims or other encumbrances subject, however, to claims identified in
Section 7.8 of the VPT Disclosure Letter.
7.6 No Violation. Except as set forth in Section 7.6 of the VPT
Disclosure Letter, neither the execution and delivery by VPT of this
Agreement nor the consummation by VPT 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 VPT's Declaration of Trust or Bylaws;
(ii) violate, result in a breach of any provision of, or constitute a default
under, or require any approval or consent under or result in the termination
or in a right of termination or cancellation of, or accelerate the
performance required by or result in a material adverse change to, or result
in the creation of any lien, security interest, charge or encumbrance upon
any of the VPT Properties under, 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 to which
VPT or any of the VPT Subsidiaries is a party, or by which VPT or any of the
VPT Subsidiaries or any of the VPT Properties is bound or affected, except
for any of the foregoing matters in this clause which, individually or in the
aggregate, would not have a VPT Material Adverse Effect; (iii) contravene or
conflict with or constitute a violation of any provision of any law, rule,
regulation, judgment, injunction, order or decree binding upon or applicable
to VPT or any VPT Subsidiary; or (iv) other than the filings provided for in
this Agreement, required under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976 (the "HSR Act"), the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), the Securities Act or applicable state securities and
"Blue Sky" laws (collectively, the "Regulatory Filings"), require any
consent, approval or authorization of, or declaration, filing or registration
with, any governmental or regulatory authority which has not been obtained or
made, except where the failure to obtain any such consent, approval or
authorization of, or declaration, filing or registration with, any
governmental or regulatory authority would not have a VPT Material Adverse
Effect.
7.7 SEC Documents. Since October 1, 1995, VPT has timely filed
with the Securities and Exchange Commission ("SEC") all forms, reports and
documents required to be filed by VPT since October 1, 1995 under the
Securities Act, the Exchange Act and the rules and regulations promulgated
thereunder (the "Securities Laws"), including, without limitation, (i) all
Annual Reports on form 10-K, (ii) all Quarterly Reports on form 10-Q, (iii)
all proxy statements relating to meetings of shareholders (whether annual or
special), (iv) all Current Reports on form 8-K and (v) all other reports,
schedules, registration statements and other documents, each as amended
(collectively, the "VPT SEC Reports"), all of which were prepared in
compliance in all material respects with the applicable requirements of the
Exchange Act and the Securities Act. VPT has no knowledge that any VPT SEC
Reports required to be filed with the SEC prior to October 1, 1995 have not
been filed. As of their respective dates, the VPT SEC 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. Each of the
consolidated balance sheets of VPT included in or incorporated by reference
into the VPT SEC Reports (including the related notes and schedules) fairly
presents the consolidated financial position of VPT and the VPT Subsidiaries
as of its date and each of the consolidated statements of operations, cash
flows and shareholders' equity included in or incorporated by reference into
the VPT SEC Reports (including any related notes and schedules) fairly
presents the results of operations, cash flows and shareholders' equity, as
the case may be, of VPT and the VPT Subsidiaries for the periods set forth
therein (subject, in the case of unaudited statements, to normal year-end
audit adjustments which would not be material in amount or effect), in each
case 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
pursuant to Section 13 or 15(d) of the Exchange Act.
7.8 Litigation. Except as set forth in Section 7.8 of the VPT
Disclosure Letter, there are (i) no continuing orders, injunctions or decrees
of any court, arbitrator or governmental authority to which VPT or any VPT
Subsidiary is a party or by which any of its properties or assets are bound
or likely to be affected and (ii) no actions, suits or proceedings pending
against VPT or any VPT Subsidiary or to which any of their respective
properties or assets are likely to be subject or, to the knowledge of VPT,
threatened against VPT or any VPT Subsidiary or to which any of their
respective properties or assets are likely to be subject, at law or in
equity, that in each such case would, individually or in the aggregate, have
a VPT Material Adverse Effect.
7.9 Absence of Certain Changes. Except as disclosed in the VPT
SEC Reports filed with the SEC prior to the date hereof or as set forth in
Section 7.9 of the VPT Disclosure Letter, since October 1, 1995, VPT and the
VPT Subsidiaries have conducted their business only in the ordinary course of
such business and consistent with past practices and there has not been
(i) any VPT Material Adverse Effect; provided, however, that changes
affecting the real estate industry generally, changes in the economies of the
jurisdictions in which VPT or the VPT Subsidiaries conduct business, and any
changes in the condition, business, operations or financial results of VPT
and the VPT Subsidiaries taken as a whole that are caused primarily or
substantially by such changes or events or as a result of the announcement of
this Agreement and the transactions contemplated hereby, or required by this
Agreement shall not be deemed to be a VPT Material Adverse Effect and no VPT
Material Adverse Effect shall be deemed to have occurred as a result of the
payment by VPT of costs, expenses, fees or similar charges incurred by its
contemplation, negotiation, execution or consummation of this Agreement, (ii)
any declaration, setting aside or payment of any dividend or other
distribution with respect to the VPT Shares, (iii) any repurchase, redemption
or other reacquisition by VPT or any VPT Subsidiary of any outstanding shares
of capital stock or securities of, or ownership interest in, VPT or any VPT
Subsidiary, (iv) any split, combination or reclassification of any of VPT's
shares of beneficial interest or issuance or authorization relating to the
issuance of any other securities in respect of, in lieu of or in substitution
for VPT's shares of beneficial interest, (v) any amendment of any term of any
outstanding security of VPT or any VPT Subsidiary, (vi) any incurrence,
assumption or guaranty by VPT or any VPT Subsidiary of any indebtedness for
borrowed money or any other agreement or arrangement entered into by VPT or
any VPT Subsidiary having the economic effect of any of the foregoing except
in the ordinary course of business, consistent with past business practice,
(vii) any creation or assumption by VPT or any VPT Subsidiary of any Lien on
any material asset other than in the ordinary course of business, consistent
with past practices (including the sale, pledging or assigning of
receivables), (viii) any change in any method of accounting or accounting
practice by VPT or any VPT Subsidiary except for any such change required by
reason of a concurrent change in generally accepted accounting principles or
to conform a VPT Subsidiary's accounting policies and practices to those of
VPT, (ix) (a) any grant of any severance or termination pay to any director,
executive officer or key employee of VPT or any VPT Subsidiary, (b) any
entering into of any employment, deferred compensation or other similar
agreement (or any amendment to any such existing agreement) with any
director, executive officer or key employee of VPT or any VPT Subsidiary, (c)
any increase in benefits payable under any existing severance or termination
pay policies or employment agreements with any director, executive officer or
key employee, or (d) any increase in compensation, bonus or any other
benefits payable to directors, executive officers or employees of VPT or any
VPT Subsidiaries, (x) any sale or transfer (other than granting of mortgage
liens) by VPT of any of the assets of VPT (other than sales or transfers of
immaterial assets in the ordinary course of business), cancellation of any
material debts or claims or waiver of any material rights of VPT, (xi) except
pursuant to VPT's obligations hereunder, any amendment to VPT's Declaration
of Trust or by-laws, (xii) any loans, advances or capital contributions by
VPT to or investments by VPT in, any other person, other than to any direct
or indirect wholly-owned subsidiary of VPT and other than travel and
entertainment advances to employee of VPT in the ordinary course of business
consistent with past practice, (xiii) except for this Agreement and any other
agreement executed and delivered pursuant to this Agreement, any material
transactions by VPT and VPT has not incurred any material expenditure other
than in the ordinary course of business or as specifically permitted under
other sections of this Agreement, and (xiv) any payments or other
distributions by VPT or any VPT Subsidiary to any of their officers,
directors or affiliates other than in the ordinary course of business and
consistent with past practices or as disclosed in the VPT SEC Reports filed
prior to the date hereof.
7.10 INTENTIONALLY OMITTED.
7.11 Taxes. Except as set forth in Section 7.11 of the VPT
Disclosure Letter or where such failure would not have, individually or in
the aggregate, a VPT Material Adverse Effect:
(a) VPT and each of the VPT Subsidiaries has paid or caused to be
paid all federal, state, local, foreign, and other taxes, and all
deficiencies, or other additions to tax, interest, fines and penalties
(collectively, "Taxes"), owed or accrued by it and due and payable through
the date hereof.
(b) VPT and each of the VPT Subsidiaries have timely filed all
federal, state, local and foreign tax returns (collectively "Tax Returns")
required to be filed by any of them through the date hereof, and all such
returns accurately set forth the amount of any Taxes relating to the
applicable period.
(c) VPT and each of the VPT Subsidiaries have withheld and paid
all Taxes required to have been withheld and paid in connection with amounts
paid or owing to any employee, independent contractor, creditor, shareholder
or other party.
(d) For the nine month period ending September 30, 1971 and at all
times thereafter up to and including the date hereof, VPT (i) has qualified
to be treated as a REIT within the meaning of Sections 856-860 of the Code,
including, without limitation, the requirements of Sections 856 and 857 of
the Code, (ii) has operated, and intends to continue to operate through the
date prior to the Effective Time, in such a manner as to qualify as a REIT
for the tax year ending September 30, 1997 and (iii) has not taken or omitted
to take any action, other than any action taken pursuant to or contemplated
by this Agreement, which could result in a challenge to its status as a REIT
and no such challenge is pending or threatened. For the periods described in
the preceding sentence, VPT has met all requirements necessary to be treated
as a REIT for purposes of the income tax provisions of those states in which
VPT is subject to income tax and which provide for the taxation of a REIT in
a manner similar to the treatment of REITs under Sections 856-860 of the
Code.
(e) The most recent financial statements contained in the VPT SEC
Reports reflect adequate reserves for Taxes payable by VPT and each VPT
Subsidiary for all taxable periods and portions thereof through the date of
such financial statements.
(f) Since the date of the most recent financial statements
included in the VPT SEC Reports, VPT and each VPT Subsidiary have not
incurred any liability for taxes under Sections 857(b), 860(c) or 4981 of the
Code and have made sufficient accrual for Taxes in accordance with generally
accepted accounting principles with respect to periods for which Tax Returns
have not been filed.
(g) There are no outstanding agreements, waivers of arrangements
extending the statutory period of limitations applicable to any claim for, or
the period for the collection or assessment of, Taxes due from VPT and each
VPT Subsidiary for any taxable period and there have been no deficiencies
proposed, assessed or asserted for such Taxes.
(h) Except as contemplated by Section 10.3(d) hereof, there are no
closing agreements that could affect Taxes of VPT and each VPT Subsidiary for
periods after the Effective Time pursuant to Section 7121 of the Code or any
similar provision under state, local or foreign tax laws.
(i) No audit or other proceedings by any court, governmental or
regulatory authority or similar authority has occurred, been asserted or is
pending and none of VPT and each VPT Subsidiary have received notice that any
such audit or proceeding may be commenced.
(j) No election has been made or filed by or with respect to, and
no consent to the application of, Section 341(f)(2) has been made by or with
respect to, VPT, VPT Subsidiary or any of its properties or assets.
(k) None of the assets of VPT and each VPT Subsidiary is an asset
or property that is or will be required to be treated as being owned by any
person (other than VPT or each such Subsidiary) pursuant to the provisions of
Section 168(f)(8) of the Internal Revenue Code of 1954, as amended and in
effect immediately before the enactment of the Tax Reform Act of 1986.
(l) VPT and each VPT Subsidiary have not agreed to, or filed
application for, and are not required to make any changes or adjustment to
the accounting method.
(m) There is no contract, agreement, plan or arrangement covering
any person that, individually or collectively, could give rise to the payment
of any amount that would not be deductible by VPT or any VPT Subsidiary by
reason of Section 280G of the Code.
7.12 Books and Records.
(a) The books of account and other financial records of VPT and
each of the VPT Subsidiaries are true, complete and correct in all material
respects, have been maintained in accordance with good business practices,
and are accurately reflected in all material respects in the financial
statements included in the VPT SEC Reports.
(b) The minute books and other records of VPT and each of the VPT
Subsidiaries have been, or will be prior to the Closing, made available to
Buyer, contain in all material respects accurate records of all meetings and
accurately reflect in all material respects all other action of the
shareholders and Trustees and any committees of the Trustees of VPT and each
of the VPT Subsidiaries.
7.13 Properties.
(a) Title and Survey Matters. All of the real estate properties
owned by VPT and each of the VPT Subsidiaries (the "VPT Properties") are set
forth in Section 7.13 of the VPT Disclosure Letter. VPT has made available
to Buyer for inspection the title reports (as supplemented or superseded by
any title reports, title insurance commitments or pro forma title policies
obtained by or provided to Buyer on or prior to the date hereof, the "Title
Reports") and surveys (as supplemented or superseded by any updated or
recertified surveys or surveyor's certificates or reports obtained by or
provided to Buyer on or prior to the date hereof, the "Surveys") in its
possession or control relating to the VPT Properties. VPT has not created or
consented to and is not aware of any encumbrance to title to the VPT
Properties or any survey matter affecting the VPT Properties other than (i)
matters listed in the Title Reports, (ii) matters shown on the Surveys, (iii)
ordinances and regulations, including zoning ordinances and building codes,
affecting building use or occupancy, (iv) mechanics', carriers', workmen's
liens or encumbrances which are the responsibility of tenants under leases,
(v) rights of tenants, as tenants only under the Leases, and (vi) matters
disclosed in Section 7.13 of the VPT Disclosure Letter (collectively, the
"Permitted Exceptions").
