Exhibit 10.6
INDEMNIFICATION AND ESCROW AGREEMENT
THIS INDEMNIFICATION AND ESCROW AGREEMENT (this "Agreement") is
entered into as of the 1st day of June, 2000 by and among FrontLine Capital
Group (formerly known as Reckson Services Industries, Inc.), a Delaware
corporation ("RSI"), CarrAmerica Realty Corporation, a Maryland corporation
("CarrAmerica"), Strategic Omni Investors LLC, a Delaware limited liability
company ("Strategic Omni"), Security Capital Holdings S.A., a Luxembourg
corporation ("SC-USRealty"), The ▇▇▇▇▇▇ ▇▇▇▇ Company, a District of Columbia
corporation ("OCCO"), ▇▇▇▇ Holdings LLC, a Maryland limited liability company
("▇▇▇▇ Holdings"), and the additional persons who are shown on the signature
page hereto (the "Additional Indemnitors") (CarrAmerica, Strategic Omni,
SC-USRealty, OCCO, ▇▇▇▇ Holdings, and each of the Additional Indemnitors,
collectively the "Shareholders" and individually a "Shareholder"; sometimes
collectively referred to herein with RSI as "Depositors" and individually a
"Depositor") and Citibank, N.A., a New York corporation, as escrow agent
hereunder (the "Escrow Agent").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, RSI, CarrAmerica, VANTAS Incorporated, a Nevada corporation
("VANTAS"), and HQ Global Workplaces, Inc., a Delaware corporation ("HQGW"),
have entered into an Agreement and Plan of Merger dated as of January 20,
2000, as amended as of April 29, 2000 and as of May 31, 2000 (the "Merger
Agreement") pursuant to which VANTAS will merge with and into HQGW ("the
Merger");
WHEREAS, on the date hereof, pursuant to an agreement among certain
of the Shareholders and RSI dated as of January 20, 2000 (the "Stock Purchase
Agreement"), certain of the Shareholders are selling to RSI, and RSI is
purchasing from such Shareholders, that number of the shares of voting common
stock, par value $.01 per share, and non-voting common stock, par value $.01
per share, of Holdco as set forth in, and subject to the terms and conditions
of, the Stock Purchase Agreement;
WHEREAS, on the date hereof, pursuant to the Merger Agreement, each
issued and outstanding share of (A) common stock, par value $.01 per share
("VANTAS Common Stock"), of VANTAS shall be converted into the right to
receive $8.00 per share in cash and (B) (i) Series A Convertible Preferred
Stock, par value $.01 per share, of VANTAS (the "Series A Stock"), (ii) Series
B Convertible Preferred Stock, par value $.01 per share, of VANTAS (the
"Series B Stock"), (iii) Series C Convertible Preferred Stock, par value $.01
per share, of VANTAS (the "Series C Stock"), (iv) Series D Convertible
Preferred Stock, par value $.01 per share, of VANTAS (the "Series D Stock"),
and (v) Series E Convertible Preferred Stock, par value $.01 per share of
VANTAS (the "Series E Stock"), other than shares of Series A Stock, Series B
Stock, Series C Stock, Series D Stock and Series E Stock held in the treasury
of VANTAS, are, by virtue of the Merger and without any action on the part of
the holder thereof, being converted into the right to receive shares of voting
common stock of HQGW;
WHEREAS, as a condition to the consummation by VANTAS and/or RSI, as
applicable, of the transactions contemplated by the Merger Agreement, the
Stock Purchase Agreement, and that certain Stock Purchase Agreement by and
among VANTAS, RSI, CarrAmerica, OmniOffices (UK) Limited ("Omni UK") and
OmniOffices (Lux) 1929 Holding Company S.A. ("LuxCo") (the "UK Agreement"),
(i) the Shareholders have hereby agreed to indemnify and hold harmless RSI
from and against certain losses related to the Merger Agreement and the Stock
Purchase Agreement, and (ii) CarrAmerica has hereby agreed to indemnify and
hold harmless RSI from and against certain losses related to the UK Agreement,
upon the terms and conditions provided herein;
WHEREAS, as a condition to the consummation by HQGW and the
applicable Shareholders of the transactions contemplated by the Merger
Agreement, the Stock Purchase Agreement and the UK Agreement, RSI has agreed
to indemnify and hold harmless certain Shareholders from and against certain
losses from certain matters upon the terms and conditions provided herein;
WHEREAS, in connection with the Shareholders' indemnification
obligations, the parties have agreed that the Shareholders are depositing an
aggregate of 706,612 shares of non-voting common stock of Holdco (the
"Non-Voting Common Stock") (collectively, the "Shareholder Indemnification
Shares") and $4,158,492 in cash (the "Shareholder Cash Collateral") with the
Escrow Agent to be held and disbursed by the Escrow Agent in accordance with
this Agreement, with such Shareholder Indemnification Shares and Shareholder
Cash Collateral having an aggregate initial value of $30,000,000 as of the
Closing;
WHEREAS, in connection with RSI's indemnification obligations, the
parties have agreed that RSI is depositing an aggregate of 820,322 shares of
voting common stock of Holdco (the "Voting Common Stock") (the "RSI
Indemnification Shares," and together with the Shareholder Indemnification
Shares, the "Indemnification Shares") with the Escrow Agent to be held and
disbursed by the Escrow Agent in accordance with this Agreement, with the RSI
Indemnification Shares having an aggregate initial value of $30,000,000 as of
the Closing;
WHEREAS, capitalized words and phrases used and not defined herein
shall have the meanings ascribed to them in the Merger Agreement; and
WHEREAS, the Escrow Agent is willing to establish and administer this
escrow on the terms set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises, and other good and
valuable consideration the receipt and sufficiency of which are hereby
acknowledged, the parties hereto do hereby agree as follows:
1. Certain Definitions. As used in this Agreement, certain
capitalized terms not otherwise defined herein shall have the following
respective meanings:
"Cash Collateral" shall mean the Shareholder Cash Collateral and any
cash deposited by RSI or any Shareholder in the Escrow Account in substitution
of RSI Indemnification Shares or Shareholder Indemnification Shares in
accordance with Section 2(b).
