Exhibit 2.1
PURCHASE AGREEMENT
PURCHASE AGREEMENT (this "Agreement"), dated as of April 16, 2004, by and
among HRPT Properties Trust, a Maryland real estate investment trust ("Parent"),
HRP GP, LLC, a Delaware limited liability company and a wholly-owned subsidiary
of Parent (the "Successor GP"), Hallwood Realty, LLC, a Delaware limited
liability company (the "General Partner"), Hallwood Commercial Real Estate, LLC,
a Delaware limited liability company ("HCRE"), HWG, LLC, a Delaware limited
liability company ("HWG, LLC"), HWG Realty Investors, LLC, a Delaware limited
liability company ("HWG Realty"), HWG 98 Advisors, Inc., a Delaware corporation
("HWG98"), HWG 95 Advisors, Inc., a Delaware corporation ("HWG95") and solely
for the purpose of Article V, The Hallwood Group Incorporated, a Delaware
corporation ("Group"). The General Partner, HCRE, HWG, LLC, HWG Realty, HWG98
and HWG95 are referred to collectively as the "Sellers."
WHEREAS, concurrently with entering into this Agreement, Parent, HWP LP
Acquisition LLC, a Delaware limited liability company and wholly-owned
subsidiary of Parent (the "Purchaser"), the General Partner and Hallwood Realty
Partners, L.P., a Delaware limited partnership (the "Partnership") are entering
into an Agreement and Plan of Merger, dated as of the date hereof (the "Merger
Agreement"), pursuant to which the Purchaser will be merged with and into the
Partnership (capitalized terms used but not defined herein and lower-case terms
defined in Section 9.03 of the Merger Agreement shall have the meanings set
forth in the Merger Agreement);
WHEREAS, the General Partner owns all of the general partner interest (the
"General Partner Interest") in the Partnership;
WHEREAS, HWG, LLC owns 330,432 Units (the "HWG, LLC Units"), representing
20.7% of the Partnership's outstanding Units;
WHEREAS, HWG Realty owns 0.1% of the partnership interests (collectively,
the "Fund Partnership Interests") in each of Hallwood Real Estate Investors Fund
XIII, a Delaware partnership, Hallwood Real Estate Investors Fund XV, a Delaware
partnership and Hallwood Real Estate Investors Fund XVI, a Delaware partnership
(collectively, the "Fund Partnerships");
WHEREAS, HWG98 and HWG95 own 10% of the member interests (collectively,
the "HRP LLC Member Interests" and together with the General Partner Interest,
the HWG, LLC Units and the Fund Partnership Interests, the "Sellers' Interests")
of HRP 98, L.L.C., a Delaware limited liability company ("HRP98 LLC"), and HRP
95, L.L.C., a Delaware limited liability company ("HRP95 LLC" and collectively
with HRP98 LLC, the "HRP LLCs"), respectively; and
WHEREAS, HCRE or its wholly-owned subsidiary is a party to the Management
Agreements set forth on Schedule I (collectively, the "Management Agreements")
with the Partnership, pursuant to which HCRE or its wholly-owned subsidiary
provides certain services to subsidiaries of the Partnership.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration given to each party to this Agreement, the receipt of
which is hereby acknowledged, the parties agree as follows:
ARTICLE I
VOTING AGREEMENT
1.01 Voting of HWG, LLC Units. HWG, LLC hereby agrees that at any meeting
of the unitholders of the Partnership, however called, or in any other
circumstance in which the vote on, consent to or approval of the Merger
Agreement and the Merger by unitholders of the Partnership is sought, HWG, LLC
shall:
(a) vote the HWG, LLC Units in favor of and to approve the Merger
Agreement and the Merger;
(b) vote the HWG, LLC Units against any action or agreement that
would result in a breach of any covenant, representation or warranty or any
other obligation or agreement of the Partnership under the Merger Agreement; and
(c) vote the HWG, LLC Units against any action or agreement
submitted to unitholders that would reasonably be expected to impede, interfere
with, delay, postpone or attempt to discourage the Merger, including, but not
limited to:
(i) any extraordinary corporate transaction, such as a merger,
consolidation or other business combination involving the Partnership or any of
its Subsidiaries;
(ii) a sale or transfer of a material amount of assets
of the Partnership or any of its Subsidiaries or a reorganization,
recapitalization or liquidation of the Partnership and its Subsidiaries;
(iii) any material change in the present capitalization
or distribution policy of the Partnership; or
(iv) any other material change in the Partnership's structure
or business,
in each case, other than the Merger Agreement and the Merger or the transactions
contemplated thereby.
1.02 Grant of Irrevocable Proxy; Appointment of Proxy.
(a) HWG, LLC hereby irrevocably grants to, and appoints Parent as
HWG, LLC's proxy and attorney-in-fact (with full power of substitution), for and
in the name, place and stead of HWG, LLC, to vote the HWG, LLC Units in the
manner provided in Section 1.01.
(b) HWG, LLC represents that any proxies previously given in respect
of the HWG, LLC Units are revocable, and that any such proxies are hereby
revoked.
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(c) HWG, LLC hereby affirms that the irrevocable proxy set forth in
this Section 1.02 is given in connection with the execution of this Agreement
and the Merger Agreement and affirms that the irrevocable proxy is coupled with
an interest and may under no circumstances be revoked until the termination of
this Agreement pursuant to Section 6.01. HWG, LLC hereby ratifies and confirms
all that such irrevocable proxy may lawfully do or cause to be done by virtue
hereof. HWG, LLC shall execute and deliver to Parent any proxy cards that HWG,
LLC receives to vote in favor of the Merger Agreement and the Merger.
ARTICLE II
SALE OF SELLERS' INTERESTS; TERMINATION OF MANAGEMENT AGREEMENTS
2.01 Sale of Sellers' Interests. At the Closing, immediately prior
to the Effective Time:
(a) the General Partner shall transfer and deliver to the Successor
GP, free and clear of all Liens, and the Successor GP shall purchase from the
General Partner, the General Partner Interest;
(b) HWG, LLC shall transfer and deliver to the Successor GP, free
and clear of all Liens, and the Successor GP shall purchase from HWG, LLC, the
HWG, LLC Units;
(c) HWG Realty shall transfer and deliver to the Successor GP, free
and clear of all Liens, and the Successor GP shall purchase from HWG Realty, the
Fund Partnership Interests;
(d) HWG98 shall transfer and deliver to the Successor GP, free and
clear of all Liens, and the Successor GP shall purchase from HWG98, the HRP LLC
Member Interests in HRP98 LLC;
(e) HWG95 shall transfer and deliver to the Successor GP, free and
clear of all Liens, and the Successor GP shall purchase from HWG95, the HRP LLC
Member Interests in HRP95 LLC; and
(f) As the purchase price for Sellers' Interests conveyed pursuant
to this Agreement, Successor GP shall pay to HWG, LLC, on behalf of all the
Sellers, an amount equal to the sum of:
(i) 8.5% of the Gross Merger Consideration, plus
(ii) the Merger Price multiplied by 330,432 (in the aggregate, the
"Purchase Price"), without interest, less any withholding (as
provided in Section 6.16). The parties hereto acknowledge and
agree that (a) if the Gross Merger Consideration is
$245,000,000, then the Purchase Price shall be reduced by an
amount equal to the amount by which the Working Capital
Adjustment would have reduced the Gross Merger Consideration
to less
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than $245,000,000 but for the parenthetical in Section
2.01(b)(i)(x) of the Merger Agreement and (b) the Purchase
Price shall be reduced by any amounts owed by Group to the
Partnership.
2.02 Payment of Purchase Price. The Purchase Price shall be paid as
follows: (i) $18,500,000 by wire transfer at the Effective Time to an escrow
agent acceptable to Parent, Successor GP and Sellers, to be held pursuant to the
terms of an Escrow Agreement substantially in the form of Exhibit A; and (ii)
the remainder of the Purchase Price by wire transfer in immediately available
funds to an account specified by HWG, LLC to Parent and the Successor GP in
writing.