(b) Leases. The rent rolls (the "Rent Rolls") for each of the VPT
Properties set forth in Section 7.13 of the VPT Disclosure Letter are true,
correct and complete as of July 31, 1997 in all material respects. Since
July 31, 1997 there have been no changes on the Rent Rolls that have had,
when considered in conjunction with all other changes on the Rent Rolls, more
than an immaterial aggregate negative effect on the value of the VPT
Properties taken as a whole. Except as set forth on the Rent Rolls, there
are no Leases (as defined below) or other material written or oral agreements
relating to the use or occupancy of any of the VPT Properties or any portion
thereof. With respect to each VPT Property that is not a multifamily
Property, the Rent Rolls show all leases, license agreements and other
material agreements, written or oral, relating to the use or occupancy of any
part of a VPT Property (the "Leases"), including the name of each tenant, the
date of each tenant's Lease and all amendments or modifications, if any,
thereto, and any subleases as to which VPT has given consent or otherwise has
knowledge. With respect to each VPT Property that is a multifamily property,
to VPT's knowledge the Rent Rolls show all leases, license agreements and
other material occupancy agreements relating to the use or occupancy of any
part of a multifamily property (the "Multifamily Leases"). Section 7.13 of
the VPT Disclosure Letter sets forth a complete and accurate list of any
security deposit paid or deposited by the tenant under each Lease and
Multifamily Lease as of July 31, 1997 (and, if such security deposit is in
the form of a letter of credit or otherwise not in cash, the form of such
security deposit) and whether any security deposit under a Lease has been
applied against the tenant's obligations under its Lease. VPT has delivered
to Buyer a true, correct and complete copy of each of the Leases (including
all amendments thereto). Except as may be otherwise disclosed on the Rent
Rolls, in Section 7.13 of the VPT Disclosure Letter or in any of the tenant
estoppel letters delivered to Buyer prior to the date hereof:
(i) each of the Leases is in full force and effect;
(ii) except as set forth in the schedule of rent receivables
included in Section 7.13 of the Disclosure Letter, there are no arrearages of
base annual rent or any additional rent payable by any tenant under any Lease
in excess of one (1) month;
(iii) except as set forth in Section 7.13 of the VPT
Disclosure Letter, to the knowledge of VPT, none of the tenants is in default
in the observance of any of the monetary or other material obligations to be
kept, observed or performed by it under its Lease;
(iv) no tenant under the Leases is entitled to any free rent,
rebate, concession, deduction or offset not set forth in the Leases;
(v) except as set forth in the schedule of outstanding
obligations with respect to tenant improvements, leasing commissions and
capital expenditures required under the Leases included in Section 7.13 of
the VPT Disclosure Letter (the "Schedule of Outstanding Tenant Obligations"),
and except as set forth in any tenant estoppel certificate received by Buyer
or its advisors on or prior to the date of this Agreement, no tenant under
any Lease is entitled to receive money, or any contribution from the
landlord, either in money or in kind, on account of the construction of any
improvements, and all alterations, installations, decorations and other work
required to be performed by the landlord under the provisions of each Lease
have been completed and fully paid for or will be completed in accordance
with the requirements of the Leases or will be paid for in the ordinary
course of business;
(vi) to the best knowledge of VPT, neither VPT nor any VPT
Subsidiary has received from any tenant under a Lease a written notice of
default by VPT in performing any of its obligations as landlord under such
Lease or written notice of violation of any statute, rule, law, ordinance, or
other legal regulation pertaining to the VPT Properties or any part thereof
in each case (a) during the last twelve months and (b) which has not been
cured or resolved to the satisfaction of the sender of such notice;
(vii) VPT has the sole right to collect rent under each Lease
and each Multifamily Lease and such right has not been assigned, pledged,
hypothecated or otherwise encumbered, except for an assignment as security
for the payment of any indebtedness to any existing mortgage holder of any of
the VPT Properties that VPT shall discharge and release at or prior to
closing; and
(viii) VPT is the holder of all unapplied security deposits
identified in the Rent Rolls.
(c) Contracts. Set forth in Section 7.13 of the VPT Disclosure
Letter are complete and accurate schedules (the "Contract Schedules") of all
service agreements, management and leasing brokerage agreements and other
written or oral agreements of any similar kind or character (the "Contracts")
binding upon VPT, except for those which VPT shall terminate on the Closing
Date without penalty or liability to Buyer. Except as set forth on the
Contract Schedules, there are no material written or oral agreements relating
to the management, leasing, operation or maintenance of any of the VPT
Properties or any portion thereof. VPT has not delivered or received any
written notice alleging any default in the performance or observance of any
of the covenants, conditions or obligations to be kept, observed or performed
under any of the Contracts. VPT has delivered to Buyer a true, correct and
complete copy of each of the Contracts (including all amendments thereto).
(d) Leasing Commissions. Except as set forth in the Schedule of
Outstanding Tenant Obligations, on the Closing Date and at all times
thereafter, there shall be no leasing commissions due and owing in connection
with any of the Leases or any renewals or extensions thereof of any expansion
options set forth in such Leases or under the Multifamily Leases, except (i)
those commissions (the "Renewal Commissions") due and payable in the event a
tenant exercises an option available under a Lease to renew or extend the
term of the Lease or expand the space occupied by the tenant, (ii) those
other commissions (the "Other Commissions") which become due and payable
after the Closing Date upon conditions set forth in the commission agreements
described in Section 7.13 of the VPT Disclosure Letter, (iii) leasing
commissions payable in connection with Leases entered into after the date
hereof which are permitted hereunder or approved or deemed approved by Buyer
or Merger Subsidiary and (iv) leasing commissions payable in the ordinary
course with respect to Multifamily Leases. All Renewal Commissions and all
Other Commissions which may become due and payable after the date hereof are
set forth in Section 7.13 of the VPT Disclosure Letter.
(e) Condemnation Proceedings. VPT has received no written notice
of any pending or contemplated condemnation or eminent domain proceedings
affecting all or any part of the VPT Properties.
(f) Bankruptcy. Except as set forth on Section 7.13 of the VPT
Disclosure Letter, there is no bankruptcy, insolvency, rearrangement or
similar action or proceeding, whether voluntary or involuntary (a
"Bankruptcy"), pending or, to VPT's knowledge, threatened against VPT, any
VPT Subsidiary or any of the tenants listed on Section 7.13(f) of the VPT
Disclosure Letter (the "Major Tenants").
(g) Compliance with Permitted Exceptions. VPT has not received
notice of and, to the best of VPT's knowledge, neither VPT nor any VPT
Subsidiary is in material default in complying with the terms and provisions
of, any of the covenants, conditions, restrictions, rights-of-way or
easements constituting one or more of the Permitted Exceptions which are to
be performed or complied with by the owner of the VPT Properties.
(h) Ground Leases. Set forth on Section 7.13 of the VPT
Disclosure Letter is a complete and accurate list of all ground leases
affecting the VPT Properties (the "Ground Lease Schedule"). Except as set
forth on the Ground Lease Schedule, each ground lease is in full force and
effect, neither VPT nor any VPT Subsidiary is in default in the payment of
ground rent or in the performance of any monetary or other material covenant
or obligation to be performed by VPT or any VPT Subsidiary, as ground lessee,
under such ground lease and, to the knowledge of VPT, the ground lessor is
not in default under such ground lease.
(i) Mechanics' Liens. Except as set forth in the Title Reports,
VPT has no knowledge of any material mechanics' liens or suppliers' liens
affecting any of the VPT Properties.
(j) Material Adverse Effect. The term "VPT Material Adverse
Effect," when used in this Section 7.13, in Section 7.14 and in Sections
10.3(a) and 10.3(c) but only insofar as they relate to the representations
and warranties contained in this Section 7.13 and Section 7.14, shall mean
the following: (i) a "VPT Material Adverse Effect," as defined in Section
7.1(a) hereof, or (ii) any negative circumstances, changes or effects, when
considered in conjunction with any positive circumstances, changes or effects
and offset to the extent of any insurance, that have resulted in, or are
reasonably likely to result in, an aggregate decrease in the value of the VPT
Properties, taken as a whole, of $4,500,000 or more.
7.14 Environmental Matters. Except as set forth in Section 7.14 of
the VPT Disclosure Letter or in any environmental assessment or report listed
therein or otherwise obtained by or provided to Buyer or its advisors on or
prior to the date of this Agreement (collectively, the "Environmental
Reports"), to the best of VPT's knowledge, (i) no hazardous substances or
hazardous wastes, including asbestos, lead and petroleum, have been
generated, stored, released, discharged or disposed of from or on the VPT
Properties during the period of VPT's ownership of such properties except for
hazardous materials or hazardous wastes commonly used by landlords and
tenants for or contained in similar properties which were used in the
ordinary course of business and in compliance with all Environmental Laws (as
hereinafter defined), (ii) VPT has not received written notice from any
governmental authority that any of the VPT Properties is in violation of any
laws, regulations, judgments or consent decrees relating to hazardous
substances or hazardous waste (collectively, "Environmental Laws"), and (iii)
there is no pending civil, criminal or administrative suit or other legal
proceeding against VPT (and no such suit or proceeding has been threatened in
writing to VPT) or any unsatisfied judgment against VPT with respect to any
Environmental Laws or principals of common law relating to hazardous
substances or hazardous waste. VPT has provided to Buyer complete copies of
all environmental reports, assessments, studies and similar items with
respect to the VPT Properties within its possession or control. As used in
this Agreement, the terms "hazardous substances" and "hazardous wastes" shall
have the meanings set forth in the Comprehensive Environmental Response,
Compensation and Liability Act, as amended, and the regulations thereunder;
the Resource Conservation and Recovery Act, as amended, and the regulations
thereunder; and the Federal Clean Water Act, as amended, and the regulations
thereunder.
7.15 No Brokers. Neither VPT nor any of the VPT Subsidiaries has
entered into any contract, arrangement or understanding with any person or
firm which may result in the obligation of such entity or Buyer 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 VPT has
retained Merrill Lynch & Co. ("Merrill Lynch") pursuant to an engagement
letter previously furnished to Buyer to act as its financial advisor in
connection with the transactions contemplated by this Agreement. VPT 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.
7.16 Opinion of Financial Advisor. VPT has received the opinion of
Merrill Lynch, to the effect that, as of the date hereof, the VPT Merger
Consideration is fair to the holders of VPT Shares from a financial point of
view, and has delivered a true and correct copy of such opinion to Buyer.
7.17 Related Party Transactions. Section 7.17 of the VPT
Disclosure Letter or the VPT SEC Reports set forth all arrangements,
agreements and contracts or understandings entered into by VPT or any of the
VPT Subsidiaries (which are or will be in effect as of or after the date of
this Agreement) with (i) any consultant (X) involving payments in excess of
$60,000 or (Y) which may not be terminated at will by VPT or the VPT
Subsidiary which is a party thereto, or (ii) any person who is an officer,
trustee, director or affiliate of VPT or any of the VPT Subsidiaries. All
such documents are listed in Section 7.17 of the VPT Disclosure Letter and
the copies of such documents, which have previously been provided or made
available to Buyer and its counsel, are true and correct copies. Except as
disclosed in Section 7.17 of the VPT Disclosure Letter and the VPT SEC
Reports, VPT (including all VPT Subsidiaries) has not made any payments to,
received any services from, or is dependent on any services of, any affiliate
of VPT other than services provided by officers and directors in such
capacities and payments to such officers and directors of VPT.
7.18 Contracts and Commitments. There is no contract, agreement or
understanding required to be described or filed as an exhibit to any VPT SEC
Report that is not described or filed as required by the Securities Act or
the Exchange Act, as the case may be. Except as would not individually or in
the aggregate have a VPT Material Adverse Effect, all such contracts,
agreements and understandings are valid and binding on VPT and are in full
force and effect and enforceable against VPT in accordance with their
respective terms other than contracts, agreements or understandings which are
by their terms no longer in force or effect. Except as disclosed in the VPT
Disclosure Letter, no approval or consent of, or notice to any Person is
needed in order that such contract, agreement or understanding shall continue
in full force and effect in accordance with its terms without penalty,
acceleration or rights of early termination following the consummation of the
transactions contemplated by this Agreement. Except to the extent any of the
following would not individually or in the aggregate have a VPT Material
Adverse Effect, VPT is not in violation of, breach of or default under any
such contract, agreement or understanding nor, to VPT's knowledge, is any
other party to any such contract, agreement or understanding. Except as set
forth in the VPT SEC Reports or in Section 7.18 of the VPT Disclosure Letter,
VPT is not a party to any contracts, agreements or arrangements (including
leases of real property) relating to non-competition, indebtedness,
guarantees of indebtedness of any other person, employment, or collective
bargaining.
7.19 Definition of VPT's Knowledge. As used in this Agreement, the
phrase "to the knowledge of VPT" or "to the best knowledge of VPT" or any
similar phrase means the actual knowledge after due inquiry of VPT's current
President, Executive Vice President and two Senior Vice Presidents, and shall
include information disclosed to VPT by written notice from Buyer whether
pursuant to the terms hereof or otherwise.
7.20 ERISA; Benefit Plans. (a) "Employee Plans" shall mean each
"employee benefit plan," as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974 ("ERISA"), which (i) is subject to any
provision of ERISA and (ii) is maintained, administered or contributed to by
VPT or any affiliate (as defined below) and covers any employee or former
employee of VPT or any affiliate or under which VPT or any affiliate has any
liability. For purposes of this Section and Section 4.13, "affiliate" of any
Person means any other Person which, together with such Person, would be
treated as a single employee under Section 414 of the Internal Revenue Code
of 1986, as amended (the "Code").
(b) No Employee Plan constitutes a "multiemployer plan," as
defined in Section 3(37) of ERISA, and no Employee Plan, other than VPT's
Terminated Employee's Retirement Plan, is subject to Title IV of ERISA.
Neither VPT nor any of its affiliates has incurred, nor are they reasonably
likely to incur, any liability under Title IV of ERISA arising in connection
with the termination of, or complete or partial withdrawal from, any plan
previously covered by Title IV of ERISA that would have, individually or in
the aggregate, a VPT Material Adverse Effect. No transaction or holding of
any asset under or in connection with any employee Plan has or will make VPT
or any of the VPT Subsidiaries or any officer or director of VPT or any of
the VPT Subsidiaries subject to any liability under Section 502(i) of ERISA
or liable for any tax pursuant to Section 4975 of the Code that would have,
individually or in the aggregate, a VPT Material Adverse Effect.