"Company Level Loss" shall mean any loss, liability, claim, damage or
expense (including reasonable legal fees and expenses) directly or indirectly
incurred by HQGW or its Subsidiaries and VANTAS or its Subsidiaries
respectively; it being understood that a Company Level Loss shall not include
any consequential, incidental or punitive damages or any Direct Loss.
"Escrow Property" shall mean the Indemnification Shares and the Cash
Collateral delivered to the Escrow Agent, together with all interest,
dividends and other distributions and payments thereon received by Escrow
Agent, less any property and/or funds distributed or paid in accordance with
this Agreement.
"Loss" or "Losses" shall mean a Company Level Loss or a Direct Loss.
"Direct Loss" shall mean any loss, liability, claim, damage or
expense (including reasonable legal fees and expenses) incurred by (i) any
Shareholder Indemnitee arising from, relating to or as a result of the
inaccuracy at the time made or deemed made of any of the representations or
warranties set forth in: (a) Section 5(B) of the Merger Agreement; and (b)
Section 5 of the Stock Purchase Agreement; or (ii) RSI Indemnitees arising
from, relating to, or as a result of the inaccuracy at the time made or deemed
made of any of the representations or warranties set forth in: (a) Section
4(B) of the Merger Agreement; (b) Section 4 of the Stock Purchase Agreement
and (c) Article II, Section (B) of the UK Agreement; it being understood that
a Direct Loss shall not include (x) any consequential, incidental or punitive
damages, (y) any loss or damages suffered by such party as a result of the
diminution in value (either directly or indirectly) of the interest held by
such party in the Holdco, or (z) any Company Level Loss.
"Market Value" shall mean $36.57 per share.
"Ownership Percentage" shall mean, with respect to a Shareholder, the
percentage set forth opposite such Shareholder's name on Schedule A attached
hereto.
"RSI Indemnitees" shall mean RSI and its directors, officers,
employees, shareholders, agents and representatives.
"RSI's Indemnification Share" shall mean one (1) minus the
Shareholder's Indemnification Share.
"Shareholder Indemnitees" shall mean the Shareholder listed on
Schedule C attached hereto and its directors, officers, employees,
shareholders, agents and representatives.
"Shareholder Litigation" shall mean the legal proceedings disclosed
in Schedule 4(p) of the Merger Agreement under the caption "Omni Offices, Inc.
and CarrAmerica Realty Corporation v. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇" and
any and all other claims, counterclaims, causes of actions or other
proceedings threatened or initiated by or on behalf of ▇▇▇▇▇▇ ▇▇▇▇▇▇
("Arcoro") or ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ("Kaidanow") that relate to facts or
circumstances or alleged facts or alleged circumstances arising on or prior to
May 31, 2000 (the "Closing Date"), other than any such claims, causes of
action or other proceedings with respect to and only to the extent of
allegations thereon that any information supplied in writing by RSI to
CarrAmerica for inclusion in materials that HQGW delivers to Arcoro or
Kaidanow in connection with the Merger contains any untrue statement of a
material fact with respect to RSI or VANTAS or omits to state a material fact
necessary in order to make the statements therein with respect to RSI or
VANTAS not misleading.
"Shareholders' Indemnification Share" shall mean the aggregate
percentage ownership interest of the Voting Common Stock and Non-Voting Common
Stock of Holdco owned by the Shareholders immediately after the Closing.
2. Establishment of Escrow Account.
(a) Each Shareholder and RSI are contemporaneously with the execution
and delivery of this Agreement by each of the parties delivering the number of
Indemnification Shares (together with executed stock powers in respect
thereof) and/or the amount of Cash Collateral set forth opposite its name on
Schedule A hereto to the Escrow Agent for deposit into an escrow account (the
"Escrow Account") by the Escrow Agent and the Escrow Agent hereby acknowledges
receipt of the same. All Indemnification Shares and Cash Collateral in the
Escrow Account shall be available for distribution by the Escrow Agent,
subject to the provisions of this Agreement, to reimburse any RSI Indemnitee
or any Shareholder Indemnitee, as the case may be, in respect of any Losses
that are indemnifiable pursuant to this Agreement. Notwithstanding the escrow
of the Indemnification Shares, dividends and other distributions declared and
paid on Indemnification Shares held in escrow shall continue to be paid by
Holdco to the respective Shareholders and RSI, all voting rights with respect
to such shares shall inure to the benefit of and be enjoyed by the respective
Shareholders and RSI, and such Shareholders and RSI shall be the legal and
beneficial owners of such shares for all purposes subject to the terms of this
Agreement; provided, that the parties agree that (i) Holdco shall deposit with
the Escrow Agent any securities issued to the Shareholders or RSI in respect
of any Indemnification Shares held in escrow as a result of a stock split or
combination of shares of Voting Common Stock or Non-Voting Common Stock, as
the case may be, payment of a stock dividend or other stock distribution made
without receipt of consideration therefor in or on the Voting Common Stock or
Non-Voting Common Stock, as the case may be, or change of shares of the Voting
Common Stock or Non-Voting Common Stock, as the case may be, into any other
securities pursuant to or as part of a business combination or otherwise, in
each case together with specific written instructions to the Escrow Agent on
whose behalf the same should be credited, and (ii) such securities shall be
held by the Escrow Agent as, and shall be included within the definition of,
Indemnification Shares, as the case may be; provided, however, notwithstanding
the foregoing proviso, to the extent that any such distribution of securities
is properly taxable as a dividend for federal income tax purposes, Holdco
shall instruct the Escrow Agent to distribute such securities to the
respective Shareholders and RSI. The Escrow Agent agrees that it shall invest
any Cash Collateral in the HQ/VANTAS Indemnification Escrow Agreement account
(F/B/O 795012). The Escrow Agent shall not have any liability for any loss
sustained as a result of any investment made pursuant to the preceding
sentence or as a result of any liquidation of any such investment prior to its
maturity. Any interest earned on any Cash Collateral shall not be used to
increase the amount of the Escrow Account of any party hereto and shall be
paid to the applicable depositor of the Escrow Account from time to time upon
written demand by such depositor, upon specific written instructions to the
Escrow Agent with respect thereto. The Escrow Agent shall have no obligation
to invest or reinvest the Cash Collateral if deposited with the Escrow Agent
after 11:00 a.m. (E.S.T.) on such day of deposit. Instructions received after
11:00 a.m.(E.S.T.) will be treated as if received on the following business
day. The Escrow Agent shall have the power to sell or liquidate the foregoing
investments whenever the Escrow Agent shall be required to release the Escrow
Property pursuant to the terms hereof. Requests (or instructions) received
after 11:00 a.m. (E.S.T.) by the Escrow Agent to liquidate the Escrow Property
will be treated as if received on the following business day. The Escrow Agent
shall have no responsibility for any investment losses resulting from the
investment, reinvestment or liquidation of the Escrow Property. Any interest
or other income received on such investment and reinvestment of the Escrow
Property shall become part of the Escrow Property. If a selection is not made,
the Escrow Property shall remain uninvested with no liability for interest
therein. It is agreed and understood that the Escrow Agent may earn fees
associated with the investments outlined above.