2.03 Termination of Management Agreements. At the Effective Time, HCRE
shall, and shall cause its wholly-owned subsidiary, HCRE California, Inc. to,
terminate each of the Management Agreements and release the Partnership and each
of its subsidiaries from all liability thereunder. Notwithstanding the
foregoing, the Partnership shall remain obligated to pay to HCRE or HCRE
California, Inc., as appropriate, all amounts due under the Management
Agreements for fees earned thereunder in the ordinary course of business to the
extent accrued prior to the Determination Date or which relate to services
performed between the Determination Date and the Effective Time.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Each Seller hereby represents and warrants, jointly and severally, to
Parent and the Successor GP as follows:
3.01 Organization, Standing and Power.
(a) Each Seller is a limited liability company or a corporation, as
applicable, duly organized, validly existing and in good standing under the Laws
of the state in which it is organized and has full limited liability company or
corporate power and authority, as applicable, necessary to enable it to own,
lease or otherwise hold its properties and assets and to conduct its business as
presently conducted.
(b) Each Subsidiary (as defined herein) is an entity duly organized,
validly existing and in good standing under the Laws of the state in which it is
organized and has full limited liability company or partnership power and
authority, as applicable, necessary to enable it to own, lease or otherwise hold
its properties and assets and to conduct its business as presently conducted.
(c) Each Seller and each Subsidiary is duly qualified to do business
in each jurisdiction where (i) the nature of its business or its ownership or
leasing of its properties make such qualification necessary or (ii) the failure
to so qualify, individually or in the aggregate, has had or could reasonably be
expected to have a Seller Material Adverse Effect (as defined in Section 3.04).
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(d) The Sellers have delivered to Parent true, correct and complete
copies of the organizational documents of the Sellers and each Subsidiary (the
"Organizational Documents"). The Organizational Documents are in full force and
effect.
3.02 Authority; Execution and Delivery; Enforceability.
(a) Each Seller has all necessary limited liability company or
corporate power and authority, as applicable, to execute, deliver and perform
all of its obligations under this Agreement.
(b) The execution, delivery and performance by such Seller of this
Agreement and the consummation of the transactions contemplated by this
Agreement have been duly authorized by all necessary limited liability company
or corporate action, as applicable, on the part of each Seller, subject in the
case of the General Partner, to receipt of Unitholder Approval.
(c) Such Seller has duly executed and delivered this Agreement, and
this Agreement constitutes such Seller's legal, valid and binding obligation,
enforceable against such Seller in accordance with its terms, except as that
enforceability may be limited by any applicable bankruptcy, insolvency,
reorganization, moratorium or similar Laws affecting the enforcement of
creditor's rights generally and the application of general principles of equity
(regardless of whether that enforceability is considered in a proceeding at law
or in equity).
3.03 Subsidiaries; Equity Interests.
(a) Each Subsidiary that is being acquired (directly or indirectly)
by Successor GP pursuant to this Agreement is set forth in Section 3.02 of the
Partnership Disclosure Letter.
(b) HWG98 and HWG95 own 10% of the member interests in HRP98 LLC and
HRP95 LLC, respectively, and HRP98 LLC and HRP95 LLC own the one percent general
partner interest in Hallwood 98, L.P., a Delaware limited partnership ("Hallwood
98 LP") and Hallwood 95, L.P., a Delaware limited partnership ("Hallwood 95 LP"
and together with HRP98 LLC, HRP95 LLC and Hallwood 98 LP, the "Subsidiaries"),
respectively.
(c) Other than pursuant to this Agreement, there are no options,
warrants, calls, rights, convertible or exchangeable securities, units
commitments, Contracts, arrangements or undertakings to which any Seller or any
Subsidiary is a party or by which it is bound (x) obligating any Seller or any
Subsidiary to issue, deliver or sell, or cause to be issued, delivered or sold,
equity interests in, or any security convertible or exercisable for or
exchangeable into equity interests in, any Subsidiary or (y) obligating any
Seller or any Subsidiary to issue, grant, extend or enter into any such option,
warrant, call, right, security, unit, commitment, Contract, arrangement or
undertaking.
(d) Each outstanding share of capital stock or other equity
ownership interest of each Subsidiary is duly authorized, validly issued, fully
paid and nonassessable (subject to the requirements, if any, under applicable
state Law, obligating any limited partner of a Subsidiary that is a limited
partnership to repay the amount of any distribution wrongly received from such
Subsidiary), and each such share or other equity ownership interest is owned by
a Seller or a
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Subsidiary of any of the Sellers free and clear of all Liens, options, rights of
first refusal, agreements, limitations on the Sellers' or any Subsidiary's
voting rights, charges and other encumbrances whatsoever.
3.04 No Conflicts; Consents.
(a) Except as set forth in Section 3.04 of the letter dated as of
the date of this Agreement from the Sellers to Parent and the Successor GP (the
"Disclosure Letter"), the execution, delivery and performance by each Seller of
this Agreement does not and the consummation of the transactions contemplated by
this Agreement and such Seller's compliance with the terms of this Agreement
will not:
(i) conflict with or result in any violation of any provision
of such party's Organizational Document;
(ii) conflict with, or result in any violation of, or default
(with or without notice or lapse of time or both) under, or give rise to a right
of termination, cancellation or acceleration of any obligation or to loss of a
material benefit under, or to increased, additional, accelerated or guaranteed
rights or entitlements of any person under, or result in the creation of, any
Liens upon any property of a Seller or a Subsidiary under, or require the
consent of any person under, any provision of any Contract to which any Seller
or any Subsidiary is a party or by which any of their respective properties or
assets are bound or affected; or
(iii) subject to the filings and other matters referred to in
Section 3.04(b)(i) and assuming the accuracy of the representations and
warranties of Parent and Successor GP in this Agreement, conflict with or result
in any violation of any Judgment or Law applicable to any Seller, any
Subsidiary, or any of their respective properties or assets;
except such items as, individually or in the aggregate, could not reasonably be
expected to cause, result in or have a material adverse effect on the ability of
such Seller to perform its obligations under this Agreement (a "Seller Material
Adverse Effect"); provided, however, that effects relating to (A) the economy in
general, (B) changes affecting the real estate industry generally, (C) changes
in the market price or trading volume of the Partnership's securities, or (D)
the announcement of the Merger or the transactions contemplated thereby, shall
not be deemed to constitute a Seller Material Adverse Effect or be considered in
determining whether a Seller Material Adverse Effect has occurred.
(b) No Consent of, or registration, declaration or filing with, or
notice to, or Permit from, any Governmental Entity is required to be obtained or
made by or with respect to any Seller in connection with the execution, delivery
and performance of this Agreement or the consummation of the transactions
contemplated by this Agreement, other than:
(i) the filing with the SEC of such reports under Sections 13
and 16 of the Exchange Act as may be required in connection with this Agreement
or the Merger;
(ii) the consents set forth in Section 3.04 of the
Disclosure Letter; and
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(iii) such other items as, individually or in the aggregate,
could not reasonably be expected to have a Seller Material Adverse Effect.
3.05 No Finder's Fees. Except as disclosed in the Merger Agreement, no
broker, investment banker, financial advisor or other person is entitled to any
broker's, finder's, financial adviser's or other similar fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by any Seller or any affiliate thereof, for which Successor
GP, Parent or the Partnership will be responsible.
3.06 Litigation. Except as set forth in Section 3.06 of the Disclosure
Letter, there is no suit, action, proceeding or investigation pending against,
or to the knowledge of any Seller threatened against or affecting, Sellers or
any Subsidiary before any Governmental Entity that (i) individually or in the
aggregate would have a Seller Material Adverse Effect or (ii) seeks to prevent,
hinder, modify or challenge the transactions contemplated by this Agreement or
would otherwise prevent or delay the consummation of the transactions
contemplated by this Agreement. None of the Sellers are subject to any
outstanding Judgment against any of them or naming them as a party that
individually or in the aggregate, could reasonably be expected to have a Seller
Material Adverse Effect.
3.07 Title.
(a) Except for Liens that will be released at Closing:
(i) The General Partner has good and valid title to the
General Partner Interest, free and clear of any Lien.
(ii) HWG, LLC has good and valid title to the HWG, LLC Units
free and clear of any Lien.
(iii) HWG Realty has good and valid title to the Fund
Partnership Interests free and clear of any Lien.