(c) Except to the extent it would not have, individually or
in the aggregate, a VPT Material Adverse Effect, (i) each Employee Plan that
is intended to be qualified under Section 401(a) of the Code is the subject
of a favorable determination letter issued by the Internal Revenue Service
relating to its qualified status, and, to VPT's knowledge, nothing has
occurred that would adversely effect the qualified status of any such plan,
and (ii) each Employee Plan has been maintained in material compliance with
its terms and with the requirements prescribed by any and all statutes,
orders, final rules and final regulations, including but not limited to ERISA
and the Code, which are applicable to such Employee Plan. Except for routine
claims for benefits, there are no material liabilities arising under, or
relating to, such Employee Plans.
(d) "Benefit Arrangement" shall mean each employment,
severance or other similar contract, arrangement or policy and each plan or
arrangement (written or oral) providing for compensation, bonus, profit-
sharing, stock option, or other stock related rights or other forms of
incentive or deferred compensation, which (i) is not an Employee Plan, and
(ii) is entered into, maintained or contributed to, as the case may be, by
the VPT or any of its affiliates. Except to the extent that it would not
have, individually or in the aggregate, a VPT Material Adverse Effect, each
Benefit Arrangement has been maintained in material compliance with its terms
and with the requirements prescribed by and any all statutes, orders, rules
and regulations that are applicable to such Benefit Arrangement. Except for
routine claims for benefits, there are no material liabilities arising under,
or relating to, such Benefit Arrangement.
(e) With respect to each Employee Plan and Benefit
Arrangement (where applicable); VPT has made available to Buyer complete and
accurate copies of the following: (i) all plan texts and agreements; (ii)
all material employee communications (including summary plan descriptions);
(iii) the most recent annual report; (iv) the most recent annual and periodic
accounting of plan assets; (v) the most recent determination letter received
from the IRS; and (vi) the most recent actuarial valuation.
(f) Except as set forth on Section 7.20 of the VPT Disclosure
Letter, the consummation of the transactions contemplated by this Agreement
will not (i) entitle any individual to severance pay, (ii) accelerate the
time of payment or vesting of, or increase the amount of, compensation due to
any individual or (iii) result in the payment of an amount that will be taken
into account in determining whether there is an "excess parachute payment"
under Section 280G(b)(1) of the Code. Notwithstanding the foregoing, in
connection with the cash payments for the VPT Options as provided in Section
5.3, VPT has obtained consent to such cash payments from the persons listed
in Section 7.3 of the VPT Disclosure Letter.
7.21 Anti-takeover Plan. Neither VPT nor any VPT Subsidiary has in
effect any plan, scheme, device or arrangement, commonly or colloquially
known as a "poison pill" or, except as set forth in VPT's Declaration of
Trust or by-laws, an "Anti-takeover" plan or any similar plan, scheme, device
or arrangement. The Trustees of VPT have approved the Merger and this
Agreement and have agreed (unless otherwise required in accordance with
fiduciary duties of the Trustees of VPT under applicable law as advised by
independent legal counsel) to recommend that the holders of the VPT Shares
vote their shares in favor of the Merger.
7.22 Shareholder Vote Required. The only vote of the holders of
any class or series of shares of beneficial interest of VPT necessary to
approve the Merger and the transactions contemplated by this Agreement is the
affirmative vote of holders of two-thirds of the outstanding VPT Shares.
7.23 Undisclosed Liabilities. Except as and to the extent
reflected, reserved against or otherwise disclosed in VPT's consolidated
balance sheet dated June 30, 1997 (including the notes thereto) or as set
forth in Section 7.23 of the Disclosure Letter, neither VPT nor any VPT
subsidiary had, at June 30, 1997, any liabilities or obligations of any kind,
whether accrued, absolute, asserted or unasserted, contingent or otherwise,
whether or not such liabilities would have been required to be reflected in a
balance sheet prepared in accordance with generally accepted accounting
principles consistently applied, which would have, individually or in the
aggregate, a VPT Material Adverse Effect.
7.24 Insurance. VPT maintains, and has maintained or caused to be
maintained, without interruption, during its existence, policies or binders
of insurance covering such risk, and events, including personal injury,
property damage and general liability in amounts VPT reasonably believes
adequate for its business and operations, and its current insurance policies
(other than directors' and officers' insurance) will not terminate due to the
consummation of the Merger.
7.25 Absence of Sensitive Payments. To VPT's knowledge, none of
VPT or any VPT Subsidiary or affiliate or any officer or director or any of
them acting alone or together, has performed any of the following acts,
except to the extent that such acts, individually or collectively, would not
have a VPT Material Adverse Effect: (i) the making of any contribution,
payment, remuneration, gift or other form of economic benefit (a "Payment')
to or for the private use of any governmental official, employee, or agent
where the Payment or the purpose of the Payment was illegal under the laws of
the United States or the jurisdiction in which such Payment was made, (ii)
the establishment or maintenance of any unrecorded fund, asset or liability
for any purpose or for the making of any false or artificial entries on its
books, (iii) the making of any Payment to any person or the receipt of any
Payment with the intention or understanding that any part of the Payment was
to be used for any purpose other than that described in the document
supporting the Payment, or (iv) the giving of any Payment to, or the receipt
of any Payment from, any person who was or could have been in a position to
help or hinder the business of VPT or any VPT Subsidiary (or assist VPT or
any VPT Subsidiary in connection with any actual or proposed transaction)
which (A) would reasonably have been expected to subject VPT or any VPT
Subsidiary to any damage or penalty in any civil, criminal or governmental
litigation or proceeding, (B) if not given in the past, would have had a VPT
Material Adverse Effect or (C) if it had not continued in the future, would
have had a VPT Material Adverse Effect.
7.26 Amendment of Registration Rights Agreement. The Registration
Rights Agreement (as defined in Section 9.15) may be amended with the consent
of VPT and the holders of a majority of the Registrable Securities (as
defined in the Registration Rights Agreement) outstanding.
8. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer and Merger Subsidiary represent and warrant to VPT as follows:
8.1 Existence; Good Standing; Authority; Compliance With Law.
(a) Buyer is a corporation duly organized, validly existing and in
good standing under the laws of the State of Maryland and Merger Subsidiary
is a corporation duly incorporated, validly existing and in good standing
under the laws of the State of Maryland. Buyer is duly licensed or qualified
to do business 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, except where the failure to be so licensed or
qualified would not have a Buyer Material Adverse Effect. For purposes
hereof, the term "Buyer Material Adverse Effect" means any change or effect
that is or is reasonably likely to be materially adverse to the condition
(financial or otherwise), business, assets or results of operations of the
Buyer and the Buyer Subsidiaries (as defined below) taken as a whole or
adversely affects the ability of Buyer or Merger Subsidiary to consummate the
transactions contemplated by this Agreement in any material respect or
materially impairs or delays Buyer's or Merger Subsidiary's abilities to
perform their obligations hereunder. Each of Buyer and Merger Subsidiary has
all requisite corporate power and authority to own, operate, lease and
encumber its properties and carry on its business as now conducted.
(b) The business of Buyer and the Buyer Subsidiaries has been
operated in compliance with all laws, ordinances, regulations and orders of
all governmental entities, except for violations which would not have,
individually or in the aggregate, a Buyer Material Adverse Effect, or except
as set forth in Section 8.1 of the disclosure letter delivered at or prior to
the execution hereof to VPT, which shall refer to the relevant sections of
this Agreement (the "Buyer Disclosure Letter"). Notwithstanding the above,
the preceding sentence shall not be deemed a representation or warranty with
respect to Environmental Laws and any and all representations and warranties
of Buyer with respect to the compliance with Environmental Laws are set forth
in Section 8.15 hereof. Buyer and the Buyer Subsidiaries have all
Governmental Approvals of all Governmental Agencies required by law with
respect to the operation of their businesses, except those the absence of
which would not, individually or in the aggregate, have a Buyer Material
Adverse Effect or prevent or delay consummation of the Merger. All such
Government Approvals are in full force and effect, and, Buyer and the Buyer
Subsidiaries are in compliance in all material respects with all conditions
and requirements of the Government Approvals and with all rules and
regulations relating thereto. Buyer has not received any notices of
violations of any Federal, state and local laws, regulations and ordinances
relating to its business, operations or assets or the Buyer Properties (as
defined in Section 8.14) which, if it were determined that a violation had
occurred, would have a Buyer Material Adverse Effect.
(c) The Articles of Incorporation or other charter documents and
Bylaws (and all amendments thereto) of Buyer and each of the Buyer
Subsidiaries are listed in Section 8.1 of the Buyer Disclosure Letter, true
and correct copies of which have previously been delivered or made available
to VPT or its counsel. For purposes of this Agreement, the term "Buyer
Subsidiary" shall include any of the entities set forth under such heading in
Section 8.7 of the Buyer Disclosure Letter.
8.2 Authorization, Validity and Effect of Agreements. Buyer and
Merger Subsidiary each has the requisite corporate power and authority to
enter into the transactions contemplated hereby and to execute and deliver
this Agreement. To the extent required by law, the Board of Directors of
each of Buyer and Merger Subsidiary has approved this Agreement, the Merger
and the other transactions contemplated by this Agreement. No vote of the
Buyer's stockholders is required to approve the issuance of the Buyer Common
Stock as contemplated by this Agreement. The Board of Directors of Buyer has
taken all necessary actions and votes (such votes being in substantially the
form previously provided to VPT) to provide under certain circumstances
exemption from Section 3-602 of the MGCL for certain affiliates of VPT
acquiring Buyer Common Stock in connection with the transactions contemplated
by this Agreement from subsequent business combinations with Buyer. The
Bylaws of Buyer provide that Title 3, Subtitle 7 of the MGCL shall not apply
to any acquisition by any person of shares of stock of Buyer. To the
knowledge of Buyer, no other state takeover or similar statute or regulation
applies to the Merger or any of the transactions contemplated by this
Agreement with respect to Buyer. Subject to the filing and acceptance for
record of appropriate merger documents as required by MGCL, the execution by
Buyer and Merger Subsidiary of this Agreement and the consummation of the
transactions contemplated by this Agreement have been duly authorized by all
requisite action on the part of Buyer and the Merger Subsidiary. Assuming
this Agreement constitutes a valid and binding obligation of VPT, this
Agreement constitutes the valid and legally binding obligation of Buyer and
Merger Subsidiary, enforceable against Buyer and Merger Subsidiary in
accordance with its terms, subject to applicable bankruptcy, insolvency,
moratorium or other similar laws relating to creditors' rights and general
principles of equity.
8.3 No Violation. Except as set forth in Section 8.3 of the Buyer
Disclosure Letter, neither the execution and delivery by Buyer and Merger
Subsidiary of this Agreement nor the consummation by Buyer and Merger
Subsidiary 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 Articles of Incorporation or Bylaws of Buyer or Merger
Subsidiary; (ii) violate, result in a breach of any provision of, constitute
a default under, or require any approval or consent under or result in the
termination or in a right of termination or cancellation of, or accelerate
the performance required by or result in a material adverse change to, or
result in the creation of any lien, security interest, charge or encumbrance
upon any of the properties of Buyer or any of the Buyer Subsidiaries under,
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 to which Buyer or any of the Buyer Subsidiaries
is a party, or by which Buyer or any of the Buyer Subsidiaries or any of
their properties is bound or affected, except for any of the foregoing
matters which, individually or in the aggregate, would not have a Buyer
Material Adverse Effect; (iii) contravene or conflict with or constitute a
violation of any provision of any law, rule, regulation, judgment,
injunction, order or decree binding upon or applicable to the Buyer or Merger
Subsidiary; or (iv) other than the Regulatory Filings, require any consent,
approval or authorization of, or declaration, filing or registration with,
any governmental or regulatory authority which has not been obtained or made
except where the failure to obtain any such consent, approval or
authorization of, or declaration, filing or registration with, any
governmental or regulatory authority would not have a Buyer Material Adverse
Effect.
8.4 Financing. Buyer will have available to it on the Closing
Date unrestricted funds which it may use in its sole discretion to purchase
and pay for the VPT Shares pursuant to the Merger, respectively, in
accordance with the terms of this Agreement.
8.5 Title Reports and Surveys Obtained by Buyer on Properties.
Section 8.5 of the Buyer Disclosure Letter includes full and complete copies
of all title insurance commitments and pro forma title insurance policies
obtained by Buyer on or before the date hereof with respect to the VPT
Properties (each a "Policy" and collectively, the "Policies"). In addition,
Buyer has provided to VPT full and complete copies of all title reports and
all surveys, updated or recertified surveys, and surveyor's certificates, in
each case with respect to the VPT Properties or a part thereof, obtained by
or on behalf of Buyer or otherwise provided to Buyer or its advisors by a
party other than VPT on or before the date hereof.
8.6 Capitalization. The charter of Buyer authorizes it to issue
197,650,000 shares of Buyer Common Stock, 350,000 shares of Class A Common
Stock, par value $0.01 per share (the "Buyer Class A Common Stock"), and
2,000,000 shares of Series A 8% Convertible Redeemable Preferred Stock, par
value $0.01 per share (the "Buyer Preferred Stock"). As of the date hereof,
there are 16,572,043 shares of Buyer Common Stock issued and outstanding,
339,806 shares of Buyer Class A Common Stock and no shares of Buyer Preferred
Stock issued and outstanding. All such shares of Buyer are duly authorized,
validly issued, fully paid, nonassessable and free of preemptive rights.