(b) At any time and from time to time after the Closing Date, any or
all of the Indemnification Shares deposited by any Shareholder or RSI in the
Escrow Account on the Closing Date may be withdrawn upon at least five (5)
business days' prior notice by RSI or the Shareholders, as applicable, to the
other (with a copy to the Escrow Agent), but if and only if simultaneously
with such withdrawal the withdrawing party delivers immediately available
funds to the Escrow Agent for deposit into the Escrow Account in an amount
equal to the aggregate Market Value of the number of Indemnification Shares so
withdrawn, which determination shall be set forth in a written notice to the
Escrow Agent signed by RSI or the applicable Shareholder and upon which the
Escrow Agent shall be entitled to conclusively rely.
3. Tax Indemnification.
(a) Tax Indemnification by Shareholders. Subject to the limitations
of indemnification pursuant to Section 5, the Shareholders severally, based on
each such Shareholder's Ownership Percentage, shall indemnify the RSI
Indemnitees against and hold them harmless from (i) any Loss incurred by
reason of any liability of HQGW and its Subsidiaries for Taxes for any
Pre-Closing Tax Period, (ii) any Loss incurred by reason of any liability for
Taxes of the Shareholders or any other person (other than HQGW) which is or
has ever been affiliated with HQGW and its Subsidiaries, and (iii) any Loss
incurred by reason of any liability for reasonable legal, accounting,
appraisal, consulting or similar fees and expenses for any item attributable
to any item in clause (i) or (ii) above.
(b) Tax Indemnification by RSI. Subject to the limitations of
indemnification pursuant to Section 5, RSI shall indemnify the Shareholder
Indemnitees against and hold them harmless from (i) any Loss incurred by
reason of any liability of VANTAS and its Subsidiaries for Taxes for any
Pre-Closing Tax Period, (ii) any Loss incurred by reason of any liability for
Taxes of RSI or any other person (other than VANTAS and its Subsidiaries)
which has ever been affiliated with RSI and its Subsidiaries, and (iii) any
Loss incurred by reason of any liability for reasonable legal, accounting,
appraisal, consulting or similar fees and expenses for any item attributable
to any item in clause (i) or (ii) above.
(c) Straddle Period. For purposes of subparagraphs (a) and (b) above,
in the case of any taxable period that includes (but does not end on) the
Closing Date (a "Straddle Period"):
(i) real, personal and intangible property Taxes ("Property Taxes") of
HQGW and its Subsidiaries and VANTAS and its Subsidiaries, respectively,
for any Pre-Closing Tax Period (other than Taxes imposed in connection
with the Merger or otherwise in connection with this Agreement or the
transactions contemplated hereby) shall be equal to the amount of such
Property Taxes of HQGW and its Subsidiaries and VANTAS and its
Subsidiaries, respectively, for the entire Straddle Period (limited,
however, to those Taxes attributable to the assets of HQGW and its
Subsidiaries and VANTAS and its Subsidiaries, respectively, owned prior
to the Closing Date) multiplied by a fraction, the numerator of which is
the number of days during the Straddle Period that are in the Pre-Closing
Tax Period and the denominator of which is the number of days in the
Straddle Period; and
(ii) the Taxes of HQGW and its Subsidiaries and VANTAS and its
Subsidiaries, respectively (other than Property Taxes and other than
Taxes referred to in Section 6(e) of this Agreement, which Taxes will be
governed by such Section), for the Pre-Closing Tax Period shall be
computed as if such taxable period ended as of the close of business on
the Closing Date. The indemnity obligations of the Shareholders in
respect of Taxes for a Straddle Period shall, subject to the limitations
on indemnification pursuant to Section 5, equal the excess of (x) such
Taxes for the Pre-Closing Tax Period over (y) the sum of (i) the amount
of such Taxes for the Pre-Closing Tax Period paid by the Shareholders or
any of their affiliates (other than HQGW) at any time and (ii) the amount
of such Taxes paid by HQGW and its Subsidiaries on or prior to the
Closing Date (which includes any payments of estimated taxes or similar
amounts made by HQGW and its Subsidiaries on or prior to the Closing Date
and any amounts of Taxes for which a reserve has been reflected on the
Company Balance Sheet, even though the amount reflected for such reserve
has not yet been paid, based on each such Shareholder's Ownership
Percentage, to the applicable taxing authority). The Shareholders
severally, based on each such Shareholder's Ownership Percentage, shall
initially pay such excess to RSI upon the later of (A) five days prior to
the date on which the Tax Return (including any Tax Return with respect
to estimated Taxes) with respect to the liability for such Taxes is
required to be filed (and if no such Tax Return is required to be filed,
five days prior to the date satisfaction of the Tax liability is required
by the relevant taxing authority) or (B) ten days after the receipt from
RSI of notice that such amount is required to be paid pursuant hereto.
The payments to be made pursuant to this paragraph by the Shareholders
with respect to a Straddle Period shall be appropriately adjusted to
reflect any final determination (which shall include the execution of
Form 870-AD or any successor form) with respect to Taxes for the Straddle
Period.
