AGREEMENT OF MERGER
between
HEALTH AND RETIREMENT PROPERTIES TRUST
and
GOVERNMENT PROPERTY INVESTORS, INC.
February 17, 1997
AGREEMENT OF MERGER
THIS AGREEMENT OF MERGER ("Agreement") is made and entered into
February 17, 1997, between: HEALTH AND RETIREMENT PROPERTIES TRUST ("HRPT"), a
Maryland real estate investment trust, with its principal office located in
Newton, Massachusetts, and GOVERNMENT PROPERTY INVESTORS, INC. ("GPI"), a
corporation organized and existing under the laws of the State of Delaware, with
its principal office located in Washington, D.C.
RECITALS:
1. The Trustees and/or Boards of Directors of HRPT and GPI are each of
the opinion that the transactions described in this Agreement are in their
respective best interests and of their respective shareholders and, accordingly,
have agreed to effect the merger provided for in this Agreement upon the terms
and subject to the conditions set forth in this Agreement; and
2. This Agreement provides for the merger (the "Merger") of Government
Property Holdings Trust ("GPH"), a Maryland real estate investment trust, to be
organized by GPI, with and into Hub Acquisition Trust ("Merger Sub"), a Maryland
real estate investment trust, to be organized by HRPT, so that Merger Sub will
be the surviving entity, and for GPI to receive common shares of beneficial
interest of HRPT in exchange for its shares of beneficial interest of GPH, and
following the Merger, for Merger Sub to conduct the business and operations of
GPI; and
3. Pursuant to a plan of liquidation and dissolution to be adopted by
the stockholders of GPI, GPI will liquidate and dissolve and as a result, the
former stockholders of GPI shall become shareholders of HRPT; and
4. HRPT and GPI desire to make certain representations, warranties and
agreements in connection with the Merger; and
5. The parties intend that the Merger and subsequent liquidation of GPI
shall qualify as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Internal Revenue Code").
In consideration of the foregoing, and the representations, warranties,
covenants and agreements set forth in this Agreement, the parties agree as
follows:
SECTION 1
DEFINITIONS
Except as otherwise provided in this Agreement, the capitalized terms
set forth below (in their singular and plural forms as applicable) shall have
the following meanings:
1.1 "1933 Act": the Securities Act of 1933, as amended.
1.2 "1934 Act": the Securities Exchange Act of 1934, as amended.
1.3 "Acquisition Proposal": defined in Section 6.3.
1.4 "Additional Properties": the land and improvements and fixtures, if
any, described on Disclosure Schedule 1.4 together with personal property of the
sellers of such Additional Properties used in connection therewith (other than
personal property of any tenant).
1.5 "Additional Properties Acquisition Cost": the aggregate cost of
acquiring Additional Properties including the purchase price, any contingent
purchase price, the amount of any indebtedness assumed (but exclusive of
transaction expenses and commissions paid by HRPT or any of its affiliates)
that, prior to the Second Closing Date, HRPT or any of its affiliates have
purchased or entered into a binding agreement to purchase.
1.6 "Aggregate Closing Consideration": $436,000,000 minus (a) the total
debt of GPI and the GPI subsidiaries on a consolidated basis (exclusive of the
GPI Affiliate Debt), plus (b) for GPH and the other GPI Subsidiaries cash and
cash equivalents, restricted cash, utility deposits, prepaid expenses (including
real estate and other ad valorem tax expense, rent expense and insurance expense
related to insurance policies set out on Disclosure Schedule 4.18), accounts
receivable (less reserves for doubtful accounts) for rent or for tenant
improvement work performed, and other assets (excluding (1) deposits for the LA
MEPS Premises, Waco Premises and Phoenix Premises, (2) acquisition deposits
relating to any other property not included in Premises, (3) accruals related to
straight-line rents, (4) intercompany receivables, (5) capitalized leasing or
brokers commissions, (6) deferred or capitalized costs of any kind) less (c) for
GPH and the other GPI Subsidiaries, accounts payable and accrued expenses
(including (1) payments due for goods and services to be made to vendors,
contractors and the like, (2) payments due or accruals for payroll, vacation,
insurance and other benefits of employees and related taxes, (3) accruals or
payments due for real estate, personal property or other ad valorem taxes, state
or local income, sales, revenue, franchise or net worth taxes, reimbursements to
employees for business-related expenses (4) contractors retention, (5) future
rent abatements, if any, (6) prepaid rents if any, (7) leasing commissions
earned but not paid on space listed as "vacant" on Disclosure Schedule 4.22(c)
or for replacement of tenants other than tenants on Material Leases, (8) debt
prepayment penalties related to debt other than that secured solely by the
Premises identified on Disclosure Schedule 1.71 as Properties Nos. 13, 14, 19
and 20, (9) Transaction Expenses, (10) expected payments due to insurance
carriers for retropremiums, if any, and (11) an amount equal to $167,021; and
excluding straight-line rent accruals), and accrued interest payable (exclusive
of accrued interest related to GPI Affiliate Debt), all in accordance with GAAP,
collectively referred to as "working capital" for GPI and the GPI Subsidiaries
on a consolidated basis. GPI and HRPT shall prepare, by March 15, 1997, a Pro
Forma Balance Sheet as of March 31, 1997 (the "Pro Forma Balance Sheet") based
on the Consolidated Balance Sheet of GPI and its Subsidiaries as of February 28,
1997, in accordance with GAAP. Within 30 days of the Closing Date, GPI and HRPT
shall prepare a consolidated balance sheet as of March 31, 1997, comparative
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to the Pro Forma Balance Sheet. Ernst & Young LLP, independent accountants,
shall perform agreed upon procedures as set forth on Disclosure Schedule 1.6.
Any difference between the Pro Forma Balance Sheet and the consolidated balance
sheet of GPI and its Subsidiaries as of March 31, 1996, confirmed by Ernst &
Young LLP which would have affected the determination of the Aggregate Closing
Consideration shall be an adjustment to the Second Closing Consideration. The
Aggregate Closing Consideration may also be subject to adjustment as provided in
Sections 7.3, 8.2, 8.3, and 8.4.
1.7 "Agreement": this Agreement of Merger and, for purposes of Sections
4.2, 4.5, 5.2 and 5.4, each of this Agreement of Merger, the Registration Rights
Agreement, the Indemnification Agreement, the Non-Solicitation Agreement, the
Service Agreement, the Consulting Agreement and the Representation Letter to
which the Person making the representation is a party.
1.8 "Articles of Merger": the Articles of Merger to be executed by
Merger Sub and GPH and delivered to the Department of Assessments and Taxation
of the State of Maryland relating to the merger of GPH with and into Merger Sub
as contemplated by Section 2.1.
1.9 "Aurora Premises": the premises identified on Disclosure Schedule
1.25 as Subject Property No. 1.
1.10 "Certificate": defined in Section 3.3.
1.11 "Charter Documents": with respect to a Person which is a
corporation or a real estate investment trust, its certificate or articles of
incorporation or organization or its declaration of trust and its by-laws and,
with respect to a Person which is a partnership, its agreement and certificate
of partnership.
1.12 "Closing": the closing of the Merger which will take place as
described in Section 3.1.
1.13 "Closing Date": the date on which the Closing occurs.
1.14 "COBRA": the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended, as set forth in Section 4980B of the Internal Revenue Code and
Part 6 of Title I of ERISA.
1.15 "College Park Premises": the premises identified on Disclosure
Schedule 1.71 as Subject Property No. 17.
1.16 "Company Benefit Arrangement": any benefit arrangement maintained
by GPI or any GPI Subsidiary, or any ERISA Affiliates of GPI or any GPI
Subsidiary, covering any employees, former employees, directors or former
directors of GPI or any GPI Subsidiary or any of their respective ERISA
Affiliates, and the beneficiaries of any of them.
1.17 "Company Employee Benefit Plan": any Employee Benefit Plan that is
sponsored or contributed to by GPI or any GPI Subsidiary or any of their ERISA
Affiliates
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covering the employees or former employees of GPI or any GPI Subsidiary or any
of their ERISA Affiliates.
1.18 "Company Plan": any Company Employee Benefit Plan or Company
Benefit Arrangement.
1.19 "Consulting Agreement": defined in Section 7.2(d).
1.20 "Contract": any contract, agreement, indenture, note, bond, loan
agreement, instrument, lien, conditional sales contract, lease, ground lease,
Tenant Lease, mortgage, license, franchise, insurance policy, commitment or
other arrangement or agreement, including, without limitation, the Development
Partnership Agreements.
1.21 "Contract Properties": the land and improvements and fixtures, if
any, described on Disclosure Schedule 1.21, together with any personal property
of the sellers of such Contract Properties to be sold pursuant to the applicable
purchase and sale agreement and used in connection therewith.
1.22 "Contract Property Leases": all leases of the Contract Properties
listed on Disclosure Schedule 1.22.
1.23 Intentionally Deleted.
1.24 "Development Partnership Agreements": the agreements with third
parties identified on Disclosure Schedule 1.24.
1.25 "Development Properties": the properties described on Disclosure
Schedule 1.25.
1.26 "Development Property Leases": all leases of the Development
Properties listed on Disclosure Schedule 1.26.
1.26A "Disclosure Schedule": the disclosure schedules delivered by HRPT
and GPI to each other prior to the execution of this Agreement.
1.27 "Effective Time": the date and time at which the Merger becomes
effective pursuant to Maryland Law and as provided in Section 3.2 of this
Agreement.
1.28 "Employee Benefit Plan": any employee benefit plan, as defined in
Section 3(3) of ERISA.
1.29 "Environmental Laws": any and all applicable federal, state and
local environmental statutes, laws and ordinances, all regulations and rules of
all governmental agencies, bureaus or departments and all applicable judicial,
administrative and regulatory decrees, judgments and orders, including common
law rulings, relating to injury to, or the protection of, the environment, or
the impact of the environment on human health, including, without limitation,
all requirements pertaining to reporting, licensing, permitting, investigation,
remediation and removal of emissions, discharges, releases or threatened
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releases of Hazardous Materials into the environment or relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials.
1.30 "Environmental Reports": defined in Section 4.24(e).
1.31 "ERISA": the Employee Retirement Income Security Act of 1974, as
amended.
1.32 "ERISA Affiliate": a Person and/or such Person's Subsidiaries or
any trade or business (whether or not incorporated) which is under common
control with such Person or such Person's Subsidiaries or which is treated as a
single employer with such Person or any Subsidiary of such Person under Section
414(b), (c), (m) or (o) of the Internal Revenue Code or Section 4001(b)(1) of
ERISA.
1.33 "Escrow Agreement": the escrow agreement in the form attached as
Schedule 1.33.
1.34 "Financial Statements": defined in Section 4.8.
1.35 "GAAP": generally accepted accounting principles as in effect on
the date of the financial statements, taxes or other item being referenced.
1.36 "Golden Premises": the premises identified on Disclosure Schedule
1.25 as Subject Property No. 2.
1.37 "GPH Common Shares": the shares of beneficial interest, par value
$.01 per share, of GPH.
1.38 "GPI Affiliate Debt": certain notes of GPI in the principal
amounts and payable to the persons listed on Disclosure Schedule 1.38.
1.39 "GPI Common Stock": the common stock, par value $0.01 per share of
GPI, including the Series A and Series B Common Stock of GPI.
1.40 "GPI Property Debt": the indebtedness of certain of the GPI
Subsidiaries listed on Disclosure Schedule 1.40.
1.41 "GPI Subsidiaries": the Subsidiaries of GPI listed on Disclosure
Schedule 4.4, each of which is a "GPI Subsidiary."
1.42 "GPI Third Party Debt": the notes of GPI held by the Persons
listed on Disclosure Schedule 1.42 in the principal amounts set forth opposite
their names.
1.43 "Hazardous Materials": any substance defined as a "hazardous
substance", "hazardous material", "hazardous" or "dangerous waste" or similar
term under the Comprehensive Environmental Response, Compensation and Liability
Act (42 U.S.C. Section 9601 et seq.), the Resource Conservation and Recovery Act
(42 U.S.C. Section
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6901 et seq.) or any similar or analogous state or local statute, law or
regulation or which contains or consists of gasoline, diesel fuel or other
petroleum products or natural gas, natural gas liquids, liquefied natural gas or
synthetic gas usable for fuels.
1.44 "Houston Premises": the Premises identified on Disclosure Schedule
1.71 as Subject Property No. 1.
1.45 "HRPT Common Shares": the common shares of beneficial interest,
par value $0.01 per share, of HRPT of the same class and series as that traded
on the NYSE on the date of this Agreement.
1.46 "HRPT Merger Shares": a number of HRPT Common Shares equal to the
quotient obtained by dividing the Aggregate Closing Consideration by the Merger
Price, provided the fractional portion of the quotient, if any, shall be
disregarded.
1.47 "HRPT Second Closing Shares": a number of HRPT Common Shares equal
to the quotient obtained by dividing the Second Closing Consideration by the
Second Closing Price.
1.48 "HRPT SEC Reports": collectively, (a) HRPT's Annual Report on Form
10-K for the fiscal year ended December 31, 1995, as filed with the SEC, (b)
proxy and information statements relating to (i) all meetings of HRPT's
shareholders (whether annual or special) and (ii) actions by written consent in
lieu of a shareholders' meeting, if any, from December 31, 1995 until the date
hereof, and (c) all other reports, including quarterly reports, and registration
statements filed by HRPT with the SEC since December 31, 1995.
1.49 "HRPT Terminating Event": any of the occurrences set forth in
Section 10.1(e).
1.50 "HRPT Subsidiaries": the Subsidiaries of HRPT, each of which is an
"HRPT Subsidiary."
1.51 "HSR Act": the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended.
1.52 "Internal Revenue Code": defined in the Recitals.
1.53 "IRS": the Internal Revenue Service.
1.54 "Knowledge": the terms "GPI's knowledge" and "to the knowledge of
GPI" mean the knowledge of those officers and directors of GPI and the GPI
Subsidiaries listed on Disclosure Schedule 1.54; the terms "HRPT's knowledge"
and "to the knowledge of HRPT," and the terms "Merger Sub's knowledge" and "to
the knowledge of Merger Sub" mean the knowledge of any of their respective
officers or trustees.
1.55 "LA MEPS Premises": the premises identified on Disclosure Schedule
1.21 as Subject Property No. 3.
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1.56 "Lien": any interest in property, whether such interest is based
on common law, statute, court decision or contract and including, without
limitation, any mortgage, pledge, security interest, lease, encumbrance
(including any easement, exception, reservation or limitation, right of way or
the like), lien, purchase option, call or right, or charge of any kind
(including any agreement to give or permit any of the foregoing), any
conditional sale or other title retention agreement, any lease of property
(whether real, personal or mixed) which is required, in accordance with GAAP, to
be recorded by the lessee as the acquisition of an asset and the incurrence of a
liability, and the filing of any financing statement under the Uniform
Commercial Code or personal property security legislation of any jurisdiction.
1.57 [Intentionally omitted.]
1.58 "Maryland Law": Title 8 of the Corporations and Associations
Article of the Annotated Code of Maryland and the Maryland General Corporation
Law.
1.59 "Material Adverse Effect": (i) any material adverse effect on the
business, assets, liabilities, financial condition or results of operations of
GPI and its Subsidiaries, taken as whole; or, (ii) with respect to any of the
Premises, any event which gives any U.S. Government tenant under a Material
Lease a right to terminate such lease or xxxxx or offset any rental payments
thereunder in accordance with the terms of such lease.
1.60 "Material Leases": all of the Tenant Leases identified on
Disclosure Schedule 1.60.
1.61 "Merger": the merger of GPH with and into Merger Sub as provided
in Section 2.1 of this Agreement.
1.62 "Merger Price": $17.291.
1.63 "Multiemployer Plan": a multiemployer plan, as defined in Sections
3(37) and 4001(a)(3) of ERISA.
1.64 "NYSE": The New York Stock Exchange, Inc.
1.65 "Party": HRPT or GPI and "Parties" shall mean HRPT or GPI.
1.66 "Pension Plan": any employer pension benefit plan, as defined in
Section 3(2) of ERISA.
1.67 "Permits": defined in Section 4.11.
1.68 "Permitted Liens": Liens set forth on Disclosure Schedule 1.68 and
(i) any Liens for real estate Taxes not yet due or delinquent; (ii) any
imperfection of title or similar Lien that, individually or in the aggregate
with other such Liens, do not materially and adversely interfere with the
current use of such Premises or Development Properties; (iii) statutory liens of
mechanics, materialmen and other similar liens arising by operation of law which
arise in the ordinary course of construction in accordance with the approved
plans
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and specifications relating to the Development Properties, or which are incurred
pursuant to any of the Development Partnership Agreements, in all cases which
Liens are not yet delinquent; (iv) applicable zoning regulations and ordinances,
provided that the same do not prohibit or impair in any material respect the use
of any Premises or Development Properties as currently used; (v) the ground
lease with respect to the Premises located in Buffalo, New York; (vi) any other
Liens approved by HRPT; and (vii) Liens listed as exceptions on Schedule B to
any title reports and policies with respect to real property provided to or
otherwise obtained by HRPT prior to the date hereof (for purposes of the Aurora
Premises and the Golden Premises, the Liens listed on Disclosure Schedule 1.68
in lieu of this clause (vii)).
1.69 "Person": an individual, partnership, joint venture, corporation,
limited liability company, trust and any other form of business organization.
1.70 "Phoenix Premises": the premises identified on Disclosure Schedule
1.21 as Subject Property No. 2.
1.71 "Premises": the land, improvements and fixtures described in
Disclosure Schedule 1.71 together with all personal property owned by GPI or any
of the GPI Subsidiaries and used in connection therewith.
1.72 "Prohibited Transaction": a transaction that is prohibited under
Section 4975 of the Internal Revenue Code or Section 406 of ERISA and not exempt
under Section 4975 of the Internal Revenue Code or Section 408 of ERISA,
respectively.
1.73 "Proprietary Data": defined in Section 4.23.
1.74 "Registration Rights Agreement": defined in Section 2.6.
1.75 "Reportable Event": a "reportable event", as defined in Section
4043 of ERISA, whether or not the reporting of such event to the Pension Benefit
Guaranty Corporation has been waived.
1.76 "Representation Letter": that certain letter, dated the date
hereof, from GPI to HRPT with respect to certain matters concerning the College
Park Premises.
1.77 "San Diego Premises": the premises identified on Disclosure
Schedule 1.25 as Subject Property No. 3.
1.78 "SEC": the United States Securities and Exchange Commission.
1.79 "Second Closing": the closing which will take place as described
in Section 9.
1.80 "Second Closing Consideration": the greater of $8,000,000 or an
amount equal to 3% of the Additional Properties Acquisition Cost. The Second
Closing Consideration may be subject to adjustment as provided in Sections 1.6,
8.3 and 8.10.
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1.81 "Second Closing Date": the one year anniversary of the Closing
Date.
1.82 "Second Closing Price": the arithmetic average of the closing sale
prices for an HRPT Common Share as reported by NYSE for the 20 trading days
immediately prior to the Second Closing Date.
1.83 "Second Closing Recipient": the successor to GPI designated in its
plan of liquidation to be adopted prior to the Closing.
1.84 "Subsidiaries": all corporations, associations or other entities
of which a person owns, directly or indirectly, 50% or more of the voting stock
or other voting equity interests of such corporation, association or other
entity.
1.85 "Survivor": defined in Section 2.1.
1.86 "Taxes": defined in Section 4.16.
1.87 "Tax Returns": defined in Section 4.16.
1.88 "Tenant Leases": all leases of the Premises listed on Disclosure
Schedule 1.88.
1.89 "Transaction Expenses": the expenses of GPI incurred in connection
with the transactions contemplated by this Agreement set forth on Disclosure
Schedule 1.89.
1.90 "Waco Premises": the premises identified on Disclosure Schedule
1.21 as Subject Property No. 1.
SECTION 2
TRANSACTIONS AND TERMS OF MERGER
2.1 Merger.
Subject to the terms and conditions of this Agreement, at the Effective
Time, GPH shall be merged with and into Merger Sub in accordance with the
provisions of and with the effect provided in Maryland Law. The separate
existence of GPH shall thereupon cease, and Merger Sub shall be the surviving
entity of the Merger (sometimes referred to as the "Survivor") and shall
continue to be governed by Maryland Law. The Merger shall be consummated
pursuant to the terms of this Agreement, which has been approved and adopted by
the Boards of Directors and/or Trustees of HRPT, Merger Sub and GPI and GPH.
2.2 Declaration of Trust of the Survivor.
The Declaration of Trust of Merger Sub in effect immediately prior to
the Effective Time shall be the Declaration of Trust of the Survivor, until
amended in accordance with Maryland Law.
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2.3 Bylaws of the Surviving Corporation.
The Bylaws of Merger Sub in effect immediately prior to the Effective
Time shall be the Bylaws of the Survivor, until amended in accordance with
Maryland Law.
2.4 Directors and Officers of the Survivor.
The directors and officers of Merger Sub immediately prior to the
Effective Time shall be the directors and officers of the Survivor as of the
Effective Time.
2.5 Manner of Converting Shares.
All of the HRPT Common Shares and all shares of beneficial interest of
Merger Sub issued and outstanding immediately prior to the Effective Time shall
remain issued and outstanding after the Effective Time and shall be unaffected
by the Merger. The manner and basis of converting the shares of beneficial
interest of GPH upon consummation of the Merger shall be as follows:
(a) GPH Common Shares. Except as otherwise provided in this
Section 2.5, each GPH Common Share issued and outstanding immediately
prior to the Effective Time shall, as of the Effective Time, by virtue
of the Merger and without any action on the part of the holder thereof,
be converted into the right to receive one percent of (i) the HRPT
Merger Shares, (ii) any HRPT Common Shares issued to pursuant to
Sections 8.3 and 8.4 and (iii) HRPT Common Shares issued pursuant to
Section 9.2.
(b) Anti-Dilution Provisions. If HRPT changes the number of
HRPT Common Shares issued and outstanding, after the determination of
the Merger Price and prior to the Effective Time, as a result of a
stock split, stock dividend, recapitalization, reclassification,
redemption, exchange, self-tender or exchange offer, or any action by
HRPT similar to any of the foregoing, or affects the value of the HRPT
Common Shares as a result of any dividend or distribution of cash,
securities or other property (other than regular cash dividends
declared and paid in a manner and amount consistent with recent past
practice and other than the issuance of HRPT Common Shares in
connection with business combination transactions) and the record date
therefor shall be after the date of this Agreement and prior to the
Effective Time, the numbers of HRPT Common Shares to be issued pursuant
to this Agreement shall be appropriately adjusted.
(c) Treasury Shares. Any and all GPH Common Shares held as
treasury shares by GPH shall be cancelled and retired at the Effective
Time, and no consideration shall be issued in exchange therefor.
(d) Fractional Shares. No fractional HRPT Common Shares will
be issued as a result of the Merger. In lieu of the issuance of
fractional shares pursuant to this Agreement, cash adjustments (without
interest) will be paid to GPI in respect of any fraction of an HRPT
Common Share that would otherwise be issuable to GPI, and
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the amount of such cash adjustment shall be determined by multiplying
the fraction of an HRPT Common Share otherwise issuable times the
Merger Price.
2.6 Investment and Registration Rights Agreement.
The issuance of the HRPT Merger Shares pursuant to this Agreement will
not be registered under the 1933 Act or any state securities laws in reliance
upon certain exemptions from registration contained therein. The transfer of the
HRPT Merger Shares will, accordingly, be subject to certain restrictions as set
forth in the Investment and Registration Rights Agreement, in the form attached
as Schedule 2.6 (the "Registration Rights Agreement"). GPI shall have certain
rights to require the registration of an offering of the HRPT Merger Shares
pursuant to the Registration Rights Agreement.
SECTION 3
CLOSING, EFFECTIVE TIME AND DELIVERY OF CONSIDERATION
3.1 The Closing.
Following the day on which the last of the conditions set forth in this
Agreement shall be fulfilled or waived in accordance herewith (other than those
conditions which are to be fulfilled contemporaneously with the Closing),
subject to the terms and conditions of this Agreement, the closing of the Merger
shall take place (a) at the offices of Xxxxxxxx & Worcester LLP, at Boston,
Massachusetts at 9:00 a.m. (local time), on the day set forth in a notice from
HRPT to GPI which shall not be sooner than 3 business days following the date of
such notice and not later than March 31, 1997 (unless delayed as permitted by
Section 10.2), or (b) at such other time, date or place as the Parties may
agree.
3.2 Effective Time.
If all of the conditions to the Merger set forth in this Agreement
shall have been fulfilled or waived and this Agreement shall not have been
terminated, on the Closing Date the Parties shall deliver to the Department of
Assessments and Taxation of the State of Maryland the Articles of Merger in
accordance with Maryland Law. The Merger shall become effective at the time of
filing of the Articles of Merger.
3.3 Issuance of HRPT Merger Shares.
At the Closing, HRPT shall authorize the transfer agent for the HRPT
Common Shares to issue the number of whole HRPT Common Shares to which GPI is
entitled pursuant to Section 2.5. As promptly as possible after the Effective
Date, GPI, as the sole record holder of all of the outstanding certificates
which immediately prior to the Effective Time represented GPH Common Shares
(collectively, the "Certificates" and each a "Certificate") shall surrender such
Certificates (together with a stock power, duly executed in blank) to HRPT and
shall thereupon be entitled to receive in exchange therefor (i) one or more
certificates as requested by GPI (properly issued, executed and counter-signed,
as appropriate) representing, in the aggregate, the HRPT Merger Shares to which
GPI shall have become entitled pursuant to the provisions of Section 2.5 and
(ii) as to any fractional
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share, a check representing the cash consideration to which GPI shall have
become entitled pursuant to Section 2.5. The Certificates so surrendered shall
forthwith be cancelled. No interest will be paid or accrued on the cash payable
upon the surrender of the Certificates. From the Effective Time until surrender
in accordance with the provisions of this Section 3.3, each Certificate shall
represent for all purposes only the right to receive the consideration provided
in Section 2.5. No dividends that are otherwise payable on HRPT Common Shares
will be paid GPI until GPI surrenders the Certificates. After such surrender,
there shall be paid GPI any dividends on such HRPT Common Shares that shall have
a record date on or after the Effective Time and prior to such surrender. If the
payment date for any such dividend is after the date of such surrender, such
payment shall be made on such payment date. In no event shall the persons
entitled to receive such dividends be entitled to receive interest on such
dividends.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF GPI
GPI represents and warrants to HRPT and acknowledges that HRPT is
relying upon such representations and warranties in connection with the
transactions provided for in this Agreement:
4.1 Organization, etc.
GPI and each of the GPI Subsidiaries is duly organized, validly
existing and in good standing as a corporation, real estate investment trust,
limited liability company or partnership, as the case may be, and has all
requisite power and authority (i) to conduct its business as it is now
conducted, (ii) to own or lease all of the properties owned or leased by it,
(iii) in the case of GPI, to enter into and perform this Agreement and (iv) to
otherwise consummate the transactions contemplated by this Agreement. True,
correct and complete copies of the Charter Documents of GPI and each of the GPI
Subsidiaries as of the date of this Agreement have been previously delivered or
made available to HRPT. The records and minute books of GPI and each of the GPI
Subsidiaries contain complete and accurate, in all material respects, minutes of
all meetings of the directors and/or trustees and shareholders of GPI and each
of the GPI Subsidiaries held since their respective dates of organization, all
such meetings were duly called and held, and the share certificate books and
register of shareholders of GPI and each of the GPI Subsidiaries are complete
and accurate. GPI and each of the GPI Subsidiaries is duly qualified to do
business and is in good standing in all jurisdictions in which the ownership or
lease of property by it or the conduct of its business makes such qualification
necessary, except where the failure to be so qualified would not have a Material
Adverse Effect.
4.2 Authorization; Execution; Binding Effect.
The execution, delivery and performance of this Agreement, and the
consummation of the transactions provided for in this Agreement, have been duly
authorized by all necessary action on the part of GPI and this Agreement
constitutes the legal, valid and binding obligation of GPI, enforceable against
GPI in accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, or other laws
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affecting creditors' rights and remedies generally and by general principles of
equity (regardless of whether such enforceability is considered in a proceeding
in equity or at law).
4.3 Capitalization.
The authorized capital stock of GPI and the number of shares
outstanding on the date of this Agreement is set forth in Disclosure Schedule
4.3. Except as set forth on Disclosure Schedule 4.3, GPI has no shares of
capital stock or any other voting or equity securities or interests outstanding.
All outstanding shares of GPI Common Stock are duly authorized, validly issued
and fully paid and non-assessable. Except for this Agreement or as set forth in
Disclosure Schedule 4.3, there is no existing subscription, option, warrant,
call, right, commitment or other agreement to which GPI is a party requiring,
and there are no convertible securities of GPI outstanding which upon conversion
would require, directly or indirectly, the issuance of any additional GPI Common
Stock or other securities convertible into GPI Common Stock or any other equity
security of GPI, and there are no outstanding contractual obligations of GPI to
repurchase, redeem or otherwise acquire any outstanding GPI Common Stock. Except
as set forth on Disclosure Schedule 4.3, there are no preemptive rights nor any
rights to demand or require registration under the 1933 Act or any state
securities laws in respect of shares of GPI Common Stock. The holders of GPI
Common Stock set forth in Disclosure Schedule 4.3 are the record and beneficial
owners of such number of shares set forth opposite their respective names on
such schedule, which shares represent all of the issued and outstanding capital
stock of GPI.