Except as set forth in Section 8.6 of the Buyer Disclosure Letter, as of the
date hereof Buyer has no outstanding bonds, debentures, notes or other
obligations the holders of which have or upon the happening of certain events
would have the right to vote (or which are convertible into or exercisable
for securities having the right to vote) with the shareholders of Buyer on
any matter. Except as set forth in Section 8.6 of the Buyer Disclosure
Letter, as of the date hereof there are no existing options, warrants, calls,
subscriptions, convertible securities, or other rights, agreements, stock
appreciation rights or similar derivative securities or instruments or
commitments which obligate Buyer to issue, transfer or sell any shares of
capital stock of Buyer or make any payments in lieu thereof. Except as set
forth in Section 8.6 of the Buyer Disclosure Letter or as disclosed in the
Buyer SEC Reports (as hereinafter defined) filed prior to the date hereof, as
of the date hereof there are no agreements or understandings to which Buyer
or any Buyer Subsidiary is a party with respect to the voting of any shares
of capital stock of Buyer or which restrict the transfer of any such shares,
nor does Buyer 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 Section 8.6 of the Buyer Disclosure
Letter or as disclosed in the Buyer SEC Reports filed prior to date hereof,
there are no outstanding contractual obligations of Buyer or any Buyer
Subsidiary to repurchase, redeem or otherwise acquire any shares of capital
stock, partnership interests or any other securities of Buyer or any Buyer
Subsidiary. Buyer has delivered to VPT complete and correct copies of all
Buyer option plans and all forms of options issued pursuant to any Buyer
option plan, including all amendments thereto. Section 8.6 of the Buyer
Disclosure Letter contains a complete and correct list setting forth as of
the date hereof, (i) the number of options outstanding, (ii) the dates on
which such options were granted and (iii) the exercise price of each
outstanding option.
8.7 Subsidiaries. Except as set forth in Section 8.7 of the Buyer
Disclosure Letter, Buyer owns directly or indirectly each of the outstanding
shares of capital stock or all of the partnership or other equity interests
of Buyer in each of the Buyer Subsidiaries. Each of the outstanding shares
of capital stock in each of the Buyer Subsidiaries having corporate form is
duly authorized, validly issued, fully paid and nonassessable. Except as set
forth in Section 8.7 of the Buyer Disclosure Letter, each of the outstanding
shares of capital stock of, or partnership or other equity interests in, each
of the Buyer Subsidiaries owned by Buyer is owned, directly or indirectly,
free and clear of all liens, pledges, security interests, claims or other
encumbrances. Except as set forth in Section 8.7 of the Buyer Disclosure
Letter, as of the date hereof there are no options, warrants, calls,
subscriptions, convertible securities, or other rights, agreements or
commitments which obligate Buyer or any Buyer Subsidiary to issue, transfer
or sell any shares of capital stock, of any Buyer Subsidiary.
8.8 Other Interests. Except for interests in the Buyer
Subsidiaries as set forth in Section 8.7 of the Buyer Disclosure Letter, as
of the date hereof neither Buyer nor any Buyer Subsidiary owns directly or
indirectly any interest or investment (whether equity or debt) in any
corporation, partnership, joint venture, business, trust or other entity
(other than investments in short-term investment securities).
8.9 SEC Documents. Since April 23, 1997, Buyer has timely filed
with the SEC all forms, reports and documents required to be filed by Buyer
since April 23, 1997 under the Securities Laws, including, without
limitation, (i) all Annual Reports on form 10-K, (ii) all Quarterly Reports
on form 10-Q, (iii) all proxy statements relating to meetings of stockholders
(whether annual or special), (iv) all Current Reports on form 8-K, (v) the
Buyer's Registration Statement on Form S-11 as filed with the SEC on July 30,
1997 and (vi) all other reports, schedules, registration statements and other
documents, each as amended (collectively, the "Buyer SEC Reports") all of
which were prepared in compliance in all material respects with the
applicable requirements of the Exchange Act and the Securities Act. As of
their respective dates, the Buyer SEC 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. Each of the consolidated balance sheets of Buyer
included in or incorporated by reference into the Buyer SEC Reports
(including the related notes and schedules) fairly presents the consolidated
financial position of Buyer and the Buyer Subsidiaries as of its date and
each of the consolidated statements of income, cash flows and shareholders'
equity included in or incorporated by reference into the Buyer SEC Reports
(including any related notes and schedules) fairly presents the results of
income, cash flows and shareholders' equity, as the case may be, of Buyer and
the Buyer Subsidiaries for the periods set forth therein (subject, in the
case of unaudited statements, to normal year-end audit adjustments which
would not be material in amount or effect), in each case 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 pursuant to Section 13 or
15(d) of the Exchange Act.
8.10 Litigation. Except as set forth in Section 8.10 of the Buyer
Disclosure Letter, there are (i) no continuing orders, injunctions or decrees
of any court, arbitrator or governmental authority to which Buyer or any
Buyer Subsidiary is a party or by which any of its properties or assets are
bound or likely to be affected and (ii) no actions, suits or proceedings
pending against Buyer or any Buyer Subsidiary or to which any of their
respective properties or assets are likely to be subject or, to the knowledge
of Buyer, threatened against Buyer or any Buyer Subsidiary or to which any of
their respective properties or assets are likely to be subject, at law or in
equity, that in each such case would, individually or in the aggregate, have
a Buyer Material Adverse Effect.
8.11 Absence of Certain Changes. Except as disclosed in the Buyer
SEC Reports filed with the SEC prior to the date hereof or as set forth in
Section 8.11 of the Buyer Disclosure Letter, since June 1, 1997, there has
not been (i) any Buyer Material Adverse Effect; provided, however, that
changes affecting the real estate industry generally, changes in the
economies of the jurisdictions in which Buyer or the Buyer Subsidiaries
conduct business, and any changes in the condition, business, operations or
financial results of Buyer and the Buyer Subsidiaries taken as a whole that
are caused primarily or substantially by such changes or events or as a
result of the announcement of this Agreement and the transactions
contemplated hereby, or required by this Agreement shall not be deemed to be
a Buyer Material Adverse Effect and no Buyer Material Adverse Effect shall be
deemed to have occurred as a result of the payment by Buyer of costs,
expenses, fees or similar charges incurred by its contemplation, negotiation,
execution or consummation of this Agreement, (ii) any authorization,
declaration, setting aside or payment of any dividend or other distribution
with respect to the Buyer Common Stock, (iii) any repurchase, redemption or
other reacquisition by Buyer or any Buyer Subsidiary of any outstanding
shares of stock or securities of, or ownership interest in, Buyer or any
Buyer Subsidiary, (iv) any split, combination or reclassification of any of
Buyer's stock or issuance or authorization relating to the issuance of any
other securities in respect of, in lieu of or in substitution for shares of
Buyer's capital stock, (v) any amendment of any term of any outstanding
security of Buyer or any Buyer Subsidiary in any way which would have a Buyer
Material Adverse Effect, and (vi) except pursuant to Buyer's obligations
hereunder, there has not been any amendment to Buyer's charter or By-laws.
8.12 Taxes. Except as set forth in Section 8.12 of the Buyer
Disclosure Letter or where such failure would not have, individually or in
the aggregate, a Buyer Material Adverse Effect:
(a) Buyer and each of the Buyer Subsidiaries has paid or caused to
be paid all Taxes, owed or accrued by it through the date hereof.
(b) Buyer and each of the Buyer Subsidiaries has timely filed all
Tax Returns required to be filed by any of them through the date hereof, and
all such returns accurately set forth the amount of any Taxes relating to the
applicable period.
(c) Buyer and each Buyer Subsidiary has withheld and paid all
Taxes required to have been withheld and paid in connection with amounts paid
or owing to any employee, independent contractor, creditor, shareholder or
other party.
(d) The most recent financial statements contained in the Buyer
SEC Reports reflect adequate reserves for Taxes payable by Buyer and each
Buyer Subsidiary for all taxable periods and portions thereof through the
date of such financial statements.
(e) Since the date of the most recent financial statements
included in the Buyer SEC Reports, Buyer and each Buyer Subsidiary have made
sufficient accrual for Taxes in accordance with generally accepted accounting
principles with respect to periods for which Tax Returns have not been filed.
(f) There are no outstanding agreements, waivers of arrangements
extending the statutory period of limitations applicable to any claim for, or
the period for the collection or assessment of, Taxes due from Buyer and each
Buyer Subsidiary for any taxable period and there have been no deficiencies
proposed, assessed or asserted for such Taxes.
(g) There are no closing agreements that could affect Taxes of
Buyer and each Buyer Subsidiary for periods after the Effective Time pursuant
to Section 7121 of the Code or any similar provision under state, local or
foreign tax laws.
(h) No audit or other proceedings by any court, governmental or
regulatory authority or similar authority has occurred, been asserted or is
pending and none of Buyer and each Buyer Subsidiary have received notice that
any such audit or proceeding may be commenced.
(i) No election has been made or filed by or with respect to, and
no consent to the application of, Section 341(f)(2) has been made by or with
respect to, Buyer, each Buyer Subsidiary or any of its properties or assets.
(j) None of the assets of Buyer and each Buyer Subsidiary is an
asset or property that is or will be required to be treated as being owned by
any person (other than Buyer or each such Subsidiary) pursuant to the
provisions of Section 168(f)(8) of the Internal Revenue Code of 1954, as
amended and in effect immediately before the enactment of the Tax Reform Act
of 1986.
(k) Buyer and each Buyer Subsidiary has not agreed to, or filed
application for, and is not required to make any changes or adjustment to the
accounting method.
8.13 Books and Records.
(a) The books of account and other financial records of Buyer and
each of the Buyer Subsidiaries are true, complete and correct in all material
respects, have been maintained in accordance with good business practices,
and are accurately reflected in all material respects in the financial
statements included in the Buyer SEC Reports.
(b) The minute books and other records of Buyer and each of the
Buyer Subsidiaries have been, or will be prior to the Closing, made available
to VPT, contain in all material respects accurate records of all meetings and
accurately reflect in all material respects all other action of the
shareholders and Directors and any committees of the Directors of Buyer and
each of the Buyer Subsidiaries.
8.14 Properties.
(a) Title and Survey Matters. All of the real estate properties
owned by Buyer, and each of the Buyer Subsidiaries (the "Buyer Properties")
are set forth in Section 8.14 of the Buyer Disclosure Letter. Buyer has made
available to VPT for inspection all title insurance policies and any
subsequent title reports, title insurance commitments and proforma title
insurance policies (collectively, the "Buyer Title Reports") and all surveys
and surveyor's certificates (collectively, the "Buyer Surveys") within its
possession or control relating to the Buyer Properties. Buyer is not aware
of any encumbrance to title to the Buyer Properties or any survey matter
affecting the Buyer Properties other than (i) matters listed in the Buyer
Title Reports, (ii) matters shown on the Buyer Surveys, (iii) ordinances and
regulations, including zoning ordinances and building codes, affecting
building use or occupancy, (iv) mechanics', carriers', workmen's liens or
encumbrances which are the responsibility of tenants under leases, or which
otherwise do not have a material adverse effect on the value of the Buyer
Properties as a whole and (v) matters disclosed in Section 8.14 of the Buyer
Disclosure Letter (collectively, the "Buyer Permitted Exceptions").
(b) Leases. The Rent Rolls for each of the Buyer Properties set
forth in Section 8.14 of the Buyer Disclosure Letter are true, correct and
complete as of August 20 or August 27, 1997, as the case may be, in all
material respects. The Rent Rolls show all leases, license agreements and
other material occupancy agreements, written or oral, relating to the use or
occupancy of any part of a Buyer Property (the "Buyer Leases"), including the
name of each tenant, the date of each tenant's Buyer Lease and all material
amendments or modifications, if any, thereto.
(c) Condemnation Proceedings. Buyer has received no written
notice of any pending or contemplated condemnation or eminent domain
proceedings affecting all or any part of the Buyer Properties.
(d) Bankruptcy. There is no bankruptcy, insolvency, rearrangement
or similar action or proceeding, whether voluntary or involuntary, pending
or, to Buyer's knowledge, threatened against Buyer.
(e) Compliance with Buyer Permitted Exceptions. To the best of
Buyer's knowledge, Buyer is not in material default in complying with the
terms and provisions of any of the covenants, conditions, restrictions,
rights-of-way or easements constituting one or more of the Buyer Permitted
Exceptions which are to be performed or complied with by the owner of the
Buyer Properties.
(f) Ground Leases. Set forth on Section 8.14 of the Buyer
Disclosure Letter is a complete and accurate list of all ground leases
affecting the Buyer Properties. Except as set forth on such list, each such
ground lease is in full force and effect, Buyer is not in default in the
payment of ground rent or in the performance of any other material covenant
or obligation to be performed by Buyer, as ground lessee, under such ground
lease and, to the knowledge of Buyer, the ground lessor is not in default
under such ground lease.
(g) Mechanics' Liens. Except as set forth in the Buyer Title
Reports, Buyer has no knowledge of any material mechanics' liens or
suppliers' liens affecting any of the Buyer Properties.
8.15 Environmental Matters. Except as set forth in Section 8.15 of
the Buyer Disclosure Letter or in any environmental assessment or report
listed therein or provided by Buyer to VPT or its advisors on or prior to the
date of this Agreement (collectively, the "Buyer Environmental Reports"), to
the best of Buyer's actual knowledge, (i) no hazardous substances or
hazardous wastes have been generated, stored, released, discharged or
disposed of from or on the Buyer Properties during the period of Buyer's
ownership of such properties except for hazardous materials or hazardous
wastes commonly used by landlords and tenants for similar properties which
were used in the ordinary course of business and in compliance with all
Environmental Laws, (ii) Buyer has not received written notice from any
governmental authority that any of the Buyer Properties is in violation of
any Environmental Laws, and (iii) there is no pending civil, criminal or
administrative suit or other legal proceeding against Buyer (and no such suit
or proceeding has been threatened in writing to Buyer) or any unsatisfied
judgment against Buyer with respect to any Environmental Laws or principals
of common law relating to hazardous substances or hazardous waste. Buyer has
provided to VPT complete copies of all environmental reports, assessments,
studies and similar items with respect to the Buyer Properties within its
possession or control.
8.16 No Brokers. Neither Buyer nor any of the Buyer Subsidiaries
has entered into any contract, arrangement or understanding with any person
or firm which may result in the obligation of such entity or VPT 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. Buyer 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.