(iv) HWG98 has good and valid title to the HRP LLC Member
Interests of HRP98 LLC free and clear of any Lien.
(v) HWG95 has good and valid title to the HRP LLC Member
Interests of HRP95 LLC free and clear of any Lien.
(b) Upon purchase of the Sellers' Interests by the Successor GP, the
applicable Seller will deliver good and valid title thereto, free and clear of
any Lien.
(c) On the date hereof, all of the HWG, LLC Units are owned of
record and beneficially by HWG, LLC and constitute all of the Units owned of
record or beneficially by HWG, LLC or its Subsidiaries. HWG, LLC has sole voting
power and power of disposition with respect to all the HWG, LLC Units, with no
restrictions on HWG, LLC's voting rights or power of disposition pertaining
thereto, subject to applicable federal securities laws or any applicable state
securities laws.
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3.08 No Other Rights. Other than pursuant to this Agreement, there are no
outstanding options, warrants or rights to purchase or acquire the Sellers'
Interests or the capital stock or equity ownership interest of any Subsidiary.
3.09 Status of Management Agreements.
(a) True, correct and complete copies of the Management Agreements
have previously been delivered to Parent and the Successor GP by HCRE or the
Partnership.
(b) There are no existing defaults, events of default or events,
occurrences or acts that, with the giving of notice or lapse of time or both,
would constitute defaults by HCRE or any other party thereto, and no penalties
have been incurred nor are amendments pending, with respect to the Management
Agreements.
3.10 Tax Matters. HWG, LLC is, and since its formation has been, properly
characterized as a partnership for U.S. federal, state and local income tax
purposes and not as an association taxable as a corporation and for avoidance of
doubt has never been a "publicly traded partnership" treated as a corporation
under Section 7704 of the Code (or any similar Tax Law). HWG Realty is, and
since its formation has been, a "disregarded entity" for U.S. federal income Tax
purposes under Treasury Regulation Sections 301.7701-2 and -3 (and any
comparable provision of applicable Law of state and local jurisdictions that
permit such treatment).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUCCESSOR GP
Parent and Successor GP, jointly and severally, represent and warrant to
the Sellers and to the Partnership as follows:
4.01 Organization, Standing and Power. Parent is a real estate investment
trust and the Successor GP is a limited liability company; each of Parent and
the Successor GP is duly organized, validly existing and in good standing under
the Laws of the jurisdiction in which it is organized and has full trust or
limited liability company power and authority (as applicable) necessary to
enable it to own, lease or otherwise hold its properties and assets and to
conduct its businesses as presently conducted. The Successor GP is a
wholly-owned subsidiary of Parent.
4.02 Authority; Execution and Delivery; Enforceability.
(a) Each of Parent and the Successor GP has all requisite trust or
limited liability company power and authority (as applicable) to execute,
deliver and perform this Agreement and to consummate the transactions
contemplated by this Agreement. The execution, delivery and performance by each
of Parent and the Successor GP of this Agreement and the consummation by each of
the transactions contemplated by this Agreement have been duly authorized by all
necessary trust and trustee action or limited liability company and member
action, as applicable, on the part of Parent and the Successor GP, respectively.
Each of Parent and the Successor GP has duly executed and delivered this
Agreement, and this Agreement constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its
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terms, except as that enforceability may be limited by any applicable
bankruptcy, insolvency, reorganization, moratorium or similar Laws affecting the
enforcement of creditor's rights generally and the application of general
principles of equity (regardless of whether that enforceability is considered in
a proceeding at law or in equity).
(b) Each of the Board of Trustees of Parent and the sole member of
the Successor GP has duly adopted resolutions approving and declaring the
advisability of this Agreement and the transactions contemplated by this
Agreement, in accordance with the applicable provisions of the MREIT and the
DLLCA, respectively.
4.03 No Conflicts, Consents.
(a) No Conflicts. The execution, delivery and performance by each of
Parent and the Successor GP of this Agreement do not, and the consummation of
the transactions contemplated by this Agreement and compliance with the terms of
this Agreement will not, conflict with, or result in any violation of or default
(with or without notice or lapse of time, or both) under, any provision of (i)
the charter or organizational documents of Parent or any of its subsidiaries,
(ii) any Contract to which Parent or any of its subsidiaries is a party or by
which any of their respective properties or assets is bound or (iii) subject to
the filings and other matters referred to in Section 4.04(b) of the Merger
Agreement, any Judgment or Law applicable to Parent or any of its subsidiaries
or their respective properties or assets, subject in the case of clauses (ii)
and (iii) above, for such matters as, individually or in the aggregate, could
not reasonably be expected to have a material adverse effect on (A) the ability
of Parent or the Successor GP to perform its obligations under this Agreement or
(B) the ability of Parent or the Successor GP to consummate the transactions
contemplated by this Agreement (any of the foregoing, a "Parent Material Adverse
Effect").
(b) Consents. No Consent of, or registration, declaration or filing
with, or notice to, or Permit from any Governmental Entity is required to be
obtained or made by or with respect to Parent or any of its subsidiaries in
connection with the execution, delivery and performance of this Agreement, the
Merger Agreement or the consummation of the transactions contemplated hereby and
thereby, other than such items set forth in Section 4.04(b) of the Merger
Agreement or such other items as, individually or in the aggregate, could not
reasonably be expected to have a Parent Material Adverse Effect.
4.04 Brokers. No broker, investment banker, financial advisor or other
person is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of Parent or the
Successor GP, for which any of the Sellers will be responsible.
4.05 Financing. Parent and the Successor GP have available (through cash
on hand and existing credit arrangements or otherwise) all of the funds
necessary for the acquisition of all of Sellers' Interests pursuant to this
Agreement, as and when needed, and to perform their respective obligations under
this Agreement.
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4.06 Litigation. There is no suit, action, proceeding or investigation
pending against, or to the knowledge of Parent threatened against or affecting,
Parent or any of its subsidiaries before any Governmental Entity that questions
the validity of this Agreement or any action to be taken by Parent or the
Successor GP in connection with the consummation of the transactions
contemplated by this Agreement, or Purchaser in connection with the consummation
of the transactions contemplated by the Merger Agreement, or would otherwise
prevent or delay the consummation of the transactions contemplated by this
Agreement.
4.07 Investment Representations. Successor GP and Parent understand that
the Sellers' Interests have not been registered under the Securities Act.
Successor GP and Parent also understand that the Sellers' Interests are being
offered and sold pursuant to an exemption from registration contained in the
Securities Act of 1933, as amended (the "Securities Act") based in part upon
Parent's and Successor GP's representations contained in the Agreement.
Successor GP and Parent hereby represent and warrant, jointly and severally, as
follows:
(a) Successor GP Bears Economic Risk. Successor GP is capable of
evaluating the merits and risks of its investment in the Partnership and in HWG
Realty. Successor GP understands that it must bear the economic risk of this
investment indefinitely unless the Sellers' Interests are registered pursuant to
the Securities Act, or an exemption from registration is available. Successor GP
understands that neither the Partnership nor HWG Realty has any present
intention of registering the Sellers' Interests, respectively. Successor GP also
understands that there is no assurance that any exemption from registration
under the Securities Act will be available and that, even if available, such
exemption may not allow Successor GP to transfer all or any portion of the
Sellers' Interests under the circumstances, in the amounts or at the times
Successor GP might propose.
(b) Acquisition for Own Account. Successor GP is acquiring the
Sellers' Interests for Successor GP's own account for investment only, and not
with a view towards their distribution.
(c) Accredited Investor. Successor GP represents that it is an
accredited investor within the meaning of Regulation D under the Securities Act.
(d) Partnership Information. Successor GP has reviewed the
publicly-available filings of the Partnership and has had an opportunity to
discuss the Partnership's business, management and financial affairs with
directors, officers and management of the Partnership and has had the
opportunity to review the Partnership's operations and facilities. Successor GP
has also had the opportunity to ask questions of and receive answers from, the
Partnership and its management regarding the terms and conditions of this
investment.
(e) Other Information. Successor GP has received and read the
financial statements of the Fund Partnerships and the HRP LLCs and has had an
opportunity to discuss their respective businesses, management and financial
affairs with their respective directors, officers and management and has had the
opportunity to review their respective operations and facilities. Successor GP
has also had the opportunity to ask questions of and receive answers from, such
entities and their management regarding the terms and conditions of this
investment.