RSI shall cause Holdco to within 10 days of the receipt thereof, pay to
each of the Shareholders an amount equal to such Shareholder's Ownership
Percentage, an amount equal to 100% of any refund of any Taxes of HQGW
with respect to any Pre-Closing Tax Period received by HQGW, any of its
Subsidiaries or Holdco at any time after the Closing Date (including for
this purpose any credit against Taxes owed for any taxable period ending
after the Closing Date, if such credit is attributable to a taxable
period ending on or prior to the Closing Date, any refund of estimated
tax payments made on or prior to the Closing Date or any application of
such payments to either a taxable period commencing after the Closing
Date or a portion of a Straddle Period that is subsequent to the Closing
Date, and any interest received by HQGW, any of its Subsidiaries or
Holdco with respect to any of the foregoing from the applicable taxing
authority) unless (and only to the extent) that the amount of such refund
for Taxes was reflected as an asset on the Company Balance Sheet.
(d) RSI shall indemnify each of the Shareholder Indemnitees for any
Extra Tax Costs incurred by such Shareholder Indemnitees in connection with
the HQ Merger, the Second Step Merger, and/or the sale of shares by such
Shareholder Indemnitee pursuant to the Stock Purchase Agreement. For purposes
of this Section 3(d), "Extra -Tax Costs" shall be defined as (i) all interest,
penalties, and similar charges actually payable by a Shareholder Indemnitee to
any applicable taxing authority with respect to Extra Taxes attributable to
the period ending on the earlier of January 1, 2003 or the date all of such
Shareholder Indemnitee's shares of stock in HQGW not sold pursuant to the
Stock Purchase Agreement actually are sold (in either case, the "Deemed Sale
Date"), plus (ii) in the event that such interest, penalties, and similar
charges have not been paid on or prior to the Deemed Sale Date, all interest,
penalties and similar charges accruing with respect to such interest,
penalties and similar charges until the earlier of the actual date on which
the interest, penalties, and similar charges described in clause (i) are paid
or thirty (30) days following a "final determination" within the meaning of
Section 1313 of the Code that the Shareholder Indemnitee is required to pay
Extra Taxes, plus (iii) if and to the extent that a Shareholder Indemnitee is
required to pay any Extra Taxes prior to the applicable Deemed Sale Date,
interest on such Extra Taxes from the date the Shareholder Indemnitee makes
such payment of Extra Taxes to and including the applicable Deemed Sale Date,
computed at a rate equal to the rate applicable under Section 6621 of the Code
with respect to underpayments of federal income tax, plus (iv) an amount equal
to all federal, state and local income taxes (net of the federal income tax
benefit, if any, resulting to the Shareholder Indemnitee from any deduction
allowed to such Shareholder Indemnitee for any such state and local income
taxes) required to be paid by such Shareholder Indemnitee with respect to the
payment received pursuant to this Section 3(d). For purposes of this Section
3(d), "Extra Taxes" shall be defined as the excess of (i) the amount of all
Taxes (other than stock transfer Taxes) payable (determined as described
below) by a Shareholder Indemnitee by reason of the Second Step Merger and/or
the sale of shares of stock by the Shareholder Indemnitee pursuant to the
Stock Purchase Agreement over (ii) the amount of Taxes (other than stock
transfer Taxes) that would have been payable by such Shareholder Indemnitee by
such reason if (a) the exchange into Holdco Preferred Stock described on the
Financing Exhibits were not to have taken place and (b) the surviving
corporation in the Second Step Merger were the HQ Surviving Corporation rather
than M Sub. The amount of Extra Taxes and the Extra Tax Costs for purposes of
this Section 3(d) shall be determined and certified to by an independent
accountant selected by the applicable Shareholder Indemnitee, as may be
reasonably acceptable to RSI. Extra Taxes and Extra Tax Costs shall be
considered payable for the purposes hereof on the earlier of (i) the date on
which the Shareholder Indemnitee notifies RSI in writing of any assertion by
the Internal Revenue Service, formal or informal, of a position to the effect
that such amounts might be required to be paid, or (ii) the date on which the
Shareholder Indemnitee delivers to RSI a copy of an opinion of the tax advisor
to such Indemnitee providing that it is more likely than not that the
Shareholder Indemnitee is liable for such Extra Taxes and Extra Tax Costs (in
either case, a "Potential Adverse Determination Date"), unless in either event
RSI notifies such Shareholder Indemnitee in writing within ten days of the
Potential Adverse Determination Date that, pursuant to the provisions of this
section, it will indemnify the Shareholder Indemnitee for (a) all interest,
penalties, and similar charges accruing with respect to such Extra Taxes and
Extra Tax Costs from the Potential Adverse Determination Date until the
earlier of thirty (30) days following a "final determination" within the
meaning of Section 1313 of the Code that the Shareholder is required to pay
Extra Taxes and/or Extra Tax Costs or ten (10) days following written notice
from RSI to such Shareholder Indemnitee to pay all such Extra Taxes and Extra
Tax Costs as to which a Potential Adverse Determination Date has occurred (in
either case, the "Delayed Payment Date"), and (b) all legal and accounting
costs and expenses incurred in connection with any challenge or assertion by
the Internal Revenue Service (it being understood that the Shareholder
Indemnitee shall not in any event have any duty to contest any such challenge
except, and only to the extent that, RSI bears any and all costs associated
therewith), in which event Extra Taxes and Extra Tax Costs shall be considered
payable for purposes hereof on the Delayed Payment Date. The obligations of
RSI pursuant to this Section 3(d) are in addition to, and not in lieu of, the
obligations of HQ Surviving Corporation and HQGW under Section 7(j) of the
Merger Agreement. The provisions of Section 5(a), 5(b), 5(c) and 5(d) shall
not apply with respect to this Section 3(d).
4. Other Indemnification.
(a) Other Indemnification by the Shareholders. (W) The Shareholders
severally, based on each such Shareholder's respective Ownership Percentage,
shall indemnify the RSI Indemnitees against and hold them harmless from any
Company Level Loss (other than any relating to Taxes, for which
indemnification provisions are set forth in Section 3(a), and any relating to
the Shareholder Litigation, for which indemnification provisions are set forth
in Section 4)(a)(X)) arising from, relating to or otherwise in respect of any
inaccuracy of any representation or warranty of HQGW contained in the Merger
Agreement (other than the representations set forth in Sections 4(A)(b) and
4(A)(ee) of the Merger Agreement, for which indemnification provisions are set
forth in Section 4(a)(X) below) or in any certificate delivered pursuant
thereto or in connection therewith at the time made or deemed made (regardless
of whether or not VANTAS or RSI was aware of such failure on or prior to the
Effective Time).