8.17 Related Party Transactions. Section 8.17 of the Buyer
Disclosure Letter or the Buyer SEC Reports set forth all arrangements,
agreements and contracts or understandings entered into by Buyer or any of
the Buyer Subsidiaries (which are or will be in effect as of or after the
date of this Agreement) with (i) any consultant (X) involving payments in
excess of $60,000 or (Y) which may not be terminated at will by Buyer or the
Buyer Subsidiary which is a party thereto, or (ii) any person who is an
officer, trustee, director or affiliate of Buyer or any of the Buyer
Subsidiaries. All such documents are listed in Section 8.17 of the Buyer
Disclosure Letter and the copies of such documents, which have previously
been provided or made available to VPT and its counsel, are true and correct
copies. Except as disclosed in Section 8.17 of the Buyer Disclosure Letter or
the Buyer SEC Reports, Buyer (including all Buyer Subsidiaries) has not made
any payments to, received any services from, or is dependent on any services
of, any affiliate of Buyer other than services provided by officers and
directors in such capacities and payments to such officers and directors of
Buyer.
8.18 Definition of Buyer's Knowledge. As used in this Agreement,
the phrase "to the knowledge of Buyer" or "to the best knowledge of Buyer" or
any similar phrase means the actual knowledge after due inquiry of Buyer's
current Chairman, President and Chief Financial Officer and shall include
information disclosed to Buyer by written notice from VPT whether pursuant to
the terms hereof or otherwise.
8.19 Anti-takeover Plan. Neither Buyer nor any Buyer Subsidiary
has in effect any plan, scheme, device or arrangement, commonly or
colloquially known as a "poison pill" or, except as set forth in Buyer's
charter or By-laws, an "Anti-takeover" plan or any similar plan, scheme,
device or arrangement. The Directors have approved the Merger and this
Agreement and have agreed to recommend that the holders of the Buyer Common
Stock vote their shares in favor of the issuance of the Buyer Common Stock
pursuant to this Agreement.
8.20 Undisclosed Liabilities. Except as and to the extent
reflected, reserved against or otherwise disclosed in Buyer's consolidated
balance sheet dated June 30, 1997 (including the notes thereto) or as set
forth on Section 8.21 of the Buyer Disclosure Letter, neither Buyer nor any
Buyer subsidiary had, at June 30, 1997, any liabilities or obligations of any
kind, whether accrued, absolute, asserted or unasserted, contingent or
otherwise, whether or not required to be reflected in a balance sheet
prepared in accordance with generally accepted accounting principles
consistently applied, which would have, individually or in the aggregate, a
Buyer Material Adverse Effect.
9. COVENANTS
9.1 Conduct of Businesses.
(a) General. During the period from the date of this Agreement
until the Effective Time, except as specifically permitted by this Agreement,
unless the other party has consented in writing thereto:
(i) VPT and Buyer shall use their reasonable best efforts, and
shall cause their respective Subsidiaries to use their reasonable best
efforts, to preserve intact their business organizations and goodwill and
keep available the services of their respective officers and employees;
(ii) VPT and Buyer shall confer on a regular basis with one or
more representatives of one or more representatives of the other to report on
material operational matters;
(iii) VPT and Buyer shall promptly notify the other of any
material emergency or other material change in the condition (financial or
otherwise), business, properties, assets, liabilities or the normal course of
its businesses or in the operation of their properties, any material
governmental complaints, investigations or hearings (or communications
indicating that the same may be contemplated);
(iv) VPT and Buyer shall promptly deliver to the other true
and correct copies of any report, statement or schedule filed with the SEC
subsequent to the date of this Agreement;
(v) VPT shall give to Buyer and its agents, representatives,
employees and designees, full access to the books, records, files, financial
reports, plans and specifications that are in VPT's possession or control
that relate to any of the VPT Properties during normal business hours and
after reasonable prior notice for the purpose of reviewing the same in
preparation for the Closing, and VPT shall furnish to Buyer during such
period all information concerning the Properties that is in VPT's possession
or control which Buyer may reasonably request. Buyer shall have no right to
conduct any tests or otherwise conduct physical diligence or investigations
at any of the VPT Properties after the date of this Agreement and shall
indemnify and hold harmless VPT from any costs or expenses incurred by VPT in
connection with any such diligence or investigation conducted prior to the
date hereof; provided that notwithstanding the foregoing, Buyer and its
designees shall have the right to inspect the VPT Properties prior to the
Closing (but not perform testing of any kind) during regular business hours
and after obtaining the prior consent of VPT, which consent will not be
unreasonably withheld;
(vi) VPT shall give prompt written notice to Buyer of any fire
or other casualty affecting any portion of the VPT Properties after the date
of this Agreement;
(vii) VPT shall deliver to Buyer, promptly after receipt by
VPT, copies of all notices of violation issued by any board, bureau,
commission, department or body of any municipal, county, state or federal
government unit, or any subdivision thereof, with respect to any of the VPT
Properties received by VPT after the date of this Agreement; and
(viii) In the event either party becomes aware that any of its
respective representations or warranties set forth in Sections 7 and 8 hereof
will not be true and correct in all material respects on the Closing Date as
if made at and as of the Closing Date, such party shall give prompt written
notice thereof to the other party, and shall give access to all appropriate
information related thereto that is in its possession or control;
(ix) VPT shall not, and shall cause each VPT Subsidiary not
to, acquire, enter into an option to acquire or exercise an option or
contract to acquire additional real property, incur additional indebtedness
(except for indebtedness incurred under commercial contracts entered into in
the normal course of its business), encumber assets or commence construction
of, or enter into any agreement or commitment to develop or construct, any
other type of real estate projects or otherwise enter into or modify any
easement, covenant, condition, right of way or restriction with respect to
any VPT Property;
(x) Subject to the provisions of Section 9.2, VPT shall not,
and shall not permit any of the VPT Subsidiaries, to sell, lease, license,
mortgage or otherwise encumber or subject to a Lien or otherwise dispose of
any VPT Properties or any portion thereof or any of the capital stock of or
partnership or other interests in any of the VPT Subsidiaries, provided,
however, VPT and the VPT Subsidiaries may sell, lease, license, mortgage or
otherwise encumber or subject to a Lien or otherwise dispose of any
immaterial asset in the ordinary course of business and consistent with past
practice or any material asset in the ordinary course of business and
consistent with past practice after providing prior written notice to Buyer
and with its consent, which consent shall not be unreasonably withheld; and
provided, further, that the foregoing restriction shall not apply to the sale
of the assets set forth in Section 9.1 of the VPT Disclosure Letter;
(xi) VPT shall not acquire or agree to acquire, lease or
manage, (A) by merging or consolidating with, or by purchasing a substantial
portion of the assets of, or by any other manner, any business or any
corporation, partnership, joint venture, association or other business
organization or division thereof or (B) any assets, other than assets that
are immaterial to VPT and the VPT Subsidiaries taken as a whole and except
for the purchases of non-material assets in the ordinary course of business
consistent with past practice and shall not make any loans, advances or
capital contributions to, or investments in, any other person;
(b) Conduct by VPT. Prior to the Closing Date, unless Buyer
or Merger Subsidiary has consented thereto (and Buyer and Merger Subsidiary
hereby agree to give good faith consideration to any such request for consent
by VPT and to respond to any such request within three (3) business days),
VPT:
(i) Shall, and shall cause each VPT Subsidiary to, conduct
its operations according to their usual, regular and ordinary course in
substantially the same manner as heretofore conducted;
(ii) Shall not amend VPT's Declaration of Trust or Bylaws, and
shall cause each VPT Subsidiary not to amend its charter, bylaws or
equivalent documents except as contemplated by this Agreement (except in
order to render the provisions of Section 3-701 of the MGCL inapplicable to
the Buyer);
(iii) Except as contemplated pursuant to Section 9.7(a) in
connection with the Performance Incentive Bonus Plan and an existing
employment agreement, VPT shall not, and shall cause each VPT Subsidiary not
to, (A) issue or authorize for issue any shares of beneficial interest or
stock (except for shares issued upon the exercise of currently outstanding
share options therefor) or any Security convertible into or exercisable for
the foregoing, effect any share split, reverse share split, share dividend,
recapitalization or other similar transaction or issue or authorize the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of beneficial interest or stock of VPT or any VPT Subsidiary, (B)
grant, confer or award any option, warrant, conversion right or other right
not existing on the date hereof to acquire, redeem, repurchase any shares of
beneficial interest of VPT, (C) increase any compensation or enter into or
amend any employment agreement with any of its present or future officers or
trustees, (D) adopt any new employee benefit plan or (except as contemplated
in this Agreement) amend any existing employee benefit plan or severance or
termination pay policies in any material respect, except for changes which
are less favorable to participants in such plans; or (E) authorize, declare,
set aside or pay any dividends or make any other distribution or payments
with respect to any shares of beneficial interest of VPT, directly or
indirectly redeem, purchase or otherwise acquire any shares of beneficial
interest of VPT or stock or equity interests of any of the VPT Subsidiaries,
or make any commitment for any such action.
(iv) Shall not, and shall not permit any of the VPT
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 VPT included in the VPT SEC Reports or incurred in the
ordinary course of business consistent with past practice;
(v) Shall not, and shall not permit any of the VPT
Subsidiaries to, enter into or amend, modify or terminate any Contract which
may result in total payments or liability by or to it in excess of $50,000
other than Contracts for expenses of attorneys and accountants incurred in
connection with the Merger;
(vi) Subject to the provisions of Section 9.7, shall not, and
shall not permit any of the VPT Subsidiaries to, enter into any Contract with
any officer, trustee, director, consultant or affiliate of VPT or any of the
VPT Subsidiaries;
(vii) Shall, and shall cause each VPT Subsidiary to, timely
prepare, in a manner consistent with past practice, and file all Tax Returns
required to be filed the due date of which (including reasonable extensions)
occurs on or before the Effective Time and pay all Taxes due with respect to
any such Tax Returns;
(viii) Shall not make any tax election (unless required by law
or necessary to preserve VPT's status as a REIT or the status of each VPT
Subsidiary that is a joint venture, partnership or limited liability company
as a partnership for federal income tax purposes);
(ix) Shall not make or rescind any express or deemed election
relating to Taxes, settle or compromise any claim, suit, litigation,
proceeding, investigation, audit or controversy relating to Taxes (unless
required by law or necessary to preserve VPT's status as a REIT or status of
each VPT Subsidiary that is a joint venture, partnership or limited liability
company as a partnership for federal income tax purposes);
(x) Shall not terminate or materially amend or renew any
Contract for the management or leasing of a Property or renew or enter into
any new property management or leasing Contract unless (i) such Contract will
not be binding on Buyer following the Closing or (ii) such Contract is
terminable upon not more than forty-five (45) days' notice without penalty by
Buyer. Neither VPT nor any VPT Subsidiary shall otherwise enter into or
materially amend any new Contracts other than with third parties in the
ordinary course of operating its business;
(xi) Shall not amend in any material respect the partnership
agreement of Bay City Holdings, L.P. or grant a lien or security interest in,
or assign, pledge, or otherwise hypothecate the partnership interest or the
right to reserve distributions of VPT in Bay City Holdings, L.P.; and
(xii) Shall use commercially reasonable efforts to obtain from
each Major Tenant and Ground Lessor a written estoppel certificate
substantially in the form previously agreed to by VPT dated no earlier than
forty-five (45) days prior to the Closing Date.
Notwithstanding anything to the contrary in this Section 9.1(b), it is
specifically contemplated and agreed to that VPT shall be permitted to make
payments, subject to the limitations contained in the last sentence of
Section 9.7(a), to participants in the Performance Incentive Bonus Plan and
to an employee under an existing employment agreement at any time prior to or
at the Closing in accordance therewith.
(c) Conduct by Buyer. Prior to the Effective Time, unless VPT has
consented in writing thereto (and VPT hereby agrees to give good faith
consideration to any such request for consent by Buyer and to respond to any
such request within three (3) business days) or unless otherwise specifically
permitted by this Agreement, Buyer shall not (A) authorize, declare, set
aside or pay any dividend or make any other distribution or payment with
respect to any shares of capital stock of Buyer, directly or indirectly
redeem, purchase or otherwise acquire any shares of capital stock of Buyer or
stock or equity interests of any of the Buyer Subsidiaries, or make any
commitment for any such action, or (B) amend its charter or By-laws.
9.2 New Leases and Lease Modifications.
(a) Prior to the Closing Date, if this Agreement shall not
have been terminated by Buyer or Merger Subsidiary, VPT shall not, without
the written consent of Buyer or Merger Subsidiary, which consent may not be
unreasonably withheld, (i) effect any material change in any Lease
(including, without limitation, consenting to any assignment or material
sublet request) currently in effect which affects VPT Properties other than
those listed in Section 9.2 of the VPT Disclosure Letter, (ii) renew or
extend the term of any Lease, unless the same is renewed or extended by the
exercise by the applicable tenant of an extension or expansion right pursuant
to the terms of a Lease, (iii) enter into any new Lease or cancel or
terminate any Lease or (iv) enter into any lease, license agreement or other
agreement relating to the use or occupancy of a multi-family Property unless
such lease arrangement is on VPT's standard form, is at market rates and on
market terms and is in the ordinary course of business. When seeking consent
to a new or modified Lease, VPT shall provide notice of the identity of the
tenant, a term sheet or letter of intent containing material business terms
(including, without limitation, rent, expense base, concessions, tenant
improvement allowances, brokerage commissions, and expansion and extension
options) and whatever credit and background information, if any, VPT then
possesses with respect to such tenant. Buyer and Merger Subsidiary shall be
deemed to have consented to any proposed Lease or Lease modification if
neither has responded to VPT within five (5) business days after receipt of
such information. Upon Buyer or Merger Subsidiary's approval or deemed
approval, VPT or a VPT Subsidiary shall be entitled to enter into a Lease on
the standard lease form for such Property, without material change other than
changes customarily made to leases to other comparable tenants of the
Property.