4.4 Share Holdings.
Except as set forth in Disclosure Schedule 4.4, GPI is the sole record
and beneficial owner of such number of shares of each of the GPI Subsidiaries as
set forth opposite such Subsidiary's name on such schedule, which shares
represent all of the outstanding capital stock/equity of each such Subsidiary,
such shares are held free and clear of any and all Liens and there are no
existing options, warrants, calls, rights or commitments with respect to such
shares. The Subsidiaries of GPI which are listed on Disclosure Schedule 4.4(A)
have no assets and are not engaged in any trade or business. The Subsidiaries of
GPI which are listed on Disclosure Schedule 4.4(B) hold only interests related
to the Aurora Premises.
4.5 No Conflicting Agreements or Charter Provisions.
Except as set forth on Disclosure Schedule 4.5, the execution, delivery
and compliance with and performance of the terms and provisions of this
Agreement will not conflict with or result in a breach of the terms, conditions
or provisions of, or constitute a default under, or result in any violation of,
(i) the Charter Documents of GPI or any of the GPI Subsidiaries or any
resolutions adopted by the shareholders or the Board of Directors and/or
Trustees of GPI or any of the GPI Subsidiaries, (ii) any provision of any
material Contract to which GPI or any of the GPI Subsidiaries is a party or by
which it or any of the GPI Subsidiaries or any part of its or any of the GPI
Subsidiaries' assets may be bound, or (iii) any order, judgment, decree,
license, permit, statute, law, rule or regulation to which GPI or any of the GPI
Subsidiaries is subject, which conflict, breach, default or violation
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has or could reasonably be expected to have a Material Adverse Effect. The
execution, delivery and performance of this Agreement will not result in the
creation of any Lien (other than a Lien in favor of GPI or HRPT) upon or any
preferential arrangement with respect to the business or any material part of
the assets or properties of GPI or any of the GPI Subsidiaries.
4.6 Litigation.
Except as set forth in Disclosure Schedule 4.6, there is (whether
insured or uninsured) no action, suit, proceeding or investigation pending or,
to the knowledge of GPI, threatened, at law or in equity, in any court or before
or by any federal, state, municipal or other governmental authority, department,
commission, board, agency or other instrumentality (i) against GPI or any of the
GPI Subsidiaries, (ii) to the knowledge of GPI, affecting GPI or any of the GPI
Subsidiaries or any of their properties, except for litigation that would not
have a Material Adverse Effect, (iii) to the knowledge of GPI, against or
adversely affecting any director, trustee or officer of GPI or any of the GPI
Subsidiaries with respect to which such director, trustee or officer would be
entitled to indemnification from GPI or any of the GPI Subsidiaries, or (iv)
adversely affecting this Agreement or any action taken or to be taken or
documents executed or to be executed pursuant to or in connection with the
provisions of this Agreement.
4.7 Names.
Schedule 4.7 sets forth a preliminary listing of each name under which
each of GPI and each of the GPI Subsidiaries has conducted business at any time
as well as any entity with or into which any of them has merged. A complete
listing of such names will be provided on or before February 27, 1997.
4.8 Financial Statements.
GPI has delivered to HRPT copies of GPI's consolidated balance sheet
and consolidated statements of income and of cash flows of and for the years
ended December 31, 1995 and December 31, 1996, audited by Ernst & Young LLP,
independent certified public accountants ("Financial Statements"). Each of the
Financial Statements (i) has been prepared from the books and records of GPI and
the GPI Subsidiaries, which in all material respects account for transactions,
assets and liabilities consistent with good business and accounting practice and
(ii) fairly present the financial position, results of operations and cash flows
of GPI and the GPI Subsidiaries, in accordance with GAAP, applied on a
consistent basis.
4.9 No Undisclosed Liabilities.
As of December 31, 1996, neither GPI nor any of the GPI Subsidiaries
had any material obligations, indebtedness or liabilities of any nature which
would have been required by GAAP to be reflected in the Financial Statements
that are not shown in the Financial Statements or the notes thereto or disclosed
in this Agreement. Except as set forth in the Financial Statements or as set
forth on Disclosure Schedule 4.9, neither GPI nor any of the GPI Subsidiaries,
on the date of this Agreement, has outstanding any
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material obligation, indebtedness or liability, and GPI does not know of any
basis for the assertion against GPI or any of the GPI Subsidiaries of any such
material obligation, indebtedness or liability, other than those incurred since
December 31, 1996 in the ordinary course of business.
4.10 Default.
Except for defaults, events or occurrences, the consequences of which,
individually or in the aggregate, would not have a Material Adverse Effect,
neither GPI nor any of the GPI Subsidiaries is in default or, to GPI's
knowledge, alleged to be in default with respect to any judgment, order, writ,
injunction or decree of any court or any federal, state, municipal or other
governmental authority, department, commission, board or agency or other
governmental entity. Except for defaults, events or occurrences, the
consequences of which, individually or in the aggregate, would not have a
Material Adverse Effect, neither GPI nor any of the GPI Subsidiaries is in
breach or default or alleged to be in breach or default under any Contract and
GPI does not know of any condition or state of facts which is likely to cause or
create a default or defaults under any such Contract (other than as set forth on
Disclosure Schedule 4.5). Neither GPI nor any GPI Subsidiary has received
written notice that any of them is in breach or default or alleged to be in
breach or default under any of the agreements evidencing the indebtedness
secured by the Premises identified on Disclosure Schedule 1.71 as Properties
Nos. 13, 14, 19 and 20 and to GPI's knowledge there exists no condition or state
of facts which constitutes or which with the giving of notice and/or lapse of
time would constitute an event of default under any such agreement. Except as
set forth on Disclosure Schedule 4.10, GPI does not know of any other party to
any Contract to which GPI or any of the GPI Subsidiaries is a party and which is
material to the business of GPI and the GPI Subsidiaries, that is in material
default thereunder and, to the knowledge of GPI, there exists no condition or
event which, after notice or lapse of time or both, would constitute a material
default of any other party to any such Contract.
4.11 Compliance with Law.
(a) Except as may have been disclosed to HRPT by a third party
in writing or orally disclosed to HRPT by its local counsel in
connection with HRPT's zoning due diligence, prior to the date of this
Agreement, GPI and each of the GPI Subsidiaries (A) has complied with
all laws, regulations and orders which are applicable to their
respective businesses as presently conducted, (B) possesses all
permits, licenses and other governmental approvals, accreditations,
participation agreements, consents, authorizations and orders
specifically applicable to, or necessary for the conduct of, its
business as currently conducted (collectively, "Permits"), and (C)
except as set forth on Disclosure Schedule 4.5, has obtained all
governmental approvals and all other approvals, consents,
certifications and waivers and has made all filings, given all notices
and otherwise complied with all governmental laws, rules and
regulations which are required on the part of GPI to enter into and
perform this Agreement, and to otherwise consummate the transactions
contemplated by this Agreement, except in each case, where the failure
to have acted in accordance with clauses (A), (B) and (C) has not and
would not reasonably be expected to have a Material Adverse Effect.
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(b) Except as may have been disclosed to HRPT by a third party
in writing or orally disclosed to HRPT by its local counsel in
connection with HRPT's zoning due diligence, prior to the date of this
Agreement, to GPI's knowledge, (i) the Premises and the use and
operation thereof do not violate any material federal, state, municipal
and other governmental statutes, ordinances, by-laws, rules,
regulations or any other legal requirements, including, without
limitation, those relating to construction, occupancy, zoning, adequacy
of parking, environmental protection, occupational health and safety
and fire safety applicable thereto; and (ii) there are presently in
effect all material licenses, permits and other authorizations
necessary for the current use, occupancy and operation thereof, except,
in each case, where the failure to comply with clauses (i) and (ii)
preceding has not and would not reasonably be expected to have a
Material Adverse Effect. Except as set forth on Disclosure Schedule
4.11(b), GPI has not received written notice of any request,
application, proceeding, plan, study or effort which would materially
adversely affect the current use of any of the Premises or the Waco
Premises or the proposed use of any of the Development Properties or
zoning of any of the Premises or which would modify or realign any
adjacent street or highway.
4.12 No Adverse Changes; Acquisitions, Disposition and Commitments.
(a) Except as set forth on Disclosure Schedule 4.12, since
December 31, 1996, there has not been, occurred or arisen (i) any
change in, or agreement to change the character or nature of the
business of GPI or any of the GPI Subsidiaries, (ii) any change in the
financial condition, results of operations, business, properties,
assets or liabilities of GPI and the GPI Subsidiaries, which would have
a Material Adverse Effect, (iii) any damage or destruction in the
nature of a casualty loss, whether covered by insurance or not,
adversely affecting any property of GPI or any of the GPI Subsidiaries
in a manner that would have a Material Adverse Effect, (iv) to GPI's
knowledge, any new or proposed legislation or regulation relating, in
either case, to the business of leasing real property to agencies of
the United States, which would reasonably be expected to have a
Material Adverse Effect, (v) any termination of any Tenant Lease (other
than a scheduled expiration of the term thereof), (vi) except in the
ordinary course of business consistent with past practice, any material
increase in the compensation payable or to become payable by GPI or any
of the GPI Subsidiaries to any of its directors, officers, management,
personnel, consultants or agents or any material increase in benefits
under any bonus, insurance, pension or other benefit plan made for or
with any of such persons, (vii) any actual or threatened strike or
other labor trouble or dispute which has or might have a Material
Adverse Effect, (viii) any direct or indirect redemption, purchase or
other acquisition by GPI or any of the GPI Subsidiaries of any shares
of GPI or any of the GPI Subsidiaries, any declaration, setting aside
or payment of any dividend or other distribution by GPI or any of the
GPI Subsidiaries in respect of shares of GPI or any of the GPI
Subsidiaries whether in cash, shares or property, or any loan to any
stockholder other than advances for expenses in the ordinary course of
business to any stockholder in his capacity as an officer, director or
employee of GPI or any of the GPI Subsidiaries, (ix) any extraordinary
item (as defined by GAAP) resulting in a loss suffered by GPI or any of
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the GPI Subsidiaries, which, individually or in the aggregate, would
have a Material Adverse Effect, (x) any waiver by GPI and the GPI
Subsidiaries of any material right or rights, except for waivers in the
ordinary course of business consistent with past practices, (xi) any
Lien on any of the assets of GPI or any of the GPI Subsidiaries, except
Liens incurred in the ordinary course of business and consistent with
past practice or Permitted Liens, (xii) any obligation incurred by GPI
or any of the GPI Subsidiaries other than any incurred in the ordinary
course of business or which, individually or in the aggregate, with all
other obligations so incurred, is or are not material in amount to GPI
and the GPI Subsidiaries, taken as a whole, or (xiii) any other event,
condition or state of facts of any character peculiar to GPI or any of
the GPI Subsidiaries or to their operations and not generally
applicable to private enterprises in the same business as GPI or any of
the GPI Subsidiaries which has, or might reasonably be expected in the
future to have, a Material Adverse Effect.
(b) Since December 31, 1996, except as set forth in Disclosure
Schedule 4.12, neither GPI nor any GPI Subsidiary has acquired, sold,
leased or disposed of any property or assets or entered into any
commitment or agreement to do any of the foregoing.
4.13 Patents, etc.
GPI and each of the GPI Subsidiaries owns or has the right to use all
rights under any patent, trademark, trade name, or copyright (or any application
or registration respecting any thereof), discovery, improvement, process,
formula, know-how, data, plan, specification, drawing or the like, necessary or
required for the conduct of its business as such business is currently being
conducted and, to the knowledge of GPI, is not infringing or alleged to be
infringing upon the rights of any third party with respect to any of the
foregoing, and GPI does not know of any basis for the assertion against GPI or
any of the GPI Subsidiaries of a claim for such infringement.
4.14 Certain Transactions.
Except as set forth in Disclosure Schedule 4.14, there are no contracts
or business or financial arrangements between GPI or any of the GPI Subsidiaries
and any officer or director of GPI or any of the GPI Subsidiaries, nor, to the
knowledge of GPI, are there any such contracts or business or financial
arrangements with a holder of the outstanding shares of GPI or any of the GPI
Subsidiaries, nor, to the knowledge of GPI, are there any such contracts or
business or financial arrangements with any such person's family members or
affiliates, involving or affecting the business, properties, or assets of GPI or
any of the GPI Subsidiaries or creating a potential conflict of interest.
Disclosure Schedule 4.14 sets forth a list of all of the directors, trustees,
officers and employees of GPI and each of the GPI Subsidiaries together with the
salaries of all officers and employees of GPI and each of the GPI Subsidiaries.
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4.15 Pension and Benefit Plans.
(a) Company Employee Benefit Plans and Company Benefit
Arrangements. Schedule 4.15(a) lists each Company Employee Benefit Plan
and Company Benefit Arrangement. GPI and the GPI Subsidiaries have
delivered to HRPT with respect to each such Company Employee Benefit
Plan and Company Benefit Arrangement true and complete copies of (i)
all written documents comprising such plans and arrangements (including
amendments and individual, trust or insurance agreements relating
thereto); (ii) the most recent Federal Form 5500 series (including all
schedules thereto) filed with respect to each such Company Employee
Benefit Plan; (iii) the two most recent financial statements and
actuarial reports, if any, pertaining to each such plan or arrangement;
(iv) the summary plan description currently in effect and all material
modifications thereto, if any, for each such Company Employee Benefit
Plan; and (v) written communications to employees to the extent the
substance of any Company Employee Benefit Plan described therein
differs materially from the other documentation furnished under this
Section.
(b) Multiemployer Plans. Neither GPI nor any GPI Subsidiary
nor any ERISA Affiliate of GPI or any GPI Subsidiary has at any time
during the 6-year period preceding the date hereof participated in or
been required to make or accrue a contribution to any Multiemployer
Plan. Neither GPI nor any GPI Subsidiary nor any of their respective
ERISA Affiliates has incurred or reasonably expects to incur any
material withdrawal liability (within the meaning of Section 4201 of
ERISA) or any other material current, contingent or potential liability
with respect to any Multiemployer Plan.
(c) Welfare Benefits Plans. Except as set forth in Disclosure
Schedule 4.15(c) and pursuant to the provisions of COBRA, no Company
Employee Benefit Plan provides benefits described in Section 3(1) of
ERISA to any former employees or retirees of GPI or any GPI Subsidiary.
Except as set forth in Disclosure Schedule 4.15 (c), no condition
exists that would prevent GPI or any GPI Subsidiary from amending or
terminating any Company Employee Benefit Plan or Company Benefit
Arrangement providing health or medical benefits in respect of any
active or retired employee other than limitations imposed by law.
(d) Company Employee Benefit Plans. None of the Company
Employee Benefit Plans is a Pension Plan which is subject to Title IV
of ERISA and neither GPI nor any GPI Subsidiary nor any ERISA Affiliate
has at any time maintained or sponsored a Pension Plan which is subject
to Title IV of ERISA. Neither GPI nor any GPI Subsidiary nor any ERISA
Affiliate has incurred any material liability under Section 4062 of
ERISA to the Pension Benefit Guaranty Corporation or to a trustee
appointed under Section 4042 of ERISA. All Company Employee Benefit
Plans that are Pension Plans intended to be qualified under Section 401
of the Internal Revenue Code are so qualified and have been so
qualified during the period since their adoption; each trust created
under any such plan is exempt from tax under Section 501(a) of the
Internal Revenue Code and has been so exempt since its creation. A true
and correct copy of the most recent determination letter from the IRS
regarding such qualified status for each such plan has been delivered
to HRPT.
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(e) Additional Benefits. Except as set forth on Disclosure
Schedule 4.15(e), no employee of GPI or of any ERISA Affiliate of GPI
will receive or be entitled to, and neither GPI nor any GPI Subsidiary
shall be liable for, any additional benefits, bonuses, service or
accelerated rights to payment of benefits under any Company Plan,
including the right to receive any parachute payment, as defined in
Section 280G of the Internal Revenue Code, or become entitled to any
severance, termination allowance or similar payments as a result of the
transactions contemplated by this Agreement.
(f) Compliance with Laws; Contributions. Each Company Plan has
at all times prior hereto been maintained, in all material respects, in
accordance with all applicable laws. Other than claims for benefits in
the ordinary course, there is no claim pending or, to the knowledge of
GPI, threatened involving any Company Plan by any Person against such
plan or GPI or any GPI Subsidiary. There is no pending or, to the
knowledge of GPI, threatened proceeding involving any Company Plan
before the IRS, the United States Department of Labor or any other
governmental authority. Each of GPI and the GPI Subsidiaries and their
respective ERISA Affiliates have made full and timely payment of all
amounts required to be contributed under the terms of each Company Plan
and applicable law or required to be paid as expenses under such
Company Plan. To the extent it might give rise to any material
liability: (i) no Prohibited Transaction has occurred with respect to
any Company Employee Benefit Plan or any other employee benefit plan or
arrangement maintained by GPI or any GPI Subsidiary or any of their
respective ERISA Affiliates which is covered by Title I of ERISA; (ii)
no Reportable Event that was not waived by regulation of the Pension
Benefit Guaranty Corporation, and no event described in Section 4062 or
4063 of ERISA, has occurred in connection with any Company Employee
Benefit Plan; and (iii) neither GPI nor any GPI Subsidiary nor any of
their current or former ERISA Affiliates (while an ERISA Affiliate) has
engaged in, or is a successor or parent corporation to any entity that
has engaged in, a transaction described in Section 4069 of ERISA.
4.16 Tax Matters.
(a) GPI and each of the GPI Subsidiaries have (x) filed when
due with local, foreign and other governmental agencies all tax
returns, estimates, information and reports ("Tax Returns") required to
be filed by them with respect to all federal, state, local or foreign
taxes, levies, imposts, duties, licenses and registration fees, and
charges of any nature whatsoever including, without limitation, income
taxes, unemployment and social security withholding taxes, interest,
penalties, and additions to tax with respect thereto ("Taxes"), and (y)
paid when due and payable or, to the extent of Taxes not yet due and
payable, have accrued or otherwise adequately reserved in accordance
with GAAP for the payment of all Taxes. All such Tax Returns are
correct and complete in all respects excluding defects which,
individually and in the aggregate, will not have a Material Adverse
Effect. Complete and accurate copies of all such Tax Returns have been
furnished or made available to HRPT. Neither GPI nor any of the GPI
Subsidiaries has obtained an extension of the time within which to file
any Tax Return. Neither GPI nor any of its Subsidiaries
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has received written notice from any governmental agency in a
jurisdiction in which such entity does not file a Tax Return stating
that such entity is or may be subject to taxation by that jurisdiction.
(b) No Taxes have been assessed or asserted in writing in
respect of any Tax Returns filed by GPI or any of the GPI Subsidiaries
or claimed in writing to be due by any taxing authority or otherwise
that are not accrued or adequately reserved for in accordance with
GAAP. No Tax Return of GPI or any of the GPI Subsidiaries has been or,
to GPI's knowledge, is currently being audited by the IRS or other
taxing authority (whether foreign or domestic). Neither GPI nor any of
the GPI Subsidiaries has executed or filed with the IRS or any other
taxing authority (whether foreign or domestic) any agreement, waiver,
or other document extending, or having the effect of extending, the
period for assessment or collection of any Taxes, which extension or
waiver is still in effect, and neither GPI nor any of the GPI
Subsidiaries has entered into any tax allocation or sharing agreement
with any other entity. GPI has delivered to HRPT correct and complete
copies of all examination reports, statements of deficiencies and
similar documents prepared by the IRS or any other taxing authority
that have been received by GPI or any GPI Subsidiary. All final
adjustments made by the IRS with respect to any Tax Return of GPI or
any of the GPI Subsidiaries have been reported to the relevant state,
local, or foreign taxing authorities to the extent required by law. No
requests for ruling or determination letters filed by GPI or any of the
GPI Subsidiaries are pending with any taxing authority. Neither GPI nor
any GPI Subsidiary has any liability to any Person, with respect to
Taxes paid, owed or to be paid for periods of time during which GPI or
any GPI Subsidiary or any predecessor thereof were members of a
consolidated group other than a consolidated group of which GPI is the
common parent.
(c) At all times that it has been in existence, GPI has
qualified as a "real estate investment trust" under Section 856 of the
Internal Revenue Code, and each GPI Subsidiary (other than general or
limited partnerships or limited liability companies) has qualified as a
"qualified REIT Subsidiary" under Section 856(i) of the Internal
Revenue Code. GPI has at all times satisfied Section 857(a)(3) of the
Internal Revenue Code and does not have any "non-REIT earnings and
profits" within the meaning of Treasury Regulation ss. 1.857-11. The
assets of GPI as of the Effective Time fulfill the "substantially all"
requirement as it is set forth in IRS Revenue Procedure 77-37, ss.
3.01. Neither GPI nor any of the GPI Subsidiaries has filed a consent
pursuant to Section 341(f) of the Internal Revenue Code, or agreed to
have Section 341(f)(2) of the Internal Revenue Code apply to any
disposition of a subsection (f) asset (as such term is defined in
Section 341(f)(4) of the Internal Revenue Code) owned by it. No
property of GPI or any of the GPI Subsidiaries is property that such
entity is or will be required to treat as being owned by another person
pursuant to the provisions of Section 168(f)(8) of the Internal Revenue
Code of 1954, as amended and in effect immediately prior to the
enactment of the Tax Reform Act of 1986. Neither GPI nor any of the GPI
Subsidiaries has agreed to or is required to make any adjustment
pursuant to Section 481(a) of the Internal Revenue Code by reason of a
change in the accounting method initiated by GPI or any of the GPI
Subsidiaries, and GPI has no knowledge that the IRS has proposed any
such
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adjustment or change in accounting method. Neither GPI nor any of the
GPI Subsidiaries has executed or entered into a closing agreement
pursuant to Section 7121 of the Internal Revenue Code or any
predecessor provision thereof or any similar provision of state, local
or foreign law.
4.17 Contracts.
(a) Except as set forth in Disclosure Schedule 4.17, neither
GPI nor any of the GPI Subsidiaries is a party to or bound by any (A)
Contract not made in the ordinary course of business and not terminable
on thirty (30) days notice without payment of premium or penalty; (B)
advertising, public relations, franchise, distributorship or sales
agency Contract; (C) Contract involving the commitment or payment of in
excess of $100,000, at any one time or annually for the future purchase
or sale by GPI or any of the GPI Subsidiaries of property improvements,
services or equipment that is not otherwise reimbursable; (D) Contract
among shareholders or granting a right of refusal or for a partnership
or for a joint venture or for the acquisition, sale or lease (other
than the Tenant Leases and Development Property Leases) of any material
assets of GPI or any of the GPI Subsidiaries; (E) mortgage, pledge,
conditional sales contract, security agreement, factoring agreement or
other similar Contract with respect to any real or tangible personal
property of GPI or any of the GPI Subsidiaries; (F) loan agreement,
credit agreement, promissory note, guarantee, indenture, subordination
agreement, letter of credit or any other similar type of Contract; or
(G) retainer Contract with attorneys, accountants, actuaries,
appraisers, investment bankers or other professional advisers (other
than those referred to in Section 4.28). GPI and each of the GPI
Subsidiaries has delivered or otherwise made available to HRPT true,
correct and complete copies of the Contracts listed in Disclosure
Schedule 4.17, together with all amendments, waivers, modifications,
supplements or side letters affecting the obligations of any party
thereunder.
(b) Except as set forth in Disclosure Schedule 4.17, GPI is
not a party to or bound by any employment, consulting, non-competition,
severance or indemnification Contract and no GPI Subsidiary is a party
to or bound by any employment, consulting, non-competition, severance
or indemnification Contract.
(c) Except as set forth opposite the description of a Contract
in Disclosure Schedule 4.17:
(i) Each of the Contracts which is material to any of
GPI or any of the GPI Subsidiaries is valid and enforceable in
accordance with its terms, assuming the validity and
enforceability thereof against the other parties thereto in
all material respects, and subject to applicable bankruptcy,
insolvency, reorganization and similar laws affecting
creditors' rights and remedies generally and subject, as to
enforceability, to general principles of equity (regardless of
whether enforcement is sought in a proceeding at law or in
equity).
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(ii) No previous or current party to any such
Contract which is material to any of GPI or any of the GPI
Subsidiaries has given to GPI or any of the GPI Subsidiaries
written notice of or made a claim with respect to any breach
or default under any such Contract which breach or default has
not been cured or waived.
4.18 Insurance.
(a) Schedule 4.18 sets forth a true and correct list of all
insurance policies of any kind or nature whatsoever which are in force
and to which GPI or any of the GPI Subsidiaries is a named party or
beneficiary, specifying the insurance carrier, the type of insurance
coverage, the policy number, the date through which premiums have been
paid, the aggregate amount of insurance coverage per claim or per
occurrence, as the case may be, applicable self-retention limits and/or
self- or co-insurance requirements, and describing in reasonable detail
each pending claim under each such policy. Such insurance provides
coverage against, among other matters, property damage and other
casualty loss, personal injury, workers' compensation claims, general
liability, and other similar risks and matters incident to the conduct
of the business of GPI and each of the GPI Subsidiaries and similarly
situated businesses and in a manner and in an amount that is consistent
with industry practice. GPI and each of the GPI Subsidiaries regularly
accrues, and the financial statements of GPI reflect the accrual of,
adequate reserves against loss contingencies, in accordance with GAAP,
arising from known and incurred claims against GPI and each of the GPI
Subsidiaries. Based on the past claims experience of GPI and each of
the GPI Subsidiaries, such insurance together with such reserves is
reasonably likely to adequately cover any loss contingencies and, to
GPI's knowledge, all policies of such insurance are binding and
effective upon the issuers (each of whom is reputable and creditworthy)
in accordance with their respective terms.
(b) Neither GPI nor any of the GPI Subsidiaries has received
written notice from any insurance carrier of defects or inadequacies in
the Premises which, if uncorrected, would result in a termination of
insurance coverage or a material increase in the premiums charged
therefor.
4.19 Bank Accounts.
Schedule 4.19 contains a correct and complete list of every bank
account or lock box that GPI or any of the GPI Subsidiaries has or maintains
with any bank, savings and loan association or other financial institution, the
account identification number, if any, and the names of persons authorized to
make withdrawals or have access to each such account or lock box.
4.20 Accounts.
(a) The accounts receivable of GPI and each of the GPI
Subsidiaries as reflected in the Financial Statements or arising after
the date thereof are the result of bona fide transactions in the
ordinary course of business.
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(b) All accounts payable of GPI and each of the GPI
Subsidiaries as reflected in the Financial Statements or arising after
the date thereof are the result of bona fide transactions in the
ordinary course of business and have been paid or are not yet due and
payable (giving due regard to payment practices prevailing in the
industry and GPI's and such GPI Subsidiary's historical course of
dealing with its vendors and suppliers).
4.21 Labor Matters.
(a) No employees of GPI or any of the GPI Subsidiaries are
represented by any labor organization, and no labor organization or
group of employees of GPI or any of the GPI Subsidiaries have made a
pending demand for recognition or have filed a petition seeking a
representation proceeding with the National Labor Relations Board
within the last two years; and
(b) There are no strikes, grievances or other labor disputes
pending against GPI or any of the GPI Subsidiaries and, to the
knowledge of GPI, there are no such strikes, grievances and disputes
threatened. There are no unfair labor practice charges or complaints
pending or, to the knowledge of GPI, threatened by or on behalf of any
employee or group of employees of GPI or any of the GPI Subsidiaries.
4.22 Title to Properties.
(a) Schedule 4.22 identifies (i) the real property comprising
the Premises and the Development Properties which, as of the date
hereof, constitute all of the real property owned by GPI and the GPI
Subsidiaries (based on surveys and title insurance policies issued in
favor of GPI or the GPI Subsidiaries with respect to such Premises and
Development Properties) and (ii) the leases of all real property which
is leased by any of them, and of the nature of GPI's and the GPI
Subsidiaries' interest therein.
(b) Except as otherwise set forth in Disclosure Schedule 4.22,
the GPI Subsidiaries have marketable title to all real property
constituting the Premises and Development Properties and title to all
other property and assets, tangible and intangible, owned by them, in
each case free and clear of all Liens, except: (i) the Tenant Leases
and Development Property Leases, (ii) Permitted Liens, and (iii) Liens
reflected in the Financial Statements.