(X) All Shareholders severally, based on each such Shareholder's
respective Ownership Percentage, shall indemnify the RSI Indemnitees against
and hold them harmless from RSI's Indemnification Share of any Company Level
Loss and from any claims, causes of action or other proceedings under which
any RSI Indemnitee may be subject to liability arising from, relating to, or
otherwise in respect of any inaccuracy of the representations set forth in
Section 4(A)(b) and 4(A)(ee) of the Merger Agreement. CarrAmerica shall
indemnify the RSI Indemnitees against and hold them harmless from RSI's
Indemnification Share of any Company Level Loss and from any claims, causes of
action or other proceedings under which any RSI Indemnitee may be subject to
liability arising from, relating to, or otherwise in respect of the
Shareholder Litigation.
(Y) Each Shareholder severally with respect to any Direct Loss
attributable to itself only shall indemnify the RSI Indemnitees against and
hold them harmless from any such Direct Loss directly or indirectly suffered
or incurred by any such RSI Indemnitee.
(Z) CarrAmerica shall indemnify the RSI Indemnitees against and hold
them harmless from any Company Level Loss directly or indirectly suffered or
incurred by any such RSI Indemnitee arising from, relating to or otherwise in
respect of any inaccuracy of the representations and warranties of HQ UK and
HQ LuxCo contained in the UK Agreement or in any certificate delivered
pursuant thereto or in connection therewith at the time made or deemed made
(regardless of whether or not VANTAS or RSI was aware of such failure on or
prior to the Closing Date).
(b) Other Indemnification by RSI. (Y) RSI shall indemnify the
Shareholder Indemnitees against and hold them harmless from any Company Level
Loss or Direct Loss (other than any relating to Taxes, for which
indemnification provisions are set forth in Section 3(a)) directly or
indirectly suffered or incurred by them arising from, relating to or otherwise
in respect of any inaccuracy of any representation or warranty of RSI or
VANTAS contained in the Merger Agreement (other than the representations set
forth in Section 5(A)(b) of the Merger Agreement, for which indemnification
provisions are set forth in Section 5(b)(Z) below), the UK Agreement or the
Stock Purchase Agreement or in any certificate delivered pursuant to either of
the foregoing or in connection therewith at the time made or deemed made
(regardless of whether or not any Shareholders were aware of such failure on
or prior to the Effective Time).
(Z) RSI shall indemnify the Shareholder Indemnitees against and hold
them harmless from the Shareholders' Indemnification Share of any Company
Level Loss and from any claims, causes of actions or other proceedings under
which any Shareholder Indemnitee may be subject to liability (i) arising from,
relating to, or otherwise in respect of the matter disclosed in clause (ii) of
Schedules 5(r) or 5(u) to the Merger Agreement or any inaccuracy of the
representations set forth in Section 5(A)(b) of the Merger Agreement or (ii)
threatened or initiated by or on behalf of any holder of VANTAS Common Stock
or Preferred Stock that relate to the execution and delivery of the Merger
Agreement or to any of the transactions contemplated therein, or (iii) arising
from, relating to, or otherwise in respect of the offer or sale of equity
securities of HQGW or Holdco to any third party in connection with the
transactions contemplated by the Merger Agreement, the Stock Purchase
Agreement or the UK Agreement; provided that, RSI shall not be required to
make any payment under this clause (Z) to the extent of any amounts that the
Shareholders are required to pay under Section 4(a) hereof with respect to the
same facts and circumstances that give rise to a claim under this clause (Z).
(ZZ) Except with respect to any matter referred to in clause (ZZZ)
below, in the event Holdco is required to pay any amounts under (i) Section
11(a) of that certain Exchange Agreement dated as of May 31, 2000 by and
between Holdco and RSI (the "Exchange Agreement") or otherwise as a result of
a breach of the representations and warranties of Holdco contained in Section
2 of the Exchange Agreement, (ii) Section 11(a) of any of those certain
Purchase Agreements, each dated as of May 31, 2000, by and between, in each
case, RSI, on the one hand, and the Investor specified in each such Agreement,
on the other hand, or otherwise as a result of a breach of representations and
warranties of RSI contained in Section 2 of the Purchase Agreements, or (iii)
Section 11(a) of the Purchase Agreement dated as of May 31, 2000 by and among
Holdco, RSI and Equity Office Properties Trust or otherwise as a result of a
breach of the representations and warranties of Holdco contained in Sections 2
and 3 of such Purchase Agreement (all of the foregoing obligations being
hereinafter referred to as "Holdco Indemnification Obligations"), RSI shall
indemnify the Shareholder Indemnitees and hold them harmless in an amount
equal to the product of any amounts paid by Holdco under the Holdco
Indemnification Obligations and the Shareholders' Indemnification Share;
provided that, RSI shall not be required to make any payment under this clause
(Z) to the extent of any amounts that the Shareholders are required to pay
under Section 4(a) hereof with respect to the same facts and circumstances
that give rise to a claim under this clause (ZZ).
(ZZZ) In the event Holdco pays any Holdco Indemnification Obligations
under Section 12(a) of any Purchase Agreement arising from, relating to or
otherwise in respect of any act or failure to act of RSI or any breach of any
of RSI's representations under Section 3 of any such Purchase Agreement, then
in lieu of the indemnification provisions of clause (ZZ) above, RSI shall
indemnify and hold Holdco harmless from the entire amount of such payment.