(b) Buyer and Merger Subsidiary hereby designate Jeffrey H.
Lynford, Edward Lowenthal and Gregory F. Hughes, and each one acting
individually, as individuals who will be available and authorized to grant
Lease approvals.
(c) Notwithstanding anything in this Agreement to the contrary,
VPT may apply security deposits or, other than with respect to any Major
Tenant, cancel or terminate any Lease in accordance with the provisions of
such Lease or commence collection, unlawful detainer or other remedial action
against any tenant without Buyer or Merger Subsidiary's consent upon the
occurrence of a default by the tenant under said Lease and VPT shall promptly
advise Buyer of any such action.
9.3 Meeting of Shareholders. VPT will take all action necessary
in accordance with applicable law and its Declaration of Trust, to convene a
meeting of its shareholders as promptly as practicable to consider and vote
upon the approval of this Agreement and the transactions contemplated hereby,
and the amendment of VPT's Declaration of Trust to eliminate the ownership
restrictions contained in Section 6.14 of such Declaration of Trust. The
Trustees of VPT shall recommend that its shareholders approve this Agreement
and the transactions contemplated hereby and the amendment to VPT's
Declaration of Trust and VPT shall use its reasonable best efforts to obtain
such approval; provided, however, that nothing contained in this Section 9.3
shall prohibit the Trustees of VPT from failing to make such recommendation
or using their reasonable best efforts to obtain such approval if the
Trustees of VPT, as the case may be, have determined in good faith, after
consultation with and based upon the advice of counsel, that such action is
necessary for such Trustees to comply with their fiduciary duties to VPT's
shareholders under applicable law.
9.4 Filings; Other Action.
(a) Subject to the terms and conditions herein provided, VPT and
Buyer shall: (i) to the extent required, promptly make their respective
filings and thereafter make any other required submissions under the HSR Act
with respect to the Merger; (ii) use all reasonable best efforts to cooperate
with one another in (x) 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 any third parties in connection with the execution and delivery of
this Agreement, the consummation of the transactions contemplated by this
Agreement and (y) timely making all such filings and timely seeking all such
consents, approvals, permits or authorizations; (iii) use all reasonable best
efforts to obtain in writing any consents required from third parties to
effectuate the Merger, such consents to be in reasonably satisfactory form to
VPT and Buyer; and (iv) use all reasonable best efforts to take, or cause to
be taken, all other actions and do, or cause to be done, all other things
necessary, proper or appropriate to consummate and make effective the
transactions contemplated by this Agreement. If, at any time after the
Effective Time, any further action is necessary or desirable to carry out the
purpose of this Agreement, the proper officers, directors and trustees of
Buyer and VPT shall take all such necessary action.
(b) As promptly as practicable following the date hereof (i) VPT
(and, if required by applicable SEC regulations, the Buyer) shall prepare and
file with the SEC under the Exchange Act, all filings required to be made
thereunder including a proxy statement and form of proxy (such proxy
statement, together with any amendments or supplements thereto, the "Proxy
Statement") relating to the shareholder meeting of VPT and the vote of the
shareholders of VPT with respect to this Agreement, and (ii) following
clearance by the SEC of the Proxy Statement, VPT and Buyer shall prepare and
file with the SEC under the Securities Act a registration statement on Form
S-4 (such registration statement, together with any amendments or supplements
thereto, the "Form S-4"), in which the Proxy Statement will be included as a
prospectus, in connection with the registration under the Securities Act of
the Buyer Common Stock to be distributed to the stockholders of VPT in the
Merger (the securities referred to in the foregoing clause being referred to
herein collectively as the "Registered Securities"). Buyer will cause the
Form S-4 (and, if it is required by applicable SEC regulations to include
information therein, the Proxy Statement) to comply as to form in all
material respects with the applicable provisions of the Securities Act, the
Exchange Act and the rules and regulations thereunder, and VPT will cause the
Proxy Statement to comply as to form in all material respects with the
applicable provisions of the Exchange Act and the rules and regulations
thereunder. Each of Buyer, on the one hand, and VPT, on the other hand,
shall furnish all information about itself and its business and operations
and all necessary financial information to the other as the other may
reasonably request in connection with the preparation of the Proxy Statement
and the Form S-4. Buyer shall use its reasonable best efforts, and VPT will
cooperate with Buyer, to have the Form S-4 declared effective by the SEC as
promptly as practicable (including clearing the Proxy Statement with the
SEC). Each of VPT and Buyer agrees promptly to correct any information
provided by it for use in the Proxy Statement and the Form S-4 if and to the
extent that such information shall have become false or misleading in any
material respect, and each of the parties hereto further agrees to take all
steps necessary to amend or supplement the Proxy Statement and the Form S-4,
and to cause the Proxy Statement and the Form S-4, as so amended or
supplemented to be filed with the SEC and to be disseminated to their
respective stockholders, in each case as and to the extent required by
applicable federal and state securities laws. Each of VPT and Buyer agrees
that the information provided by it for inclusion in the Proxy Statement or
the Form S-4 and each amendment or supplement thereto, at the time of mailing
thereof and at the time of the respective meetings of stockholders of VPT and
Buyer 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. Buyer will advise VPT, and deliver copies (if any) to VPT,
promptly after either receives notice thereof, of any request by the SEC for
amendment of the Proxy Statement or the Form S-4 or comments thereon and
responses thereto or requests by the SEC for additional information, or
notice of the time when the Form S-4 has become effective or any supplement
or amendment has been filed, the issuance of any stop order, the suspension
of the qualification of the Registered Securities issuable in connection with
the Merger or for offering or sale in any jurisdiction.
VPT shall use its best efforts to timely mail the Proxy Statement to
its stockholders. It shall be a condition to the mailing of the Proxy
Statement that (i) Buyer shall have received "comfort" letters from Coopers &
Lybrand LLP, independent public accountants for VPT, of the kind contemplated
by the Statement of Auditing Standards with respect to Letters to
Underwriters promulgated by the American Institute of Certified Public
Accountants (the "AICPA Statement"), dated as of the date on which the Form
S-4 shall become effective (and Buyer shall also receive such a letter as of
the Effective Time), each addressed to Buyer, in form reasonably satisfactory
to Buyer, concerning the procedures undertaken by Coopers & Lybrand LLP with
respect to the financial statements and information of VPT and the VPT
Subsidiaries contained in the Form S-4 and the other matters contemplated by
the AICPA Statement and otherwise customary in scope and substance for
letters delivered by independent public accountants in connection with
transactions such as those contemplated by this Agreement and (ii) VPT shall
have received a "comfort" letter from Ernst & Young LLP, independent public
accountants for Buyer, of the kind contemplated by the AICPA Statement, dated
as of the date on which the Form S-4 shall become effective (and VPT shall
also receive such a letter as of the Effective Time), each addressed to VPT,
in form reasonably satisfactory to VPT, concerning the procedures undertaken
by Ernst & Young LLP with respect to the financial statements and information
of Buyer and its Subsidiaries contained in the Form S-4 and the other matters
contemplated by the AICPA Statement and otherwise customary in scope and
substance for letters delivered by independent public accountants in
connection with transactions such as those contemplated by this Agreement.
9.5 Access to Information.
(a) Upon reasonable notice and subject to restrictions contained
in confidentiality agreements by which VPT and Buyer are bound, VPT and Buyer
shall (and shall cause their respective subsidiaries to) afford to the
officers, employees, accountants, counsel and other representatives of the
other reasonable access, during normal business hours during the period prior
to the Effective Time, to all their properties, books, contracts, commitments
and records and permit such persons to make such inspections as they may
reasonably require and, during such period, each of VPT and Buyer shall (and
shall cause their subsidiaries to) furnish promptly to the other all
information concerning its business, properties and personnel as the other
may reasonably request; provided that if a party is withholding information
because it is obligated to do so pursuant to a confidentiality agreement by
which it is bound, the party shall give the other notice of such withholding.
(b) All such information shall be Confidential Information, as
defined in the Confidentiality Agreements (as defined in Section 12.5),
except as otherwise provided in such Confidentiality Agreement. In the event
of termination of this Agreement for any reason each party shall promptly
return all Confidential Information obtained from the other, and any copies
made of, or reports or analyses based on, such Confidential Information, to
the other and not use any such Confidential Information for any purpose that
would be competitive with or cause material harm to the other.
9.6 Publicity. Buyer and VPT 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; 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 applicable stock exchange if it
has used its reasonable best 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.
9.7 Certain Benefits.
(a) Buyer acknowledges that consummation of the transactions
contemplated by this Agreement will constitute a change in control of VPT (to
the extent such concept is applicable) for the purposes of all employee or
employee benefit agreements, contracts, plans, programs, policies or
arrangements of VPT. From and after the Effective Time, VPT, Buyer, Merger
Subsidiary and their respective subsidiaries (including the Successor) shall
not be subject to the terms of any cash bonus plans, share option and share
incentive plans, employment agreements, consulting agreements,
change-of-control agreements, and severance agreements or plans between VPT
or any VPT Subsidiary and any officer, trustee, director, or employee of VPT
or any VPT Subsidiary in effect prior to the Effective Time whether described
in the VPT SEC reports, disclosed by VPT to Buyer or otherwise.
Notwithstanding anything to the contrary in this Agreement, it is
specifically contemplated and agreed to that VPT shall be permitted to make
aggregate payments of up to $3.4 million to participants in the Performance
Incentive Bonus Plan and for severance under an existing employment agreement
at any time prior to or at the Closing.
(b) This Section 9.7 is intended for the irrevocable benefit of,
and to grant third party rights to, the employees of VPT employed as of the
Closing Date, and shall be binding on all successors and assigns of Buyer,
VPT and the Successor. Each of the employees of VPT employed as of the
Closing Date shall be entitled to enforce the covenants contained in this
Section 9.7.
(c) In the event the Successor or any of its successors or assigns
(i) consolidates with or merges into any other person or entity and shall not
be the continuing or successor corporation or entity of such consolidation or
merger or (ii) transfers or conveys all or substantially all of its
properties, proper provision shall be made so that the successors and assigns
of the Successor assume the obligations set forth in this Section 9.7.
9.8 Listing Application. Each of Buyer and VPT shall cooperate
and promptly prepare and submit to the AMEX all reports, applications and
other documents that may be necessary or desirable to enable all of the Buyer
Common Stock that will be outstanding or will be reserved for issuance at the
Effective Time to be listed for trading on the AMEX. Each of Buyer and VPT
shall furnish all information about itself and its business and operation and
all necessary financial information to the other as the other may reasonably
request in connection with the such AMEX listing process. Each of Buyer and
VPT agrees promptly to correct any information provided by it for use in the
AMEX listing process if and to the extent that such information shall have
become false or misleading in any material respect. Each of Buyer and VPT
will advise and deliver copies (if any) to the other parties, promptly after
it receives notice thereof, of any request by the AMEX for amendment of any
submitted materials or comments thereon and responses thereto or requests by
the AMEX for additional information.
9.9 Further Action. Each party hereto shall, subject to the
fulfillment at or before the Effective Time of each of the conditions of
performance set forth herein or the waiver thereof, perform such further acts
and execute such documents as may reasonably be required to effect the
Merger. In connection with the Closing, VPT and each VPT Subsidiary shall
use its best efforts to deliver to Buyer such deeds, bills of sale,
assignments, certificates, affidavits and indemnities as are required to
effectuate the consummation of the transactions described herein, except to
the extent that the Trustees of VPT may determine in good faith, after
receiving advice from their counsel, that any such action would be expected
to be a breach of such trustees' fiduciary duties under applicable law.
9.10 Indemnification and Insurance.
(a) In the event of any threatened or actual claim, action, suit,
proceeding or investigation, whether civil, criminal or administrative,
including, without limitation, any such claim, action, suit, proceeding or
investigation in which any person who is now, or has been at any time prior
to the date hereof, or who becomes prior to the Effective Time, a trustee,
director, officer, employee, fiduciary or agent of VPT or any of its
subsidiaries (the "Indemnified Parties") is, or is threatened to be, made a
party based in whole or in part on, or arising in whole or in part out of, or
pertaining to (i) the fact that he or it is or was a trustee, director,
officer, employee or agent of VPT or any of its subsidiaries, or is or was
serving at the request of VPT or any of its subsidiaries as a trustee,
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, or (ii) this Agreement or any of
the transactions contemplated hereby, whether in any case asserted or arising
before or after the Effective Time, the parties hereto agree to cooperate and
use their reasonable best efforts to defend against and respond thereto. It
is understood and agreed that VPT shall indemnify and hold harmless, and
after the Effective Time the Successor and Buyer shall indemnify and hold
harmless, as and to the full extent VPT is permitted by applicable law and
its Declaration of Trust and Bylaws as in effect on the date hereof, each
Indemnified Party against any losses, claims, damages, liabilities, costs,
expenses (including attorneys' fees and expenses), judgments, fines and
amounts paid in settlement in connection with any such threatened or actual
claim, action, suit, proceeding or investigation, and in the event of any
such threatened or actual claim, action, suit, proceeding or investigation
(whether asserted or arising before or after the Effective Time), (i) VPT,
and the Successor and Buyer after the Effective Time, shall promptly pay
expenses in advance of the final disposition of any claim, suit, proceeding
or investigation to each Indemnified Party to the full extent permitted by
law, (ii) the Indemnified Parties may retain one counsel satisfactory to them
(or, if separate defenses are available to different Indemnified Parties, one
counsel for each Indemnified Party which has such a separate defense), and
VPT, and the Successor and Buyer after the Effective Time, shall pay all
reasonable fees and expenses of such counsel for the Indemnified Parties
within thirty days after statements therefor are received, and (iii) VPT, the
Successor and Buyer will use their respective reasonable best efforts to
assist in the vigorous defense of any such matter; provided, that neither VPT
nor the Successor nor Buyer shall be liable for any settlement effected
without its prior written consent (which consent shall not be unreasonably
withheld); and provided further that neither the Successor nor Buyer shall
have any obligation hereunder to any Indemnified Party when and if a court of
competent jurisdiction shall ultimately determine, and such determination
shall have become final and non-appealable, that indemnification of such
Indemnified Party in the manner contemplated hereby is prohibited by
applicable law. Any Indemnified Party wishing to claim indemnification under
this Section 9.10, upon learning of any such claim, action, suit, proceeding
or investigation, shall notify VPT and, after the Effective Time, the
Successor and Buyer, thereof, provided that the failure to so notify shall
not affect the obligations of VPT, the Successor or Buyer except to the
extent such failure to notify materially prejudices such party.