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(f) Rule 144. Successor GP acknowledges and agrees that the Sellers'
Interests must be held indefinitely unless they are subsequently registered
under the Securities Act or an exemption from such registration is available.
Successor GP has been advised or is aware of the provisions of Rule 144
promulgated under the Securities Act, as in effect from time to time, which
permits limited resale of shares purchased in a private placement subject to the
satisfaction of certain conditions, including, among other things: the
availability of certain current public information about the Partnership, the
resale occurring following the required holding period under Rule 144 and the
number of shares being sold during any three-month period not exceeding
specified limitations.
(g) Residence. The office or offices of the Successor GP in which
its investment decision was made is located at the address or addresses of the
Successor GP set forth in the notice provision of this Agreement.
ARTICLE V
NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATIONS
5.01 Survival of Representations, Warranties, etc. All representations and
warranties of the Sellers set forth in this Agreement shall survive the Closing
and shall expire, except with respect to claims asserted prior to and pending at
the time of expiration, twelve (12) months following the Closing; provided, that
the representations and warranties contained in Section 3.07 shall survive
indefinitely (or if indefinite survival is not permitted by law, then for the
maximum period permitted by applicable law). All such representations and
warranties shall be deemed to have been given and made on the date hereof and as
of the Closing.
5.02 Agreement to Indemnify. Each of the Sellers and Group (collectively,
the Indemnitor"), jointly and severally, shall defend, indemnify and hold
harmless Parent, the Successor GP and the Partnership, and their respective
Affiliates, officers, trustees, employees and agents (each, a "Parent
Indemnitee"), from and against and in respect of any and all losses, damages,
liabilities, deficiencies, Taxes, costs and expenses including, without
limitation, interest, penalties, and reasonable attorneys' fees and expenses
(collectively, "Losses"), asserted against, relating to, imposed upon or
incurred by a Parent Indemnitee resulting from, arising out of, or in connection
with: (i) any breach by any of the Sellers of any of their respective
representations or warranties contained in this Agreement; (ii) the transactions
contemplated by this Agreement or the Merger Agreement, including the approval
of the payment of the Purchase Price by the Audit Committee of the Board of
Directors of the General Partner or the payment of the Purchase Price pursuant
to this Agreement; (iii) the actions captioned High River Limited Partnership x.
Xxxxxxxx Realty, LLC et al., C.A. 20276 and I.G. Holdings, Inc. et al. x.
Xxxxxxxx Realty, LLC, et al., C.A. 20283 in the Court of Chancery of the State
of Delaware, New Castle County (the "Current Actions") and (iv) any and all
actions, suits, proceedings, claims, demands, assessments and judgments incident
to any of the foregoing; provided, however, that the indemnification provided in
this Section 5.02 shall not include (i) claims by any party to this Agreement to
interpret or enforce the terms and provisions of this Agreement or
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(ii) any claim by any party to the Merger Agreement to interpret or enforce the
terms and provisions of the Merger Agreement.
5.03 Third Party Claims.
(a) Promptly after the receipt by any Parent Indemnitee of notice of
any claim, action, suit or proceeding of any third party which is subject to
indemnification hereunder, Parent Indemnitee shall give written notice of such
claim to the Indemnitor, stating the nature and basis of such claim and the
amount thereof, to the extent known. Failure of the Parent Indemnitee to give
such notice shall not relieve the Parent Indemnitee from any liability which it
may have on account of its indemnification obligation or otherwise, except to
the extent that the Parent Indemnitee is materially prejudiced thereby.
(b) The Indemnitor shall continue the defense of the Current
Actions, for itself and on behalf of the Partnership subject to the provisions
of this Section 5.03 and the Partnership, as a Parent Indemnitee, shall be
entitled to the benefit of the provisions of this Section 5.03 with respect
thereto. The Indemnitor shall be entitled to elect to participate in the defense
of and, if it so chooses, to assume the defense of such claim, action, suit or
proceeding with counsel selected by the Indemnitor and reasonably satisfactory
to the Parent Indemnitee. Upon any such election by the Indemnitor to assume the
defense of such claim, action, suit or proceeding, the Indemnitor shall not be
liable for any legal or other expenses subsequently incurred by the Parent
Indemnitee in connection with the defense thereof, provided, however, that (i)
if the Parent Indemnitee shall have reasonably concluded that separate counsel
is required because a conflict of interest would otherwise exist, then the
Parent Indemnitee shall have the right to select separate counsel to participate
in the defense of such action on its behalf, at the expense of the Indemnitor
and (ii) the Parent Indemnitee may, at its option and at its own expense,
participate in such defense and employ counsel separate from the counsel
employed by the Indemnitor. The Indemnitor shall be liable for the reasonable
fees and expenses of counsel employed by the Parent Indemnitee for any period in
which the Indemnitor has not assumed the defense thereof (other than during any
period in which the Parent Indemnitee failed to give the notice provided above).
The parties shall use commercially reasonable efforts to minimize Losses from
claims by third parties and shall act in good faith in responding to, defending
against, settling or otherwise dealing with such claims, notwithstanding any
dispute as to liability as between the parties under this Article V. The parties
shall also cooperate in any such defense, give each other full access to all
non-privileged information relevant thereto and make employees and other
representatives available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder. Whether or not
the Indemnitor shall have assumed the defense, the Indemnitor shall not be
obligated to indemnify the Parent Indemnitee hereunder for any settlement
entered into without the Indemnitor's prior written consent, which consent shall
not be unreasonably withheld or delayed. Unless the sole relief is monetary
damages which are payable in full by the Indemnitor, the Indemnitor shall not
settle any claim without the prior written consent of the Parent Indemnitee,
which consent shall not be unreasonably withheld or delayed.
12
ARTICLE VI
MISCELLANEOUS
6.01 Termination. This Agreement (a) may be terminated at any time by
mutual written consent of the parties; (b) shall terminate, without any action
by the parties, on the date on which the Merger Agreement terminates in
accordance with its terms or (c) may be terminated by Sellers in the
circumstances in which the Partnership would be entitled to terminate the Merger
Agreement under Section 6.03(c) of the Merger Agreement. Regardless of any
termination of this Agreement, the rights and obligations of the parties
contained in Article V of this Agreement shall survive indefinitely or as
otherwise provided specifically therein.
6.02 Effect of Termination. In the event of termination of this Agreement,
this Agreement shall forthwith become void and have no effect, without any
liability or obligation on the part of any party, except that nothing in this
Section 6.02 shall relieve a party from liability for fraud or liability for the
willful breach by a party of any representation, warranty or covenant set forth
in this Agreement.
6.03 Amendment. This Agreement may be amended, supplemented or modified by
the parties at any time only by an instrument in writing signed on behalf of
each of the parties.
6.04 Extension; Waiver. At any time prior to the Effective Time, (a) the
parties may extend the time for the performance of any of the obligations or
other acts of the other parties, (b) each party may waive any inaccuracies in
the representations and warranties of another party contained in this Agreement
or in any document delivered pursuant to this Agreement or (c) each party may
waive compliance with any of the agreements or conditions of another party
contained in this Agreement. Any agreement on the part of a party to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party. The failure of any party to this Agreement to
assert any of its rights under this Agreement or otherwise shall not constitute
a waiver of such rights.
6.05 Notices. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given upon receipt (or upon the next succeeding business day if received after
5:00 p.m. local time on a business day or if received on a Saturday, Sunday or
United States holiday) by the parties at the following addresses (or at such
other address for a party as shall be specified by like notice):
(a) if to Parent or Successor GP, to:
HRPT Properties Trust
000 Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxx X. Xxxxx
with a copy to:
Xxxxxxxx & Worcester LLP
Xxx Xxxx Xxxxxx Xxxxxx
00
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxxx Xxxxxx
(b) if to any of the Sellers, to:
Hallwood Realty, LLC
0000 Xxxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx
with a copy to:
Weil, Gotshal & Xxxxxx, LLP
000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxxxx
6.06 Interpretation. When a reference is made in this Agreement to a
Section or an Article, such reference shall be to a Section or Article of this
Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. Whenever the words
"include," "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation."