(c) Other than the Tenant Leases, neither GPI nor any GPI
Subsidiary has entered into any contract or agreement with respect to
the occupancy of the Premises and, to GPI's knowledge, other than the
Development Property Leases, there are no contracts or other agreements
with respect to the occupancy of the Development Properties, which will
be binding after the Closing. To GPI's knowledge, other than the
Contract Property Leases, there is no contract or agreement with
respect to the occupancy of the Contract Properties which will be
binding after the Closing with respect thereto. The copies of the
Tenant Leases, the Development Property Leases and the Contract
Property Leases heretofore delivered
-23-
or made available by GPI to HRPT are true, correct and
complete copies thereof; the Tenant Leases have not been amended except
as evidenced by amendments similarly delivered or made available and
constitute the entire agreement between GPI or the GPI Subsidiaries and
the tenants thereunder. Disclosure Schedule 4.22 includes a true,
correct and complete rent-roll with respect to each of the Premises
and, except as otherwise set forth in Disclosure Schedule 4.22: (i) to
GPI's knowledge, each of the Tenant Leases is in full force and effect
on the terms set forth therein in all material respects and each tenant
thereunder is bound by its obligations in accordance with the terms set
forth therein and has no currently exercisable rights of abatement,
offsets, defenses or other basis for relief or adjustment as a result
of any default of any GPI Subsidiary; (ii) no tenant under a Tenant
Lease has asserted in writing or, to GPI's knowledge, has any defense
to, offsets or claims against, rent payable by it or the performance of
its other obligations under its Tenant Lease; (iii) neither GPI nor any
GPI Subsidiary has any material overdue outstanding obligation to
provide any tenant under a Tenant Lease with an allowance to construct,
or to construct at its own expense, any tenant improvements; (iv) no
tenant under a Tenant Lease is in arrears in the payment of any sums or
in the performance of any material obligation required of it under its
Tenant Lease beyond any applicable grace period, and no tenant under a
Tenant Lease has prepaid any rent or other charges, except for one
month's rent and related charges; (v) no Tenant has filed a petition in
bankruptcy or for the approval of a plan of reorganization or
management under the Federal Bankruptcy Code or under any other similar
state law, or made an admission in writing as to the relief therein
provided, or otherwise become the subject of any proceeding under any
federal or state bankruptcy or insolvency law, or has admitted in
writing its inability to pay its debts as they become due or made an
assignment for the benefit of creditors, or has petitioned for the
appointment of or has had appointed a receiver, trustee or custodian
for any of its property; (vi) no tenant under a Tenant Lease or, to the
knowledge of GPI, under a Development Property Lease has requested in
writing a modification of its Tenant Lease, or a release of its
obligations under its Tenant Lease in any material respect or has given
written notice terminating its Tenant Lease, or has been released of
its obligations thereunder in any material respect prior to the normal
expiration of the term thereof; (vii) no guarantor of any tenant's
obligations has been released or discharged, voluntarily or
involuntarily, or by operation of law, from any obligation under or in
connection with any Tenant Lease or any transaction related thereto;
(viii) all security deposits paid by tenant under Tenant Leases are as
set forth in Disclosure Schedule 4.22; and (ix) all tenant finish and
lease commissions due with respect to each of the Tenant Leases have
been paid.
(d) To GPI's knowledge, all warranties, certifications and
representations of the landlords under the Tenant Leases (including in
any solicitations or requests for offers delivered in connection with
such landlords' entering into the Tenant Leases) and in any collateral
documentation are true and correct in all material respects as of the
relevant date thereof. All covenants and agreements of the GPI
Subsidiaries as landlords under the Tenant Leases required to be
performed as of the date hereof have been performed in all material
respects.
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(e) No Person other than GPI, the GPI Subsidiaries and tenants
under Tenant Leases has any interest in the Premises, except as set
forth in Disclosure Schedule 4.22 or pursuant to Permitted Liens.
4.23 Proprietary Information.
GPI and each of the GPI Subsidiaries owns, or has a right to use
without material limitations or restrictions adversely affecting the use of the
same in the ordinary conduct of its business, subject to all applicable laws,
rules and regulations, including without limitation, directives, orders or
similar actions of any applicable state regulatory authority, all technology,
know-how, processes and other proprietary information now used in the conduct of
its business (collectively, "Proprietary Data"), and the consummation of the
transactions contemplated by this Agreement will not alter or impair any such
rights or breach any agreements with third party vendors or require payments of
additional sums thereto. No claims have been asserted by any person to use or
obtain access to any such Proprietary Data and no person has challenged or
questioned (i) the validity or effectiveness of any license or agreement
relating to the same in accordance with the terms thereof or (ii) the right of
GPI or any of the GPI Subsidiaries to copy, modify, use or distribute the same,
nor to the best of GPI's knowledge, is there any basis for any such claim,
challenge or question. The manner in which GPI or any of the GPI Subsidiaries
has actually used or copied such Proprietary Data does not infringe on the
rights of any persons.
4.24 Environmental Matters.
(a) Except as disclosed in Disclosure Schedule 4.24(a) or the
Environmental Reports, GPI and each of the GPI Subsidiaries:
(i) is in compliance in all material respects with
all Environmental Laws, has not received any written
notification of potential liability under, or any written
request for information pursuant to, the Comprehensive
Environmental Response, Compensation and Liability Act of
1980, as amended ("CERCLA"), the Resource Conservation
Recovery Act, as amended
("RCRA"), or any similar state law;
(ii) has not entered into and is not a party under
any consent decree, compliance order, or administrative or
judicial order, injunction or judgment pursuant to any
Environmental Law; and
(iii) except where such would not reasonably be
expected to result in a Material Adverse Effect, has obtained
all permits, licenses and other authorizations and made all
filings which are required to be obtained by GPI and each GPI
Subsidiary for the ownership of its property, facilities and
assets and the operation of its businesses under all
Environmental Law, is and at all times since its organization
has been in compliance with the terms and conditions of all
such required permits, licenses and other authorizations,
and is not the subject of any pending or, to GPI's knowledge,
threatened
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with any legal action involving a demand for damages or
other potential liability arising under or relating to any
Environmental Law.
(b) Except as disclosed in Disclosure Schedule 4.24(b) or the
Environmental Reports:
(i) except where such would not reasonably be
expected to have a Material Adverse Effect, no disposal,
release, burial or placement of Hazardous Materials has
occurred on any property or facility owned, leased, operated
or occupied by GPI or any GPI Subsidiary during the period
that such facilities and properties were owned, leased,
operated or occupied by GPI or any of the GPI Subsidiaries or,
to the knowledge of GPI and the GPI Subsidiaries, at any prior
time or, to the knowledge of GPI and the GPI Subsidiaries, at
any other facility or site listed on the National Priorities
List or otherwise listed or subject to pending investigation
or remediation under CERCLA, RCRA or any analogous state
statute to which Hazardous Materials from or generated by GPI
or any GPI Subsidiary may have been taken at any time in the
past;
(ii) there has been no disposal, release, burial or
placement of Hazardous Materials on any other property which
has resulted in contamination of or beneath any properties or
facilities currently or, to the knowledge of GPI and the GPI
Subsidiaries, formerly owned, leased, operated or occupied by
GPI or any GPI Subsidiary during the period that such
facilities and properties were owned, leased, operated or
occupied by it (or, to the knowledge of GPI, at any prior
time) which would reasonably be expected to result in any
material liability for the removal or remediation of such
contamination; and
(iii) no Lien has been imposed on any GPI or any of
the GPI Subsidiaries' properties or facilities under any
Environmental Law.
(c) Except as disclosed in Disclosure Schedule 4.24(c) or in
the Environmental Reports, to GPI's knowledge, there are no
above-ground or underground storage tanks; no friable asbestos; no
polychlorinated biphenyls in excess of legally permissible
concentrations; and no insulating material containing urea formaldehyde
on any property currently owned, leased, operated or occupied by GPI or
any GPI Subsidiary;
(d) Neither GPI nor any GPI Subsidiary has received written
notice of any claim or allegation of injury to human health as a result
of the quality of air within the buildings at any of the properties
owned, leased, operated or occupied by GPI or any of the GPI
Subsidiaries; and
(e) GPI and each of the GPI Subsidiaries has delivered to HRPT
a true and complete copy of all written reports of environmental
audits, evaluations, assessments, studies or tests in their possession,
custody or control relating to GPI
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and each of the GPI Subsidiaries, their business and their assets and
properties (collectively, "Environmental Reports").
4.25 Utilities, Etc.
All utilities and services necessary for the use and operation of the
Premises (including, without limitation, road access, gas, water, electricity
and telephone) are available thereto, are of sufficient capacity to meet
adequately all needs and requirements necessary for the current use and
operation of such Premises and for their respective intended purposes. To GPI's
knowledge, no fact, condition or proceeding exists which would result in the
termination or material impairment of the furnishing of such utilities to any of
the Premises.
4.26 Substantial Completion.
GPI reasonably anticipates that substantial completion of the
Development Properties will occur on or before the dates specified in Disclosure
Schedule 4.26 in accordance with the Development Budgets attached to Disclosure
Schedule 4.26 and in accordance with all applicable material requirements of the
Development Property Leases for such Development Properties.
4.27 GPH.
(a) GPH will be organized prior to the Closing Date to act as
a holding company for all of GPI's Subsidiaries. Between the date of
its organization and the Closing Date, GPH will conduct no business,
have no employees and will not be a party to any lease, license,
contract, agreement, commitment, instrument or obligation.
(b) The authorized equity of GPH will be one hundred (100) GPH
Common Shares. On the Closing Date: (i) GPH will have no other voting
or equity securities or interests outstanding except for one hundred
(100) GPH Common Shares; (ii) all outstanding GPH Common Shares will be
duly authorized, validly issued and fully paid and non-assessable and
will be owned, beneficially and of record, by GPI; (iii) there will be
no existing subscription, option, warrant, call, right, commitment or
other agreement to which GPH is a party requiring, and (iv) there will
be no convertible securities of GPH outstanding which upon conversion
would require, directly or indirectly, the issuance of any additional
GPH Common Shares or other securities convertible into GPH Common
Shares or any other equity security of GPI, and there are no
outstanding contractual obligations of GPH to repurchase, redeem or
otherwise acquire any outstanding GPH Common Shares. On the Closing
Date, GPI will be the record and beneficial owner of all of the issued
and outstanding shares of beneficial interest of GPH.
(c) On the Closing Date, GPH will be a real estate investment
trust, duly organized, validly existing and in good standing under the
laws of the state of Maryland with all requisite trust power and
authority (i) to conduct its business as it
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is then conducted, (ii) to own or lease all of the properties owned or
leased by it, (iii) to consummate the transactions contemplated by this
Agreement.
(d) The consummation of the transactions provided for in this
Agreement will, on the Closing Date, have been duly authorized by all
necessary action on the part of GPH.
4.28 Fees.
No person acting on behalf of GPI is, or will be, entitled to any
commission, broker's, finder's or investment banking fees from any of the
Parties or from any Person controlling, controlled by or under a common control
with any Party, in connection with the transactions contemplated by this
Agreement except Xxxxxxx Xxxxx & Co. and Xxxxxxxxx, Lufkin & Xxxxxxxx
Securities.
SECTION 5
REPRESENTATIONS AND WARRANTIES OF HRPT
HRPT represents and warrants to GPI and acknowledges that GPI is
relying on such representations and warranties in connection with the
transactions provided for in this Agreement:
5.1 Organization, etc.
HRPT is a real estate investment trust, duly organized, validly
existing and in good standing under the laws of the state of Maryland and each
has all requisite trust power and authority (i) to conduct its business as it is
now conducted, (ii) to own or lease all of the properties owned or leased by it,
(iii) to enter into and perform this Agreement and (iv) to otherwise consummate
the transactions contemplated by this Agreement.
5.2 Authorization: Execution: Binding Effect.
The execution, delivery and performance of this Agreement and the
consummation of the transactions provided for in this Agreement have been duly
authorized by all necessary action on the part of HRPT. This Agreement
constitutes the legal, valid and binding obligations of HRPT, enforceable
against it in accordance with their terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization or other laws affecting
creditors' rights and remedies generally and by general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
5.3 Capitalization.
The authorized shares of beneficial interest of HRPT and the number of
shares of beneficial interest outstanding on the date of this Agreement is set
forth in the HRPT SEC Reports. All outstanding shares of beneficial interest are
duly authorized, validly issued and fully paid and non-assessable. HRPT has no
shares of beneficial interest or any other
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voting or equity securities or interests outstanding except for such shares.
Except for this Agreement and as set forth in Disclosure Schedule 5.3, there is
no existing subscription, option, warrant, call, right, commitment or other
agreement to which HRPT is a party requiring, and there are no convertible
securities of HRPT outstanding which upon conversion would require, directly or
indirectly, the issuance of any additional HRPT equity securities or other
securities convertible into any equity security of HRPT and there are no
outstanding contractual obligations of HRPT to repurchase, redeem or otherwise
acquire any outstanding HRPT equity securities. Except as described in
Disclosure Schedule 5.3, there are no preemptive rights nor any rights to demand
or require registration under the 1933 Act or any state securities laws in
respect of any equity securities.
5.4 No Conflicting Agreements or Trust/Charter Provisions.
Except as described in Disclosure Schedule 5.4, the execution, delivery
and compliance with and performance of the terms and provisions of this
Agreement will not conflict with or result in a breach of the terms, conditions
or provisions of, or constitute a default (or an event which, with notice, lapse
of time, or both, would constitute a default) under, or result in any violation
of, (A) the Charter Documents of HRPT or any resolutions adopted by the
shareholders or trustees of HRPT or (B) any provision of any Contract to which
HRPT or any of the HRPT Subsidiaries is a party or by which it or any of the
HRPT Subsidiaries or any part of it or any of the HRPT Subsidiaries' assets may
be bound or (C) any order, judgment, decree, license, permit, statute, law, rule
or regulation to which HRPT or any of the HRPT Subsidiaries is subject. The
execution, delivery and performance of this Agreement will not result in the
creation of any lien, charge or encumbrance upon or any preferential arrangement
with respect to the business or any part of the assets or properties of HRPT.
5.5 Litigation.
Except as set forth in the HRPT SEC Reports, there is (whether insured
or uninsured) no action, suit, proceeding or investigation pending or, to the
knowledge of HRPT, threatened, at law or in equity, in any court or before or by
any federal, state, municipal or other governmental authority, department,
commission, board, agency or other instrumentality (i) against HRPT or any of
the HRPT Subsidiaries, (ii) to the knowledge of HRPT, affecting HRPT or any of
the HRPT Subsidiaries or any of their properties, except for private civil
litigation involving claims which will not have a material adverse effect on the
business, assets, liabilities, financial condition, results of operations or
business prospects of HRPT and its subsidiaries, taken as a whole, (iii) to the
knowledge of HRPT, against or adversely affecting any officer of HRPT or any of
the HRPT Subsidiaries, or (iv) adversely affecting this Agreement or any action
taken or to be taken or documents executed or to be executed pursuant to or in
connection with the provisions of this Agreement.
5.6 No Undisclosed Liabilities.
Except as set forth in the HRPT SEC Reports, as of September 30, 1996,
neither HRPT nor any of the HRPT Subsidiaries had any obligations, indebtedness
or liabilities of any nature which would have been required by GAAP to be
reflected on the consolidated
-29-
balance sheet of HRPT as of September 30, 1996, that are not shown on such
balance sheet or the notes to such balance sheet. Except as set forth in such
balance sheet, neither HRPT nor any of the HRPT Subsidiaries, on the date of
this Agreement, has outstanding any material obligation, indebtedness or
liability, and HRPT does not know of any basis for the assertion against HRPT or
any of the HRPT Subsidiaries of any such obligation, indebtedness or liability,
other than those incurred since September 30, 1996, in the ordinary course of
business or disclosed in Disclosure Schedule 5.6 or in the HRPT SEC Reports.
5.7 Default.
Except for events or occurrences, the consequences of which,
individually or in the aggregate, would not have a material adverse effect on
the business, assets, liabilities, financial condition, results of operations or
business prospects of HRPT and its Subsidiaries, taken as a whole, neither HRPT
nor any of the HRPT Subsidiaries is in default or, to HRPT's knowledge, alleged
to be in default with respect to any judgment, order, writ, injunction or decree
of any court or any federal, state, municipal or other governmental authority,
department, commission, board or agency or other governmental entity. Except for
events or occurrences, the consequences of which, individually or in the
aggregate, would not have a material adverse effect on the business, assets,
liabilities, financial condition, results of operations or business prospects of
HRPT and its Subsidiaries, taken as a whole, neither HRPT nor any of the HRPT
Subsidiaries is in breach or default or alleged to be in breach or default under
any lease, license, contract, agreement, commitment, instrument or obligation
and HRPT does not know of any condition or state of facts which is likely to
cause or create a default or defaults under any such lease, license, contract,
agreement, commitment, instrument or obligation. Except as set forth in
Disclosure Schedule 5.7, HRPT does not know of any other party to any lease,
license, contract, agreement, commitment, instrument or obligation to which HRPT
or any of the HRPT Subsidiaries is a party and which is material to the business
of HRPT and the HRPT Subsidiaries taken as a whole, that is in default
thereunder and, to the knowledge of HRPT, there exists no condition or event
which, after notice or lapse of time or both, would constitute a default of any
other party to any such lease, license, contract, agreement, commitment,
instrument or obligation.
5.8 Compliance with Law.
HRPT and each of the HRPT Subsidiaries (A) has complied with all laws,
regulations and orders which are applicable to their respective businesses as
presently conducted, (B) possesses all Permits, and (C) has obtained all
governmental approvals and all other approvals, consents, certifications and
waivers and has made all filings, given all notices and otherwise complied with
all governmental laws, rules and regulations which are required on the part of
HRPT to enter into and perform this Agreement, and to otherwise consummate the
transactions contemplated by this Agreement, except in each case, where the
failure to have acted in accordance with clauses (A), (B) and (C) has not and
will not have a material adverse effect on the business, assets, liabilities,
financial condition, results of operations or business prospects of HRPT and its
Subsidiaries, taken as a whole.
5.9 Securities Filings.
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All reports and statements filed with respect to HRPT pursuant to the
1934 Act since December 31, 1995, conform in all material respects to the
applicable requirements of the 1934 Act and the rules and regulations
promulgated thereunder and did not include at the time of filing such documents
any untrue statement of a material fact or omit to state any material fact
required to be stated or necessary to make the statements made, in light of the
circumstances under which they were made, not misleading. Since December 31,
1995, HRPT has not failed to make any filing required by the 1934 Act on a
timely basis.
5.10 Merger Shares.
As of their respective dates of issuance, the HRPT Common Shares to be
issued pursuant to this Agreement will have been duly authorized, validly issued
and fully paid and non-assessable, free and clear of any Lien created by or
attributable to HRPT and there are no preemptive rights with respect to such
issuance.
5.11 Tax Matters.
At all times after December 31, 1986, HRPT has qualified as a "real
estate investment trust" under Section 856 of the Internal Revenue Code
("REIT"), and each HRPT Subsidiary (other than general or limited partnerships)
has qualified either as a "qualified REIT subsidiary" under Section 856(i) of
the Internal Revenue Code or as a REIT. HRPT has at all times after December 31,
1986, satisfied Section 857(a)(3) of the Internal Revenue Code and does not have
any "non-REIT earnings and profits" within the meaning of Treasury Regulation
ss. 1.857-11. Neither HRPT nor any of the HRPT Subsidiaries has filed a consent
pursuant to Section 341(f) of the Internal Revenue Code, or agreed to have
Section 341(f)(2) of the Internal Revenue Code apply to any disposition of a
subsection (f) asset (as such term is defined in Section 341(f)(4) of the
Internal Revenue Code) owned by it. No property of HRPT or any of the HRPT
Subsidiaries is property that such entity is or will be required to treat as
being owned by another person pursuant to the provisions of Section 168(f)(8) of
the Internal Revenue Code of 1954, as amended and in effect immediately prior to
the enactment of the Tax Reform Act of 1986. Neither HRPT nor any of the HRPT
Subsidiaries has agreed to or is required to make any adjustment pursuant to
Section 481(a) of the Internal Revenue Code by reason of a change in the
accounting method initiated by HRPT or any of the HRPT Subsidiaries, and HRPT
has no knowledge that the IRS has proposed any such adjustment or change in
accounting method. Neither HRPT nor any of the HRPT Subsidiaries has executed or
entered into a closing agreement pursuant to Section 7121 of the Internal
Revenue Code or any predecessor provision thereof or any similar provision of
state, local or foreign law.
5.12 Merger Sub.
(a) Merger Sub will be organized prior to the Closing Date.
(b) On the Closing Date HRPT will be the record and beneficial
owner of all of the issued and outstanding shares of beneficial
interest of Merger Sub.
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(c) On the Closing Date, Merger Sub will be a real estate
investment trust, duly organized, validly existing and in good standing
under the laws of the state of Maryland with all requisite trust power
and authority (i) to conduct its business as it is then conducted, (ii)
to own or lease all of the properties owned or leased by it and (iii)
to consummate the transactions contemplated by this Agreement.
(d) The consummation of the transactions provided for in this
Agreement will, on the Closing Date, have been duly authorized by all
necessary action on the part of Merger Sub.
SECTION 6
CERTAIN COVENANTS AND AGREEMENTS
6.1 Conduct of Business by GPI.
From the date of this Agreement to the Effective Time, except as
required in connection with the Merger and the other transactions contemplated
by this Agreement or as set forth on Disclosure Schedule 6.1 and unless GPI
obtains HRPT's prior written consent (provided, if HRPT shall fail to respond
within five business days of a written request for consent, or such shorter
period as may be reasonably required under the circumstances, (GPI agreeing to
identify the response period and any circumstances requiring a response period
of fewer than five business days in its written request) such consent shall be
deemed to have been given) in each instance, GPI will, and will cause each GPI
Subsidiary to:
(a) Carry on its business as currently conducted and only in
the usual and ordinary course;
(b) Use its best efforts to preserve its business organization
intact, to continue to operate the Premises in a good and businesslike
fashion consistent with past practices and to maintain the Premises in
good working order and condition in a manner consistent with past
practice, to retain the services of its present employees and to
preserve the goodwill of its tenants;
(c) Maintain insurance coverage of the types and in the
amounts carried by it prior to the execution of this Agreement and
promptly report all known claims within the applicable claims period;
(d) Not purchase, sell, lease or dispose of any property or
assets and not incur any liability or make any material commitment or
enter into any other transaction, except, in each case, in the ordinary
and usual course of business or pursuant to Contracts existing on the
date hereof; provided (x) in the case of Additional Properties, neither
GPI nor any GPI Subsidiary will enter into an agreement to acquire such
Additional Property and (y) in the case of the Contract Properties,
neither GPI nor any GPI Subsidiary will enter into an amendment to the
agreement to acquire any Contract Property or waive any diligence
contingencies (except for such diligence contingencies that expire with
the passage of time)
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without HRPT's consent, which may be withheld in HRPT's sole
discretion, in the case of contracts to acquire Additional Properties,
and which may be withheld by HRPT in the case an amendment to an
agreement to acquire any Contract Property, in its reasonable
discretion provided if the amendment would have an adverse effect on
HRPT's expected yield with respect to the particular Contract Property
such withholding shall be deemed reasonable;
(e) Not issue any shares of capital stock or other securities
or options or rights to purchase shares of capital stock or other
securities, not purchase any of its capital stock and not pay any
dividend on its capital stock;
(f) Not increase the compensation of any officer, employee or
agent other than in the usual and ordinary course of business, and not
create any additional employee benefit plan or amend any existing
employee benefit plan;
(g) Not organize any new Subsidiary, and not acquire or enter
into an agreement to acquire, by merger, consolidation or purchase of
stock or assets, any business or entity;
(h) Not (i) create, incur or assume any long-term debt
(including obligations in respect of capital leases) or, except in the
ordinary course of business under existing lines of credit, create,
incur or assume any short-term debt for borrowed money, (ii) assume,
guarantee, endorse or otherwise become liable or responsible (whether
directly, contingently or otherwise) for the obligations of any other
person, (iii) except in the ordinary course of business and consistent
with past practice, make any loans or advances to any other person, or
(iv) make any capital contributions to, or investments in, any person
(other than a GPI Subsidiary);
(i) Not enter into, modify, amend or terminate any of the
Material Leases or other material agreement with respect to any of the
Premises, which would encumber or be binding upon the Premises from and
after the Closing Date;
(j) Not amend or modify its charter documents;
(k) Whether or not in the ordinary course of business, unless
GPI elects to cause the Houston Premises to be transferred pursuant to
Section 8.2, not enter into a lease of the Houston Premises;
provided that GPI will cause GPH not to engage in any trade or business, and not
to enter into any lease, license, contract, agreement, commitment, instrument or
obligation from the date of this Agreement to the Effective Time, except as
required in connection with the Merger and the other transactions contemplated
by this Agreement.
In connection with the continued operation of the business of GPI
between the date of this Agreement and the Effective Time, GPI shall confer in
good faith with one or more representatives of HRPT as often as HRPT shall
reasonably request to report operational matters of materiality and the general
status of ongoing operations including, without limitation, the status of
Development Properties, and the Contract Properties and
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negotiations with respect to Additional Properties and the Contract Properties.
GPI acknowledges that HRPT does not and will not waive any rights it may have
under this Agreement as a result of such consultations nor shall HRPT be
responsible for any decisions made by GPI's officers and directors with respect
to matters which are the subject of such consultation unless HRPT so consents in
writing or unless its consent is deemed to have been given as provided above.
6.2 Inspection of and Access to Information.
Between the date of this Agreement and the Effective Time, GPI will,
and will cause each of the GPI Subsidiaries to: (i) provide HRPT and its
accountants, counsel and other authorized representatives full access, during
usual business hours to any and all of its premises, properties, contracts,
commitments, books, records and other information (including tax returns filed
and those in preparation); (ii) cause its respective officers to provide to HRPT
and its authorized representatives any and all financial, technical and
operating data and other information pertaining to its business as HRPT shall
from time to time reasonably request; and (iii) subject to such reasonable
limitations as GPI shall deem necessary, permit HRPT to discuss, and cooperate
in discussions, with the GPI Subsidiaries, employees, architects, contractors
and tenants.
6.3 No Solicitation.
From the date of this Agreement until the Effective Time or until this
Agreement is terminated or abandoned as provided in Section 10, neither GPI nor
any of the GPI Subsidiaries shall directly or indirectly (i) solicit or initiate
(including by way of furnishing any information) discussions with or (ii) enter
into negotiations with, or furnish any information that is not publicly
available to, any corporation, partnership, person or other entity (other than
HRPT pursuant to this Agreement) concerning any proposal for a merger, sale of
assets, sale of shares of stock or securities or other takeover or business
combination transaction (an "Acquisition Proposal") involving GPI or any GPI
Subsidiary, and GPI will instruct its officers, directors, advisors and other
financial and legal representatives and consultants not to take any action
contrary to the foregoing provisions of this sentence.
6.4 Best Efforts: Further Assurances: Cooperation.
Each of the Parties shall use its best efforts to perform its
obligations under this Agreement and to take, or cause to be taken or do, or
cause to be done, all things necessary, proper or advisable under applicable law
to obtain all regulatory approvals and satisfy all conditions to the obligations
of the Parties under this Agreement and to cause the Merger and the other
transactions contemplated in this Agreement to be carried out promptly in
accordance with the terms of this Agreement and shall cooperate fully with each
other and their respective officers, directors, employees, agents, counsel,
accountants and other designees in connection with any steps required to be
taken as a part of its obligations under this Agreement. Upon the execution of
this Agreement and thereafter, each Party shall do such things as may be
reasonably requested by the other Parties in order more effectively to
consummate the Merger and the other transactions contemplated by this Agreement,
including without limitation:
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(a) GPI and HRPT shall promptly make their respective filings
and submissions and shall take, or cause to be taken, all actions and
do, or cause to be done, all things necessary, proper or advisable
under applicable laws and regulations to (i) comply with the provisions
of the HSR Act, if applicable, and (ii) obtain any other required
consent or approval of any third party or any other federal, state or
local governmental agency or regulatory body with jurisdiction over the
transactions contemplated by this Agreement. GPI and HRPT agree to
cooperate and keep each other reasonably informed regarding any
required HSR filings and the process for obtaining HSR clearance, if
required.
(b) If any claim, action, suit, investigation or other
proceeding by any governmental body or other person is commenced which
questions the validity or legality of the Merger or any of the other
transactions contemplated by this Agreement or seeks damages in
connection therewith, the Parties agree to cooperate and use all
reasonable efforts to defend against such claim, action, suit,
investigation or other proceeding and, if an injunction or other order
is issued in any such action, suit or other proceeding, to use best
efforts to have such injunction or other order lifted, and to cooperate
reasonably regarding any other impediment to the consummation of the
transactions contemplated by this Agreement.
(c) Each Party shall give prompt written notice to the other
of (i) the occurrence, or failure to occur, of any event which
occurrence or failure would be likely to cause any representation or
warranty of GPI or HRPT, as the case may be, contained in this
Agreement to be untrue or inaccurate in any material respect at any
time from the date of this Agreement to the Effective Time or that will
or may result in the failure to satisfy any of the conditions specified
in Section 7 and (ii) any failure of GPI or HRPT, as the case may be,
to comply with covenant, condition or agreement to be complied with or
satisfied by it by this Agreement.
6.5 Expenses.
If the Merger is consummated, each Party shall pay its own attorneys'
and accountants' fees and costs and costs of its internal personnel in
connection with the transactions contemplated hereby, HRPT shall pay all title
insurance premiums and charges, local and special regulatory counsel fees,
surveyor charges, environmental consultant charges, transfer taxes, recording
fees and the like, and the cost of the Ernst & Young LLP confirmation of the Pro
Forma Balance Sheet referred to in Section 1.6 and GPI shall pay the fees
referred to in Section 4.28. If the Merger is not consummated, each Party shall
pay all costs and expenses incurred by it in connection with the transactions
contemplated hereby including its own attorneys' and accountants' fees and costs
and the costs of its internal personnel, GPI shall pay the fees referred to in
Section 4.28 and HRPT shall pay all title insurance premiums and charges, local
and special regulatory counsel fees, surveyor charges and environmental
consultant charges.
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6.6 Public Announcements.