(b) Buyer shall cause the Successor (and its successors) to
establish on the Closing Date and maintain for a period of not less than six
(6) years from the Closing Date provisions in its Declaration of Trust or By-
laws or similar organizational documents concerning the indemnification and
limitation of liability of the Indemnified Parties that are no less favorable
to those persons than the provisions of VPT's Declaration of Trust or the
charter, By-laws or similar organizational documents of any of its
Subsidiaries in effect on the date hereof. At or prior to the Effective
Time, Buyer or VPT shall purchase directors' and officers' liability
insurance coverage for VPT's trustees and officers which shall provide them
with $10 million of aggregate coverage for six years following the Effective
Time on terms with respect to coverage and amount no less than those of such
policy in effect on the date hereof, provided that such insurance can be
obtained for no more than $240,000. Buyer shall cause the Successor to
reimburse all expenses, including reasonable attorneys' fees, incurred by any
person or entity to enforce the obligations of Buyer and Successor under this
Section 9.10(b).
(c) This Section 9.10 is intended for the irrevocable benefit of,
and to grant third party rights to, the Indemnified Parties and shall be
binding on all successors and assigns of Buyer, VPT and the Successor. Each
of the Indemnified Parties shall be entitled to enforce the covenants
contained in this Section 9.10.
(d) In the event the Successor or any of its successors or assigns
(i) consolidates with or merges into any other person or entity and shall not
be the continuing or successor corporation or entity of such consolidation or
merger or (ii) transfers or conveys all or substantially all of its
properties and assets to any person or entity, then, and in each such case,
proper provision shall be made so that the successors and assigns of Buyer
assume the obligations set forth in this Section 9.10.
9.11 REIT Status. Notwithstanding anything to the contrary set
forth in this Agreement, nothing in this Agreement shall prohibit VPT or any
VPT Subsidiary from taking any action at any time or from time to time that
in the reasonable judgment of VPT is necessary for VPT to maintain its
qualification as a REIT within the meaning of Sections 856-860 of the Code
for any period or portion thereof ending on or prior to the Merger; provided,
however, that to the extent VPT or any VPT Subsidiary deems it necessary to
take any such action which would otherwise result in the breach of a covenant
contained herein, VPT shall request Buyer's consent to such action, which
consent shall not be unreasonably withheld. In the event that such consent is
withheld, VPT or any VPT Subsidiary may take such action provided that it
does not have more than a de minimis effect on the value of VPT and the VPT
Subsidiaries, taken as a whole.
9.12 Other Offers. From the date hereof until the termination of
this Agreement, VPT and the VPT Subsidiaries will not, and will use their
reasonable best efforts to cause their officers, directors, employees or
other agents not to, directly or indirectly, (ii) take any action to solicit,
initiate or facilitate any VPT Acquisition Proposal (as defined below) or
(ii) unless otherwise required in accordance with the fiduciary or similar
duties of the Trustees under applicable law as advised by independent legal
counsel to VPT, engage in negotiations with, or disclose any non-public
information relating to VPT and any VPT Subsidiary or afford access to the
properties, books or records of VPT or any VPT Subsidiary to, any Person that
may be considering making, or has made, a VPT Acquisition Proposal or has
agreed to endorse any VPT Acquisition Proposal (other than the Merger).
(Nothing herein shall prohibit VPT from amending or waiving the provisions of
confidentiality agreements it has entered into with third persons with
respect to the ability of such persons to submit a VPT Acquisition Proposal
to VPT or its stockholders.) VPT will promptly as reasonably practicable
inform buyer of receipt after the date hereof of any VPT Acquisition Proposal
or any indication that any person is considering making a VPT Acquisition
Proposal or any request for non-public information relating to VPT or any VPT
Subsidiary or for access to the properties, books or records of VPT or any
VPT Subsidiary by any person that may be considering making, or has made, a
VPT Acquisition Proposal. VPT shall as promptly as reasonably practicable
provide a general summary of such VPT Acquisition Proposal and shall keep
Buyer informed of the status of any such Acquisition Proposal and any
response thereto. For purposes of this Agreement, "VPT Acquisition Proposal"
means any offer or proposal for, or any indication of interest in, (i) any
merger, share exchange or business combination or similar transaction, (ii)
any sale, lease, exchange, mortgage, pledge, transfer or other disposition of
25% or more of the assets of VPT and the VPT Subsidiaries, taken as a whole,
in a single transaction or series of transactions (whether or not related) or
(iii) any tender offer or exchange offer for 25% or more of the outstanding
shares of beneficial interest of VPT involving VPT or any VPT Subsidiary or
the acquisition of any equity interest in, or a substantial portion of the
assets of, VPT or any VPT Subsidiary, other than the transactions
contemplated by this Agreement. VPT shall immediately cease and cause to be
terminated, its existing solicitation, activity, discussions or negotiations
with any parties conducted heretofore by VPT or any of its representatives
with respect to a VPT Acquisition Proposal.
9.13 Notice of Certain Events.
(a) VPT shall promptly as reasonably practicable notify Buyer of:
(i) any notice or other communication from any person alleging that the
consent of such person (or another person) is or may be required in
connection with the transactions contemplated by this Agreement; (ii) any
notice or other communication from any governmental or regulatory agency or
authority in connection with the transactions contemplated by this Agreement;
(iii) any actions, suits, claims, investigations or proceedings commenced or,
to the best of its knowledge, threatened against, relating to or involving or
otherwise affecting VPT or any VPT Subsidiary that, if pending on the date of
this Agreement, would have been required to have been disclosed pursuant to
Section 7.8 or which relate to the consummation of the transaction
contemplated by this Agreement; and (iv) of any fact or occurrence between
the date of this Agreement and the Effective Time of which it becomes aware
which makes any of its representations contained in this Agreement untrue or
causes any breach of its obligations under this Agreement.
(b) Each of Buyer and Merger Subsidiary shall promptly as
reasonably practicable notify VPT of: (i) any notice or other communication
from any person alleging that the consent of such person (or other person) is
or may be required in connection with the transactions contemplated by this
Agreement, (ii) any notice or other communication from any governmental or
regulatory agency or authority in connection with the transactions
contemplated by this Agreement; (iii) any actions, suits, claims,
investigations or proceedings commenced or, to the best of its knowledge,
threatened against, relating to or involving or otherwise affecting Buyer or
Merger Subsidiary that, if pending on the date of this Agreement, would have
been required to have been disclosed pursuant to Section 8.10 or which relate
to the consummation of the transaction contemplated by this Agreement; and
(iv) of any fact or occurrence between the date of this Agreement and the
Effective Time of which it becomes aware which makes any of its
representations contained in this Agreement untrue or causes any breach of
its obligations under this Agreement.
9.14 Affiliate Letters.
At least 30 days prior to the Closing Date, VPT shall deliver to the
Buyer a list of names and addresses of the executive officers, directors and
those persons who were, in VPT's reasonable judgment, at the record date for
its stockholders meeting to approve the Merger, "Affiliates" (each such
person, an "Affiliate") of VPT within the meaning of Rule 145 of the rules
and regulations promulgated under the Securities Act. VPT shall use all
reasonable efforts to deliver or cause to be delivered to the Buyer prior to
the Closing Date, from each of the Affiliates of VPT identified in the
foregoing list, an Affiliate Letter in the form attached hereto as Exhibit A.
The Buyer shall be entitled to place legends as specified in such Affiliate
Letters on the certificates evidencing any Buyer Common Stock to be received
by such Affiliates pursuant to the terms of this Agreement and to issue
appropriate stock transfer instructions to the transfer agent for the Buyer
Common Stock consistent with the terms of such Affiliate Letter.
9.15 Amendment to Registration Rights Agreement.
VPT shall use reasonable best efforts to obtain on or before the
Closing Date the approval of the shareholders of VPT parties to that certain
Registration Rights Agreement dated September 29, 1995, as amended (the
"Registration Rights Agreement"), holding a majority of the Registrable
Securities (as defined in the Registration Rights Agreement) outstanding to
amend the Registration Rights Agreement to provide that it shall terminate
upon the consummation of the transactions contemplated by this Agreement.
10. CONDITIONS
10.1 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 Closing Date 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, and
the amendment of VPT's Declaration of Trust as referenced in Section 9.3
hereto, shall have been approved by the requisite vote of shareholders of
VPT, if required by applicable law.
(b) The waiting period applicable to the consummation of the
Merger under the HSR Act, if applicable, shall have expired or been
terminated.
(c) Neither of the parties hereto shall be subject to any order,
ruling or injunction of a court of competent jurisdiction which restrains or
prohibits the consummation of the transactions contemplated by this Agreement
(an "Injunction"). In the event any such Injunction shall have been issued,
each party agrees to use its best efforts to have any such Injunction lifted,
stayed or reversed.
(d) The Proxy Statement shall have been filed with and approved by
the SEC.
(e) The Form S-4 shall have been declared effective by the SEC
under the Securities Act and no stop order suspending the effectiveness of
the Form S-4 shall have been issued by the SEC, and no proceeding for that
purpose shall have been initiated or, to the knowledge of Buyer or VPT,
threatened by the SEC.
10.2 Conditions to Obligations of VPT to Effect the Merger. The
obligation of VPT to effect the Merger shall be subject to the fulfillment at
or prior to the Closing Date of the following conditions, unless waived by
VPT:
(a) Each of the representations and warranties of Buyer contained
in this Agreement shall be true and correct as of the date of this Agreement
and as of the Closing Date as though made on and as of the Closing Date,
except to the extent that any changes, circumstances or events making such
representations and warranties not true or correct would not, individually or
in the aggregate, constitute a Buyer Material Adverse Effect, and VPT shall
have received a certificate, dated the Closing Date, signed on behalf of
Buyer by the President of Buyer to the foregoing effect.
(b) Buyer 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 Effective Time, and VPT
shall have received a certificate, dated the Closing Date, signed on behalf
of Buyer by the President of Buyer to the foregoing effect.
(c) From the date of this Agreement through the Effective Time
and, except as disclosed in the Buyer Disclosure Letter or in the Buyer SEC
Reports filed prior to the date of this Agreement, since June 30, 1997 there
shall not have occurred any change, circumstance or event concerning Buyer or
any of the Buyer Subsidiaries, that has had or could be reasonably likely to
have a Buyer Material Adverse Effect and VPT shall have received a
certificate, dated the Closing Date, signed on behalf of Buyer by the
President of Buyer to the foregoing effect; provided, however, that for
purposes of this Section 10.2(c), a change in the trading price of the Buyer
Common Stock, or the consummation by Buyer or its affiliates of an
acquisition, disposition, financing or similar transaction approved by
Buyer's Board of Directors, in each case in and of itself, shall not be
deemed a Buyer Material Adverse Effect.
(d) Buyer shall have obtained the approval for the listing of the
Buyer Common Stock issuable in the Merger on the AMEX, subject to official
notice of issuance.
(e) Buyer shall have entered into registration rights agreements
with each of the three largest stockholders, as of the date hereof, of VPT,
which registration rights agreements shall provide such stockholders with
registration rights, including shelf registration rights, for the shares of
Buyer Common Stock acquired in the Merger on substantially the terms
contained in the existing registration rights agreement dated June 2, 1997
between Buyer and, among other persons, Mutual Qualified Fund.
(f) Buyer or VPT shall have obtained the insurance referenced in
Section 9.10(b).
10.3 Conditions to Obligation of Buyer and Merger Subsidiary to
Effect the Merger. The obligations of Buyer and Merger Subsidiary to effect
the Merger shall be subject to the fulfillment at or prior to the Closing
Date of the following conditions, unless waived by Buyer:
(a) Each of the representations and warranties of VPT contained in
this Agreement shall be true and correct as of the date of this Agreement and
as of the Closing Date as though made on and as of the Closing Date, except
to the extent that any changes, circumstances or events making such
representations and warranties not true or correct would not, individually or
in the aggregate, constitute a VPT Material Adverse Effect, and Buyer shall
have received a certificate, dated the Closing Date, signed on behalf of VPT
by the President of VPT to the foregoing effect.
(b) VPT 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 Effective Time, and Buyer shall
have received a certificate, dated the Closing Date, signed on behalf of VPT
by the President of VPT to the foregoing effect.
(c) From the date of this Agreement through the Effective Time
and, except as disclosed in the VPT Disclosure Letter or in the VPT SEC
Reports filed prior to the date of this Agreement, since June 30, 1997 there
shall not have occurred any change, circumstance or event, concerning VPT,
any of the VPT Subsidiaries or any VPT Property, that has had or could be
reasonably likely to have a VPT Material Adverse Effect and Buyer shall have
received a certificate, dated the Closing Date, signed on behalf of VPT by
the President or Vice President of VPT to the foregoing effect.
(d) VPT shall have entered into a closing agreement with or
otherwise received a determination pursuant to Section 856(g)(4) from the
Internal Revenue Service substantially to the effect that (i) if VPT failed
to satisfy the REIT asset tests in its 1994 and 1995 fiscal years as a result
of its ownership of certain commercial paper, such failure was not willful
and was due to reasonable cause under Code Section 856(g)(4), and VPT is
entitled to elect REIT status for no later than the commencement of its 1996
fiscal year, and (ii) in such case, all corporations that were subsidiaries
of VPT immediately prior to its 1996 fiscal year will be treated as qualified
REIT subsidiaries, within the meaning of Section 856(i)(2), for such fiscal
year. In connection with obtaining such determination, VPT (x) shall advise
the IRS of the potential for VPT to have tax liability for its 1994 and 1995
fiscal years in the event REIT status were revoked for such years and VPT and
its subsidiaries were not permitted to file a consolidated federal income tax
return for such periods and (y) shall not agree to any material condition,
obligation or other undertaking, other than the payment of a reasonable
amount with respect to its potential tax liability and related costs for such
periods.