5. Limitations on Indemnification. Any claim brought under Section 3
or 4 is subject in each case to the following limitations and restrictions:
(a) Damages Net of Insurance, etc. The amount of any Company Level
Loss for which indemnification is provided under this Agreement shall be net
of any amounts actually recovered by the Second Step Surviving Corporation
under insurance policies with respect to such Company Level Loss (which the
Second Step Surviving Corporation shall use commercially reasonable efforts to
recover under such policies) and the amount of any Loss shall be (i) increased
to take account of any net Tax cost incurred by the indemnified party arising
from the receipt of indemnity payments hereunder (grossed up for such
increase), and (ii) reduced to take account of any net Tax benefit realized by
the Second Step Surviving Corporation arising from the incurrence or payment
of any such Loss. In computing the amount of any such Tax cost or Tax benefit,
the indemnified party or the Second Step Surviving Corporation, as the case
may be, shall be deemed to recognize all other items of income, gain, loss,
deduction or credit before recognizing any item arising from the receipt of
any indemnity payment hereunder or the incurrence or payment of any
indemnified Loss. Any indemnity payment under this Agreement shall be treated
as an adjustment to the Merger Consideration for tax purposes, unless a final
determination (which shall include the execution of a Form 870-AD or successor
form) with respect to the indemnified party causes any such payment not to be
treated as an adjustment to the Merger Consideration for United States Federal
income tax purposes.
(b) Minimum Claim Amounts.
(i) Claims made by the RSI Indemnitees with respect to Losses for which
indemnification is provided pursuant to Section 3(a), 3(c), 4(a)(W) or
4(a)(Z) shall be required to be paid if and only if the aggregate amount
of all such Losses, but for this Section 5(b)(i), exceed on a cumulative
basis $6,219,000 (the "Holder Basket"), in which event the entire amount
of such Losses shall be recoverable; it being understood that claims with
respect to Losses or damages arising from claims, causes of action or
other proceedings for which indemnification is provided pursuant to
Section 4(a)(X) or 4(a)(Y) shall not be subject to the foregoing
limitation.
(ii) Claims made by the Shareholder Indemnitees with respect to Losses
for which indemnification is provided pursuant to Section 3(b), 3(c) or
4(b)(Y) (with respect to claims for Company Level Losses) shall be
required to be paid if and only if the aggregate amount of all such
Losses, but for this Section 5(b)(ii), exceed on a cumulative basis
$25,510,000 (the "RSI Basket"), in which event the entire amount of such
Losses shall be recoverable; it being understood that claims with respect
to Direct Losses for which indemnification is provided pursuant to
Section 4(b)(Y) or Losses, claims, causes of action or other proceedings
pursuant to Section 4(b)(Z), 4(b)(ZZ) or 4(b)(ZZZ)) shall not be subject
to the foregoing limitation.
(iii) In determining whether the Shareholder Indemnitees or RSI
Indemnitees, as the case may be, is or are entitled to indemnification
under Section 4 (other than under Section 4(b)(ZZ) or 4(b)(ZZZ)), the
representations and warranties of the Shareholders and HQGW, or RSI and
VANTAS, as applicable, shall not be deemed qualified by any references to
material or materiality contained therein and any inaccuracies therein
shall be determined without regard to whether such inaccuracy constitutes
a Company Material Adverse Effect or a VANTAS Material Adverse Effect;
provided, however, in no event will any Shareholder Indemnitees or RSI
Indemnitees, as the case may be, be entitled (A) to recovery for any Loss
relating to or arising out of an inaccuracy of any representation or
warranty of VANTAS, RSI, HQGW or any Shareholder, as the case may be,
even if such Shareholder Indemnitee or RSI Indemnitee, as applicable,
would be entitled to indemnification pursuant to Section 5(b)(i) or
5(b)(ii), but for this Section 5(b)(iii), unless the Loss related thereto
exceeds $50,000, (B) to aggregate items referred to in clause (A) of this
Section 5(b)(iii) for the purpose of exceeding the limitation set forth
in clause (A) of this Section 5(b)(iii), or (C) to otherwise submit the
items referred to in clause (A) of this Section 5(b)(iii) as Losses
reimbursable pursuant to this Section 5.
(c) Percentage Recovery.
(i) If cumulative Company Level Losses under Sections 3(a), 3(c), 4(a)(W)
and 4(a)(Z) exceed the Holder Basket, the indemnification amount to be
paid to the applicable RSI Indemnitees shall be equal to RSI's
Indemnification Share of the entire amount of Company Level Losses. In
all events (other than as expressly limited to RSI's Indemnification
Share in Section 4(a)(X)), 100% of the entire amount of Losses under
Sections (4)(a)(X) and 4(a)(Y) shall be paid to the applicable RSI
Indemnitees.
(ii) If cumulative Company Level Losses under Sections 3(b), 3(c) and
4(b)(Y) exceed the RSI Basket, the indemnification amount to be paid to
the applicable Shareholder Indemnitees shall be equal to the
Shareholders' Indemnification Share of the entire amount of Company Level
Losses. The indemnification amount to be paid in respect of Company Level
Losses under Section 4(b)(Z) is limited to the Shareholders'
Indemnification Share thereof and the indemnification amount to be paid
under Section 4(b)(ZZ) or 4(b)(ZZZ) shall not be limited in any respect.
In all events, 100% of the entire amount of Losses that constitute Direct
Losses of any Shareholder Indemnitee shall be paid to the applicable
Shareholder Indemnitees.
(d) Other Limitations on Recovery.
(i) Except as otherwise provided in the immediately following sentence,
claims made by any RSI Indemnitee against any Shareholder pursuant to
this Agreement shall be made solely against the Shareholder
Indemnification Shares or Cash Collateral deposited into the Escrow
Account by such Shareholder. Claims made by any RSI Indemnitee against
any Shareholder with respect to Direct Losses and under Section 4(a)(X)
shall be made first against the Shareholder Indemnification Shares or
Cash Collateral deposited into the Escrow Account by such Shareholder in
accordance with Section 7, but only after any and all amounts in respect
of Valid Claims with respect to the Company Level Losses shall have first
been disbursed in accordance with Section 7; provided, that if the amount
available in the Escrow Account attributable to such Shareholder (valuing
any Indemnification Shares in accordance with Section 7) is less than the
full amount of the claim, or if the Escrow Account has been terminated, a
claim may be made directly against such Shareholder, which shall be
personally liable for the remaining amount of the claim. Except as set
forth in the preceding sentence, no Shareholder shall have any personal
liability to any RSI Indemnitee in any respect pursuant to this Agreement
or otherwise.