The timing and content of all announcements regarding any aspect of
this Agreement or the Merger to the financial community, government agencies,
employees or the public generally shall be mutually agreed upon in advance
(unless HRPT or GPI is advised by counsel that any such announcement or other
disclosure not mutually agreed upon in advance is required to be made by law or
NYSE rule in which case HRPT shall use commercially reasonable efforts to
consult with GPI prior to any such announcement).
6.7 Interim Financial Statements.
Prior to the Effective Time, (a) GPI shall deliver to HRPT, as soon as
available but in no event later than 45 days after the end of each fiscal
quarter, a consolidated balance sheet as of the last day of such fiscal period
and the consolidated statements of income, stockholders' equity and cash flows
of GPI and its Subsidiaries for the fiscal period then ended, each prepared in
accordance with GAAP and (b) HRPT shall deliver, promptly after filing, a copy
of any report or statement pursuant to the 1934 Act. GPI shall deliver to HRPT
monthly statements of income and/or financial position for any periods after the
date of this Agreement within 30 days of the end of each month.
6.8 Supplements to Schedules.
From time to time prior to the Effective Time, GPI and HRPT will each
promptly supplement or amend the respective schedules which they have delivered
pursuant to this Agreement with respect to any matter arising which, if existing
or occurring at the date of this Agreement, would have been required to be set
forth or described in any such disclosure schedule or which is necessary to
correct any information in any such schedule which has been rendered inaccurate.
The delivery of any supplement or amendment to the respective disclosure letters
of the parties pursuant to this Section 6.8 shall not in any matter constitute a
waiver by any party of any of the conditions contained in Section 7; provided,
however, that the disclosure by any party in any such supplement or amendment to
its disclosure letter of any matter arising or occurring after the date hereof
(which did not exist on the date hereof) shall not form the basis of a claim
against the disclosing party for misrepresentation or breach of a
representation, warranty, covenant or agreement.
6.9 Contribution to GPH.
On the Closing Date, GPI shall contribute all of its interest in the
other Subsidiaries of GPI and the contracts and other agreements listed on
Disclosure Schedule 6.9, to GPH, in each case free and clear of all Liens, in
consideration of the GPH Common Shares, the assumption of the GPI Third Party
Debt and Transaction Expenses.
6.10 Reorganization.
From and after the date of this Agreement and until the Effective Time,
neither HRPT nor GPI nor any of their Subsidiaries or other affiliates shall
take any action, or fail to take any action, with the intention of jeopardizing
qualification of the Merger as a reorganization within the meaning of Section
368(a) of the Internal Revenue Code. Each of
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the Parties agrees to treat the Merger as a tax-free reorganization within the
meaning of Section 368(a) of the Internal Revenue Code for purposes of filing
all federal, state and local income tax returns.
6.11 Change of Name.
As soon as reasonably practicable after the Closing Date, HRPT will use
its best efforts to change the name of each of the GPI Subsidiaries to remove
"Rosecliff".
6.12 REIT Status.
GPI will take all action required in connection with its liquidation
and dissolution to (i) ensure that GPI will continue to be qualified as a "real
estate investment trust" and (ii) that each GPI Subsidiary will continue to be
qualified as a "qualified REIT subsidiary" through the Effective Time.
6.13 Substitute Guarantor.
To facilitate GPI's obtaining the consent of lenders under Section
7.3(k), HRPT will make an affiliate of HRPT with a net worth of not less than
$100,000,000 available to assume any guarantees by GPI of indebtedness relating
to the Premises identified on Disclosure Schedule 1.71 as Properties Nos. 13,
14, 19 and 20.
6.14 Names.
Within 10 days after the date of this Agreement, GPI will provide HRPT
additional information required to make Schedule 4.7 complete and correct.
6.15 GPI Shareholders.
Contemporaneously with the delivery of this Agreement by GPI, each of
Rosecliff Realty L.P. and The 1818 Fund II, L.P. shall deliver an agreement to
vote their shares of GPI Common Stock in favor of the transactions contemplated
by this Agreement and on or before February 27, 1997, GPI will deliver the
certificate of its secretary confirming that the Merger and the transactions
contemplated by this Agreement have been approved by its stockholders pursuant
to Section 228 of the Delaware General Corporation Law.
6.16 Co-Manager Letter.
Contemporaneously with the delivery of this Agreement by HRPT, HRPT
shall have executed and delivered a letter agreement relating to underwriting of
any equity offering the proceeds of which will be used to satisfy HRPT's
obligations under this Agreement.
6.17 Arbitration.
The Parties agree that any and all disputes or disagreements arising
out of or relating to this Agreement, other than actions or claims for
injunctive or other equitable relief or claims raised in actions or proceedings
brought by third parties, shall be resolved
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through negotiations or, if the dispute is not so resolved, through mediation
and if necessary binding arbitration conducted by a private mediator to be
agreed upon by the Parties and in accordance with rules and procedures to be
agreed upon by the Parties. If, within ten (10) business days after the date of
this Agreement, the Parties shall not have agreed upon the identity of the
private mediator or the rules and procedures governing the mediation and/or
arbitration, such mediation and/or arbitration shall be conducted by the
American Arbitration Association in accordance with the rules and procedures of
the American Arbitration Association. Any such mediation and/or arbitration,
whether by an agreed upon mediator or by the American Arbitration Association,
shall be conducted in Boston, Massachusetts, and the decision of the mediator
shall be binding on all parties and not appealable.
SECTION 7
CONDITIONS
7.1 Conditions to Each Party's Obligations.
The respective obligations of each Party to effect the Merger shall be
subject to the fulfillment at or prior to the Closing of each of the following
conditions:
(a) HSR Act. Early termination shall have been granted or
applicable waiting periods shall have expired under the HSR Act, if
applicable.
(b) Injunction. At the Effective Time there shall be no
effective injunction, writ or preliminary restraining order or any
order of any nature issued by a court or governmental agency of
competent jurisdiction that the transactions provided for in this
Agreement or any of them not be consummated as provided in this
Agreement and no proceeding or lawsuit shall have been commenced or
threatened by any governmental or regulatory agency with respect to any
other transactions contemplated by this Agreement, which proceeding or
lawsuit in the reasonable opinion of HRPT or GPI makes it inadvisable
to consummate such transactions.
(c) Consents. All consents, authorizations, orders and
approvals of (or filing or registration with) any governmental
commission, board or other regulatory body required in connection with
the execution, delivery and performance of this Agreement shall have
been obtained, except to the extent that any such consent,
authorization, order or approval (or filing or registration) is
required due to any governmental commission, board or other regulatory
body's status as a payor of GPI, in which case such consent,
authorization, order or approval shall have been obtained (or filing or
registration shall have been made) except where the failure to obtain
the same would not have a Material Adverse Effect.
7.2 Conditions to Obligations of GPI.
The obligations of GPI to effect the Merger shall be subject to the
fulfillment at or prior to the Closing of each of the following conditions:
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(a) Representations and Warranties. The representations and
warranties of HRPT set forth in this Agreement shall be true and
correct in all material respects as of the date of this Agreement and
as of the Effective Time as though made on and as of the Effective Time
(except where such representation or warranty specifically relates to
an earlier date).
(b) Performance of Obligations By HRPT. HRPT shall have
performed in all material respects all covenants and agreements
required to be performed by it under this Agreement.
(c) Registration Rights Agreement. HRPT shall have executed
and delivered the Registration Rights Agreement to GPI and such
agreement shall be in full force and effect at the Effective Time.
(d) Information Access Agreement and Voting Agreement. Merger
Sub shall have executed and delivered an Information Access Agreement
and Voting Agreement to The 1818 Fund II, L.P. and Rosecliff Inc. in
the forms attached as Schedule 7.2(d), and such agreements shall be in
full force and effect at the Effective Time.
(e) Opinions of HRPT Counsel. GPI shall have received an
opinion of Xxxxxxxx & Worcester LLP, dated the Closing Date, in form
and substance reasonably satisfactory to GPI, with respect to the
transactions contemplated by this Agreement.
(f) Authorization of Merger. All corporate action necessary to
authorize the execution, delivery and performance of this Agreement by
HRPT and the consummation of the transactions contemplated by this
Agreement shall have been duly and validly taken.
(g) Certificates. HRPT shall furnish GPI with a certificate of
its appropriate officers as to compliance with the conditions set forth
in Section 7.2.
(h) Conduct of Business and No Material Adverse Change. The
fundamental character of the business of HRPT and its Subsidiaries as
investors in healthcare related real estate shall not, except for the
transactions contemplated by this Agreement, have changed between the
date hereof and the Effective Date. HRPT and its Subsidiaries, taken as
a whole, shall not have suffered a material adverse change in their
financial condition, business, assets, liabilities or operations from
the date hereof to the Effective Time; provided, however, that a
decline in the price of HRPT Common Shares or a change in any rating
assigned to any debt of HRPT by Xxxxx'x Investors Service, Inc.,
Standard & Poor's Ratings Group or Fitch Investors Services, L.P. shall
not in and of itself be deemed a material adverse change.
(i) Indemnification Agreement. HRPT shall have executed and
delivered an Indemnification Agreement (the "Indemnification
Agreement") in the form of Schedule 7.2(i), and such agreement shall be
in full force and effect at the Effective Time.
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(j) Service Contract. HRPT and/or its nominee shall have
executed and delivered a Service Contract (the "Service Contract") in
the form of Schedule 7.2(j), and such contract shall be in full force
and effect at the Effective Time.
(k) Prepayments. HRPT shall prepay all GPI Third Party Debt
and all GPI Property Debt (except for that GPI Property Debt secured
solely by Premises identified on Disclosure Schedule 1.71 as Properties
Nos. 13, 14, 19 and 20) on the Closing Date.
7.3 Conditions to Obligations of HRPT.
The obligations of HRPT to effect the Merger shall be subject to the
fulfillment at or prior to the Closing of each of the following conditions:
(a) Representations and Warranties. The representations and
warranties of GPI set forth in this Agreement shall be true and correct
in all material respects as of the date of this Agreement and, except
as otherwise permitted under Sections 6.1 and 8.2, as of the Effective
Time as though made on and as of the Effective Time (except where such
representation or warranty specifically relates to an earlier date).
(b) Performance of Obligations of GPI. GPI shall have
performed in all material respects all covenants and agreements
required to be performed by it under this Agreement.
(c) Registration Rights Agreement. GPI shall have executed and
delivered the Registration Rights Agreement to HRPT and such agreement
shall be in full force and effect at the Effective Time.
(d) Opinion of GPI's Counsel. HRPT shall have received an
opinion of Xxxxxxx Xxxx & Xxxxxxxxx, dated the Closing Date, in form
and substance reasonably satisfactory to HRPT, with respect to the
transactions contemplated by this Agreement and an opinion of
Xxxxxxxxxx Xxxxxxxx LLP, dated the Closing Date, subject to customary
assumptions, qualifications and conditions, and otherwise in form and
substance reasonably satisfactory to HRPT, and stating in substance (i)
that the Development Partnership Agreements (x) do not violate
applicable federal law relating to the acquisition and administration
of federal contracts, including leases, or (y) give rise to a right on
the part of the U.S. Government to terminate the Development Property
Lease and (ii) that, under circumstances similar to those contemplated
by the Development Partnership Agreements, the U.S. Government would
customarily grant a novation in favor of the general partner acquiring
the interest of the developer general partner.
(e) Authorization of Merger. All corporate action necessary to
authorize the execution, delivery and performance of this Agreement by
GPI and the consummation of the transactions contemplated by this
Agreement shall have been duly and validly taken.
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(f) Shareholder Approval. The Merger shall have been approved
by GPI, as the sole shareholder of GPH, in accordance with Maryland Law
and shall also have been approved by the stockholders of GPI in
accordance with the Delaware General Corporation Law..
(g) No Material Adverse Effect. No change which has a Material
Adverse Effect shall have occurred from the date hereof to the
Effective Time.
(h) Certificates. GPI shall furnish HRPT with a certificate of
its appropriate officers as to compliance with or satisfaction of the
conditions set forth in Section 7.3.
(i) Nonsolicitation Agreements. At or prior to the Closing,
the persons listed on Disclosure Schedule 1.54 shall have each executed
and delivered a Nonsolicitation Agreement (the "Nonsolicitation
Agreements"), in the form of Schedule 7.3(i), and such agreement shall
be in full force and effect at the Effective Time.
(j) Indemnification Agreement. GPI shall have executed and
delivered the Indemnification Agreement in the form of Schedule 7.2(i),
and such agreement shall be in full force and effect at the Effective
Time.
(k) Consents and Prepayment. All consents and waivers required
under any agreements identified in Section 4.5 including, without
limitation, the agreements evidencing the indebtedness secured solely
by the Premises identified on Disclosure Schedule 1.71 as Properties
Nos. 13, 14, 19 and 20, shall have been obtained. If on the Closing
Date, the borrower shall not have the right to prepay, without premium
or penalty, all amounts owed to each lender identified on Disclosure
Schedule 7.3(k), the Aggregate Closing Consideration shall be reduced
by an amount equal to the aggregate premium and penalty which the
borrower would be obliged to pay if it prepaid all such indebtedness in
full on the Closing Date, provided there will be no such reduction with
respect to indebtedness secured solely by Premises identified on
Disclosure Schedule 1.71 as Properties Nos. 13, 14, 19 and 20. HRPT
shall have the right to prepay all GPI Third Party Debt and all GPI
Property Debt on the Closing Date other than the indebtedness secured
solely by the Premises identified on Disclosure Schedule 1.71 as
Properties Nos. 13, 14, 19 and 20.
(l) Mortgagee Estoppel Certificates. HRPT shall have received
estoppel certificates dated within thirty (30) days prior to the
Closing Date, executed by the lenders holding the indebtedness secured
by the Premises identified on Disclosure Schedule 1.71 as Properties
Nos. 13, 14, 19 and 20, which estoppel certificates shall specify the
principal balance outstanding and the date of the most recent interest
payment received thereunder and shall confirm whether such lender has
sent any written notice of any default by the applicable borrower (GPI
agreeing also to use reasonable efforts to cause the certifying party
to identify all material documents setting forth (provided, however,
that the delivery by GPI to the
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certifying party of a request for such identification together with
follow up telephone calls shall be deemed to constitute reasonable
efforts) the terms and conditions with respect to such indebtedness).
(m) Tenant Certificates. HRPT shall have received estoppel
certificates, satisfactory in form (HRPT agreeing to accept such form
as is required to be delivered by a tenant under its lease and provided
HRPT will accept, from any tenant under a Material Lease, a statement
that (i) the lease is in full force and effect, (ii) there are no
prepayments of rent or other charges due under the Lease in excess of
one month and (iii) no notice of default has been issued by tenant
under the lease), and substance to HRPT and dated within thirty (30)
days prior to the Closing Date, executed by all tenants under Material
Leases; provided, however, if GPI shall fail, after using commercially
reasonable efforts, to obtain any tenant estoppel certificate required
under this Section 7.3(m) as to Premises representing, in the
aggregate, no more than 840,500 square feet, GPI's certification as to
such material may be substituted for the tenants'.
(n) Partner Estoppel Certificates. HRPT shall have received
estoppel certificates, in the form attached hereto as Schedule 7.3(n),
executed by the third party partner to the Development Partnership
Agreement relating to the San Diego Premises and Golden Premises.
(o) Condition of the Premises. All of the Premises, including
all improvements located thereon, shall be in substantially the same
physical condition as on the date of this Agreement, ordinary wear and
tear excepted and except for construction of Development Properties in
accordance with the approved plans and specifications therefor, subject
to Section 8.3(a) and (b), in all material respects.
(p) No Condemnation. No action shall be pending or, to the
knowledge of GPI, threatened for the condemnation or taking by power of
eminent domain of any of the real properties comprising the Premises
which has had or would be reasonably expected to result in a Material
Adverse Effect.
(q) Title Insurance. With respect to the Golden Premises, a
title insurance company satisfactory to HRPT or the title insurance
company insuring the existing title policy shall be prepared, subject
only to payment of the applicable premiums and charges, to issue a
title insurance policy, to the applicable GPI Subsidiary, insuring
title to the Golden Premises is vested in the applicable GPI
Subsidiary, pursuant to an ALTA (or such other form if ALTA is not
available in such jurisdiction) title insurance policies in the form
attached hereto as Schedule 7.3(q) and a title insurance company
reasonably acceptable to HRPT or the existing title insurance company
shall be prepared, to amend the existing title insurance policy with
respect to the San Diego DFAS to provide affirmative coverage against
any violation of the matters described in Schedule B, item 3 thereof if
available.
(r) Survey. HRPT shall have received an ALTA survey of the
Premises located in Richland, Washington (or, if any ALTA survey is not
available in the applicable jurisdiction, such other form of survey in
accordance with the customary
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standards for such State), together with a certificate of such
surveyor, such survey and certification to be in form and substance
reasonably satisfactory to HRPT.
(s) Information Access Agreement and Voting Agreement. The
1818 Fund II, L.P. and Rosecliff Inc. shall have executed and delivered
to Merger Sub an Information Access Agreement and Voting Agreement in
the forms attached as Schedule 7.2(d), and such agreements shall be in
full force and effect as of the Effective Time.
(t) Service Contract. GPI shall have executed and delivered to
M&P Partners, L.P. the Service Contract in the form of Schedule 7.2(j)
and such agreement shall be in full force and effect at the Effective
Time.
(u) Termination of Agreements. The contracts and agreements
listed on Disclosure Schedule 7.3(u) shall have been terminated without
liability or recourse to any of the GPI Subsidiaries and HRPT shall
have received such evidence thereof as it shall reasonably request.
(v) GPH. The contribution of assets of GPI to GPH in
accordance with Section 6.9 shall have occurred and HRPT shall have
received such evidence thereof as it shall reasonably request.
(w) Resignations. All officers and directors of GPH and each
of the GPI Subsidiaries shall have delivered their resignations
effective upon the Effective Date.
SECTION 8
OTHER AGREEMENTS
8.1 Deposit.
Within three business days following the execution of this Agreement,
HRPT shall deposit $5,000,000 with Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx
("PW") or if PW shall decline, within ten business days of the date the Parties
agree on another escrow agent, to be held pursuant to the terms of the Escrow
Agreement. On the Closing Date, upon compliance with and performance of the
conditions set forth in Section 7.2, or upon any termination of this Agreement
pursuant to Section 10.1(a) (b) or (c) or by HRPT pursuant to Section 10.1(e),
upon notice from HRPT to the escrow agent, the Escrow Agreement shall terminate
and all funds held thereunder shall be paid to HRPT. If this Agreement is
terminated by GPI pursuant to Section 10.1(d)(ii), all funds then held pursuant
to the Escrow Agreement shall be paid to GPI, as liquidated damages and GPI
shall have no further recourse against HRPT, the HRPT Subsidiaries or any of
their respective officers, trustees, directors, employees or stockholders.
8.2 Houston Premises.
Anything to the contrary contained herein notwithstanding, GPI may
elect to cause the Houston Premises to be transferred to GPI, an affiliate of
GPI or a third party, provided
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such election is made not later than the business day following the notice from
HRPT to GPI provided for in Section 3.1 and the transfer is completed not later
than the Closing Date. If GPI elects to transfer the Houston Premises, the
Aggregate Closing Consideration shall be reduced by $5,000,000 and all
representations and warranties contained in this Agreement shall be deemed not
to include the Houston Premises. If GPI elects to transfer the Houston Premises
and the proceeds thereof increase "working capital" (as defined in Section 1.6),
although the Aggregate Closing Consideration shall be reduced as provided in the
next prior sentence, HRPT shall issue GPI a number of HRPT Common Shares on the
Closing Date with an aggregate value (based upon a price for an HRPT Common
Share of $19.2125) equal to such increase in working capital.
8.3 Development Properties.
(a) Golden Premises. If completion of the Golden Premises in accordance
with the plans and specifications therefor shall not have occurred and the
obligation to pay rent of the tenant under the Development Property Lease in
effect with respect to the Golden Premises shall not have commenced by the
Closing Date, the Aggregate Closing Consideration shall be reduced by
$9,046,823. Upon (x) the 30th day after substantial completion of the Golden
Premises in accordance with the plans and specifications therefor, (y) the
transfer to HRPT of the third party developer partner's interest and (z) the
novation of the Development Property Lease in effect with respect to the Golden
Premises in favor of an HRPT Subsidiary, HRPT will issue GPI a number of HRPT
Common Shares with an aggregate value (with each such HRPT Common Share valued
at the Merger Price) equal to $9,046,823, less all amounts funded at or
subsequent to Closing, exclusive of HRPT Common Shares issued at Closing, or
anticipated to be funded in connection with the punch list items by HRPT to
complete the Golden Premises in accordance with the plans and specifications
therefor as set forth in the related guaranteed maximum price construction
contract, including, without limitation, any amounts paid to retire indebtedness
or to third party partner, together with interest thereon from the date advanced
by HRPT through the date of issuance of the HRPT Common Shares pursuant to this
Section 8.3(a) at an annual rate equal to 7.4%. If the aggregate amount so
funded, exclusive of HRPT Common Shares issued at Closing, or so anticipated to
be funded by HRPT (including the interest thereon) exceeds $9,046,823, one-half
such excess shall be deducted from the Second Closing Consideration.
(b) San Diego Premises. If completion of the San Diego Premises in
accordance with the plans and specifications therefor shall not have occurred
and the obligations to pay rent of both tenants under the Development Property
Leases in effect with respect to the San Diego Premises shall not have commenced
by the Closing Date, the Aggregate Closing Consideration shall be reduced by
$1,530,954. Upon (x) the 30th day after substantial completion of the San Diego
Premises in accordance with the Plans and specifications therefor, (y) the
transfer to HRPT of the developer partner's interest and (z) the novation of the
Development Property Leases in effect with respect to the San Diego Premises in
favor of an HRPT Subsidiary, HRPT will issue GPI a number of HRPT Common Shares
with an aggregate value (with each such HRPT Common Share valued at the Merger
Price) equal to $1,530,954 less all amounts funded or anticipated to be funded
in connection with the punch list items by HRPT at or subsequent to Closing to
complete the San Diego Premises in accordance with the plans and specifications
therefor, including,
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without limitation, any amounts paid to retire indebtedness or to third party
partners, together with interest thereon from the date advanced by HRPT through
the date of issuance of the HRPT Common Shares pursuant to this Section 8.3(b)
at an annual rate equal to 7.4%. If the aggregate amount so funded by HRPT
(including the interest thereon) exceeds $1,530,954, one-half such excess shall
be deducted from the Second Closing Consideration.
(c) Aurora Premises. Notwithstanding the provisions of Section
6.1(d) or 6.3 on or before the Closing Date, GPI will cause the
partnership interests in Xxxx Xxxxxx, L.P. held by a GPI Subsidiary to
be transferred to GPI or an affiliate of GPI other than a GPI
Subsidiary and the Aggregate Closing Consideration shall be reduced by
$11,647,101. If, at any time on or before July 31, 1997, the Aurora
Closing Conditions (as defined below) shall have been satisfied, HRPT
will issue GPI a number of HRPT Common Shares with an aggregate value
(with each such HRPT Common Share valued at the Merger Price) equal to
$11,647,101 less the sum of (x) $1,000,000, (y) the amount of any
indebtedness or funding obligations assumed by HRPT with respect to the
Aurora Premises, and (z) the cost to complete construction of the
Aurora Premises in accordance with the plans and specifications
therefor and as set forth in the guaranteed maximum price construction
contract referred to below and including, without limitation, any
amounts required to be paid to buy out the third party partner and
interest imputed on amounts advanced by HRPT with respect to the Aurora
Premises, from the date advanced until the date the obligation to pay
rent of the tenant under the Development Lease in effect with respect
to the Aurora Premises shall commence, at the Construction Rate (as
defined below), in consideration for the transfer of all GPI and GPI
affiliate ownership interests in the entity holding title to the Aurora
Premises.
Within thirty (30) days after the last to occur of (x) completion of
the Aurora construction, (y) the novation of the Development Lease in effect
with respect to the Aurora Premises to an HRPT Subsidiary and (z) the
commencement of the obligation of the tenant under the Aurora Development Lease
to pay rent, HRPT will issue GPI additional HRPT Common Shares with an aggregate
value (with each such HRPT Common Share valued at the Merger Price) equal to the
amount, if any, by which $11,647,101 exceeds the actual aggregate amounts funded
by HRPT (including HRPT Common Shares issued under the next prior paragraph)
with respect to the Aurora Premises (including, without limitation, interest
imputed at the Construction Rate and third party buy-out costs.
As used herein, "Aurora Closing Conditions" shall mean the following:
(i) A title insurance company reasonably satisfactory to HRPT or
the title insurance company which issued the existing policy
shall be prepared, subject only to payment of the applicable
premium and charges, to issue a title insurance policy, to the
applicable GPI Subsidiary, in the form attached to Disclosure
Schedule 1.68, to the extent the attached endorsements thereto
are available in Colorado except for the addition of Permitted
Liens.
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(ii) HRPT shall have received such assurances as HRPT may
reasonably require confirming that, upon completion, the
Aurora Premises will comply in all material respects with all
applicable zoning and land use requirements.
(iii) HRPT shall have approved the aggregate development budget with
respect to the Aurora Premises (which budget shall include all
costs of completion and acquisition, including, without
limitation, interest imputed at the Construction Rate, and the
cost to buy out the third party partner), which approval shall
not be unreasonably withheld, provided that HRPT shall
determine that the Development Lease in effect with respect to
the Aurora Premises will, upon the commencement of the
obligation of the tenant to pay rent thereunder, provide HRPT
with an annual yield on the aggregate amounts funded
(including, without limitation, interest imputed at the
Construction Rate) with respect to the Aurora Premises of not
less than 10.3%.
(iv) HRPT and the tenant under the Development Lease with respect
to the Aurora Premises shall have approved the complete
construction drawings and/or final plans and specifications
with respect thereto (HRPT agreeing not unreasonably to
withhold, delay or condition its approval).
(v) There shall be executed and delivered a guaranteed maximum
price construction contract with respect to the Aurora
Premises, such contract to be in form and substance reasonably
satisfactory to HRPT and to comply with the applicable
Development Lease requirements.
(vi) The contractor under the above-described construction contract
shall have, in HRPT's reasonable determination, adequate
financial resources to ensure completion of the project as
contemplated by such construction contract or shall have
provided a completion bond in form and substance reasonably
satisfactory to HRPT; and such contractor shall have obtained
such insurance as HRPT may reasonably require.
(vii) HRPT shall have received an estoppel certificate, in the form
attached hereto as Schedule 7.3(n), executed by the third
party partner to the Development Partnership Agreement
relating to the Aurora Premises.
(viii) HRPT shall reasonably determine that (x) completion of
construction can occur within the deadlines applicable thereto
pursuant to the Aurora Development Lease, as the same may be
amended as herein provided, and (y) a novation of the lease
can be obtained and a buy-out of the third party partner
consummated not less than 120 days prior to the date set forth
in Section 18.2 of the Aurora Partnership Agreement for
expiration of the purchase option.
(ix) The representations and warranties set forth in Sections 4.1,
4.6, 4.9, 4.10, 4.11, 4.17, 4.22, 4.24 and 4.26 shall be true
and correct in all material respects with respect to the
Aurora Premises as a Development Property or the Aurora
Development Partnership, as the case may be; provided,
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however, that, GPI may, by written notice to HRPT, modify such
representations and warranties to reflect changes in
circumstances and HRPT shall not have the right to object to
such modifications unless the same shall materially and
adversely affect the contemplated development or use of Aurora
Premises or such Development Partnership.
As used herein, "Construction Rate" shall mean (x) one hundred
seventy-five (175) basis points in excess of the per annum rate of interest
reported in The Wall Street Journal as the London Interbank Offered Rate for
United States dollar deposits for a ninety (90) day term in the amount
outstanding as of the date of determination or (y), in the event the rate
described in clause (x) shall cease to be published, two (2) percentage points
in excess of the per annum rate of interest, from time to time, of the 14-day
moving average closing trading price of the 180-day Treasury Bills.
(d) Liquidation. If any payments due GPI under Sections 8.3
(a), (b) or (c) become payable after GPI has liquidated, the payments
shall be made to the Second Closing Recipient.
(e) Fractional Shares. If the Second Closing Recipient would
receive a fraction of a HRPT Common Share pursuant to Section 8.3(a),
(b) or (c), a check representing an amount determined by multiplying
such fractional share by the Merger Price shall be delivered to the
Second Closing Recipient.
(f) Control. Notwithstanding 6.1(d), HRPT will permit GPI to
control negotiations with the developer partners' and others and
supervision of construction in connection with any of the Development
Properties which are not completed on or before the Closing Date until
July 31, 1997, provided any modification or amendment of agreements
relating thereto will be subject to the reasonable approval of HRPT.
After July 31, 1997, HRPT will control negotiations with the
development partners' and others and supervision of construction,
provided that any modification or amendment of any agreements relating
thereto will be subject to the reasonable approval of GPI. In the case
of HRPT's refusal to give approval, if the proposed modification or
amendment would have an adverse effect on HRPT's expected yield with
respect to the particular Development Property HRPT's refusal shall be
deemed reasonable. In the case of GPI's refusal to give approval, if
the proposed modification or amendment would have an adverse effect on
GPI's expected profit with respect to the particular Development
Property, GPI's refusal shall be deemed reasonable. HRPT agrees to
comply in all material respects with the terms of the Development
Partnership Agreements.