6.07 Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule or Law, or public
policy, all other terms and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic and legal substance of
the transactions contemplated by this Agreement is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that the transactions contemplated by this Agreement are fulfilled to
the extent possible.
6.08 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
6.09 Entire Agreement; No Third-Party Beneficiaries. This Agreement and
the Merger Agreement constitute the entire agreement, and supersedes all prior
agreements and understandings, both written and oral, among the parties with
respect to the transactions contemplated by this Agreement and the Merger
Agreement and are not intended to confer upon any Person other than the parties
hereto any rights, remedies, obligations or liabilities.
14
6.10 Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws thereof.
6.11 Assignment. Neither this Agreement nor any of the rights, interests
or obligations under this Agreement shall be assigned, in whole or in part, by
operation of law or otherwise by any of the parties without the prior written
consent of the other parties. Any purported assignment without such consent
shall be void. Subject to the preceding sentences, this Agreement will be
binding upon, inure to the benefit of, and be enforceable by, the parties and
their respective successors and assigns.
6.12 Limitations on Warranties.
(a) Except for the representations and warranties contained in
Article III of this Agreement and those contained in the Merger Agreement, the
Sellers make no other express or implied representation or warranty to Parent or
the Successor GP. Parent and the Successor GP each acknowledge that, in entering
into this Agreement, it has not relied on any representations or warranties of
the Sellers other than the representations and warranties set forth in Article
III of this Agreement and those contained in the Merger Agreement.
(b) Except for the representations and warranties contained in
Article IV of this Agreement and those contained in the Merger Agreement, Parent
and the Successor GP make no other express or implied representation or warranty
to the Sellers. The Sellers acknowledge that, in entering into this Agreement,
they have not relied on any representations or warranties of Parent and the
Successor GP other than the representations and warranties of Parent and the
Successor GP set forth in Article IV of this Agreement and those contained in
the Merger Agreement.
6.13 Specific Performance. The parties hereto agree that irreparable
damage would occur in the event any provision of this Agreement was not
performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
6.14 Further Assurances. From time to time, at Parent's request and
without further consideration, each Seller, as applicable, shall execute and
deliver such additional documents and take all such further action as may be
reasonably necessary or desirable to carry out the provisions of this Agreement.
6.15 FIRPTA Certificate. Prior to the Closing, each Seller shall have
delivered to Parent and Successor GP a certificate of non-foreign status meeting
the requirements of the Treasury Regulations under Section 1445 of the Code.
6.16 Withholding Rights. Parent, Purchaser and Successor GP shall be
entitled to deduct and withhold, from the consideration otherwise payable to the
Sellers pursuant to this Agreement, (a) such amounts as may be required to be
deducted and withheld with respect to the making of such payment(s) under the
Code, or under any provision of state, local or foreign Law, and (b) such
pro-rata amounts as may be required to be deducted or withheld from or paid by
15
holders of Units upon order of the Court of Chancery of the state of Delaware,
New Castle County in connection with the Current Actions. To the extent that
amounts are so deducted and withheld by Parent, Purchaser or Successor GP, such
deducted and withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the Sellers by Parent, Purchaser or the
Successor GP, as applicable.
6.17 Nonliability of Trustees. THE DECLARATION OF TRUST ESTABLISHING THE
PARENT, A COPY OF WHICH, TOGETHER WITH ALL AMENDMENTS THERETO (THE
"DECLARATION"), IS DULY FILED WITH THE DEPARTMENT OF ASSESSMENTS AND TAXATION OF
THE STATE OF MARYLAND, PROVIDES THAT THE NAME "HRPT PROPERTIES TRUST" REFERS TO
THE TRUSTEES UNDER THE DECLARATION COLLECTIVELY AS TRUSTEES, BUT NOT
INDIVIDUALLY OR PERSONALLY, AND THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE
OR AGENT OF THE PARENT SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR
SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, THE PARENT. ALL PERSONS
DEALING WITH THE PARENT, IN ANY WAY, SHALL LOOK ONLY TO THE ASSETS OF THE PARENT
FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION.
6.18 Consent of 1st Odyssey. To the extent requested by Parent not less
than 30 days prior to the Effective Time, HWG, LLC shall use its commercially
reasonable efforts to obtain the consent of 1st Odyssey to the assignment of
HWG, LLC's rights under that certain Staff Services Agreement dated July 1, 2003
by and between 1st Odyssey and HWG, LLC. At the Effective Time, HWG, LLC shall,
after the receipt of such consent, assign its rights thereunder, to Reit
Management & Research LLC.
6.19 Public Announcements. Parent, on the one hand, and the General
Partner, on the other hand, shall consult with each other before issuing, and
provide each other the opportunity to review and comment upon, any press release
or other public statements with respect to the transactions contemplated by this
Agreement and the Merger Agreement and shall not issue any such press release or
make any such public statement prior to such consultation, except after it has
used all reasonable efforts to consult with the other party and such release or
statement is required by applicable Law, by New York Stock Exchange rule or by
American Stock Exchange rule.
[SIGNATURE PAGES FOLLOW]
16
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.
PARENT
HRPT PROPERTIES TRUST
By: /s/ Xxxx X. Xxxxxxx
--------------------------------
Name: Xxxx X. Xxxxxxx
Title: Executive Vice President
SUCCESSOR GP
HRP GP, LLC
By: /s/ Xxxx X. Xxxxxxx
--------------------------------
Name: Xxxx X. Xxxxxxx
Title: Executive Vice President
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.
HALLWOOD REALTY, LLC
By: /s/ Xxxx X. Xxxxxxx
-------------------------------------
Name: Xxxx X. Xxxxxxx
Title: Executive Vice President
HWG, LLC
By: /s/ Xxxx X. Xxxxxxx
-------------------------------------
Name: Xxxx X. Xxxxxxx
Title: Executive Vice President
HWG REALTY INVESTORS, LLC
By: /s/ Xxxx X. Xxxxxxx
-------------------------------------
Name: Xxxx X. Xxxxxxx
Title: Executive Vice President
HWG 98 ADVISORS, INC.
By: /s/ Xxxx X. Xxxxxxx
-------------------------------------
Name: Xxxx X. Xxxxxxx
Title: Executive Vice President
HWG 95 ADVISORS, INC.
By: /s/ Xxxx X. Xxxxxxx
-------------------------------------
Name: Xxxx X. Xxxxxxx
Title: Executive Vice President
HALLWOOD COMMERCIAL REAL
ESTATE, LLC
By: /s/ Xxxxxxx X. Xxxxxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: President
SOLELY WITH RESPECT TO ARTICLE V,
THE HALLWOOD GROUP INCORPORATED
By: /s/ Xxxxxxx X. Xxxxxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Executive Vice President
SCHEDULE I
Property Owner Manager
-------- ----- -------
HALLWOOD REALTY PARTNERS, L.P.
Airport Plaza Hallwood 95, L.P. HCRE California, Inc.
Allfirst Building First Associates L.P. HCRE
Andover Executive Park SBP General Partnership HCRE
Bellevue Corporate Plaza Hallwood 95, L.P. HCRE
Xxxxxxxx Business Parks BBP General Partnership HCRE California, Inc.
Corporate Square (w/o 8, 10-12) Hallwood 95, L.P. HCRE
Corporate Square (8) GSA Corporate Square 8, HCRE
LLC
Xxxxxxxxx Xxxxxx (00-00) Xxxxxxxx Xxxx Xxxxxx HCRE
Investors Fund XV
Executive Park (w/o 3, 5 or 12) Hallwood 98, L.P. HCRE
Executive Park (3) Hallwood Real Estate HCRE
Investors Fund XVI
Executive Park (5) Hallwood Real Estate HCRE
Investors Fund XVI
Executive Park (12) Executive Park 12, LLC HCRE
Fairlane Commerce (G-L, N-Q) Hallwood 95, L.P. HCRE
Fairlane Commerce - M Hallwood Real Estate HCRE
Investors Fund XV
Fountain View Business Center Hallwood Real Estate HCRE California, Inc.