(ii) Except as otherwise provided in the immediately following sentence,
claims made by any Shareholder Indemnitee against RSI pursuant to this
Agreement shall be made solely against the RSI Indemnification Shares or
Cash Collateral deposited into the Escrow Account by RSI. Claims made by
any Shareholder Indemnitee against RSI with respect to Direct Losses and
under Section 4(b)(ZZ) and 4(b)(ZZZ) shall be made first against the RSI
Indemnification Shares or cash collateral deposited into the Escrow
Account by RSI in accordance with Section 7, but only after any and all
amounts in respect of Valid Claims with respect to Company Level Losses
shall have first been disbursed in accordance with Section 7; provided
that if the amount available in the Escrow Account attributable to RSI
(valuing any Indemnification Shares in accordance with Section 7) is less
than the full amount of the claim, or if the Escrow Account has been
terminated, a claim may be made directly against RSI, which shall be
personally liable for the remaining amount of the claim. Except as set
forth in the immediately preceding sentence, RSI shall not have any
personal liability to any Shareholder Indemnitee in any respect pursuant
to this Agreement or otherwise.
(e) Termination of Indemnities. Notwithstanding anything in this
Agreement to the contrary, the obligations of the Shareholders and RSI to
provide indemnification under this Agreement shall terminate and be
extinguished forever at the close of business on June 30, 2001, except for (i)
claims under Section 3 hereof and claims under Section 4 hereof that relate to
the representations concerning authorization and benefit plan matters set
forth in Sections 4(b), 4(r), 5(b) and 5(k) of the Merger Agreement, Section
4(b)(ZZ) and 4(b)(ZZZ) hereof, and Sections 2.2 and 2.16 of the UK Agreement
and the representations set forth in the Stock Purchase Agreement, which
claims may be made until the expiration of the applicable statute of
limitations; provided, however, that the obligations of the Shareholders
and/or RSI to provide indemnification under this Agreement shall not terminate
at such time with respect to any claim that has been properly asserted by
delivering a notice of such claim to the indemnifying party in accordance with
the terms hereof and such claim has not been paid or otherwise resolved as of
the date on which such indemnity obligation would otherwise terminate pursuant
to this Section 5(e). If a claim has been properly asserted and not paid or
resolved as described above, the indemnity obligations of the Shareholders or
RSI, as applicable, shall continue beyond June 30, 2001, but (i) the indemnity
obligation shall continue only with respect to the claim in question, and only
until such claim is paid or otherwise finally resolved, and (ii) any amounts
in the Escrow Account not reasonably determined by the indemnified party to be
needed to cover the disputed claim shall be released from the Escrow Account
to the Shareholders or RSI, as applicable, upon written instructions to the
Escrow Agent in connection therewith by the indemnified party upon which the
Escrow Agent shall be entitled to conclusively rely.
6. Other Tax Matters.
(a) For any taxable period of HQGW that includes (but does not end
on) the Closing Date, RSI shall, or shall cause the Second Step Surviving
Corporation to, timely prepare and file with the appropriate taxing
authorities all Tax Returns required to be filed; provided, however, that no
such Tax Return shall be filed without the written consent of the
Representative, which consent shall not be unreasonably withheld. The
Shareholders shall reimburse RSI (in accordance with the procedures set forth
in Sections 3(a) and 3(c)) for any amount owed by the Shareholders to RSI
pursuant to such Sections (subject to the limitation set forth in Section 5)
with respect to the taxable periods covered by such Tax Returns. For any
taxable period of HQGW that ends on or before the Closing Date, HQGW shall
timely prepare and file with the appropriate taxing authorities all Tax
Returns required to be filed and shall pay all Taxes due with respect to such
Tax Returns; provided, however, that no such Tax Return shall be filed without
the prior written consent of RSI and the Representative, which consent shall
not be unreasonably withheld. RSI and the Shareholders agree to cause HQGW to
file all Tax Returns for the taxable period including the Closing Date on the
basis that the relevant taxable period ended as of the close of business on
the Closing Date, unless the relevant taxing authority will not accept a Tax
Return filed on that basis.
(b) RSI shall cause HQGW to, and the Shareholders, RSI and the Second
Step Surviving Corporation shall, reasonably cooperate, and cause their
respective Affiliates, officers, employees, agents, auditors and other
representatives reasonably to cooperate, in preparing and filing all Tax
Returns and in resolving all disputes and audits with respect to all taxable
periods relating to Taxes, including by maintaining and making available to
each other all records necessary in connection with Taxes, provided, however,
in no event shall RSI be required to provide any Tax Return to the
Shareholders and the Shareholders shall not be required to provide to RSI any
Tax Return not actually in their possession. RSI recognizes that the
Shareholders will need access, from time to time, after the Closing Date, to
certain accounting and Tax records and information held by the Second Step
Surviving Corporation to the extent such records and information pertain to
events occurring prior to the Closing Date acting as representative for the
Shareholders; therefore, RSI agrees after the Closing to cause the Second Step
Surviving Corporation to allow the Representative, and its agents and other
representatives, at times and dates mutually acceptable to the parties,
reasonable access to such records from time to time, during normal business
hours and at the Shareholders' expense.