8.4 Contract Properties.
(a) Waco Premises. If the Waco Premises have not been acquired
by Rosecliff Realty Funding, Inc. (a GPI Subsidiary) from XxXxxx
Government Properties-Waco, Ltd. pursuant to the terms of an Agreement
of Purchase and Sale of Real Property and Escrow Instructions dated
April 1, 1996, as amended by the First Amendment thereto, dated as of
April 1, 1996, and further amended by the Tri-Party Agreement and
Amendment of Purchase and Sale of Real Property and Escrow
Instructions, dated as of "________", 1996, among Mellon Bank, N.A.,
XxXxxx Government Properties - Waco, Ltd. and Rosecliff
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Realty Funding, Inc. (the "Waco Agreement") prior to the Closing Date,
the Aggregate Closing Consideration shall be reduced by $8,514,714. At
such time as the Waco Premises are acquired in accordance with the
terms of the Waco Agreement, HRPT shall issue GPI a number of HRPT
Common Shares with an aggregate value (with each such HRPT Common Share
valued at the Merger Price) equal to $253,936 plus a number of HRPT
Common Shares with an aggregate value (with each such HRPT Common Share
valued at the Merger Price) equal to the deposit under the Waco
Agreement. If the Waco Premises are not acquired by the Second Closing
Date, or at such earlier time as the Waco Agreement is terminated
solely as a result of a default by the seller thereunder, HRPT shall
pay GPI an amount equal to the deposit under the Waco Agreement in HRPT
Common Shares as calculated above promptly upon receipt thereof or
shall assign the rights of Rosecliff Realty Funding, Inc. to receive
the deposit under the Waco Agreement to GPI.
(b) LA MEPS Premises. If the LA MEPS Premises have not been
acquired by Rosecliff Realty Funding, Inc. (a GPI Subsidiary) from
Stamford Holdings No.2, Inc. pursuant to the terms of an Agreement of
Purchase and Sale of Real Property and Escrow Instructions dated
October 4,1996 (the "LA MEPS Agreement") prior to the Closing Date, the
Aggregate Closing Consideration shall be reduced by $10,060,162. At
such time as the LA MEPS Premises are acquired in accordance with the
terms of the LA MEPS Agreement, HRPT shall issue GPI a number of HRPT
Common Shares with an aggregate value (with each such HRPT Common Share
valued at the Merger Price) equal to $10,060,162, less the costs of
acquisition (net of any deposit) including closing costs. If the LA
MEPS Premises are not acquired by the Second Closing Date, or at such
earlier time as the LA MEPS Agreement is terminated, HRPT shall pay GPI
an amount equal to the deposit under the LA MEPS Agreement in HRPT
Common Shares as calculated above promptly upon receipt thereof or
shall assign the rights of Rosecliff Realty Funding, Inc. to receive
the deposit under the LA MEPS Agreement to GPI.
(c) Phoenix Premises. If the Phoenix Premises have not been
acquired by Rosecliff Realty Funding, Inc. (a GPI Subsidiary) from Chen
& Fei Corp. pursuant to the terms of an Agreement of Purchase and Sale
of Real Property and Escrow Instructions dated July 25, 1996 as amended
by the First and Second Amendments thereto, each dated as of October
15, 1996 (the "Phoenix Agreement") prior to the Closing Date, the
Aggregate Closing Consideration shall be reduced by $12,159,106. At
such time as the Phoenix Premises are acquired in accordance with the
terms of the Phoenix Agreement, HRPT shall issue GPI a number of HRPT
Common Shares with an aggregate value (with each such HRPT Common Share
valued at the Merger Price) equal to $12,159,106, plus the amount of
any increase in the purchase price for the Phoenix Premises pursuant to
any amendment to the Phoenix Agreement to which HRPT shall have
consented in writing less the costs of acquisition (net of any deposit)
including closing costs. If the Phoenix Premises are not acquired by
the Second Closing Date, or at such earlier time as the Phoenix
Agreement is terminated, HRPT shall pay GPI an amount equal to the
deposit under the LA MEPS Agreement in HRPT Common Shares as calculated
above, promptly upon receipt thereof or shall assign the rights of
Rosecliff Realty Funding, Inc. to receive the deposit under the Phoenix
Agreement to GPI or its designee.
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(d) Liquidation. If any payments due GPI under Sections 8.4
(a), (b) or (c) become payable after GPI has liquidated, the payments
shall be made to the Second Closing Recipient.
(e) Fractional Shares. If the Second Closing Recipient would
receive a fraction of a HRPT Common Share pursuant to Section 8.4(a),
(b) or (c), a check representing an amount determined by multiplying
such fractional share by the Merger Price shall be delivered to the
Second Closing Recipient.
(f) Control. Notwithstanding the Closing, if HRPT will permit
GPI to control negotiations with the sellers and others in connection
with any of the Contract Properties which were not purchased prior to
the Closing Date until July 31, 1997, provided any modification,
amendment or termination of agreements relating thereto will be subject
to the reasonable approval of HRPT. After July 31, 1997, HRPT will
control negotiations with the sellers and others, provided that any
modification or amendment of any agreements relating thereto will be
subject to the reasonable approval of GPI. In the case of HRPT's
refusal to give approval, if the proposed modification, amendment or
termination would have an adverse effect on HRPT's expected yield with
respect to the particular Contract Property HRPT's refusal shall be
deemed reasonable. In the case of GPI's refusal to give approval, if
the proposed modification or amendment would have an adverse effect on
GPI's expected profit with respect to the particular Contract Property
GPI's refusal shall be deemed reasonable. HRPT agrees to comply in all
material respects with the terms of the purchase and sale agreements
relating to the Contract Properties.
8.5 College Park.
If any payment is due or claimed to be due pursuant to Section 2.B or
2.C of the Purchase Agreement (as defined in the Representation Letter), the
amount thereof together with any diminution in value of the College Park
Premises resulting from the extension of the term shall be "Losses" (as defined
in the Indemnification Agreement) for which the Indemnified Parties (as defined
in the Indemnification Agreement) shall be entitled to indemnification under the
Indemnification Agreement, without regard to any minimum loss threshold and
regardless of whether the same results from any breach of representation or
warranty.
HRPT agrees that GPI shall have the right to participate in any
negotiations with the Sellers named in the Purchase Agreement with respect to
the matters contemplated by Section 2.B and 2.C of the Purchase Agreement and
HRP shall give GPI notice of any information obtained by HRP with respect
thereto.
8.6 Tax Returns.
GPI will, and will cause each GPI Subsidiary and the Subsidiaries of
GPI listed on Disclosure Schedule 4.4(B) to, prepare and file all Tax Returns
and other tax reports, filings and amendments thereto required to be filed by
any of them (provided with respect to the GPI Subsidiaries the obligation will
be only with respect to periods ending on or before the Effective Time), and
provide HRPT, at its request, with copies for HRPT's review, of all such
returns, reports, filings and amendments at GPI's offices prior to filing.
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8.7 Employee Matters.
As of the Effective Time, GPI will have assumed all past, present and
future liabilities and responsibilities as plan sponsor, within the meaning of
Section 3(16)(B) of ERISA, of any Company Employee Benefit Plan, and any past,
present and future liabilities and responsibilities as employer under any
Company Benefit Arrangement. On or before the Closing Date, HRPT or its designee
will enter into the Service Contract with GPI in the form attached as Schedule
7.2(j).
8.8 Liquidation and Dissolution.
Prior to the Effective Time, the directors and the GPI Stockholders
shall adopt a plan of liquidation and dissolution. GPI shall distribute the HRPT
Merger Shares pursuant to such plan of liquidation.
8.9 Stock Purchase.
If at any time prior to the Closing Date HRPT shall determine that it
requires the consent of its lenders to permit the transactions contemplated by
this Agreement to be consummated as a merger between Merger Sub and GPH and if
HRPT shall not have obtained such consent, HRPT may fulfill its obligations
under this Agreement by causing an HRPT Subsidiary to purchase the GPH Common
Shares for the Aggregate Closing Consideration and the Second Closing
Consideration on the terms and conditions set forth in this Agreement and the
parties agree to make such conforming changes as may be reasonably required as a
result thereof.
8.10 Service Contract Adjustment.
If (a) the amounts actually paid to GPI or its successor as
reimbursement for office expenses (including rent) and salaries (including
federal, state and local employment taxes payable by an employer (including,
without limitation, FICA and FUTA), but not including severance costs) from the
Closing Date through July 31, 1997 pursuant to the Service Contract are less
than (b) the lesser of (i) the aggregate amount of such office expenses
(including rent), salaries (including severance costs) and other operating
expenses incurred by GPI or its successor for such period or (ii) $947,935, then
the excess, if any, of the amount described in clause (b) above over the amount
described in clause (a) above shall be added to the Second Closing
Consideration.
SECTION 9
SECOND CLOSING AND DELIVERY OF CONSIDERATION
9.1 Second Closing.
The Second Closing shall take place (a) at the office of Xxxxxxxx &
Worcester, LLP, at Boston, Massachusetts, at 9:00 a.m. (local time) on the
Second Closing Date, or (b) at such other time, date or place as the Parties may
agree.
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9.2 Issuance of Second Closing Shares.
At the Second Closing, HRPT shall deliver to the Second Closing
Recipient a certificate (properly issued, executed and counter-signed, as
appropriate) representing that whole number of shares of HRPT Common Shares as
is determined by dividing the Second Closing Consideration by the Second Closing
Price and as to any fractional share, a check representing an amount determined
by multiplying such fraction of a share of HRPT Common Shares otherwise issuable
by the Second Closing Price. If, on or before the Second Closing Date, an
"Indemnified Party" (as defined in the Indemnification Agreement) shall have
made a claim for payment which has not been satisfied or otherwise resolved
prior to the Second Closing Date, a number of HRPT Common Shares with an
aggregate value (with each such HRPT Common Share valued at the Merger Price),
equal to the sum of all pending claims, shall be deposited with a mutually
acceptable escrow agent to be held pursuant to the terms of an escrow agreement
substantially in the form of Schedule 9.2.
SECTION 10
TERMINATION AND EXTENSION
10.1 Termination.
This Agreement may be terminated at any time (subject to the provisions
of this Section 10.1) prior to the Effective Time:
(a) by mutual agreement of the Board of Directors of GPI and
the trustees of HRPT;
(b) by either HRPT or GPI, in writing, without liability, if
for any reason the Closing has not occurred by March 31, 1997, except
that no party shall have the right to terminate under this Section
10.1(b) if the conditions precedent to such Party's obligation to close
have been or at Closing would be satisfied or have been waived by such
Party and such Party has nonetheless failed or refused to close;
(c) by either HRPT or GPI in writing, without liability, if
there shall be any order, writ, injunction or decree of any court or
governmental or regulatory agency binding on HRPT and/or GPI, which
prohibits or restrains HRPT and/or GPI from consummating the
transactions contemplated by this Agreement, provided that HRPT and GPI
shall have used their best efforts to have any such order, writ,
injunction or decree lifted and the same shall not have been lifted
within 90 days after entry, by any such court or governmental or
regulatory agency;
(d) by GPI in writing, without liability:
(i) if the conditions set forth in Sections 7.1 and
7.2 shall not have been complied with or performed and such
noncompliance or nonperformance shall not have been cured or
eliminated (or by its nature cannot be cured or eliminated) by
HRPT or otherwise by March 31, 1997; or
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(ii) if HRPT shall (i) fail to perform in any
material respect its agreements contained in this Agreement
required to be performed by it on or prior to the Closing
Date, or (ii) breach any of its representations or warranties
contained in this Agreement, which failure or breach is not
cured within ten days after GPI has notified HRPT of its
intent to terminate this Agreement pursuant to this Section
10.1(d)(ii);
(e) by HRPT, in writing, without liability:
(i) if the conditions set forth in Sections 7.1 and
7.3 shall not have been complied with or performed and such
noncompliance or nonperformance shall not have been cured or
eliminated (or by its nature cannot be cured or eliminated) by
GPI or otherwise by March 31, 1997; or
(ii) if GPI shall (i) fail to perform in any material
respect its agreements contained in this Agreement required to
be performed on or prior to the Closing Date, or (ii) breach
any of its representations or warranties contained in this
Agreement, which failure or breach is not cured within ten
days after HRPT has notified GPI of its intent to terminate
this Agreement pursuant to this Section 10.1(e)(ii);
provided if GPI shall breach a representation or warranty
which would have a Material Adverse Effect as defined in
Section 1.59(ii), HRPT shall not terminate this Agreement and
shall consummate the transactions on the Closing Date without
adjustment to the Aggregate Closing Consideration on account
of such breach and shall have recourse under the
Indemnification Agreement, it being agreed that HRPT's failure
to exercise its right to terminate this Agreement shall not be
deemed a waiver of such breach.
10.2 Extension.
(a) Notwithstanding anything contained in Section 10.1 to the
contrary, if GPI shall be unable to satisfy a closing condition prior
to March 31, 1997, GPI shall have the right to delay the Closing Date
and extend the date for termination of the rights and obligations of
the parties under Section 10.1 until the date which is 10 business days
following notice from GPI to HRPT that such closing condition(s) are
satisfied but not later than May 31, 1997.
(b) If the Closing Date is delayed pursuant to Section
10.2(a), the Aggregate Closing Consideration shall be determined based
upon a Pro Forma Balance Sheet as of the Closing Date which shall be
prepared not later than 5 business days prior to the Closing Date and
confirmed as provided in the definition of Aggregate Closing
Consideration.
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SECTION 11
MISCELLANEOUS PROVISIONS
11.1 Notices.
All notices, communications and deliveries required or permitted by
this Agreement shall be made in writing signed by the Party making the same,
shall specify the Section of this Agreement pursuant to which it is given or
being made, and shall be deemed given or made (i) on the date delivered if
delivered by telecopy or in person, (ii) on the third business day after it is
mailed if mailed by registered or certified mail (return receipt requested)
(with postage and other fees prepaid), or (iii) on the day after it is
delivered, prepaid, to an overnight express delivery service that confirms to
the sender delivery on such day, as follows:
To HRPT or Merger Sub:
Health and Retirement Properties Trust
000 Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxx, President
Telecopy No.: 617. 332.2261
with a copy to:
Xxxxxxxx & Worcester LLP
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxxxxxx X. Xxxxxxxxxx, Xx., Esq.
Telecopy No.: 617. 338.2880
To GPI or GPH:
Government Property Investors, Inc.
0000 Xxxxxxxxxxxx Xxxxxx, X.X., Xxxxx 0000
Xxxxxxxxxx, X.X. 00000
Attn: Xxxx Xxxxx
Telecopy No.: 202.296.8335
with a copy to:
Rosecliff, Inc.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx X. Xxxxxx
Telecopy No. 212.554.5959
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and a copy to:
Xxxxxxx Xxxx & Xxxxxxxxx
Xxx Xxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx Xxx Xxxxxxx, Esq.
Telecopy No.: 000-000-0000
The 1818 Fund II, L.P.
00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxxxx
Telecopy No. 000-000-0000
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000-0000
Attn: Xxxxx X. Xxxxxxxxxx, Esq.
Telecopy No. 000-000-0000
or to such other representative or at such other address of a Party as such
Party may furnish to the other Party in writing.
11.2 Schedules.
The Schedules and all documents expressly referred to in this
Agreement, are incorporated into this Agreement and are made a part of this
Agreement as if set out in full.
11.3 Computation of Time.
Whenever the last day for the exercise of any privilege or the
discharge of any duty under this Agreement shall fall upon a Saturday, Sunday or
any date on which banks in Boston, Massachusetts are closed, the Party having
such privilege or duty may exercise such privilege or discharge such duty on the
next succeeding day which is a regular business day.
11.4 Assignment: Successors in Interest.
No assignment or transfer by HRPT, Merger Sub GPI or GPH, of its rights
and obligations under this Agreement prior to the Closing shall be made except
with the prior written consent of the other Party. This Agreement shall be
binding upon and shall inure to the benefit of the Parties and their permitted
successors and assigns, and any reference to a Party shall also be a reference
to a permitted successor or assign.
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11.5 No Third-Party Beneficiaries.
With the exception of the Parties, there shall exist no right of any
person, including, without limitation, the stockholders and creditors of GPI, to
claim a beneficial interest in this Agreement or any rights occurring by virtue
of this Agreement.
11.6 Investigations; Non-Survival of Representations and Warranties.
The respective representations and warranties of GPI and HRPT contained
in this Agreement or in any Schedule, certificate, or other document delivered
by any Party prior to Closing shall not be deemed waived or otherwise affected
by any investigation made by a Party. Except for obligations of GPI under the
Indemnification Agreement and of HRPT pursuant to the Registration Rights
Agreement, the respective representations and warranties, covenants and
agreements (except for those covenants and agreements contained in Sections 6.4,
6.5, 6.11, 6.12, 6.16, 8.2, 8.3, 8.4, 8.5, 8.6, 8.7, 8.10 and 9) of HRPT and GPI
contained in this Agreement shall expire with and be terminated by the Merger.
11.7 Number; Gender.
Whenever the context so requires, the singular number shall include the
plural and the plural shall include the singular, and the gender of any pronoun
shall include the other genders.
11.8 Captions.
The titles, captions and table of contents contained in this Agreement
are inserted in this Agreement only as a matter of convenience and for reference
and in no way define, limit, extend or describe the scope of this Agreement or
the intent of any provision of this Agreement. Unless otherwise specified to the
contrary, all references to Sections are references to Sections of this
Agreement and all references to Exhibits and Schedules are references to
Exhibits and Schedules to this Agreement.
11.9 Amendments.
To the extent permitted by law, this Agreement may be amended by a
subsequent writing signed by all of the Parties upon the approval of the Boards
of Directors of each of the Parties.
11.10 Controlling Law: Integration: Waiver.
The Merger shall be governed by Maryland Law and otherwise, this
Agreement shall be governed by and construed and enforced in accordance with the
laws of the Commonwealth of Massachusetts. This Agreement supersedes all
negotiations, agreements and understandings among the Parties with respect to
the subject matter of this Agreement (including, without limitation, the Term
Sheet dated January 7, 1997, between GPI and HRPT and the Confidentiality
Agreement dated May 17, 1996, between GPI and HRPT) and constitutes the entire
agreement among the Parties to this Agreement.
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The failure of any Party at any time or times to require performance of any
provisions of this Agreement shall in no manner affect the right to enforce the
same. No waiver by any Party of any conditions, or of the breach of any term,
provision, warranty, representation, agreement or covenant contained in this
Agreement, whether by conduct or otherwise, in any one or more instances shall
be deemed or construed as a further or continuing waiver of any such condition
or breach of any other term, provision, warranty, representation, agreement or
covenant contained in this Agreement.
11.11 Severability.
Any provision of this Agreement which is prohibited or unenforceable in
any jurisdiction will, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions of this Agreement, and any such prohibition or unenforceability in
any jurisdiction will not invalidate or render unenforceable such provision in
any other jurisdiction. To the extent permitted by law, the Parties waive any
provision of law which renders any such provision prohibited or unenforceable in
any respect.
11.12 Counterparts.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, and it shall not be necessary in making proof
of this Agreement or the terms of this Agreement to produce or account for more
than one of such counterparts.
11.13 HRPT Limitation of Liability.
The Declaration of Trust of HRPT, a copy of which has been duly filed
with the Department of Assessments and Taxation of the State of Maryland,
provides that the name "Health and Retirement Properties Trust" refers to the
trustees under such Declaration of Trust collectively as trustees, but not
individually or personally, and that no trustee, officer, shareholder, employee
or agent of HRPT shall be held to any personal liability, jointly or severally,
for any obligation of, or claim against, HRPT. All persons dealing with HRPT in
any way shall look only to the assets of HRPT, respectively, for the payment of
any sum or the performance of any obligation.
11.14 Diligence.
HRPT acknowledges that it has received surveys (other than with respect
to the Premises located in Richland, Washington) and title insurance commitments
and/or policies with respect to all of the Premises.
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EXECUTED under seal as of the date first above written.
HEALTH AND RETIREMENT PROPERTIES TRUST
By: /s/ Xxxxx X. Xxxxxxx
Xxxxx X. Xxxxxxx
GOVERNMENT PROPERTY INVESTORS, INC.
By: /s/ Xxxx X. Xxxxx
Xxxx X. Xxxxx
Chief Executive Officer
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TABLE OF CONTENTS
SECTION 1 DEFINITIONS......................................................1
SECTION 2 TRANSACTIONS AND TERMS OF MERGER.................................9
2.1 Merger..................................................9
2.2 Declaration of Trust of the Survivor....................9
2.3 Bylaws of the Surviving Corporation....................10
2.4 Directors and Officers of the Survivor.................10
2.5 Manner of Converting Shares............................10
2.6 Investment and Registration Rights Agreement...........11
SECTION 3 CLOSING, EFFECTIVE TIME AND DELIVERY OF CONSIDERATION...........11
3.1 The Closing............................................11
3.2 Effective Time.........................................11
3.3 Issuance of HRPT Merger Shares.........................11
SECTION 4 REPRESENTATIONS AND WARRANTIES OF GPI...........................12
4.1 Organization, etc......................................12
4.2 Authorization; Execution; Binding Effect...............12
4.3 Capitalization.........................................13
4.4 Share Holdings.........................................13
4.5 No Conflicting Agreements or Charter Provisions........13
4.6 Litigation.............................................14
4.7 Names..................................................14
4.8 Financial Statements...................................14
4.9 No Undisclosed Liabilities.............................14
4.10 Default................................................15
4.11 Compliance with Law....................................15
4.12 No Adverse Changes; Acquisitions, Disposition and
Commitments............................................16
4.13 Patents, etc...........................................17
4.14 Certain Transactions...................................17
4.15 Pension and Benefit Plans..............................18
4.16 Tax Matters............................................19
4.17 Contracts..............................................21
4.18 Insurance..............................................22
4.19 Bank Accounts..........................................22
4.20 Accounts...............................................22
4.21 Labor Matters..........................................23
4.22 Title to Properties....................................23
4.23 Proprietary Information................................25
4.24 Environmental Matters..................................25
4.25 Utilities, Etc.........................................27
4.26 Substantial Completion.................................27
4.27 GPH....................................................27
4.28 Fees...................................................28
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SECTION 5 REPRESENTATIONS AND WARRANTIES OF HRPT.........................28
5.1 Organization, etc.....................................28
5.2 Authorization: Execution: Binding Effect..............28
5.3 Capitalization........................................28
5.4 No Conflicting Agreements or Trust/Charter Provisions.29
5.5 Litigation............................................29
5.6 No Undisclosed Liabilities............................29
5.7 Default...............................................30
5.8 Compliance with Law...................................30
5.9 Securities Filings....................................30
5.10 Merger Shares.........................................31
5.11 Tax Matters...........................................31
SECTION 6 CERTAIN COVENANTS AND AGREEMENTS...............................32
6.1 Conduct of Business by GPI............................32
6.2 Inspection of and Access to Information...............34
6.3 No Solicitation.......................................34
6.4 Best Efforts: Further Assurances: Cooperation.........34
6.5 Expenses..............................................35
6.6 Public Announcements..................................36
6.7 Interim Financial Statements..........................36
6.8 Supplements to Schedules..............................36
6.9 Contribution to GPH...................................36
6.10 Reorganization........................................36
6.11 Change of Name........................................37
6.12 REIT Status...........................................37
6.13 Substitute Guarantor..................................37
6.14 Names.................................................37
6.15 GPI Shareholders......................................37
SECTION 7 CONDITIONS.....................................................38
7.1 Conditions to Each Party's Obligations................38
7.2 Conditions to Obligations of GPI......................38
7.3 Conditions to Obligations of HRPT.....................40
SECTION 8 OTHER AGREEMENTS...............................................43
8.1 Deposit...............................................43
8.2 Houston Premises......................................43
8.3 Development Properties................................44
8.4 Contract Properties...................................47
8.6 Tax Returns...........................................49
8.7 Employee Matters......................................50
8.8 Liquidation and Dissolution...........................50
8.9 Stock Purchase........................................50
8.10 Service Contract Adjustment...........................50
SECTION 9 SECOND CLOSING AND DELIVERY OF CONSIDERATION...................50
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9.1 Second Closing........................................50
9.2 Issuance of Second Closing Shares.....................50
SECTION 10 TERMINATION AND EXTENSION......................................51
10.1 Termination...........................................51
10.2 Extension.............................................52
SECTION 11 MISCELLANEOUS PROVISIONS.......................................52
11.1 Notices...............................................53
11.2 Schedules.............................................54
11.3 Computation of Time...................................54
11.4 Assignment: Successors in Interest....................54
11.5 No Third-Party Beneficiaries..........................54
11.6 Investigations; Non-Survival of Representations
and Warranties.....................................55
11.7 Number; Gender........................................55
11.8 Captions..............................................55
11.9 Amendments............................................55
11.10 Controlling Law: Integration: Waiver..................55
11.11 Severability..........................................56
11.12 Counterparts..........................................56
11.13 HRPT Limitation of Liability..........................56
11.14 Diligence.............................................56
SIGNATURE PAGE..............................................................57
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ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Escrow Agreement") is made as of February
__, 1997 by and among Health and Retirement Properties Trust ("HRPT"),
Government Property Investors, Inc.
("GPI"), and ____________________ (the "Escrow Agent").
R E C I T A L:
HRPT and GPI have entered into a Merger Agreement (the "Merger
Agreement"), an executed copy of which has been provided to the Escrow Agent,
pursuant to which Government Property Holdings Trust ("GPH") will be merged with
and into HUB Acquisition Trust ("Merger Sub") on the terms and conditions set
forth in the Merger Agreement.
Pursuant to the Merger Agreement, HRPT has agreed to deposit $5,000,000
into escrow upon execution of this Escrow Agreement subject to the terms and
conditions set forth in the Merger Agreement and in this Escrow Agreement.
NOW, THEREFORE, the parties agree as follows:
Section 1. Defined Terms. Terms not otherwise defined herein shall have
the respective meanings prescribed therefor in the Merger Agreement. The
following terms are defined in this Escrow Agreement:
"Bank" is _______________.
"Escrow Fund" is defined in Section 3 of this Escrow Agreement.
Section 2. Appointment of Escrow Agent. HRPT and GPI hereby appoint the
Escrow Agent as the escrow agent to hold the Escrow Fund in accordance with the
terms and conditions of this Escrow Agreement.
Section 3. Delivery and Receipt of Funds. Simultaneously with the
execution of this Escrow Agreement, HRPT shall deliver to the Escrow Agent the
sum of $5,000,000 in immediately available funds by wire transfer. The Escrow
Agent shall open an escrow account in the name of HRPT and shall deposit into
such account such immediately available funds. The amount so deposited,
including accrued interest thereon, is referred to as the "Escrow Fund." Receipt
of the Escrow Fund from HRPT is hereby acknowledged by the Escrow Agent.
Section 4. Investment of Escrow Fund. Until distributed and released in
accordance with the terms and conditions of this Escrow Agreement, the Escrow
Agent shall invest the Escrow Fund in a so-called "money market" deposit fund
with the Bank or in such other liquid, investment grade securities as may be
specified in writing by HRPT. The Escrow Fund may be invested in the name of
Escrow Agent and may be commingled with other funds.
Section 5. Release of Escrow Fund. The Escrow Agent shall distribute
and release the Escrow Fund ten days after receipt of notice (a) from HRPT that
either there has been compliance with the conditions set forth in Section 7.2 of
the Merger Agreement or that the Merger Agreement has been terminated pursuant
to Section 10.1(a), (b), (c) or (e) thereof and that any applicable grace period
has expired or (b) from GPI that GPI has terminated the Merger Agreement
pursuant to Section 10.1(d)(ii) thereof and that any applicable grace period has
expired. Such notice shall contain a certification by the party delivering the
notice certifying that such distribution and release is being requested pursuant
to clause (a) or clause (b) of the preceding sentence, as applicable, and
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that a copy of such notice has been concurrently sent to HRPT (in the case of a
notice by GPI) or to GPI (in the case of a notice by HRPT) and shall specify the
name and address of the party to whom such Escrow Fund shall be delivered and
wire transfer information. Within ten days after receipt of such notice,
provided that the Escrow Agent shall not have received a contrary instruction
from the other party, the Escrow Agent shall deliver the Escrow Fund to the
party so specified. If the Escrow Agent has received such a contrary
instruction, it shall release the Escrow Fund only pursuant to a joint direction
in writing of HRPT and GPI or pursuant to the decision of an arbitrator pursuant
to the arbitration proceedings set forth in Section 13 of this Agreement. Upon
distribution and release of the Escrow Fund, this Escrow Agreement shall be
deemed terminated and the Escrow Agent shall be released and discharged from all
further obligations hereunder.
Section 6. Duties of Escrow Agent. The acceptance by the Escrow Agent
of its duties as such under this Escrow Agreement is subject to the following
terms and conditions, which HRPT and GPI hereby agree shall govern and control
with respect to the rights, duties, liabilities and immunities of the Escrow
Agent:
(a) The Escrow Agent acts hereunder as a depositary only, and
is not responsible or liable in any manner whatever for any investment made
pursuant to the provisions of Section 4 or any failure, refusal or inability of
the Bank to release or make payment pursuant to the Escrow Agent's direction of
said Escrow Fund, including by reason of insolvency or bankruptcy of the Bank.