Investors Fund XV
Xxxxxx Road Industrial Park Hallwood Real Estate HCRE
Investors Fund XV
Montrose Office Center Hallwood 95, L.P. HCRE
Parklane Towers Hallwood 95, L.P. HCRE
Raintree Industrial Park Hallwood 95, L.P. HCRE
Riverbank Plaza (a/k/a Rancho Mission Plaza) Hallwood Real Estate HCRE California, Inc.
Investors Fund XV
West Valley Industrial Park HCRE
EXHIBIT A
ESCROW AGREEMENT
ESCROW AGREEMENT, dated of _________, 2004 (this "Agreement"), by and
among by and among HRPT Properties Trust, a Maryland real estate investment
trust ("Parent"), HRP GP, LLC, a Delaware limited liability company and a
wholly-owned subsidiary of Parent (the "Successor GP"), Hallwood Realty, LLC, a
Delaware limited liability company (the "General Partner"), Hallwood Commercial
Real Estate, LLC, a Delaware limited liability company ("HCRE"), HWG, LLC, a
Delaware limited liability company ("HWG, LLC"), HWG Realty Investors, LLC, a
Delaware limited liability company ("HWG Realty"), HWG 98 Advisors, Inc., a
Delaware corporation ("HWG98"), HWG 95 Advisors, Inc., a Delaware corporation
("HWG95"), and [_______], as Escrow Agent (the "Escrow Agent"). The General
Partner, HCRE, HWG, LLC, HWG Realty, HWG98 and HWG95 are referred to
collectively as the "Sellers."
RECITALS
The Parties to this Agreement are parties to a Purchase Agreement dated
April __, 2004 (the "Purchase Agreement"), pursuant to which the Sellers will
transfer and deliver to the Successor GP partnership interests in Hallwood
Realty Partners, L.P. ("Hallwood") and its subsidiaries and membership interests
in certain affiliates of Hallwood. Capitalized terms not defined in this
Agreement shall have the meanings given therefore in the Purchase Agreement.
Article V of the Purchase Agreement provides for indemnification by
Indemnitor for Losses of Parent Indemnitee.
NOW, THEREFORE, it is agreed:
1. Appointment of Escrow Agent; Escrow Deposit. Parent, the Successor
GP and the Sellers hereby appoint the Escrow Agent as the escrow agent under
this Agreement, and the Escrow Agent accepts such appointment according to the
terms and conditions set forth herein. On the date hereof, the Parent and the
Successor GP have caused $18,500,000 to be delivered to the Escrow Agent by wire
transfer of immediately available funds. All of such amount, but exclusive of
any interest accrued thereon, shall be hereinafter referred to as the "Escrow
Deposit." The Escrow Agent hereby acknowledges receipt of the Escrow Deposit.
The Escrow Agent shall hold, invest, reinvest, manage, administer, distribute
and dispose of the Escrow Deposit and any interest earned thereon in accordance
with the terms and conditions of this Agreement.
2. Investment of Escrow Deposit. Until the termination of this
Agreement, the Escrow Deposit, together with any interest earned thereon, shall
be invested pursuant to the written instructions of HWG, LLC, which may be sent
to the Escrow Agent from time to time, solely in one or more of the investments
referred to below:
(a) interest bearing time deposits with maturity dates of ninety (90)
days or less of any bank located within the United States of America, including
one or more accounts maintained in the commercial banking department (if any) of
the Escrow Agent; provided that any amount held on deposit in any bank not
having unsecured, non-subordinated indebtedness outstanding that is rated as
"investment grade" by a nationally recognized rating agency shall be so invested
only if such amount is fully insured by the Federal Deposit Insurance
Corporation ("FDIC");
(b) certificates of deposit with maturity dates of ninety (90) days or
less issued by the commercial banking department (if any) of the Escrow Agent,
or of any bank located in the United States of America, provided that either (A)
any such bank shall have unsecured, non-subordinated indebtedness outstanding
that is rated as "investment grade" by a nationally recognized rating agency, or
(B) the full amount of each and every certificate of deposit issued by any such
bank to the Escrow Agent hereunder shall be fully insured by the FDIC;
(c) direct obligations of, or obligations guaranteed as to all
principal and interest by, the United States of America, in each case with
maturity dates of ninety (90) days or less;
(d) repurchase agreements with maturity dates of ninety (90) days or
less that are fully secured as to payment of principal and interest by
collateral consisting of obligations described in Sections 2(a) through (c)
above;
(e) commercial paper with maturity dates of ninety (90) days or less
that is rated A-1 by Standard & Poor's Corporation or Prime-1 by Xxxxx'x
Investors Service, Inc., or better; or
(f) investments in institutional money market funds investing
principally in obligations permitted by Sections 2(a) through (e) above.
The parties acknowledge that the Escrow Agent shall not be responsible
for any diminution in the Escrow Deposit due to losses resulting from
investments made pursuant to this Agreement.
3. Payments From Escrow. The Escrow Agent shall hold the Escrow Deposit
in escrow in accordance with this Agreement and shall make payments from the
Escrow Deposit only as follows or as provided in Section 7 below:
(a) Parent Indemnitee shall be paid such amounts as are authorized to
be paid to Parent Indemnitee pursuant to Section 4(a) below.
(b) The Sellers shall be paid such amounts as are authorized to be paid
to the Sellers pursuant to Section 4(b).
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(c) On _______ ___, 2005 (the "Termination Date"), the Sellers shall be
paid an amount equal to the entire balance of the Escrow Deposit then remaining,
minus the aggregate of the then existing Claims Reserves (hereafter defined) for
Open Claims (hereafter defined).
(d) Within two (2) banking days of the Escrow Agent's having been given
a copy of a Final Determination (as hereafter defined) for an Open Claim, the
amount payable to Parent Indemnitee under the Final Determination for such Open
Claim shall be paid to Parent Indemnitee from the Claim Reserve for such Open
Claim as provided in Section 4(a) and, after the later of the date of Final
Determination of all Open Claims and payment to Parent Indemnitee in respect
thereof and the Termination Date, the balance of such Claim Reserve, if any,
shall then be paid to Sellers.
(e) Within two (2) banking days of the Escrow Agent's having been given
a copy of a Final Termination Determination (as hereafter defined) for an Open
Request, the amount payable to Sellers under the Final Termination Determination
for such Open Request shall be paid to Sellers from the Request Reserve for such
Open Request as provided in Section 4(b) provided that on the Termination Date,
the balance of such Request Reserve, if any, shall be paid to Sellers.
(f) Any payment required to be made hereunder by the Escrow Agent from
the Escrow Deposit shall be delivered in accordance with written instructions
given to the Escrow Agent by the party entitled under this Agreement to receive
such payment.
4. Payment and Return Procedures.
(a) The procedure for payment of Parent Indemnitee claims from
the Escrow Deposit shall be as follows:
(i) From time to time prior to the Termination Date,
Parent Indemnitee may request payment from the Escrow Deposit
pursuant to Article V of the Purchase Agreement by giving
written notice of Parent Indemnitee's claim to the Escrow
Agent and HWG, LLC, certifying in such notice the nature of
the claim, the amount thereof if then ascertainable and, if
not then ascertainable, a good faith estimate of the estimated
amount thereof and the provision(s) in the Purchase Agreement
on which the claim is based and the method by and date on
which such notice was given to each recipient.
(ii) If, within twenty (20) days after receipt by the
Escrow Agent of the written notice of a claim from Parent
Indemnitee in accordance with Section 4(a)(i), the Escrow
Agent has not received written objection to such claim from
HWG, LLC, the claim stated in such notice shall be
conclusively deemed to be approved by HWG, LLC and the Escrow
Agent shall promptly thereafter pay to Parent Indemnitee from
the Escrow Deposit the amount of such claim to the extent of
the funds in the Escrow Deposit.
--------
-3-
(iii) If within said twenty (20) days the Escrow
Agent shall have received from HWG a written objection to the
claim by Parent Indemnitee, certifying the nature of and
grounds for such objection (a copy of which objection shall in
each case be sent simultaneously to each of Parent Indemnitee
and Parent by HWG, LLC, in accordance with the provisions of
Section 10 below), then such claim shall be deemed to be an
"Open Claim" and the Escrow Agent shall reserve within the
Escrow Deposit an amount equal to the amount of the Open Claim
(which amount for each Open Claim is referred to as the "Claim
Reserve").