(e) The holders of VPT Options to purchase not more than an
aggregate of 50,000 VPT Shares shall have failed to execute and deliver to
Buyer consents agreeing to exchange their VPT Options for cash payments
pursuant to Section 5.3 hereof.
(f) Buyer shall have received from each of the persons named in
the list provided pursuant to Section 9.14 hereof an executed copy of an
Affiliate Letter substantially in the form of Exhibit A attached hereto.
(g) The litigation entitled Value Property Trust v. Zim Company
shall have been dismissed with prejudice substantially in accordance with the
related settlement agreement previously provided to Buyer.
(h) On the Closing Date, First American Title Insurance Company or
any other nationally recognized title insurance company (the "Title Company")
shall be unconditionally obligated and prepared, subject to the payment of
applicable title insurance premiums and other related charges, to issue an
ALTA owner's title insurance policy covering each VPT Property for which
there exists a Policy, subject to no exceptions other than (i) exceptions set
forth in the Policies attached as Section 8.5 to the Buyer Disclosure Letter
(but not including any standard or preprinted exceptions other than
exceptions for the rights of tenants in possession, as tenants only, and
matters which would be shown by a current survey), and (ii) exceptions for
matters arising after the date of each Policy (other than liens, encumbrances
or other restrictions voluntarily entered into or assented to by VPT or any
VPT Subsidiary) which, when taken together with other circumstances, changes
and effects set forth in Section 7.13(j), would not have a VPT Material
Adverse Effect (as defined in Section 7.13(j), insuring VPT's or the VPT
Subsidiary's, or their designee's, title to the VPT Properties. Such
policies of title insurance shall provide coverage in the amounts set forth
on the Policies and shall also include such endorsements as may be reasonably
or customarily requested by buyers of similar properties (specifically
excluding zoning endorsements), to the extent such endorsements are available
and customarily obtained in the state and jurisdiction in which each VPT
Property is located. VPT and the VPT Subsidiaries shall have delivered all
customary affidavits and other documentation required by the Title Company
for the issuance of the Policies.
(i) The Registration Rights Agreement shall have been amended as
set forth in Section 9.15 hereof.
11. TERMINATION
11.1 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 VPT and Buyer:
(a) by mutual written consent of Buyer and VPT;
(b) by either Buyer or VPT if any United States federal or state
court of competent jurisdiction or other governmental entity shall have
issued an order, decree or ruling or taken any other action permanently
restraining, enjoining or otherwise prohibiting the Merger and such order,
decree, ruling or other action shall have become final and non-appealable,
provided that the party seeking to terminate shall have used its best efforts
to appeal such order, decree, ruling or other action;
(c) by Buyer upon a breach of any representation, warranty,
covenant or agreement on the part of VPT set forth in this Agreement, or if
any representation or warranty of VPT shall have become untrue, in either
case such that the conditions set forth in Section 10.3(a) or Section
10.3(b), as the case may be, would be incapable of being satisfied by
March 1, 1998; provided, however, that, in any case, a willful breach shall
be deemed to cause such conditions to be incapable of being satisfied for
purposes of this Section 11.1(c);
(d) by VPT upon a breach of any representation, warranty, covenant
or agreement on the part of Buyer or Merger Subsidiary set forth in this
Agreement, or if any representation or warranty of Buyer or Merger Subsidiary
shall have become untrue, in either case such that the conditions set forth
in Section 10.2(a) or Section 10.2(b), as the case may be, would be incapable
of being satisfied by March 1, 1998; provided, however, that, in any case, a
willful breach shall be deemed to cause such conditions to be incapable of
being satisfied for purposes of this Section 11.1(d);
(e) by Buyer or VPT, if the Trustees of VPT approve or adopt, or
recommend to VPT's shareholders approval or acceptance of, an Acquisition
Proposal by a person other than Buyer or Merger Subsidiary, but only in the
event that the Trustees of VPT, after consultation with and based upon the
advice of counsel, have determined in good faith that such action is
necessary for the Trustees of VPT to comply with their fiduciary or similar
duties to the shareholders of VPT under applicable law;
(f) by either Buyer or VPT, if the Merger shall not have been
consummated on or before March 1, 1998 (other than due to the failure of the
party seeking to terminate this Agreement to perform its obligations under
this Agreement required to be performed by it at or prior to the Effective
Time);
(g) by Buyer if the Board of Trustees of VPT shall have failed to
recommend, or shall have withdrawn, modified or amended in any material and
negative respects its approval or recommendations of the Merger or shall have
resolved to do any of the foregoing; provided, however, that such failure,
withdrawal, modification or amendment has not been due to or the result of
the Buyer's or the Merger Subsidiary's breach of any of their obligations
hereunder; or
(h) by Buyer if this Agreement and the transactions contemplated
hereby shall have failed to receive the requisite vote for approval and
adoption by the shareholders of VPT upon the holding of a duly convened
shareholders meeting.
The right of any party hereto to terminate this Agreement pursuant to
this Section 11.1 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 employees,
officers, trustees, directors, agents, representatives or advisors, whether
prior to or after the execution of this Agreement.
11.2 Effect of Termination. In the event of the termination and
abandonment of this Agreement pursuant to Section 11.1 hereof, this Agreement
shall forthwith become void and have no effect, without any liability on the
part of any party hereto or its affiliates, trustees, directors, officers or
shareholders and all rights and obligations of any party hereto shall cease
except for the agreements contained in Section 11.3 and Section 12.5;
provided, however, that nothing contained in this Section 11.2 shall relieve
any party from liability for any breach of this Agreement.
11.3 Expenses.
(a) Except as provided in paragraph (b) below, whether or not the
Merger is consummated, all costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such costs and expenses.
(b) VPT will pay, or cause to be paid, in same day funds to Buyer
the sum of (i) Buyer's Expenses (as defined below) up to a maximum of
$750,000 and (ii) $3,000,000 (the "Termination Fee") if (A) this Agreement is
terminated under Section 11.1(e) or 11.1(g) or (B) the Agreement is
terminated by Buyer under Section 11.1(h) and, with respect to this clause
(B), a VPT Acquisition Proposal by a person other than Buyer or Merger
Subsidiary exists at the time of such termination and at the time of such
termination, the required approval of the stockholders of VPT had not been
obtained at the duly convened stockholder meeting or any adjournment thereof.
"Buyer's Expenses" means documented out-of-pocket fees and expenses incurred
or paid by or on behalf of Buyer in connection with the Merger or the
consummation of any of the transactions contemplated by this Agreement,
including without limitation all HSR Act filing fees, fees and expenses of
counsel, commercial banks, investment banking firms, accountants, experts,
environmental consultants, and other consultants to Buyer. Any amounts
payable pursuant to this Section 11.3(b) shall be payable in immediately
available funds concurrently with the termination of this Agreement.
11.4 Extension; Waiver. At any time prior to the Effective Time,
any party hereto, by action taken by its Board of Directors or Trustees, 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, (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.
12. GENERAL PROVISIONS
12.1 Nonsurvival of Representations, Warranties and Agreements.
All representations, warranties, certifications and agreements in this
Agreement or in any instrument delivered pursuant to this Agreement shall
terminate as of the Effective Time and shall not survive the Merger,
provided, however, that the agreements contained in Article 5, the last
sentence of Section 9.4(a), Sections 9.7, 9.10 and 11.3 and this Article 12
shall survive the Merger.
12.2 Notices. Any notice required to be given hereunder shall be
in writing and shall be sent by facsimile transmission (confirmed by any of
the methods that follow), courier service (with proof of service), hand
delivery or certified or registered mail (return receipt requested and
first-class postage prepaid) and addressed as follows:
If to Buyer: Wellsford Real Properties, Inc.
610 Fifth Avenue
New York, NY 10020
Attn:Jeffrey H. Lynford
Tel.:(212) 333-2300
Fax: (212) 333-2323
With a copy to: Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, NY 10019
Attn:Robert B. Schumer
Tel.:(212) 373-3000
Fax: (212) 757-3990
and
Robinson Silverman Pearce
Aronsohn & Berman LLP
1290 Avenue of the Americas
New York, NY 10104
Attn: Alan S. Pearce
Tel.: (212) 541-2000
Fax: (212) 541-4630
If to VPT: Value Property Trust
120 Albany Street, 8th Floor
New Brunswick, NJ 08901
Attn:George Zoffinger
Tel.:(201) 296-3080
Fax: (201) 296-3090
With a copy to: Goodwin, Procter & Hoar LLP
Exchange Place, 53 State Street
Boston, MA 02109
Attn:Laura Hodges Taylor, P.C.
Tel: (617) 570-1000
Fax: (617) 523-1231
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.
12.3 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, Buyer and
Merger Subsidiary may each assign their respective rights, interests or
obligations hereunder to any affiliate provided that Buyer remains obligated
hereunder and such assignment does not alter the rights, interests or
obligations of VPT hereunder. 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
Sections 5.1, 5.2, 9.7 and 9.10, 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.
12.4 Entire Agreement. This Agreement, the VPT Disclosure Letter, the
Buyer 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 partes with respect thereto except that the
Confidentiality Agreement (as hereinafter defined) shall remain in effect and
shall be binding upon Buyer and VPT in accordance with its terms. 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.
12.5 Confidentiality. Buyer and VPT understand and agree that they are
still bound by and subject to the terms of the confidentiality agreements,
dated as of February 14, 1997 and August 26, 1997, by and between Buyer and
VPT (collectively, the "Confidentiality Agreements").
12.6 Amendment. This Agreement may be amended by the parties hereto, by
action taken by their respective authorized person, persons or governing
bodies, at any time before or after approval of matters presented in
connection with the Merger by the shareholders of VPT, but after any such
shareholder approval, no amendment shall be made which by law requires the
further approval of shareholders without obtaining such further approval.
This Agreement may not be amended except by an instrument in writing signed
on behalf of each of the parties hereto.
12.7 Governing Law. 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.
12.8 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.
12.9 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.
12.10 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.
12.11 Incorporation. The VPT Disclosure Letter and the Buyer
Disclosure Letter and all Schedules attached hereto and thereto and referred
to herein and therein are hereby incorporated herein and made a part hereof
for all purposes as if fully set forth herein.
12.12 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.
12.13 Interpretation and Certain Definitions.
(a) 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.
(b) 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, real estate investment 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 trustees or board of
directors or others performing similar functions with respect to such
corporation or other organization.
(c) 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.
(d) As used in this Agreement unless otherwise indicated, the word
"affiliate" shall have the meaning set forth in Rule 12b-2 of the Exchange
Act.
12.14 Specific Performance. The parties hereto agree that if any of
the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached, irreparable damage would occur, no
adequate remedy at law would exist, and damages would be difficult to
determine, and that the parties shall be entitled to specific performance of
the terms hereof, without the posting of any bond whatsoever in addition to
any other remedy at law or equity.
12.15 Broker Liability Release. Buyer, Merger Subsidiary and VPT
acknowledge and agree that Merrill Lynch has made no investigation or
determination regarding: the presence or absence of hazardous materials, lead
paint hazards, toxic wastes or other undesirable substances; the present or
future use of VPT property; violations of any federal, state, county or
municipal ordinances, statutes, or regulations; proposed acquisition of VPT
property by federal, state, county or municipal governments; the correctness
of the income and expense information, rent roll, accuracy of building
dimensions and square footage; the existence or nonexistence of physical
defects in VPT property or, except as set forth in Section 7.16, the value of
VPT. Buyer, Merger Subsidiary and VPT hereby release Merrill Lynch from any
liability relating thereto and agree that such investigation and
determination has been Buyer's sole responsibility, and Merrill Lynch shall
not be held responsible therefor except for liability for Merrill Lynch's
negligent or intentional misrepresentations.
[END OF TEXT]
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.
VALUE PROPERTY TRUST
ATTEST:
By:/s/ Paul McArthur By:/s/ George Zoffinger
____________________________ ________________________________
Name: Paul McArthur Name: George Zoffinger
Title: Executive Vice Title: President and Chief
President Executive Officer
WELLSFORD REAL PROPERTIES, INC.
ATTEST:
By: By:/s/ Gregory Hughes
____________________________ _______________________________
Name: Name: Gregory Hughes
Title: Title: Chief Financial Officer
WELLSFORD CAPITAL CORPORATION
ATTEST:
By: By:/s/ Gregory Hughes
__________________________ _______________________________
Name: Name: Gregory Hughes
Title: Title:
EXHIBITS AND SCHEDULES OMITTED
Exhibit A - Form of Affiliate Letter
VPT Disclosure Schedule -
7.1 - Compliance with Law; Organization Documents
7.3 - Capitalization
7.4 - Subsidiaries
7.6 - Noncontravention
7.8 - Litigation
7.9 - Absence of Certain Changes
7.11 - Taxes
7.13 - Properties
7.14 - Environmental Matters
7.17 - Related Party Transactions
7.18 - Contracts
7.20 - Benefit Plans
7.23 - Undisclosed Liabilities
9.1 - Conduct of Business
Buyer Disclosure Schedule -
8.1 - Compliance with Law; Organization Documents
8.3 - Noncontravention
8.5 - Title Reports
8.6 - Capitalization
8.7 - Subsidiaries
8.8 - Other Interests
8.10 - Litigation
8.11 - Absence of Certain Changes
8.12 - Taxes
8.14 - Properties
8.15 - Environmental Matters
8.17 - Related Party Transactions
8.21 - Undisclosed Liabilities
Wellsford Real Properties, Inc. agrees to supplementally furnish such
omitted exhibits and schedules to the Securities and Exchange Commission upon
request.