(b) The Escrow Agent shall not be liable for acting upon any
written notice, request, waiver, consent, receipt or other instrument or
document which the Escrow Agent in good faith believes to be genuine and what it
purports to be.
(c) It is understood and agreed that the duties of the Escrow
Agent hereunder are purely ministerial in nature and that it shall not be liable
for any error of judgment, fact or law, or any act done or omitted to be done,
except for its own willful misconduct, breach of fiduciary duty, bad faith or
gross negligence or that of its officers, directors, employees and agents. The
Escrow Agent's determination as to whether an event or condition has occurred,
or been met or satisfied, or as to whether a provision of this Escrow Agreement
has been complied with, or as to whether sufficient evidence of the event or
condition or compliance with the provision has been furnished to it, shall not
subject the Escrow Agent to any claim, liability or obligation whatsoever, even
if it shall be found that such determination was improper and incorrect,
provided, only, that the Escrow Agent and its officers, directors, employees and
agents shall not have been guilty of willful misconduct, breach of fiduciary
duty, bad faith or gross negligence in making such determination.
(d) The Escrow Agent may consult with, and obtain advice from,
legal counsel including its own officers, employees and partners in the event of
any dispute or question as to the construction of any of the provisions hereof
or its 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.
(e) In the event of any disagreement or lack of agreement
between HRPT and GPI of which the Escrow Agent has knowledge, resulting or which
might result in adverse claims or demands with respect to the Escrow Fund, the
Escrow Agent shall be entitled, in its sole discretion, to refuse to comply with
any claims or demands on it with respect thereto until such matter shall be
resolved, and in so refusing, the Escrow Agent may elect to make no delivery or
other disposition of the Escrow Fund, and in so doing the Escrow Agent shall not
be or become liable in any way to either HRPT or GPI for its failure or refusal
to comply with such claims or demands, and it shall be entitled to continue so
to refrain from acting, and so to refuse to act, until all such claims or
demands (i) shall have been finally determined by a court of competent
jurisdiction, or (ii) shall have
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been resolved by the agreement of HRPT and GPI and the Escrow Agent shall have
been notified thereof in writing.
(f) The Escrow Agent may resign at any time upon giving ten
(10) days' notice to HRPT and GPI and may appoint a successor escrow agent
hereunder so long as such successor shall accept and agree to be bound by the
terms of this Escrow Agreement and shall be acceptable to HRPT and GPI. It is
understood and agreed that the Escrow Agent's resignation shall not be effective
until a successor escrow agent agrees to be bound by the terms of this Escrow
Agreement.
Section 7. No Representations by Escrow Agent. The Escrow Agent makes
no representation as to the validity, value, genuineness, negotiability or
collectibility of any security or other document or instrument held by or
delivered to or by it.
Section 8. Obligations of Escrow Agent. The Escrow Agent shall be under
no obligation to institute or defend any actions, suits or legal proceedings in
connection herewith or take any other action likely to involve it in expense
unless first indemnified to its reasonable satisfaction.
Section 9. Expenses. The reasonable out-of-pocket expenses (including,
without limitation, reasonable legal fees and disbursements) incurred by the
Escrow Agent in the performance of its duties hereunder shall be reimbursed
one-half by GPI and one-half by HRPT. Such reimbursement for out-of-pocket
expenses shall be made by cash payment to the Escrow Agent from time to time
upon its written request. The Escrow Agent shall have no right or lien with
respect to the Escrow Fund for payment of such expenses. Except as otherwise
herein or in the Merger Agreement provided, each party shall pay its own
expenses incident to the performance or enforcement of this Escrow Agreement,
including all fees and expenses of its counsel for all activities of such
counsel undertaken pursuant to this Escrow Agreement.
[Section 10. Escrow Agent Status. _____ hereby acknowledges that the
Escrow Agent is counsel to _____ and agrees that it will not seek to disqualify
the Escrow Agent from acting and continuing to act as counsel to _____ in the
event of a dispute hereunder or in the course of the defense or prosecution of
any claim relating to the transactions contemplated hereby or by the Merger
Agreement; provided, however, that in the event of a dispute, the Escrow Agent
shall (a) immediately seek to appoint a successor escrow agent, which shall be
acceptable to HRPT and GPI, having no business relationships with HRPT or GPI
and (b) immediately resign upon acceptance of such appointment and agreement to
be bound by the terms of this Escrow Agreement by such successor escrow agent.]
Section 11. Assignment; Successors and Assigns. This Escrow Agreement
shall not be assignable by either party without the prior written consent of the
other.
Nothing in this Escrow Agreement expressed or implied is intended to or
shall be construed to confer upon or create in any Person (other than the
parties hereto and their permitted successors and assigns) any rights or
remedies under or by reason of this Agreement, including without limitation any
rights to enforce this Escrow Agreement.
Section 12. Specific Performance; Other Rights and Remedies. Each party
recognizes and agrees that the other party's remedy at law for any breach of the
provisions of this Escrow Agreement would be inadequate and agrees that for
breach of such provisions, such party shall, in addition to such other remedies
as may be available to it at law or in equity or as provided in this Escrow
Agreement, be entitled to injunctive relief and to enforce its rights by an
action for specific performance to the extent permitted by applicable law. Each
party hereby waives any requirement for security or the posting of any bond or
other surety in connection with any temporary or permanent award of injunctive,
mandatory or other equitable relief. Nothing herein contained shall
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be construed as prohibiting either party from pursuing any other remedies
available to it for such breach or threatened breach, including without
limitation the recovery of damages.
Section 13. Arbitration. The Parties agree that any and all disputes or
disagreements arising out of or relating to this Escrow Agreement, other than
actions or claims for injunctive or other equitable relief or claims raised in
actions or proceedings brought by third parties, shall be resolved through
negotiations or, if the dispute is not so resolved, through mediation and if
necessary binding arbitration conducted by ____________________, whose decision
shall be binding on all parties and not appealable. Any such mediation and/or
arbitration shall be conducted in _______________ pursuant to the procedures set
forth in Exhibit ___ attached hereto and made a part hereof and the arbitration
rules and procedures of ____________________.
Section 14. Entire Agreement. This Escrow Agreement constitutes the
entire agreement between the parties with respect to the subject matter hereof
and supersedes all prior agreements, arrangements, covenants, promises,
conditions, understandings, inducements, representations and negotiations,
expressed or implied, oral or written, between them as to such subject matter.
Section 15. Waivers; Amendments. Anything in this Escrow Agreement to
the contrary notwithstanding, amendments to and modifications of this Escrow
Agreement may be made, required consents and approvals may be granted,
compliance with any term, covenant, agreement, condition or other provision set
forth herein may be omitted or waived, either generally or in a particular
instance and either retroactively or prospectively with, but only with, the
written consent of the party entitled to the benefit thereof.
Section 16. Notices. All notices and other communications which by any
provision of this Escrow Agreement are required or permitted to be given shall
be given in writing and shall be (a) sent by nationally recognized overnight
courier service, (b) sent by telecopy confirmed by sending (by nationally
recognized overnight courier service) written confirmation at substantially the
same time, or (c) personally delivered to the receiving party. All such notices
and communications shall be mailed, sent or delivered as follows:
If to HRPT, at:
Health and Retirement Properties Trust
000 Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx, President
Facsimile: 000-000-0000
with a copy to:
Xxxxxxxx & Worcester LLP
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxxxxx X. Xxxxxxxxxx, Xx.
Facsimile: 617-338-2880
If to GPI, at:
Government Property Investors, Inc.
0000 Xxxxxxxxxxxx Xxxxxx, X.X., Xxxxx 0000
Xxxxxxxxxx, X.X. 00000
Attention: Xxxx Xxxxx
Facsimile: 000-000-0000
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with a copy to:
Xxxxxxx Xxxx & Xxxxxxxxx
Xxx Xxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxx Xxxxxxx
Facsimile: 000-000-0000
or to such other person(s) or facsimile number(s) or address(es) as the party to
receive any such communication or notice may have designated by written notice
to the other party.
Section 17. Severability. If any provision of this Escrow Agreement
shall be held or deemed to be, or shall in fact be, invalid, inoperative,
illegal or unenforceable as applied to any particular case in any jurisdiction
or jurisdictions, or in all jurisdictions or in all cases, because of the
conflicting of any provision with any constitution or statute or rule of public
policy or for any other reason, such circumstance shall not have the effect of
rendering the provision or provisions in ques tion invalid, inoperative, illegal
or unenforceable in any other jurisdiction or in any other case or circumstance
or of rendering any other provision or provisions herein contained invalid,
inoperative, illegal or unenforceable to the extent that such other provisions
are not themselves actually in conflict with such constitution, statute or rule
of public policy, but this Escrow Agreement shall be reformed and construed in
any such jurisdiction or case as if such invalid, inoperative, illegal or
unenforceable provision had never been contained herein and such provision
reformed so that it would be valid, operative and enforceable to the maximum
extent permitted in such jurisdiction or in such case.
Section 18. Counterparts. This Escrow Agreement may be executed in
several counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument, binding upon all
the parties hereto. In pleading or proving any provision of this Escrow
Agreement, it shall not be necessary to produce more than one of such
counterparts.
Section 19. Section Headings. The headings contained in this Escrow
Agreement are for reference purposes only and shall not in any way affect the
meaning or interpretation of this Escrow Agreement.
Section 20. Governing Law. The validity, interpretation, construction
and performance of this Escrow Agreement shall be governed by, and construed in
accordance with, the applicable laws of the Commonwealth of Massachusetts
applicable to contracts made and performed therein and, in any event, without
giving effect to any choice or conflict of laws provision or rule that would
cause the application of domestic substantive laws of any other jurisdiction.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as a sealed instrument as of the date first above written.
HEALTH AND RETIREMENT PROPERTIES TRUST
By:_______________________
GOVERNMENT PROPERTY INVESTORS, INC.
By:________________________
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-----------------------,
as Escrow Agent
By:________________________
SCHEDULE 2.6
INVESTMENT AND REGISTRATION RIGHTS AGREEMENT
THIS INVESTMENT AND REGISTRATION RIGHTS AGREEMENT (the "Agreement") is
made and entered ____________, 1997, among Health and Retirement Properties
Trust, a Maryland real estate investment trust ("HRPT"), and Government Property
Investors, Inc., a Delaware corporation (including its successors and assignees,
the "Holder").
RECITALS
A. Concurrently with the execution of this Agreement, HRPT has issued
to the Holder _____ shares of the beneficial interest $.01 par value per share
of HRPT ("Initial Shares") and from time to time will issue additional shares
("Additional Shares" and together with the Initial Shares and any other
securities which are hereafter issued with respect thereto by way of exchange,
reclassification, dividend or distribution, whether or not such securities have
been sold to the public, the "Securities") pursuant to a Merger Agreement, dated
February 17, 1997 (the "Merger Agreement"), among HRPT and the Holder.
B. The Securities have been issued to the Holder without registration
under the Securities Act of 1933, as amended (the "Securities Act"), and HRPT
and the Holder desire to provide for compliance with the Securities Act and for
the registration of the Securities upon the terms and conditions set forth
below.
NOW, THEREFORE, the parties agree as follows:
1. Certain Other Definitions. Capitalized terms used but not otherwise
defined in this Agreement shall have the meanings given therefor in the Merger
Agreement. The capitalized terms set forth below shall have the following
meanings:
1.1 "Commission": the United States Securities and Exchange
Commission and any successor federal agency having similar powers.
1.2 The terms "register", "registered" and "registration" refer to
a registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
1.3 "Registrable Securities": Securities that have not been sold
pursuant to a registration statement or under Rule 144 under the Securities Act.
1.4 "Registration Expenses": all expenses incurred by HRPT in
complying with Section 5, including, without limitation, all registration and
filing fees, printing expenses, fees and disbursements of counsel for HRPT, blue
sky fees and expenses, and accountants' expenses including, without limitation,
any special audits or comfort letters incident to or required by any such
registration, transfer taxes, fees of transfer agents and registrars, costs of
insurance, but excluding any fees and disbursements of underwriters,
underwriting discounts and commissions and expenses of Holder and, in the case
of an underwriter offering pursuant to Section 5.2(j) any filing fees.
2. Representations and Warranties of HRPT. The representations and
warranties of HRPT contained in Section 5 of the Merger Agreement are
incorporated by reference into this Agreement. The Holder is entitled to rely on
such representations and warranties as if they were set forth in this Agreement.
The Holder agrees that it shall not bring any action based on a breach of any
such
representation and warranty against HRPT, any Subsidiary, any affiliate or any
officer, director, employee or agent of any of them with respect to any claim
made after the first anniversary of the date of this Agreement.
3. Representations and Warranties of Holder. GPI hereby represents,
acknowledges, covenants and agrees as follows: (i) the Securities are being
acquired for its own account for investment and not with a view to any
distribution or public offering within the meaning of the Securities Act or any
state securities law; (ii) the Securities have not been registered under the
Securities Act or any state securities law; (iii) it is an "accredited investor"
within the meaning of Rule 501 promulgated by the Commission pursuant to the
Securities Act; and (iv) it will not sell or otherwise transfer any of the
Securities except upon the terms and conditions specified herein and it will
cause any subsequent Holder of the Securities to agree to take and hold the
Securities subject to the terms and conditions of this Agreement, provided that
any Holder may sell the Securities in one or more private transactions not
requiring registration under the Securities Act or any state securities law.
4. Restrictions on Transfer.
4.1 Legend. Each certificate representing the Securities issued to
the Holder or to a subsequent Holder pursuant to Section 4.2 shall include a
legend in substantially the following form, provided that such legend shall not
be required if such transfer is being made in connection with a sale that is
exempt from registration pursuant to Rule 144 under the Securities Act or if the
opinion of counsel referred to in Section 4.3 is to the further effect that
neither such legend nor the restrictions on transfer in this Section 4 are
required in order to ensure compliance with the Securities Act:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 OR ANY STATE SECURITIES ACT AND MAY
NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
EXEMPTION THEREFROM. SUCH SHARES MAY BE TRANSFERRED ONLY IN COMPLIANCE
WITH THE CONDITIONS SPECIFIED IN THE INVESTMENT AND REGISTRATION RIGHTS
AGREEMENT DATED AS OF __________, 1997, BETWEEN THE ISSUER AND THE
OTHER ENTITIES NAMED THEREIN, A COMPLETE AND CORRECT COPY OF WHICH IS
AVAILABLE FOR INSPECTION AT THE PRINCIPAL OFFICE OF THE ISSUER AND WILL
BE FURNISHED TO THE HOLDER HEREOF UPON WRITTEN REQUEST AND WITHOUT
CHARGE.
4.2 Notice of Transfer. Prior to any proposed assignment, transfer
or sale of any Securities (other than pursuant to a Registration Statement or
pursuant to Rule 144(k)), the Holder of such Securities shall give written
notice to HRPT of Holder's intention to effect such assignment, transfer or
sale, which notice shall set forth the date of such proposed assignment,
transfer or sale. Holder shall also furnish to HRPT an agreement by the
transferee that it is taking and holding the same subject to the terms and
conditions specified in this Agreement and a written opinion of Holder's
counsel, in form reasonably satisfactory to HRPT, to the effect that the
proposed transfer may be effected without registration under the Securities Act.
4.3 Termination of Restrictions. The restrictions set forth in
this Section 4 shall terminate and cease to be effective with respect to any of
the Securities (i) upon the sale of any such Securities which has been
registered under the Securities Act, (ii) upon receipt by HRPT of an opinion of
counsel, in form reasonably satisfactory to HRPT, to the effect that compliance
with such restrictions is not necessary in order to comply with the Securities
Act with respect to the sale of the Securities or (iii) upon the expiration of
the three-year period referred to in Rule 144(k) promulgated pursuant to the
Securities Act (or such other period set forth in Rule 144(k) as it may be
amended from time to time). Whenever such restrictions shall so terminate, the
Holder shall be entitled to receive from HRPT, without
2
expense (other than transfer taxes, if any, if the Holder requests that
certificates be issued in another name), certificates for such Securities not
bearing the legend set forth in Section 4.1.
5. Registration under Securities Act etc.
5.1 Shelf-Registration.
(a) General. HRPT shall prepare and file with the Commission
on or prior to 30 days after the date hereof, a registration statement
on an appropriate form under the Act relating to the offer and sale of
the Initial Shares (and with respect to the Additional Shares, as soon
after their issuance as is reasonably practicable, HRPT shall prepare
and file appropriate amendments relating to such shares) by the Holder
in accordance with the methods of distribution set forth in such
registration statement and Rule 415 under the Act (hereafter, a "Shelf
Registration Statement") and shall use its best efforts to cause the
Shelf Registration Statement to be declared effective as soon as
reasonably practicable thereafter.
(b) Effective Period. HRPT agrees to use its best efforts to
keep the Shelf Registration Statement continuously effective in order
to permit the prospectus included in the Shelf Registration Statement
to be usable by the Holders for a period of three years from the
Closing Date or such shorter period that shall terminate when all the
Securities covered by the Shelf Registration Statement have been sold;
provided that HRPT shall be deemed not to have used its best efforts to
keep the Shelf Registration Statement effective during the requisite
period if it voluntarily takes any action that would result in holders
of the Securities covered by the Shelf Registration Statement not being
able to offer and sell such Securities during that period, unless such
action is required by applicable law, and provided, further, that the
foregoing shall not apply to actions taken by HRPT in good faith and
for valid business reasons (not including avoidance of HRPT's
obligations pursuant to this Agreement), including, without limitation,
the acquisition or divestiture of a material portion of its assets, the
offering of Securities pursuant to the registration rights granted to
others or the offering of Securities by HRPT for its own account, so
long as HRPT promptly complies with the requirements of Section 5.2(f),
if applicable. Any such period during which HRPT fails to keep the
Shelf Registration Statement effective and usable for offers and sales
of Securities is hereafter referred to as a "Suspension Period". A
Suspension Period shall commence on and include the date on which HRPT
provides notice that the Shelf Registration Statement is no longer
effective that the prospectus included in the Shelf Registration
Statement is no longer usable for offers and sales of Securities or
that HRPT is required to suspend the sale of Securities because of the
occurrence of an underwritten offering in connection with the demand
registrations or primary registrations referred to above and shall end
on the date when each seller of Securities covered by the Shelf
Registration Statement either receives the copies of the supplemented
or amended prospectus contemplated by Section 5.2(f) or is advised in
writing by HRPT that use of the prospectus may be resumed; provided no
one Suspension Period shall continue for more than 75 days. If one or
more Suspension Periods occur, the time period referenced above shall
be extended by a period which is not less than the aggregate number of
days included in all Suspension Periods.
(c) Block-out Period. Each Holder of Registrable Securities
agrees by acquisition of such Registrable Securities, if so requested
by HRPT, not to effect any sale of Securities pursuant to the Shelf
Registration Statement for any period (but not more than 75 days)
reasonably deemed necessary by HRPT or its managing underwriter in
connection with the offering of HRPT equity pursuant to an underwritten
offering pursuant to demand registration rights granted to another
entity pursuant to Section 11 or the offering of any debt or equity
securities by HRPT for its own account (a "Block-out Period").
3
(d) Anything in this Agreement to the contrary
notwithstanding, in any period of 12 consecutive months, the aggregate
time during which Holder would be prohibited from selling Securities
pursuant to the Shelf Registration Statement during any Suspension
Periods and Block- out Periods shall not exceed 150 days.
5.2 Registration Procedures. HRPT shall:
(a) cause any registration statement filed pursuant to Section
5.1 and the related prospectus and any amendment or supplement, as of
the effective date of such registration statement, amendment or
supplement, (i) to comply in all material respects with the applicable
requirements of the Securities Act and the rules and regulations of the
Commission promulgated under the Securities Act and (ii) not to 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
therein not misleading;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection with such registration statement as may be necessary to keep
such registration statement effective and to comply with the provisions
of the Securities Act with respect to the disposition of all
Registrable Securities and other securities covered by such
registration statement until the earlier of such time as all such
Registrable Securities and securities have been disposed of in
accordance with the intended methods of disposition by the seller or
sellers thereof set forth in such registration statement or for a
period of three years from the Closing Date; and will furnish, upon
request, to each such seller and each Holder a copy of any amendment or
supplement to such registration statement or prospectus prior to filing
it and shall not file any such amendment or supplement to which any
such seller or Holder shall have reasonably objected on the grounds
that such amendment or supplement does not comply in all material
respects with the requirements of the Securities Act or of the rules or
regulations thereunder;
(c) furnish to each seller of such Registrable Securities and
each Holder such number of conformed copies of such registration
statement and of each such amendment and supplement thereto (in each
case including all exhibits), such number of copies of the prospectus
included in such registration statement (including each preliminary
prospectus and any summary prospectus), in conformity with the
requirements of the Securities Act, such documents, if any,
incorporated by reference in such registration statement or prospectus,
and such other documents, as such seller or Holder may reasonably
request;
(d) use its best efforts to register or qualify all
Registrable Securities and other securities covered by such
registration statement under such other securities or blue sky laws of
the states of the United States as each seller or Holder shall
reasonably request, to keep such registration or qualification in
effect for so long as such registration statement remains in effect,
and do any and all other acts and things which may be necessary or
advisable to enable such seller to consummate the disposition in such
jurisdictions of its Registrable Securities covered by such
registration statement, except that HRPT shall not for any such purpose
be required to qualify generally to do business as a foreign
corporation in any jurisdiction in which it is not and would not, but
for the requirements of this Section 5.2(d), be obligated to be so
qualified, or to subject itself to taxation in any such jurisdiction,
or to consent to general service of process in any such jurisdiction;
(e) upon request, furnish to each seller of Registrable
Securities and each Holder a signed counterpart, addressed to such
seller and such Holder, of (i) an opinion of counsel for HRPT, dated
the effective date of such registration statement, and (ii) a "comfort
letter", signed
4
by the independent public accountants who have certified HRPT's
financial statements included in such registration statement, dated the
effective date of such registration statement, covering substantially
the same matters with respect to such registration statement (and the
prospectus included in such registration statement) and, in the case of
such accountants' letter, with respect to events subsequent to the date
of such financial statements, as are customarily covered in opinions of
issuer's counsel and in accountants' letters delivered to underwriters
in underwritten public offerings of securities;
(f) immediately notify each seller of Registrable Securities
covered by such registration statement and each Holder, at any time
when a prospectus relating thereto is required to be delivered under
the Securities Act, upon discovery that, or upon the happening of any
event as a result of which, the prospectus included in such
registration statement, as then in effect, includes an untrue statement
of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing, which
untrue statement or omission requires amendment of the registration
statement or supplementation of the prospectus, and at the request of
any such seller or Holder, as soon as practicable prepare and furnish
to such seller and each Holder a reasonable number of copies of a
supplement to or an amendment of such prospectus as may be necessary so
that, as thereafter delivered to the purchasers of such Registrable
Securities, such prospectus shall 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 not misleading in
the light of the circumstances then existing; provided, however, that
each Holder of Registrable Securities registered pursuant to such
registration statement agrees that he will not sell any Registrable
Securities pursuant to such registration statement during the time that
HRPT is preparing and filing with the Commission a supplement to or an
amendment of such prospectus or registration statement;
(g) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available
to its securities holders, as soon as reasonably practicable, an
earnings statement covering the period of at least twelve months, but
not more than eighteen months, beginning with the first month of the
first fiscal quarter after the effective date of such registration
statement, which earnings statement shall satisfy the provisions of
Section ll(a) of the Securities Act;
(h) provide and cause to be maintained a transfer agent and
registrar for all Registrable Securities covered by such registration
statement from and after a date not later than the effective date of
such registration statement;
(i) cause all Registrable Securities included in a
registration statement to be listed on each securities exchange on
which similar securities issued by HRPT are then listed and, if not so
listed, but similar securities are then listed on the NASD automated
quotation system, to be listed on the NASD automated quotation system
and, if listed on the NASD automated quotation system, use its best
efforts to secure designation of all such Registrable Securities as a
NASDAQ national market system security within the meaning of Rule
11Aa2-1 of the SEC or failing that, at such time as HRPT becomes
eligible for such authorization, to secure NASDAQ authorization for
such Registrable Securities if available and, without limiting the
generality of the foregoing, to arrange for at least two market makers
to register as such with respect to such Registrable Securities with
the NASD; and
(j) enter into customary agreements (including underwriting
agreements in customary form but subject to the allocation of
Registration Expenses provided for in Section
5
1.4) and take all such other actions reasonably requested by any Holder
of Registrable Securities in order to expedite or facilitate the
disposition of such Registrable Securities.
Each seller of Registrable Securities as to which any registration is being
effected shall furnish to HRPT such information regarding such seller and the
distribution of such securities as shall be required by law or by the Commission
in connection therewith.
5.3 Indemnification.
(a) Indemnification by HRPT. HRPT shall indemnify and hold
harmless the seller of any Registrable Securities covered by any
registration statement filed pursuant to Section 5.1, its directors,
partners, trustees and officers, each other person who participates as
an underwriter in the offering or sale of such securities and each
other person, if any, who controls such seller or any such underwriter
within the meaning of the Securities Act against any losses, claims,
damages, liabilities or expenses, joint or several, to which such
seller or Holder or any such director or officer or participating or
controlling person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages, liabilities or
expenses (or related actions or proceedings) arise out of or are based
upon (x) any untrue statement or alleged untrue statement of any
material fact contained in any registration statement under which such
securities were registered under the Securities Act, any preliminary
prospectus, final prospectus or summary prospectus contained in such
registration statement, or any amendment or supplement to such
registration statement, or any document incorporated by reference in
such registration statement, or (y) any omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and HRPT will
reimburse such seller, Holder and each such director, trustee, officer,
participating person and controlling person for any legal or any other
expenses reasonably incurred by them in connection with investigating
or defending any such loss, claim, liability, action or proceeding,
provided that HRPT shall not be liable in any such case to the extent
that any such loss, claim, damage, liability or expense (or action or
proceeding in respect thereof) arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission
made in such registration statement, any such preliminary prospectus,
final prospectus, summary prospectus, amendment or supplement in
reliance upon and in conformity with written information furnished to
HRPT through an instrument duly executed by such seller or such Holder
or any such director, trustee, officer, participating person or
controlling person specifically stating that it is for use in the
preparation of such registration statement. Such indemnity shall remain
in full force and effect regardless of any investigation made by or on
behalf of such seller or such Holder or any such director, officer,
participating person or controlling person and shall survive the
transfer of such securities by such seller. HRPT shall agree to make
provision for contribution relating to such indemnity as shall be
reasonably requested by any seller of Registrable Securities or the
underwriters.
(b) Indemnification by the Sellers. As a condition to
including any Registrable Securities in any registration statement
filed pursuant to Section 5.1, each prospective seller of such
securities hereby undertakes severally and not jointly, to indemnify
and hold harmless (in the same manner and to the same extent as set
forth in Section 5.3(a)) HRPT, each director of HRPT, each officer of
HRPT who shall sign such registration statement and each other person,
if any, who controls HRPT within the meaning of the Securities Act,
with respect to any untrue statement in or omission from such
registration statement, any preliminary prospectus, final prospectus or
summary prospectus included in such registration statement, or any
amendment or supplement to such registration statement, of a material
fact if such statement or omission was made in reliance upon and in
conformity with written information furnished to HRPT through an
instrument duly executed by such seller specifically stating that it is
for use in the preparation of
6
such registration statement, preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement. Such indemnity shall
remain in full force and effect regardless of any investigation made by
or on behalf of HRPT or any such director, officer or controlling
person and shall survive the transfer of such securities by such
seller.
(c) Notice of Claims. etc. Promptly after receipt by an
indemnified party of notice of the commencement of any action or
proceeding involving a claim referred to in Sections 5.3(a) and (b),
such indemnified party will, if a claim is to be made against an
indemnifying party, give written notice to the latter of the
commencement of such action, provided that the failure of any
indemnified party to give notice shall not relieve the indemnifying
party of its obligations under Sections 5.3(a) or (b), except to the
extent that the indemnifying party is actually and materially
prejudiced by such failure to give notice. In case any such action is
brought against an indemnified party, unless in such indemnified
party's reasonable judgment (i) a conflict of interest between such
indemnified and indemnifying parties may exist in respect of such
claim, or (ii) the indemnified party has available to it reasonable
defenses which are different from or additional to those available to
the indemnifying party, the indemnifying party shall be entitled to
participate in and to assume the defense of such action, jointly with
any other indemnifying party similarly notified, to the extent that it
may wish, with counsel reasonably satisfactory to such indemnified
party, and after notice from the indemnifying party to such indemnified
party of its election so to assume the defense of such action, the
indemnifying party shall not be liable to such indemnified party for
any legal or other expenses subsequently incurred by the latter in
connection with the defense of such action other than reasonable costs
of investigation. Notwithstanding the foregoing, in any such action,
any indemnified party shall have the right to retain its own counsel
but the fees and disbursements of such counsel shall be at the expense
of such indemnified party unless (i) the indemnifying party shall have
failed to retain counsel for the indemnified party, or (ii) the
indemnifying party and such indemnified party shall have mutually
agreed to the retention of such counsel. It is understood that the
indemnifying party shall not, in connection with any action or related
actions in the same jurisdiction, be liable for the fees and
disbursements of more than one separate firm qualified in such
jurisdiction to act as counsel for the indemnified parties, unless in
any indemnified party's reasonable judgment (i) a conflict of interest
between such indemnified party and any other indemnified party may
exist in respect of such claims, or (ii) the indemnified party has
available to it reasonable defenses which are different from or
additional to those available to another indemnified party. The
indemnifying party shall not be liable for any settlement of any
proceeding effected without its written consent but if settled with
such consent or if there be a final judgment for the plaintiff, the
indemnifying party agrees to indemnify the indemnified party from and
against any loss or liability by reason of such settlement or judgment.