(iv) The amount constituting the Claim Reserve for
each Open Claim shall be paid by the Escrow Agent from the
Escrow Deposit to Parent Indemnitee either (i) in accordance
with a joint written instruction of Parent Indemnitee and HWG,
LLC or (ii) if and to the extent consistent with a certified
copy of a final order, determination, finding, judgment and/or
award issued by a court of competent jurisdiction or a final
order in arbitration, sent to the Escrow Agent by Parent
Indemnitee, which order, determination, finding, judgment
and/or award has been finally affirmed on appeal or which by
lapse of time or otherwise is no longer subject to appeal
(each of (i) and (ii), a "Final Determination").
(b) The procedure for return of the Escrow Deposit (or
portions thereof) to the Sellers prior to the Termination Date shall be as
follows:
(i) Prior to the Termination Date (A) after final
termination, by release, dismissal with prejudice or final
order or judgment (including, in each case, the exhaustion of
any and all appeals) ("Final Termination") of all claims of
all Unit holders relating to the tender offer from High River
Limited Partnership or the Merger (including the allocation of
the consideration among the General Partner and its
affiliates, on the one hand, and Unit holders other than the
General Partner and its affiliates, on the other), including,
without limitation, the Current Actions (collectively, the
"Claims"), HWG, LLC may request the return of the balance of
the Escrow Deposit then remaining including any Request
Reserve (as defined herein), less any Claim Reserves, by
giving written notice to the Escrow Agent and Parent; and (B)
from time to time, after Final Termination of all Claims of
one or more Unit holders, HWG, LLC may request the return of
an amount equal to $9.00 for each Unit held by such Unit
holder by giving written notice to the Escrow Agent and
Parent. Any notice pursuant to this Section 4(b) shall certify
that there has been a Final Termination and shall include
copies of the document(s) evidencing the Final Termination.
(ii) If, within twenty (20) days after receipt by the
Escrow Agent of the request from HWG, LLC in accordance with
Section 4(b)(i), the Escrow Agent has not received written
objection to such request from Parent, the request shall be
conclusively deemed to be approved by Parent and the Escrow
Agent shall promptly thereafter return to Sellers the balance
of the Escrow Deposit then remaining, including any Request
Reserve, in the case of a request pursuant to Section
4(b)(i)(A), less any Claim Reserves, or an amount equal to
$9.00 for each Unit held by a Unit Holder with respect to
which there has been a Final Determination to the extent of
the funds in the Escrow Deposit,
-4-
minus the aggregate of the then existing Claims Reserves, in
the case of a request pursuant to Section 4(b)(i)(B).
(iii) If within said twenty (20) days the Escrow
Agent shall have received from Parent a written objection to
the request by HWG,LLC, certifying the nature of and grounds
for such objection (a copy of which objection shall in each
case be sent simultaneously to HWG, LLC by Parent, in
accordance with the provisions of Section 10 below), then such
request shall be deemed to be an "Open Request" and the Escrow
Agent shall reserve within the Escrow Deposit an amount equal
to the amount of the Open Request (which amount for each Open
Request is referred to as the "Request Reserve").
(iv) The amount constituting the Request Reserve for
each Open Request shall be paid by the Escrow Agent from the
Escrow Deposit to Sellers either (i) in accordance with a
joint written instruction of HWG, LLC and Parent or (ii) if
and to the extent consistent with a certified copy of a final
order, determination, finding, judgment and/or award issued by
a court of competent jurisdiction or a final order in
arbitration, sent to the Escrow Agent by HWG, LLC, which
order, determination, finding, judgment and/or award has been
finally affirmed on appeal or which by lapse of time or
otherwise is no longer subject to appeal (each of (i) and
(ii), a "Final Termination Determination").
(c) The parties to this Agreement acknowledge and agree that all
instructions, directions or other communications given by Parent Indemnitee
shall be made pursuant to a writing signed by Parent Indemnitee (or a duly
authorized officer of Parent Indemnitee, as applicable), and that all
instructions, directions or other communications given by HWG, LLC shall be made
pursuant to a writing signed by a duly authorized officer of HWG, LLC.
5. Conditions to Escrow. The Escrow Agent agrees to hold the Escrow
Deposit and to perform in accordance with the terms and provisions of this
Agreement. Parent, the Successor GP, HWG, LLC and the Sellers agree that the
Escrow Agent does not assume any responsibility for the failure of Parent,
Successor GP, the Parent Indemnitee or any of the Sellers to perform in
accordance with the Purchase Agreement or this Agreement. The acceptance by the
Escrow Agent of its responsibilities hereunder is subject to the following terms
and conditions, which the parties hereto agree shall govern and control with
respect to the Escrow Agent's rights, duties, liabilities and immunities:
(a) The Escrow Agent may conclusively rely, and shall be protected in
acting or refraining from acting upon, any written notice, certification,
request, waiver, consent, receipt or other paper or document furnished to it,
not only as to its due execution and validity and effectiveness of its
provisions but also as to the truth and accuracy of any information therein
contained which the Escrow Agent reasonably believes to be genuine and to have
been signed and presented by the proper party or parties. Should it be necessary
for the Escrow Agent to act
----------------
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upon any instructions, directions, documents or instruments issued or signed by
or on behalf of any corporation, fiduciary, or individual acting on behalf of
another party hereto, it shall not be necessary for the Escrow Agent to inquire
into such corporation's, fiduciary's or individual's authority, capacity,
existence or identity. The Escrow Agent is also relieved from the necessity of
satisfying itself as to the authority of the persons executing this Agreement in
a representative capacity. It is understood that any references herein to joint
instructions or joint written instructions or words of similar import include
any instructions signed in counterpart.
(b) The Escrow Agent shall not be liable for any error of judgment or
for any act done or step taken or omitted by it in good faith, or for any
mistake of fact or law, or for anything which it may do or refrain from doing in
connection herewith, except for its own gross negligence or willful misconduct.
(c) The Escrow Agent may consult with, and obtain advice from, legal
counsel in the event of any question as to any of the provisions hereof or the
duties hereunder, and it shall incur no liability and shall be fully protected
in acting in good faith in accordance with the opinion and instructions of such
counsel.
(d) The Escrow Agent shall have no duties except those which are
expressly set forth herein and it shall not be bound by (i) the Purchase
Agreement or any agreement of the other parties hereto (whether or not it has
any knowledge thereof) or by any notice of a claim, or demand with respect
thereto, or (ii) any waiver, modification, amendment, termination or rescission
of this Agreement unless the Escrow Agent agrees thereto in writing.
(e) The Escrow Agent may resign and be discharged from its duties and
obligations hereunder by giving notice in writing of such resignation specifying
a date (no earlier than thirty (30) days following the date of such notice) when
such resignation will take effect, provided, however, that until a successor
escrow agent is appointed by Parent and HWG, LLC, and such successor accepts
such appointment, the Escrow Agent shall continue to hold the Escrow Deposit and
otherwise comply with the terms of this Agreement; provided further that the
parties to this Escrow Agreement agree to use their best efforts to mutually
agree on a successor escrow agent within thirty (30) days after the giving of
the Escrow Agent's notice and if no such successor escrow agent shall be
appointed within thirty (30) days of the Escrow Agent providing its notice, the
Escrow Agent may, at the expense of Parent Indemnitee, (i) appoint a successor
escrow agent which shall be a national or state-chartered banking, trust or
savings association, (ii) petition any court of competent jurisdiction for the
appointment of a successor escrow agent or (iii) may deposit the Escrow Deposit,
together with any interest earned thereon, with the Clerk of the state courts of
the State of Delaware, or with the office of the clerk of registry of any other
court of competent jurisdiction, at which time the Escrow Agent's duties
hereunder shall terminate. Any successor escrow agent shall execute and deliver
an instrument accepting such appointment and it shall, without further acts, be
vested with all the estates, properties, rights, powers and duties of the
predecessor escrow agent as if originally named as escrow agent. The resigning
Escrow Agent shall thereupon be discharged from any further obligations under
this Escrow Agreement except as otherwise provided in Section 5(b).
(f) Except as otherwise provided in Section 5(b), upon delivery of all
of the Escrow Deposit, together with any interest earned thereon, pursuant to
the terms of Sections 3
-6-
and 4(a) above or to a successor escrow agent, the Escrow Agent shall thereafter
be discharged from any further obligations hereunder. The Escrow Agent is hereby
authorized, in any and all events, to comply with and obey any and all final
judgments, orders and decrees (not subject to appeal) of any court of competent
jurisdiction which may be filed, entered or issued, and, if it shall so comply
or obey, it shall not be liable to any other person by reason of such compliance
or obedience.
(g) The Escrow Agent shall not have any responsibility or liability for
the completeness, correctness or accuracy of any transactions between Parent,
Successor GP or any Parent Indemnitee, on the one hand, and HWG, LLC or any
Seller, on the other hand.
(h) In the event that the Escrow Agent shall be uncertain as to its
duties or rights hereunder or shall receive instructions with respect to the
Escrow Deposit which, in its sole opinion, are in conflict with either other
instructions received by it or any provision of this Agreement, it shall without
liability of any kind, be entitled to hold the Escrow Deposit pending the
resolution of such uncertainty to the Escrow Agent's sole satisfaction, by final
judgment of a court or courts of competent jurisdiction or otherwise, or the
Escrow Agent, at its option, may, in final satisfaction of its duties hereunder,
deposit the Escrow Deposit with the Clerk of the state courts of the State of
Delaware or with the office of the clerk of registry of any other court of
competent jurisdiction.
6. Banking Days. If any date on which the Escrow Agent is required to
make an investment or a delivery pursuant to the provisions hereof is not a
banking day, then the Escrow Agent shall make such investment or delivery on the
next succeeding banking day.
7. Escrow Costs; No Right of Set-off. The Escrow Agent shall be
entitled to be paid a fee for its services pursuant to the Fee Schedule attached
as Exhibit I hereto and to be reimbursed for its reasonable costs and expenses
hereunder (including reasonable counsel fees), which fees, costs and expenses
shall be borne one-half by Successor GP and one-half by HWG, LLC. The Escrow
Agent shall be entitled to withhold from any payment to be made hereunder to any
party hereunder amounts due from such party pursuant to this Agreement.
The Escrow Agent acknowledges and agrees that it is holding the Escrow
Deposit in its capacity as escrow agent and that it has no right to apply
amounts in the Escrow Deposit against any obligations of the other parties to
this Agreement that do not arise under this Agreement.
8. Notices. All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be deemed to have been duly
given (i) on the date of service if served personally on the party to whom
notice is to be given, (ii) on the day of transmission if sent via facsimile
transmission to the facsimile number given below, and telephonic confirmation of
receipt is obtained promptly after completion of transmission or (iii) on the
day after delivery to Federal Express or similar overnight courier or the
Express Mail service maintained by the U.S. Postal Service and properly
addressed, to the party as follows:
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If to Parent, the Successor GP or any Parent Indemnitee:
HRPT Properties Trust
000 Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxx X. Xxxxx
with a copy to:
Xxxxxxxx & Worcester LLP
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxxx Xxxxxx
If to the General Partner, HWG, LLC or any other Seller:
Hallwood Realty, LLC
0000 Xxxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx
with a copy to:
Weil, Gotshal & Xxxxxx, LLP
000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxxxx
(i) If to the Escrow Agent:
(ii) [To come]
9. Entire Agreement. This Agreement, together with the Purchase
Agreement and related exhibits and schedules, contains the entire understanding
of the parties hereto with respect to the transactions contemplated hereby. This
Agreement may be amended, modified, supplemented or altered only by a writing
duly executed by Parent, the Successor GP, each of the Sellers and the Escrow
Agent and any prior agreements or understandings, whether oral or written, are
entirely superseded hereby.
10. Successors and Assigns. Except as otherwise expressly provided in
this Agreement, no party hereto shall assign this Agreement or any rights or
obligations hereunder without the prior written consent of the other parties
hereto and any such attempted assignment
-8-
without such prior written consent shall be void and of no force and effect.
This Agreement shall inure to the benefit of and shall be binding upon the
successors and permitted assigns of the parties hereto.
11. Payment and Taxation of Interest Earned on Investments of Escrow
Deposit. An amount equal to 100% of any and all interest or other income accrued
or earned on the Escrow Deposit shall be paid to HWG, LLC as promptly as
practicable following March 31, June 30, September 30 and December 31 of each
year in which all or any portion of the Escrow Deposit remains undistributed
pursuant to the terms of this Agreement. HWG, LLC hereby acknowledges that, for
federal and state income tax purposes, any interest earned on the investment of
the Escrow Deposit shall be income of HWG, LLC. The Escrow Agent shall be
responsible for reporting any interest earned to HWG, LLC.
12. No Waiver. No failure or delay by any party hereto in exercising
any right, power or privilege hereunder shall operate as a waiver thereof, and
no single or partial exercise thereof shall preclude any right of further
exercise or the exercise of any other right, power or privilege.
13. Severability. In the event that any part of this Agreement is
declared by any court or other judicial or administrative body to be null, void
or unenforceable, said provision shall survive to the extent it is not so
declared, and all of the other provisions of this Agreement shall remain in full
force and effect.
14. Governing Law; Jurisdiction. This Agreement shall be construed,
performed and enforced in accordance with, and governed by, the laws of the
State of Delaware, without giving effect to the principles of conflicts of laws
thereof. The parties hereto irrevocably elect as the sole judicial forum for the
adjudication of any matters arising under or in connection with this Agreement,
and consent to the jurisdiction of, the state courts of the State of Delaware.
15. Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which shall constitute the same
instrument.
16. Substitution of Escrow Deposit. If at any time during the term of
this Agreement, Sellers desire to replace the Escrow Deposit with an irrevocable
letter of credit ("Letter of Credit") they may do so provided the issuer of the
Letter of Credit, the term and the drawing terms are reasonably acceptable to
Parent. Upon receipt of a joint written instruction of Parent and HWG, LLC
accompanied by a Letter of Credit in an amount equal to the then balance of the
Escrow Deposit, minus the aggregate of the then existing Claim Reserves, Escrow
Agent shall release then balance of the Escrow Deposit and any accrued interest,
minus the aggregate of the then existing Claims Reserves, to HWG, LLC. The
Escrow Agent shall hold the Letter of Credit as the Escrow Deposit pursuant to
this Agreement and shall make drawings on the Letter of Credit to satisfy claims
and to establish Claim Reserves, if required pursuant to Section 4.
17. Nonliability of Trustees. THE DECLARATION OF TRUST ESTABLISHING THE
PARENT, A COPY OF WHICH, TOGETHER WITH ALL AMENDMENTS THERETO (THE
"DECLARATION"), IS DULY FILED WITH THE DEPARTMENT OF ASSESSMENTS AND TAXATION OF
THE STATE OF MARYLAND,
-9-
PROVIDES THAT THE NAME "HRPT PROPERTIES TRUST" REFERS TO
THE TRUSTEES UNDER THE DECLARATION COLLECTIVELY AS TRUSTEES, BUT NOT
INDIVIDUALLY OR PERSONALLY, AND THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE
OR AGENT OF THE PARENT SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR
SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, THE PARENT. ALL PERSONS
DEALING WITH THE PARENT, IN ANY WAY, SHALL LOOK ONLY TO THE ASSETS OF THE PARENT
FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION.
* * * * * *
-10-
IN WITNESS WHEREOF, the parties hereto have executed this Escrow
Agreement as of the date first written above.
HRPT PROPERTIES TRUST
By:
--------------------------
Name:
--------------------------
Title:
--------------------------
HRP GP, LLC
By:
--------------------------
Name:
--------------------------
Title:
--------------------------
HALLWOOD REALTY, LLC
By:
--------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: President
HALLWOOD COMMERCIAL REAL
ESTATE, LLC
By:
--------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: President
HWG, LLC
By:
--------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: President
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HWG REALTY INVESTORS, LLC
By:
--------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: President
HWG 98 ADVISORS, INC.
By:
--------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: President
HWG 95 ADVISORS, INC.
By:
--------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: President
-12-
EXHIBIT I
FEE SCHEDULE
[to come]