No indemnifying party shall, without the consent of the indemnified
party, consent to entry of any judgment or enter into any settlement
which does not include as an unconditional term the giving by the
claimant or plaintiff to such indemnified party of a release from all
liability in respect to such claim or litigation.
(d) Other Indemnification. Indemnification similar to that
specified in the Sections 5.3(a) and 5.3(b) (with appropriate
modifications) shall be given by HRPT and each seller of Registrable
Securities with respect to any required registration or other
qualification of such Registrable Securities under any federal or state
law or regulation of governmental authority other than the Securities
Act.
(e) Contribution. If the indemnification provided for in this
Section 5.3 is unavailable or insufficient to hold harmless an
indemnified party in respect of any losses, claims, damages,
liabilities or expenses described as indemnifiable pursuant to Section
5.3(a) or 5.3(b), then each indemnifying party shall, in lieu of
indemnifying such indemnified party, contribute to the amount paid or
payable by such indemnified party, as a result of such losses, claims,
damages, liabilities
7
or expenses in such proportion as appropriate to reflect the relative
fault of HRPT, on the one hand, or such seller of Registrable
Securities, on the other hand, and to the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent
any untrue statement or omission giving rise to such indemnification
obligation. HRPT and the Holders of Registrable Securities agree that
it would not be just and equitable if contributions pursuant to this
Section 5.3(e) were determined by pro rata allocation (even if the
Holders of Registrable Securities were treated as one entity for such
purpose) or by any other method of allocation which did not take
account of the equitable considerations referred to above in this
Section 5.3(e). No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any person who is not guilty of such
fraudulent misrepresentation.
(f) Indemnification Payments. Periodic payments of amounts
required to be paid pursuant to this Section 5.3 shall be made during
the course of the investigation or defense, as and when bills are
received or expense, loss, damage or liability is incurred.
(g) Limitation on Seller's Payments. Notwithstanding any
provision of this Agreement to the contrary, the liability of any
seller of Registrable Securities under this Section 5.3 shall in no
event exceed the proceeds received by such seller from the sale of
Registrable Securities covered by the registration statement giving
rise to such liability.
5.4 Registration Expenses. HRPT shall bear all Registration
Expenses incurred in connection with the performance of its obligations under
Section 5.1 of this Agreement.
6. Rule 144. HRPT shall comply with the requirements of Rule 144 under
the Securities Act, as such Rule may be amended from time to time (or any
similar rule or regulation hereafter adopted by the Commission), regarding the
availability of current public information to the extent required to enable any
Holder of Registrable Securities to sell Registrable Securities without
registration under the Securities Act pursuant to Rule 144 (or any similar rule
or regulation). Upon the request of any Holder of Registrable Securities, HRPT
will deliver to such Holder a written statement as to whether it has complied
with such requirements.
7. Amendments and Waivers. This Agreement may be amended and HRPT may
take any action herein prohibited, or omit to perform any act herein required to
be performed by it, only if HRPT shall have obtained the written consent to such
amendment, action or omission to act, of the Holder or Holders of 51% or more of
Registrable Securities (and, in the case of any amendment, action or omission to
act which adversely affects any specific Holder of Registrable Securities or a
specific group of Holders of Registrable Securities, the written consent of each
such Holder or Holders of 51% or more of the Registrable Securities held by such
group). Each Holder of any Registrable Securities at the time shall be bound by
any consent authorized by this Section 7, whether or not such Registrable
Securities shall have been marked to indicate such consent.
8. Nominees for Beneficial Owners. In the event that any Registrable
Securities are held by a nominee for the beneficial owner thereof, the
beneficial owner thereof may, at its election, be treated as the Holder of such
Registrable Securities for purposes of any request or other action by any Holder
or Holders of Registrable Securities pursuant to this Agreement or any
determination of any number or percentage of Registrable Securities held by any
Holder or Holders of Registrable Securities contemplated by this Agreement. If
the beneficial owner of any Registrable Securities so elects, HRPT may require
assurances reasonably satisfactory to it of such owner's beneficial ownership of
such Registrable Securities.
8
9. Successors in Interest. The parties anticipate the liquidation of
Holder immediately following the Effective Date. Contemporaneously therewith,
the former stockholders of Holder shall, by instrument reasonably acceptable to
HRPT, become parties to this Agreement.
10. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the respective successors and
assigns of the parties to this Agreement, whether so expressed or not, and, in
particular, shall inure to the benefit of and be enforceable by any Holder or
Holders of Registrable Securities.
11. Notices. All notices, communications and deliveries required or
permitted by this Agreement shall be made in writing signed by the Party making
the same, shall specify the Section of this Agreement pursuant to which it is
given or being made and shall be deemed given or made (i) on the date delivered
if delivered by telecopy or in person, (ii) on the third (3rd) business day
after it is mailed if mailed by registered or certified mail (return receipt
requested) (with postage and other fees prepaid) or (iii) on the day after it is
delivered, prepaid, to an overnight express delivery service that confirms to
the sender delivery on such day, as follows:
(a) if to any Holder of Registrable Securities, at the address
shown on the stock transfer books of HRPT unless such Holder has
advised HRPT in writing of a different address as to which notices
shall be sent under this Agreement, and
(b) if to HRPT, at 000 Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx
00000, Attn: Xxxxx X. Xxxxxxx, President, Telecopy No.: (000) 000-0000,
with a copy to Xxxxxxxx & Worcester LLP, Xxx Xxxx Xxxxxx Xxxxxx,
Xxxxxx, Xxxxxxxxxxxxx 00000, Attn: Xxxxxxxxx X. Xxxxxxxxxx, Xx.,
Telecopy No: (000) 000-0000,
or to such other representative or at such other address of a Party as such
Party hereto may furnish to the other Parties in writing. If notice is given
pursuant to this Section 10 of any assignment to a permitted successor or assign
of a Party hereto, the notice shall be given as set forth above to such
successor or assign of such Party.
12. Miscellaneous. HRPT shall not after the date of this Agreement
enter into any agreement with respect to its securities which is inconsistent
with or violates the rights granted to Holders of Registrable Securities in this
Agreement; provided, however, that HRPT shall be permitted to enter into
registration rights agreements with respect to Securities issued in connection
with acquisitions consummated after the date of this Agreement. This Agreement
embodies the entire agreement and understanding between HRPT and the other
parties to this Agreement relating to the subject-matter of this Agreement. This
Agreement shall be construed and enforced in accordance with and governed by the
law of the State of Delaware. The headings in this Agreement are for purposes of
reference only and shall not limit or otherwise affect the meaning of this
Agreement. This Agreement may be executed in any number of counterparts, each of
which shall be an original, but all of which together shall constitute one
instrument.
13. HRPT Limitation of Liability. The Declaration of Trust of HRPT, a
copy of which is duly filed with the Department of Assessments and Taxation of
the State of Maryland, provides that the name "Health and Retirement Properties
Trust" refers to the trustees under such Declaration of Trust collectively as
trustees, but not individually or personally, and that no trustee, officer,
shareholder, employee or agent of HRPT shall be held to any personal liability,
jointly or severally, for any obligation of, or claim against, HRPT. All persons
dealing with HRPT in any way shall look only to the assets of HRPT for the
payment of any sum or the performance of any obligation.
9
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their respective duly authorized officers as of the
date first above written.
HEALTH AND RETIREMENT PROPERTIES
TRUST
By:______________________________________
GOVERNMENT PROPERTY INVESTORS, INC.
By:_______________________________________
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Schedule 7.2(d)
VOTING AGREEMENT
This Agreement is entered into this _____ day of _________, 1997, by
and among Health and Retirement Properties Trust, a Maryland real estate
investment trust ("HRPT"), Rosecliff Realty, L.P. ("Rosecliff") and The 1818
Fund II, L.P. ("1818" and, collectively with Rosecliff, the "Principal
Shareholders").
R E C I T A L:
Pursuant to that certain Agreement of Merger, dated as of February 17,
1997 (the "Merger Agreement"), between HRPT and Government Property Investors,
Inc., a Delaware corporation ("GPI"), Government Property Holdings Trust, a
Maryland real estate investment trust ("GPH"), has of the date hereof merged
with and into HUB Acquisition Trust, a Maryland real estate investment trust
(the "Company"), and the subsidiaries of GPH have thereby become subsidiaries of
the Company (the "Acquisition").
Upon the consummation of the Acquisition, GPI will receive shares of
beneficial interest, par value $.01 per share, of HRPT (the "HRPT Common
Shares"), as consideration for shares of the capital stock of GPH held by GPI
immediately prior to the consummation of the Acquisition, and GPI will
thereafter liquidate and dissolve and as a result the former stockholders of
GPI, including the Principal Shareholders, will become shareholders of HRPT.
To induce HRPT to consummate the Acquisition, the Principal
Shareholders are willing to agree to the restrictions set forth herein with
respect to the transfer and voting of the HRPT Common Shares issued to the
Principal Shareholders pursuant to the Merger Agreement and the liquidation of
GPI.
NOW, THEREFORE, HRPT and the Principal Shareholders hereby agree as
follows:
1. Definitions. The capitalized terms set forth below (in their
singular and plural forms as applicable) shall have the meanings set forth
below. Other capitalized terms used but not defined herein shall have the
meanings specified in the Merger Agreement.
(a) "Affiliate": with respect to a specified Person, another
Person who, directly or indirectly, through one or more intermediaries, controls
or is controlled by or is under common control with the specified Person or is a
director, trustee, executive officer or general partner of the specified Person.
(b) "Change in Management": (i) a termination of the Advisory
Agreement, dated November 20, 1986, as in effect as of the date hereof,
2
between HRPT and HRPT Advisors, Inc. and as amended from time to time hereafter
and (ii) a Change of Control of HRPT Advisors, Inc.
(c) "Change of Control": with respect to a specified Person, if
any other Person becomes the beneficial owner of more than fifty percent (50%)
of the voting equity of the specified Person and within 6 months thereafter,
individuals other than individuals who at the beginning of such period
constituted the entire Board of Directors or Trustees become a majority of the
Directors or Trustees; provided, in the case of HRPT Advisors, Inc., a change in
ownership following the death or legal incapacity of a shareholder as a result
of such shareholder's interest being held by his estate or legal representative,
shall not constitute a Change of Control.
(d) "Person": an individual, partnership, joint venture,
corporation, limited liability company, trust or any other form of business
organization.
(e) "Transfer": to transfer, sell, assign, pledge, hypothecate,
give, grant or create a security interest in or lien on, place in trust (voting
or otherwise), assign an interest in or in any other way encumber or dispose of,
directly or indirectly, and whether or not by operation of law or for value, any
of the HRPT Common Shares.
2. Restrictions on Transactions in HRPT Common Shares. Until the
occurrence of a Change in Management, unless otherwise approved by the Board of
Trustees of HRPT, each Principal Shareholder agrees that it will not (i)
Transfer any HRPT Common Shares now or hereafter held by it to any Person who,
to such Principal Shareholder's knowledge, holds directly, or is an Affiliate of
a Person who holds directly, 5% or more of the aggregate HRPT Common Shares at
the time outstanding or (ii) make directly or indirectly or participate in an
unsolicited offer to purchase any HRPT Common Shares.
3. Voting. Until the occurrence of a Change in Management, unless
otherwise approved by the Board of Trustees of HRPT, each Principal Shareholder
agrees that it will not (i) vote (or direct to be voted) any HRPT Common Shares
or any other shares of equity interest of HRPT as to which it has direct or
indirect voting power or control in favor of any transaction that could result
in a Change of Control of HRPT or (ii) present any shareholder proposal dealing
with a Change of Control of HRPT.
4. Legend. Each certificate representing HRPT Common Shares subject to
this Agreement shall have endorsed, stamped or written thereon a legend which
shall read substantially as follows:
THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO
CERTAIN RESTRICTIONS SET FORTH IN AN AGREEMENT
3
BETWEEN THE ISSUER AND CERTAIN SHAREHOLDERS OF
THE ISSUER, A COPY OF WHICH WILL BE FURNISHED
WITHOUT CHARGE BY THE ISSUER TO THE HOLDER HEREOF
UPON WRITTEN REQUEST.
5. Termination. This Agreement shall terminate with respect to either
Principal Shareholder when such Principal Shareholder, together with its
Affiliates, owns less than twenty-five percent (25%) of the aggregate HRPT
Common Shares issued pursuant to the Merger Agreement.
6. Notices. All notices and other communications which by any provision
of this Agreement are required or permitted to be given shall be given in
writing and shall be (i) sent by nationally recognized overnight courier, (ii)
sent by telecopy, confirmed by sending a copy by nationally recognized overnight
courier at substantially the same time as such telecopy, or (iii) personally
delivered to the receiving party (which if other than an individual shall be an
officer or other responsible party of the receiving party). All such notices and
communications shall be mailed, sent or delivered as follows or to such other
person(s), facsimile number(s) or address(es) as the party to receive any such
communication or notice may have designated by written notice to the other
party:
A. If to Rosecliff:
Rosecliff Realty, L.P.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X. Xxxxxx
X. If to 1818:
c/o Brown Brothers Xxxxxxxx & Co.
00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxxxx
C. If to HRPT:
Health and Retirement Properties Trust
000 Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
or to such other address as a party hereto shall specify in writing given in
accordance with this section.
7. Modifications. This Agreement constitutes the entire agreement
between the parties hereto with regard to the subject matter hereof, superseding
all
4
prior understandings and agreements whether written or oral. This Agreement may
not be amended or revised except by a writing signed by the parties.
8. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and assigns
but may not be assigned by any party without the prior written consent of the
other parties hereto.
9. Captions. Captions have been inserted solely for the convenience of
reference and in no way define, limit or describe the scope or substance of any
provision and shall not affect the validity of any other provision.
10. Governing Law. This Agreement shall be construed under and governed
by the laws of The Commonwealth of Massachusetts applicable to contracts made
and to be performed entirely in Massachusetts, without giving effect to the
provisions thereof relating to conflict of laws.
11. Specific Performance. Each Principal Shareholder recognizes and
agrees that HRPT's remedy at law for breach of Sections 2 and 3 of this
Agreement would be inadequate, and further agrees that, for breach of such
provisions, each aggrieved party shall be entitled to injunctive relief and to
enforce its rights by an action for specific performance.
12. Severability. If any one or more of the provisions of this
Agreement shall be held to be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
13. Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
5
IN WITNESS WHEREOF, the undersigned have executed and delivered, or
caused to be executed and delivered by their officers hereunto duly authorized,
this Agreement as of the date first set forth above.
HEALTH AND RETIREMENT PROPERTIES TRUST
By:
Name:
Title:
ROSECLIFF REALTY, L.P.
By:
Name:
Title:
THE 1818 FUND II, L.P.
By: Xxxxx Brothers Xxxxxxxx & Co.,
a general partner
By:
Name:
Title:
SCHEDULE 7.2(d)
INFORMATION ACCESS AGREEMENT
This Agreement is entered into this ___ day of ________, 1997, by and
among Health and Retirement Properties Trust, a Maryland real estate investment
trust ("HRPT"), and Rosecliff Realty, L.P. ("Rosecliff") and The 1818 Fund II,
L.P. ("1818" and, collectively with Rosecliff, the "Principal Shareholders").
R E C I T A L:
Pursuant to that certain Agreement of Merger, dated as of February 17,
1997 (the "Merger Agreement"), between HRPT and Government Property Investors,
Inc., a Delaware corporation ("GPI"), Government Property Holdings Trust, a
Maryland real estate investment trust ("GPH"), has as of the date hereof merged
with and into HUB Acquisition Trust, a Maryland real estate investment trust
(the "Company"), and the subsidiaries of GPH have thereby become subsidiaries of
the Company (the "Acquisition").
Upon the consummation of the Acquisition, GPI will receive shares of
beneficial interest, par value $.01 per share, of HRPT (the "HRPT Common
Shares"), as consideration for shares of the capital stock of GPH held by GPI
immediately prior to the consummation of the Acquisition, and GPI will
thereafter liquidate and dissolve and as a result the former stockholders of
GPI, including the Principal Shareholders, will become shareholders of HRPT.
To induce the Principal Shareholders to approve the consummation of the
Acquisition, HRPT is willing to agree to make certain information available to
the Principal Shareholders and to provide access to HRPT's properties and
officers for a period following the Acquisition.
NOW, THEREFORE, HRPT and the Principal Shareholders hereby agree as
follows:
1. Definitions. The capitalized terms set forth below (in their
singular and plural forms as applicable) shall have the following meanings:
(a) "Affiliate": with respect to a specified Person, another
Person who, directly or indirectly, through one or more intermediaries, controls
or is controlled by or is under common control with the specified Person or is a
director, trustee, executive officer or general partner of the specified Person.
(b) "Term": a term commencing on the date hereof and expiring on
the third anniversary of the Closing (as defined in the Merger Agreement) of the
Acquisition.
2
(c) "Person": an individual, partnership, joint venture,
corporation, limited liability company, trust or any other form of business
organization.
2. Access to Information. Solely for the purpose of enabling the
Principal Shareholders to maintain their investment in HRPT on behalf of their
respective partners and Affiliates, and without any intention of participation
in the formulation, determination or direction of the basic business decisions
of HRPT, HRPT will, upon the request of a Principal Shareholder during the Term:
(a) Permit the Principal Shareholders to inspect HRPT's properties
and provide them financial statements quarterly, and at least annually, business
plans, and financial projections of HRPT;
(b) Make appropriate officers of HRPT available periodically for
consultations with the Principal Shareholders with respect to matters relating
to the business and affairs of HRPT, including, without limitation, significant
changes in management personnel, entry into new lines of business, important
acquisitions or dispositions of properties, and the proposed compromise of
significant litigation; and
(c) Inform the Principal Shareholders with respect to any major or
significant corporate actions, including, without limitation, special dividends,
mergers, acquisitions or dispositions of assets, issuances of significant
amounts of debt or equity and material amendments to the declaration of trust or
by-laws of HRPT.
3. Confidentiality. The Principal Shareholders shall hold in confidence
all proprietary and confidential information (including all material non-public
information) of HRPT which may come into the Principal Shareholders' possession
or knowledge as a result of their receipt of information hereunder, exercising a
degree of care in maintaining such confidence as is used by the Principal
Shareholders to protect their own proprietary or confidential information that
they do not wish to disclose. In addition, in connection with and as a condition
of the delivery of material non-public information, the Principal Shareholders
may be obliged to execute and deliver an appropriate confidentiality agreement
to HRPT. The Principal Shareholders shall use all reasonable efforts to ensure
that their respective employees, agents and outside consultants similarly
maintain the confidentiality of such proprietary and confidential information of
HRPT.
4. Notices. All notices and other communications which by any provision
of this Agreement are required or permitted be given shall be given in writing
and shall be (i) sent by nationally recognized overnight courier, (ii) sent by
telecopy, confirmed by sending a copy by nationally recognized courier at
substantially the same time as such telecopy, or (iii) personally delivered to
the receiving party (which if other than an individual shall be an officer or
other
3
responsible party of the receiving party). All such notices and communications
shall be mailed, sent or delivered as follows or to such other person(s),
facsimile number(s) or address(es) as the party to receive any such
communication or notice may have designated by written notice to the other
party:
A. If to Rosecliff:
Rosecliff Realty, L.P.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X. Xxxxxx
X. If to 1818:
c/o Brown Brothers Xxxxxxxx & Co.
00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxxxx
C. If to the Company or HRPT:
Health and Retirement Properties Trust
000 Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
or to such other address as a party hereto shall specify in writing given in
accordance with this section.
5. Modifications. This Agreement constitutes the entire agreement
between the parties hereto with regard to the subject matter hereof, superseding
all prior understandings and agreements whether written or oral. This Agreement
may not be amended or revised except by a writing signed by the parties.
6. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and assigns
but may not be assigned by any party without the prior written consent of the
other parties hereto.
7. Captions. Captions have been inserted solely for the convenience of
reference and in no way define, limit or describe the scope or substance of any
provision and shall not affect the validity of any other provision.
8. Governing Law. This Agreement shall be construed under and governed
by the laws of the Commonwealth of Massachusetts applicable to contracts made
and to be performed entirely in Massachusetts, without giving effect to the
provisions thereof relating to conflict of laws.
4
9. Specific Performance. Each party recognizes and agrees that a remedy
at law for breach of this Agreement would be inadequate, and further agrees
that, for breach of this Agreement, each aggrieved party shall be entitled to
injunctive relief and to enforce its rights by an action for specific
performance.
10. Severability. If any one or more of the provisions of this
Agreement shall be held to be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
11. Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
5
IN WITNESS WHEREOF, the undersigned have executed and delivered, or
caused to be executed and delivered, or caused to be executed and delivered by
their officers hereunto duly authorized this Agreement as of the date first set
forth above.
HEALTH AND RETIREMENT PROPERTIES TRUST
By:
Name:
Title:
ROSECLIFF REALTY, L.P.
By:
Name:
Title:
THE 1818 FUND II, L.P.
By: Xxxxx Brothers Xxxxxxxx & Co.,
a general partner
By:
Name:
Title:
SCHEDULE 7.2(i)
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT ("Agreement") is made and entered into
__________, 1997, between GOVERNMENT PROPERTY INVESTORS, INC., a Delaware
corporation ("GPI"), and HEALTH AND RETIREMENT PROPERTIES TRUST, a Maryland real
estate investment trust ("HRPT").
RECITALS
A. HRPT and GPI have entered into an Agreement of Merger, dated
February 17, 1997 (the "Merger Agreement"), pursuant to which Government
Property Holdings Trust ("GPH") will be merged with and into Hub Acquisition
Trust ("Merger Sub").
B. Pursuant to the terms of the Merger Agreement, and as a condition to
HRPT's obligations under the Merger Agreement, GPI has agreed to provide certain
indemnification rights to HRPT.
NOW, THEREFORE, the parties agree as follows:
1. Definitions. Capitalized terms used but not otherwise
defined in this Agreement shall have the meanings given therefor in the
Merger Agreement.
2. Indemnification by GPI.
(a) Subject to the other provisions of this
Agreement, from and after the Closing, GPI shall indemnify and
hold harmless, HRPT and its subsidiaries and affiliates, each
of their respective officers, trustees, directors, employees,
agents and representatives, and each of the heirs, executors,
successors and assigns of any of the foregoing (collectively,
the "Indemnified Parties"), against any losses, claims,
damages, liabilities or expenses whenever arising or incurred
(including, without limitation, amounts paid in settlement,
reasonable costs of investigation and reasonable attorneys'
fees and expenses) (collectively, "Losses") (x) arising out of
or relating to any breach of any representation or warranty
made by (i) GPI in the Merger Agreement, provided solely for
purposes of this Agreement, each representation and warranty
made by GPI shall be deemed to have been qualified by the
phrase "to the knowledge of GPI" (as defined in the Merger
Agreement), whether or not so qualified in the Merger
Agreement, or (ii) GPI in Sections 3 and 4 of the Registration
Rights Agreement and Section 6(b) of this Agreement or (y)
pursuant to Section 8.5 of the Merger Agreement.
(b) No Indemnified Party shall be entitled to make
any claim for indemnification pursuant to this Agreement after
December 31, 1997 (the "Claim Period").
(c) Indemnification Procedure.
(i) Promptly after receipt by an Indemnified
Party of notice of the commencement of any
action or proceeding involving a claim to
which indemnification is being sought, such
Indemnified Party will, if a claim is to be
made against GPI, give written notice to GPI
of the commencement of such action or
proceeding; provided, however, that failure
so to notify GPI shall not relieve GPI from
any liability which GPI may have with
respect to such claim, except to the extent
that GPI is actually materially prejudiced
by such failure to give notice.
(ii) In case any such action is brought against
an Indemnified Party, unless in such
Indemnified Party's reasonable judgment a
conflict of interest between the Indemnified
Party and GPI may exist in respect of such
claim, GPI shall be entitled to assume and
control the defense of such action to the
extent that it may wish, with counsel
reasonably satisfactory to such Indemnified
Party, and after notice from GPI to such
Indemnified Party of its election so to
assume and control the defense of such
action, GPI shall not be liable to such
Indemnified Party for any legal or other
expenses subsequently incurred by the latter
in connection with the defense of such
action other than reasonable costs of
investigation. Notwithstanding the
foregoing, in any such action, any
Indemnified Party shall have the right to
retain its own counsel, but the fees and
disbursements of such counsel shall be at
the expense of such Indemnified Party unless
GPI shall have failed to retain counsel for
the Indemnified Party. It is understood that
GPI shall not, in connection with any action
or related actions in the same jurisdiction,
be liable for the fees and disbursements of
more than one separate firm qualified in
such jurisdiction to act as counsel for all
Indemnified Parties, unless in any such
Indemnified Party's reasonable judgment a
conflict of interest between such
Indemnified Party and any other Indemnified
Party may exist in respect of such claim.
GPI shall not be liable for any settlement
of any proceeding effected without the
written consent of GPI but if settled with
such consent or if there be a final judgment
for the plaintiff, GPI agrees to indemnify
the Indemnified Party from and against any
loss or liability by reason of such
settlement or judgment; GPI shall not,
without the consent of the Indemnified
Party, consent to entry of any judgment or
enter into any settlement which does not
include as an unconditional term the giving
by the claimant or plaintiff to such
Indemnified Party of a release from all
liability in respect to such claim or
litigation. Within five business days of the
final determination of any such settlement
or judgment, GPI shall deliver or shall
instruct the Escrow Agent to deliver to the
Indemnified Party HRPT Common Shares issued
in the Merger having a value,
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determined under Section 2(c)(iv),
sufficient to satisfy the amount of such
claim as finally determined.
(iii) If an Indemnified Party shall claim a right
to payment pursuant to this Agreement with
respect to which there has been no action or
proceeding involving such claim pursuant to
Section 2(c)(i) above, such Indemnified
Party shall send written notice of such
claim to GPI. Such notice shall specify the
basis for such claim. As promptly as
possible after the Indemnified Party has
given such notice, such Indemnified Party
and GPI shall establish the merits and
amount of such claim (by mutual agreement or
arbitration) and, within five business days
of the final determination of the merits and
amount of such claim, GPI shall deliver (or
shall instruct the Escrow Agent to deliver)
to the Indemnified Party the amount of such
claim as finally determined. HRPT Common
Shares issued in the Merger having a value,
determined under Section 2(c)(iv),
sufficient to satisfy the amount of such
claim as finally determined.
(iv) For purposes of Paragraphs 2(c)(ii) and
2(c)(iii), HRPT Common Shares issued GPI in
the Merger that are delivered in
satisfaction of a claim made hereunder shall
be valued at the greater of the closing sale
price for an HRPT Common Share as reported
by the NYSE for the trading day next prior
to delivery or the Merger Price.
3. Liability Limits.
(a) GPI shall have no liability for Losses until such
time as the aggregate of such Losses exceeds $1,500,000 (the
"Deductible") and thereafter, GPI shall indemnify the
Indemnified Parties for all Losses incurred in excess of the
Deductible, provided the limitation contained in this Section
3(a) shall not apply with respect to Losses arising under
Section 8.5 of the Merger Agreement, and provided further that
Losses pursuant to Section 8.5 of the Merger Agreement shall
not be taken into account in determining whether the
Deductible has been met.
(b) Solely for purposes of this Agreement, a Loss or
series of related Losses shall be deemed to have a Material
Adverse Effect if the amount of such Loss or series of related
Losses exceeds $250,000.
(c) In the case of all Premises (including the
College Park Premises and including Development Properties and
Contract Properties acquired after the Closing Date) if there
shall be a Material Adverse Effect and an Indemnified Party
(A) shall make a claim for a Loss with respect to which an
Indemnified Party is entitled to indemnification under Section
2 (a) resulting from (1) a reduction or offset of rent for a
period which is less than the remaining term of the lease or
(2) a tenant claim for one time refund of rent or other
amounts, then in either case, the amount of the Loss shall be
equal to such offset, reduction or tenant claim or (B) shall
make a claim for a Loss
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with respect to which an Indemnified Party is entitled to
indemnification under Section 2(a) resulting from a reduction
or offset of rent for a period equal to the remaining term of
the lease, then the amount of the Loss shall be equal to ten
(10) times the amount of such offset or reduction. In the case
of the College Park Premises, if either (1) a reduction in
rent during the extension period from the rent for such
extension period set out by the terms of the current lease
and/or (2) a reduction in the GSA buyout option price, as
contemplated by Section 2.B or 2.C of the Purchase and Sale
Agreement with respect to the College Park Premises, then the
amount of the Loss shall be equal to the present value of (1)
the ten (10) year stream of such reduction in rent during the
extension period plus (2) the reduction in the buyout option
price ((1) and (2) discounted to the date of the claim at a
discount rate of 10%).
(d) Notwithstanding the preceding, GPI's aggregate
liability for all Losses under this Agreement and, after the
Closing Date, under the Merger Agreement shall not exceed and
shall be payable solely from the Second Closing Consideration
(as adjusted). At the Second Closing, if any Indemnified Party
shall have made a claim hereunder within the Claim Period
which remains outstanding, HRPT shall deliver to _____________
as escrow agent (the "Escrow Agent") a number of HRPT Common
Shares having a value (based on the Merger Price) equal to the
amount of such claim.
4. Arbitration.
The Parties agree that any and all disputes or
disagreements arising out of or relating to this Agreement,
other than actions or claims for injunctive or other equitable
relief or claims raised in actions or proceedings brought by
third parties, shall be resolved through negotiations or, if
the dispute is not so resolved, through mediation and if
necessary binding arbitration conducted by
____________________, whose decision shall be binding on all
parties and not appealable. Any such mediation and/or
arbitration shall be conducted in _______________ pursuant to
the procedures set forth in Exhibit ___ attached hereto and
made a part hereof and the arbitration rules and procedures of
____________________.
5. Representations and Warranties of GPI.
GPI hereby represents and warrants to HRPT that:
(i) this Agreement has been duly authorized,
executed and delivered by GPI and
constitutes the legal, valid and binding
agreement of it, enforceable against GPI in
accordance with its terms, except as
enforceability may be limited by bankruptcy,
insolvency, reorganization, or other laws
affecting creditors' rights and remedies
generally and by general principles of
equity (regardless of whether such
enforceability is considered in a proceeding
in equity or at law); and
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(ii) the execution, delivery and performance of
this Agreement and the consummation of the
transactions contemplated by this Agreement
will not violate or conflict with,
constitute a breach of or default under,
result in the loss of any material benefit
under, or permit the acceleration of or
entitle any party to accelerate any
obligation under or pursuant to any material
mortgage, lien, lease, agreement,
instrument, order, arbitration award,
judgment or decree to which GPI is a party
or by which GPI or any of GPI's assets are
bound.
6. Notices. All notices, communications and deliveries
required or permitted by this Agreement shall be made in writing signed
by the Party making the same, shall specify the Section of this
Agreement pursuant to which it is given or being made, and shall be
deemed given or made (i) on the date delivered if delivered by telecopy
or in person, (ii) on the third business day after it is mailed if
mailed by registered or certified mail (return receipt requested) (with
postage and other fees prepaid), or (iii) on the day after it is
delivered, prepaid, to an overnight express delivery service that
confirms to the sender delivery on such day, as follows:
To: Health and Retirement Properties Trust
000 Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxx, President
Telecopy No.: (000) 000-0000
with a copy to:
Xxxxxxxx & Worcester LLP
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxxxxxx X. Xxxxxxxxxx, Xx.
Telecopy No.: (000) 000-0000
To GPI:
Government Property Investors, Inc.
0000 Xxxxxxxxxxxx Xxxxxx, X.X., Xxxxx 0000
Xxxxxxxxxx, X.X. 00000
Attn: Xxxx Xxxxx
Telecopy No.: 000-000-0000
with a copy to:
Xxxxxxx Xxxx & Xxxxxxxxx
One Citicorp Center
New York, New York
Attn: Xxxx Xxx Xxxxxxx
Telecopy No.: 000-000-0000
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or to such other representative or at such other address of a Party as such
Party hereto may furnish to the other Parties in writing.
7. Time of the Essence; Computation of Time. Time is of the
essence for each and every provision of this Agreement. Whenever the
last day for the exercise of any privilege or the discharge of any duty
under this Agreement shall fall upon a Saturday, Sunday or any date on
which banks in Boston, Massachusetts are closed, the Party having such
privilege or duty may exercise such privilege or discharge such duty on
the next succeeding day which is a regular business day.
8. Successors in Interest. The parties anticipate the
liquidation of GPI immediately following the Effective Date. As a
condition of such liquidation and contemporaneously therewith, certain
holders of GPI Common Stock listed on Exhibit A shall, by instrument
reasonably acceptable to HRPT, severally assume and agree to pay,
perform and observe GPI's obligations under this Agreement in
accordance with their proportionate interests set forth opposite their
names on Exhibit A.
9. Captions. The titles and captions contained in this
Agreement are inserted in this Agreement only as a matter of
convenience and for reference and in no way define, limit, extend or
describe the scope of this Agreement or the intent of any provision of
this Agreement. Unless otherwise specified to the contrary, all
references to Sections are references to Sections of this Agreement.
10. Amendments. To the extent permitted by law, this Agreement
may be amended by a subsequent writing signed by all of the Parties.
11. Controlling Law; Integration; Waiver. This Agreement shall
be governed by and construed and enforced in accordance with the laws
of the Commonwealth of Massachusetts. This Agreement supersedes all
negotiations, agreements and understandings among the Parties with
respect to the subject matter of this Agreement and constitutes the
entire agreement among the Parties to this Agreement relating to the
subject matter of this Agreement. The failure of any Party at any time
or times to require performance of any provisions of this Agreement
shall no manner affect the right to enforce the same. No waiver by any
Party of any conditions, or of the breach of any term, provision,
warranty, representation, agreement or covenant contained in this
Agreement, whether by conduct or otherwise, in any one or more
instances shall be deemed or construed as a further or continuing
waiver of any such condition or breach of any other term, provision,
warranty, representation, agreement or covenant contained in this
Agreement.
12. Sole Recourse. The Parties agree that the remedies set
forth in this Agreement shall be the sole recourse of the Indemnified
Parties for any and all Losses and any other breaches by GPI under this
Agreement and, after the Closing Date, under the Merger Agreement.
13. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction will, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining
-6-
provisions of this Agreement, and any such prohibition or
unenforceability in any jurisdiction will not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent
permitted by law, the Parties waive any provision of law which renders
any such provision prohibited or unenforceable in any respect.
14. HRPT Limitation of Liability. The Declaration of Trust of
HRPT, a copy of which is duly filed with the Department of Assessments
and Taxation of the State of Maryland, provides that the name "Health
and Retirement Properties Trust" refers to the trustees under such
Declaration of Trust collectively as trustees, but not individually or
personally, and that no trustee, officer, shareholder, employee or
agent of HRPT shall be held to any personal liability, jointly or
severally, for any obligation of, or claim against, HRPT. All persons
dealing with HRPT in any way shall look only to the assets of HRPT for
the payment of any sum or the performance of any obligation.
EXECUTED under seal as of the date first above written.
HEALTH AND RETIREMENT PROPERTIES
TRUST
By: _________________________________
GOVERNMENT PROPERTY INVESTORS, INC.
By: _________________________________
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SCHEDULE 7.2(j)
SERVICE CONTRACT
THIS SERVICE CONTRACT is entered into as of __________ __, 1997, by and
between Government Property Investors, Inc. (the "Service Provider")
and_____________________ (the "Company").
R E C I T A L
Pursuant to that certain Agreement of Merger, dated as of February 17,
1997 (the "Merger Agreement"), between Health and Retirement Properties Trust
and the Service Provider, Government Property Holdings Trust ("GPH") has as of
the date hereof merged with and into HUB Acquisition Trust ("Merger Sub") and
the subsidiaries of GPH have thereby become subsidiaries of Merger Sub (the
"Acquisition").
Prior to the date hereof, the Service Provider rendered substantial and
valuable administrative and support services to the subsidiaries of GPH.
The Company will require the skills and services of certain employees
of the Service Provider in connection with their general business operations
after the date hereof.
The Service Provider is willing to provide such skills and services to
the Company on the terms and conditions hereinafter set forth.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual promises hereinafter set forth, the Company and the Service Provider,
intending to be legally bound, do hereby agree as follows:
1. Engagement. The Company hereby engages the Service Provider and the
Service Provider hereby accepts the engagement for the Term (hereafter defined)
and upon the terms and conditions herein set forth to provide to the Company,
administrative and support services in a manner consistent with past practice
with respect to the operation of the "Premises" (as defined in the Merger
Agreement) and from time to time requested by the Company.
2. Term. The engagement shall commence on the date hereof and expire on
July 31, 1997 (the "Term"). Upon expiration of the Term, all obligations as
between the parties shall terminate without recourse to one another under this
Agreement.
3. Performance of Services. The Service Provider shall perform services
under this Agreement directly through the employees listed on Exhibit A who
shall devote such time and attention as directed by the Company during usual
business hours as is reasonably necessary to support the business of the Company
and its affiliates. The Service Provider shall consult regularly with the
Company to monitor performance of the employees. The Company shall have the
right to decline to have any employee, whom it in good faith believes not to be
performing acceptably, continue to provide services under this Agreement.
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4. Confidentiality. The Service Provider shall hold in confidence all
proprietary and confidential information of the Company which may come into the
Service Provider's possession or knowledge as a result of its performance of
services hereunder, exercising a degree of care in maintaining such confidence
as is used by the Service Provider to protect its own proprietary or
confidential information that it does not wish to disclose. The Service Provider
shall use all reasonable efforts to ensure that its employees similarly maintain
the confidentiality of such proprietary and confidential information of the
Company.
5. Compensation. The Company shall compensate the Service Provider
during the Term by reimbursing it for (i) the compensation the Service Provider
is obligated to pay the employees listed on Exhibit A at the rates (together
with applicable employment taxes including FICA and FUTA) set forth therein, to
the extent that and so long as such employees continue to provide services under
Section 3, provided, however, that in no event shall the Company be responsible
for reimbursing the Service Provider for any severance costs or similar
expenses, (ii) rent payments in respect of the Service Provider's lease of its
office space in Washington, D.C. during the Term and (iii) other office expenses
relating to the provision of services hereunder; provided the aggregate
compensation to the Service Provider under this Agreement shall not exceed
$700,000. Reimbursement shall be made on a semi-monthly basis.
6. Notices. All notices hereunder, to be effective, shall be in writing
and shall be mailed by first class certified mail, postage prepaid, as follows:
(i) If to the Service Provider, addressed to it at:
0000 Xxxxxxxxxxxx Xxxxxx, X.X., Xxxxx 0000
Xxxxxxxxxx, X.X. 00000
Attention:
With a copy to:
Xxxxxxx Xxxx & Xxxxxxxxx
Xxx Xxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxx Xxxxxxx
(ii) If to the Company, addressed to it at:
Health and Retirement Properties Trust
000 Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention:
With a copy to:
Xxxxxxxx & Worcester LLP
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxxxxx X. Xxxxxxxxxx, Xx.
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7. Modifications. This Agreement, including the Exhibits hereto,
constitutes the entire agreement between the parties hereto with regard to the
subject matter hereof,superseding all prior understandings and agreements
whether written or oral. This Agreement may not be amended or revised except by
a writing signed by the parties.
8. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and assigns
(including any successor to GPI upon its liquidation) but may not be assigned by
either party without the prior written consent of the other party.
9. Captions. Captions have been inserted solely for the convenience of
reference and in no way define, limit or describe the scope or substance of any
provision and shall not affect the validity of any other provision.
10. Governing Law. This Agreement shall be construed under and governed
by the laws of The Commonwealth of Massachusetts applicable to contracts made
and to be performed entirely in Massachusetts, without giving effect to the
provisions thereof relating to conflict of laws.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as a
sealed instrument as of the date first above written.
GOVERNMENT PROPERTY
INVESTORS, INC.
By:________________________
Name:
Title:
M&P PARTNERS, L.P.
By:________________________
Name:
Title:
SCHEDULE 7.3(i)
NON-SOLICITATION AGREEMENT
This Agreement is entered into this ____ day of ___________, 1997, by
and among Health and Retirement Properties Trust, a Maryland real estate
investment trust ("HRPT"), HUB Acquisition Trust, a Maryland real estate
investment trust (the "Company"), and
(the "Affiliates" and each an "Affiliate").
R E C I T A L:
Pursuant to that certain Agreement of Merger, dated as of February 17,
1997 (the "Merger Agreement"), between HRPT and Government Property Investors,
Inc., a Delaware corporation ("GPI"), Government Property Holdings Trust, a
Maryland real estate investment trust ("GPH") has as of the date hereof merged
with and into the Company and the subsidiaries of GPH have thereby become
subsidiaries of the Company (the "Acquisition").
Upon the consummation of the Acquisition, GPI will receive shares of
beneficial interest, par value $.01 per share, of HRPT (the "HRPT Common
Shares"), as consideration for shares of the capital stock of GPH held by GPI
immediately prior to the consummation of the Acquisition.
The Affiliates are officers, directors or employees of GPI, one or more
GPI subsidiaries and/or shareholders of GPI actively engaged in the management
of the business of GPI. In connection with and to induce HRPT to consummate the
Acquisition, the Affiliates are willing to agree not to take certain action
which would interfere with or harm the business the subsidiaries of GPH which
have become subsidiaries of the Company and HRPT.
NOW THEREFORE, HRPT, the Company and the Affiliates hereby agree as
follows:
1. Definitions. Except as otherwise provided in this Agreement, the
capitalized terms set forth below (in their singular and plural forms as
applicable) shall have the following meanings:
(a) "Competitor": any Person engaged wholly or partly, in the
Business.
(b) "Business": the business of building, developing, leasing
and acting as administrator for real estate owned or leased to the
United States government through the General Services Administration
and other departments and agencies.
(c) "Person": an individual, partnership, partnership, joint
venture, limited liability company, trust, corporation or any other
form of business organization.
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2. Non-Solicitation. Affiliates each covenant and agree that for two
(2) years after the date of this Agreement, they will not, either directly or
indirectly, alone or in conjunction with any other Person (a) solicit any
employee, consultant, contractor or other personnel of the Company, to
terminate, alter or lessen their affiliation with the Company; or (b) solicit,
divert or appropriate any tenant or actively sought prospective tenant of the
Company for or on behalf of any Competitor.
3. Notices. All notices and other communications which by any provision
of this Agreement are required or permitted to be given shall be given in
writing and shall be (i) sent by nationally recognized overnight courier, (ii)
sent by telecopy, confirmed by sending a copy by nationally recognized overnight
courier at substantially the same time as such telecopy, or (iii) personally
delivered to the receiving party (which if other than an individual shall be an
officer or other responsible party of the receiving party). All such notices and
communications shall be mailed, sent or delivered as follows or to such other
person(s), facsimile number(s) or address(es) as the party to receive any such
communication or notice may have designated by written notice to the other
party:
A. If to any Affiliate, to the address set forth
opposite his or her name on Exhibit A hereto.
B. If to the Company or HRPT:
Health and Retirement Properties Trust
000 Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
or to such other address as a party hereto shall specify in writing given in
accordance with this section.
4. Modifications. This Agreement constitutes the entire agreement
between the parties hereto with regard to the subject matter hereof, superseding
all prior understandings and agreements whether written or oral. This Agreement
may not be amended or revised except by a writing signed by the parties.
5. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of HRPT, the Company and their respective successors and
assigns but may not be assigned by any Affiliate.
6. Captions. Captions have been inserted solely for the convenience of
reference and in no way define, limit or describe the scope or substance of any
provision and shall not affect the validity of any other provision.
7. Governing Law. This Agreement shall be construed under and governed
by the laws of The Commonwealth of Massachusetts applicable to contracts made
and to be performed entirely in Massachusetts, without giving effect to the
provisions thereof relating to conflict of laws.
8. Specific Performance. Each Affiliate recognizes and agrees that
HRPT's and the Company's remedy at law for breach of Section 2 of this Agreement
would be inadequate, and further agrees that, for breach of such provision, each
aggrieved party
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shall be entitled to injunctive relief and to enforce its rights by an action
for specific performance.
9. Severability. If any one or more of the provisions of this Agreement
shall be held to be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
10. Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
IN WITNESS WHEREOF, the undersigned have executed and delivered, or
caused to be executed and delivered by their officers hereunto duly authorized,
this Agreement as of the date first set forth above.
HEALTH AND RETIREMENT PROPERTIES TRUST
By:
Name:
Title:
HUB ACQUISITION TRUST
By:
Name:
Title:
[signature blocks for Affiliates to come]
Exhibit A
Name Address
Schedule 9.2
SECOND CLOSING ESCROW AGREEMENT
THIS SECOND CLOSING ESCROW AGREEMENT (this "Escrow Agreement") is made
as of _________ __, 19__ by and among Health and Retirement Properties Trust
("HRPT"), ____________________ (the "Successor"), and ____________________ (the
"Escrow Agent").
R E C I T A L:
HRPT and GPI entered into a Merger Agreement (the "Merger Agreement"),
an executed copy of which has been provided to the Escrow Agent, pursuant to
which Government Property Holdings Trust ("GPH") merged with and into HUB
Acquisition Trust ("Merger Sub") on the terms and conditions set forth in the
Merger Agreement.
To induce HRPT to consummate the transactions contemplated by the
Merger Agreement, GPI entered into an Indemnification Agreement with HRPT, and
the Successor subsequently entered into an Accession Agreement, executed copies
of which agreements have been provided to the Escrow Agent (such Indemnification
Agreement, as amended by such Accession Agreement, the "Indemnification
Agreement"), pursuant to which agreements the Successor agreed to indemnify HRPT
with respect to certain matters on the terms and conditions set forth in the
Indemnification Agreement.
HRPT has made a claim for Losses (as defined in the Indemnification
Agreement) which has not been resolved. Pursuant to the Indemnification
Agreement, the Successor has agreed to deposit an aggregate of _________ HRPT
Second Closing Shares (the "Escrowed Shares") into escrow upon execution of this
Escrow Agreement subject to the terms and conditions set forth in the
Indemnification Agreement and in this Escrow Agreement.
NOW, THEREFORE, the parties agree as follows:
Section 1. Defined Terms. Terms not otherwise defined herein shall have
the respective meanings prescribed therefor in the Merger Agreement and the
Indemnification Agreement.
Section 2. Appointment of Escrow Agent. HRPT and the Successor hereby
appoint the Escrow Agent as the escrow agent to hold the Escrowed Shares (as
defined below) in accordance with the terms and conditions of this Escrow
Agreement.
Section 3. Delivery and Receipt of Escrowed Shares. Simultaneously with
the execution of this Escrow Agreement, the Successor shall deliver to the
Escrow Agent certificates representing the Escrowed Shares together with undated
stock powers duly executed in blank. Receipt of the Escrowed Shares and the
related stock powers is hereby acknowledged by the Escrow Agent. Until
distributed and released in accordance with the terms and conditions of this
Escrow Agreement, the Escrow Agent shall hold in trust the Escrowed Shares and
the related stock powers. If the Escrow Agent should receive any cash or other
property in respect of the Escrowed Shares, the Escrow Agent shall invest and
reinvest such cash and the income therefrom in any money market fund,
substantially all of which is invested in direct obligations of the United
States of America or obligations the principal of and the interest on which are
unconditionally guaranteed by the United States of America and shall hold such
other property in trust subject to the terms and conditions hereinafter set
forth.
Section 4. Release of Escrowed Shares. The Escrowed Shares shall secure
the obligations of the Successor pursuant to the Indemnification Agreement and
in accordance with the terms of
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this Escrow Agreement. The Escrow Agent shall release the Escrowed Shares
pursuant to a joint direction in writing of HRPT and the Successor or pursuant
to the decision of an arbitrator pursuant to the arbitration proceedings set
forth in Section 4 of the Indemnification Agreement. For purposes of this
Section, each Escrowed Share shall be valued at the greater of the closing sale
price for an HRPT Common Share as reported on the NYSE for the trading day next
prior to delivery or the Merger Price.
Section 5. Termination of Escrow. The Escrow Agent shall distribute and
release any remaining Escrowed Shares (and, if applicable, any cash or other
property in respect of the Escrowed Shares, and any income therefrom, received
by the Escrow Agent) upon receipt of notice from HRPT and the Successor that no
claim for indemnification made on or before the expiration of the Claim Period
(as defined in the Indemnification Agreement) remains outstanding. Such notice
shall specify the name and address of each party to whom the remaining Escrowed
Shares (and, if applicable, such cash, property and income) shall be delivered.
Promptly after receipt of such notice, the Escrow Agent shall deliver the
certificates representing such Escrowed Shares (and, if applicable, such cash,
property and income) to each party so specified. Upon distribution and release
of such Escrowed Shares (and, if applicable, such cash, property and income),
this Escrow Agreement shall be deemed terminated and the Escrow Agent shall be
released and discharged from all further obligations hereunder.
Section 6. Duties of Escrow Agent. The acceptance by the Escrow Agent
of its duties as such under this Escrow Agreement is subject to the following
terms and conditions, which HRPT and the Successor hereby agree shall govern and
control with respect to the rights, duties, liabilities and immunities of the
Escrow Agent:
(a) The Escrow Agent shall not be liable for acting upon any
written notice, request, waiver, consent, receipt or other instrument or
document which the Escrow Agent in good faith believes to be genuine and what it
purports to be.
(b) It is understood and agreed that the duties of the Escrow
Agent hereunder are purely ministerial in nature and that it shall not be liable
for any error of judgment, fact or law, or any act done or omitted to be done,
except for its own willful misconduct, breach of fiduciary duty, bad faith or
gross negligence or that of its officers, directors, employees and agents. The
Escrow Agent's determination as to whether an event or condition has occurred,
or been met or satisfied, or as to whether a provision of this Escrow Agreement
has been complied with, or as to whether sufficient evidence of the event or
condition or compliance with the provision has been furnished to it, shall not
subject the Escrow Agent to any claim, liability or obligation whatsoever, even
if it shall be found that such determination was improper and incorrect,
provided, only, that the Escrow Agent and its officers, directors, employees and
agents shall not have been guilty of willful misconduct, breach of fiduciary
duty, bad faith or gross negligence in making such determination.
(c) The Escrow Agent may consult with, and obtain advice from,
legal counsel including its own officers, employees and partners in the event of
any dispute or question as to the construction of any of the provisions hereof
or its 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) In the event of any disagreement or lack of agreement
between HRPT and the Successor of which the Escrow Agent has knowledge,
resulting or which might result in adverse claims or demands with respect to the
Escrowed Shares, the Escrow Agent shall be entitled, in its sole discretion, to
refuse to comply with any claims or demands on it with respect thereto until
such matter shall be resolved, and in so refusing, the Escrow Agent may elect to
make no delivery or other disposition of the Escrowed Shares, and in so doing
the Escrow Agent shall not be or become liable in any way to either HRPT or the
Successor for its failure or refusal to comply
-3-
with such claims or demands, and it shall be entitled to continue so to refrain
from acting, and so to refuse to act, until all such claims or demands (i) shall
have been finally determined by a court of competent jurisdiction, or (ii) shall
have been resolved by the agreement of HRPT and the Successor and the Escrow
Agent shall have been notified thereof in writing.
(e) The Escrow Agent may resign at any time upon giving ten
(10) days' notice to HRPT and the Successor and may appoint a successor escrow
agent hereunder so long as such successor shall accept and agree to be bound by
the terms of this Escrow Agreement and shall be acceptable to HRPT and the
Successor. It is understood and agreed that the Escrow Agent's resignation shall
not be effective until a successor escrow agent agrees to be bound by the terms
of this Escrow Agreement.
Section 7. No Representations by Escrow Agent. The Escrow Agent makes
no representation as to the validity, value, genuineness, negotiability or
collectibility of any security or other document or instrument held by or
delivered to or by it.
Section 8. Obligations of Escrow Agent. The Escrow Agent shall be under
no obligation to institute or defend any actions, suits or legal proceedings in
connection herewith or take any other action likely to involve it in expense
unless first indemnified to its reasonable satisfaction.
Section 9. Expenses. The reasonable out-of-pocket expenses (including,
without limitation, reasonable legal fees and disbursements) incurred by the
Escrow Agent in the performance of its duties hereunder shall be reimbursed
one-half by the Successor and one-half by HRPT. Such reimbursement for
out-of-pocket expenses shall be made by cash payment to the Escrow Agent from
time to time upon its written request. The Escrow Agent shall have no right or
lien with respect to the Escrowed Shares for payment of such expenses. Except as
otherwise herein or in the Merger Agreement provided, each party shall pay its
own expenses incident to the negotiation, preparation, performance and
enforcement of this Escrow Agreement (including all fees and expenses of its
counsel, accountants and other consultants, advisors and representatives for all
activities of such persons undertaken pursuant to this Escrow Agreement), except
to the extent, if any, otherwise specifically set forth in this Agreement.
[Section 10. Escrow Agent Status. _____ hereby acknowledges that the
Escrow Agent is counsel to _____ and agrees that it will not seek to disqualify
the Escrow Agent from acting and continuing to act as counsel to _____ in the
event of a dispute hereunder or in the course of the defense or prosecution of
any claim relating to the transactions contemplated hereby or by the Merger
Agreement; provided, however, that in the event of a dispute, the Escrow Agent
shall (a) immediately seek to appoint a successor escrow agent, which shall be
acceptable to HRPT and the Shareholders, having no business relationships with
HRPT or the Shareholders and (b) immediately resign upon acceptance of such
appointment and agreement to be bound by the terms of this Escrow Agreement by
such successor escrow agent.]
Section 11. Assignment; Successors and Assigns. This Escrow Agreement
shall not be assignable by any party without the prior written consent of the
other parties.
Nothing in this Escrow Agreement expressed or implied is intended to or
shall be construed to confer upon or create in any Person (other than the
parties hereto and their permitted successors and assigns) any rights or
remedies under or by reason of this Agreement, including without limitation any
rights to enforce this Escrow Agreement.
Section 12. Specific Performance; Other Rights and Remedies. Each party
recognizes and agrees that the other party's remedy at law for any breach of the
provisions of this Escrow Agreement would be inadequate and agrees that for
breach of such provisions, such party shall, in addition to such other remedies
as may be available to it at law or in equity or as provided in this Escrow
Agreement, be entitled to injunctive relief and to enforce its rights by an
action for specific
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performance to the extent permitted by applicable law. Each party hereby waives
any requirement for security or the posting of any bond or other surety in
connection with any temporary or permanent award of injunctive, mandatory or
other equitable relief. Nothing herein contained shall be construed as
prohibiting either party from pursuing any other remedies available to it for
such breach or threatened breach, including without limitation the recovery of
damages.
Section 13. Entire Agreement. This Escrow Agreement constitutes the
entire agreement between the parties with respect to the subject matter hereof
and supersedes all prior agreements, arrangements, covenants, promises,
conditions, understandings, inducements, representations and negotiations,
expressed or implied, oral or written, between them as to such subject matter.
Section 14. Waivers; Amendments. Anything in this Escrow Agreement to
the contrary notwithstanding, amendments to and modifications of this Escrow
Agreement may be made, required consents and approvals may be granted,
compliance with any term, covenant, agreement, condition or other provision set
forth herein may be omitted or waived, either generally or in a particular
instance and either retroactively or prospectively with, but only with, the
written consent of the party entitled to the benefit thereof.
Section 15. Notices. All notices and other communications which by any
provision of this Escrow Agreement are required or permitted to be given shall
be given in writing and shall be (a) sent by nationally recognized overnight
courier service, (b) sent by telecopy confirmed by sending (by nationally
recognized overnight courier service) written confirmation at substantially the
same time, or (c) personally delivered to the receiving party. All such notices
and communications shall be mailed, sent or delivered as follows:
If to HRPT, at:
Health and Retirement Properties Trust
000 Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx, President
Facsimile: 000-000-0000
with a copy to:
Xxxxxxxx & Worcester LLP
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxxxxx X. Xxxxxxxxxx, Xx.
Facsimile: 617-338-2880
If to the Successor, at:
If to the Escrow Agent, at:
----------------------------------
----------------------------------
Attention:
Facsimile:
or to such other person(s) or facsimile number(s) or address(es) as the party to
receive any such communication or notice may have designated by written notice
to the other party.
-5-
Section 16. Severability. If any provision of this Escrow Agreement
shall be held or deemed to be, or shall in fact be, invalid, inoperative,
illegal or unenforceable as applied to any particular case in any jurisdiction
or jurisdictions, or in all jurisdictions or in all cases, because of the
conflicting of any provision with any constitution or statute or rule of public
policy or for any other reason, such circumstance shall not have the effect of
rendering the provision or provisions in ques tion invalid, inoperative, illegal
or unenforceable in any other jurisdiction or in any other case or circumstance
or of rendering any other provision or provisions herein contained invalid,
inoperative, illegal or unenforceable to the extent that such other provisions
are not themselves actually in conflict with such constitution, statute or rule
of public policy, but this Escrow Agreement shall be reformed and construed in
any such jurisdiction or case as if such invalid, inoperative, illegal or
unenforceable provision had never been contained herein and such provision
reformed so that it would be valid, operative and enforceable to the maximum
extent permitted in such jurisdiction or in such case.
Section 17. Counterparts. This Escrow Agreement may be executed in
several counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument, binding upon all
the parties hereto. In pleading or proving any provision of this Escrow
Agreement, it shall not be necessary to produce more than one of such
counterparts.
Section 18. Section Headings. The headings contained in this Escrow
Agreement are for reference purposes only and shall not in any way affect the
meaning or interpretation of this Escrow Agreement.
Section 19. Governing Law. The validity, interpretation, construction
and performance of this Escrow Agreement shall be governed by, and construed in
accordance with, the applicable laws of the Commonwealth of Massachusetts
applicable to contracts made and performed therein and, in any event, without
giving effect to any choice or conflict of laws provision or rule that would
cause the application of domestic substantive laws of any other jurisdiction.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as a sealed instrument as of the date first above written.
HRPT:
HEALTH AND RETIREMENT PROPERTIES TRUST
By:_______________________
THE SUCCESSOR:
[signature blocks to come]
THE ESCROW AGENT:
---------------------------
as Escrow Agent
By:________________________