(c) An amount equal to 100% of the amount or economic benefit of any
refunds, credits or offsets of Taxes of HQGW for any Pre-Closing Tax Period
(including that portion of a Straddle Period ending on the Closing Date) shall
be for the account of the Shareholders. Notwithstanding the foregoing, (i) any
such refunds, credits or offsets of Taxes shall be for the account of the
Second Step Surviving Corporation and RSI to the extent such refunds, credits
or offsets of Taxes are attributable (determined on a marginal basis) to the
carryback from a taxable period beginning after the Closing Date (or the
portion of a Straddle Period that begins on the day after the Closing Date) of
items of loss, deduction or credit, or other tax items, of the Second Step
Surviving Corporation (or any of its Affiliates, including RSI) and (ii) to
the extent RSI or the Second Step Surviving Corporation, depending on which
entity made such payment, pays after the Closing Date any amount with respect
to Taxes for any such Pre-Closing Tax Period, refunds of such Taxes
(determined on a first-in, first-out basis) shall be for the account of RSI or
the Second Step Surviving Corporation, depending on which entity made such
payment. The amount or economic benefit of any refunds, credits or offsets of
Taxes of HQGW or the Second Step Surviving Corporation for any taxable period
beginning after the Closing Date shall be for the account of the Second Step
Surviving Corporation and RSI. The amount or economic benefit of any refunds,
credits or offsets of Taxes of HQGW or the Second Step Surviving Corporation
for any Straddle Period shall be equitably apportioned between the
Shareholders, on the one hand, and RSI and the Second Step Surviving
Corporation, on the other hand. Each party shall forward, and shall cause its
Affiliates to forward, to the party entitled pursuant to this Section 6(c) to
receive the amount or economic benefit of a refund, credit or offset to Tax
the amount of such refund, or the economic benefit of such credit or offset to
Tax, within 30 days after such refund is received or after such credit or
offset is allowed or applied against other Tax liability, as the case may be;
provided, however, that any such amounts payable pursuant to this Section 6(c)
shall be net of any Tax cost or Tax benefit to the party making payment
pursuant to this Section 6(c) and its Affiliates attributable to the receipt
of such refund, credit or offset to Tax and/or the payment of such amounts
pursuant to this Section 6(c). RSI and the Shareholders shall treat any
amounts payable pursuant to this Section 6(c) as an adjustment to the Merger
Consideration unless a final determination (which shall include the execution
of a Form 870-AD or successor form) causes any such payment not to be treated
as an adjustment to the Merger Consideration for United States Federal income
Tax purposes.
(d) The Shareholders shall supply any necessary information to enable
the Second Step Surviving Corporation to file any amended consolidated,
combined or unitary Tax Returns for taxable years ending on or prior to the
Closing Date which are required as a result of examination adjustments made by
the IRS or by the applicable state, municipal, provincial, local or foreign
taxing authorities for such taxable years as finally determined; provided,
however, that no such Tax Return shall be filed without the prior written
consent of the Representative and RSI, which consent shall not be unreasonably
withheld.
For those jurisdictions in which separate Tax Returns are filed by
HQGW, any required amended returns resulting from such examination
adjustments, as finally determined, shall be prepared by the Second Step
Surviving Corporation or RSI and furnished to the Representative, for approval
at least 30 days prior to the due date for filing such Tax Returns.
(e) All transfer, documentary, sales, use, registration and other
such Taxes (including all applicable real estate transfer or gains Taxes and
stock transfer Taxes) and related fees (including any penalties, interest and
additions to Tax) incurred in connection with the Merger or otherwise in
connection with this Agreement and the transactions contemplated hereby that
are attributable to the assets of HQGW and its Subsidiaries shall be paid by
the Shareholders and that are attributable to the assets of VANTAS and its
Subsidiaries shall be paid by RSI. The Representative and RSI shall cooperate
in timely preparing and filing all Tax Returns as may be required to comply
with the provisions of such Tax laws.
7. Indemnification Procedures.
(a) Notice of a Claim. In order for a party to be entitled to
indemnification pursuant to this Agreement, the indemnified party shall notify
the indemnifying party in writing of any claim that it reasonably believes is
likely to result in a Loss within ten (10) days of the date such party
receives written notice or otherwise becomes aware of the claim, describing in
reasonable detail the claim (including whether such claim is for Direct Losses
or Company Level Losses) and the estimated amount of the claim; provided,
however, that the failure of an indemnified party so to notify the
indemnifying party of the claim shall not relieve the indemnifying party of
its obligations under this Agreement except to the extent the indemnifying
party shall have been actually prejudiced as a result of such failure (except
that the indemnifying party shall not be liable for any expenses incurred
during the period in which the indemnified party failed to give notice). The
indemnified party shall deliver to the indemnifying party copies of all
notices and documents (including court papers) received by the indemnified
party relating the claim along with the notice referred to above. If the
indemnifying party does not object in writing to the availability of the
indemnity under this Agreement within twenty (20) days after receiving such
notice, then the claim set forth in the notice by such party shall be
considered a valid claim under this Agreement (a "Valid Claim"), and such
Valid Claim (to the extent payable after giving effect to the limitations set
forth in Section 5(b)) shall be paid in accordance with Section 7 hereof. If
any indemnifying party objects in writing as to the availability of the
indemnity with respect to such claim within such twenty (20) day period, then
the indemnifying party and the indemnified party shall proceed in good faith
to negotiate a resolution of such dispute and, if not resolved through
negotiations, such dispute shall be resolved by litigation in an appropriate
court of competent jurisdiction.
(b) Defense of Third Party Claims. If any Valid Claim arises out of
or involves a claim or demand made by any person against the Second Step
Surviving Corporation or the indemnified party (a "Third Party Claim"), then
the indemnifying party shall be entitled to participate in the defense thereof
and, if it so chooses and acknowledges its obligation to indemnify the
indemnified party therefor, to assume the defense thereof with counsel
selected by the indemnifying party; provided, that such counsel is not
reasonably objected to by the indemnified party; and provided further, that if
either (i) any indemnified party reasonably concludes that there may be one or
more legal defenses available to it that are different from or in addition to
(and are inconsistent with) those available to the indemnifying party, or that
a conflict or potential conflict exists between any indemnified party, on the
one hand, and any indemnifying party, on the other hand (a "Conflicting
Matter"), or (ii) the Third Party Claim seeks an order, injunction or other
equitable relief or relief for other than money damages which the indemnified
party reasonably concludes cannot be separated from any related claim for
money damages (a "Specific Performance Matter"), the indemnifying party will
not have the right to direct the defense of such action on behalf of such
indemnified party with respect to such Conflicting Matter or Specific
Performance Matter, and the indemnified party shall direct the defense of the
portion of such claim that constitutes a Conflicting Matter or Specific
Performance Matter through counsel (including a local counsel, if necessary)
of its choosing, at the expense of the indemnified party. Should the
indemnifying party so elect to assume the defense of a Third Party Claim, the
indemnifying party shall not be liable to the indemnified party for legal
expenses subsequently incurred by the indemnified party in connection with the
defense thereof. If the indemnifying party assumes such defense, the
indemnified party shall have the right to participate in the defense thereof
and to employ counsel, at its own expense, separate from the counsel employed
by the indemnifying party, it being understood that the indemnifying party
shall control such defense. Notwithstanding the foregoing, the indemnifying
party shall be liable for the fees and expenses of counsel employed by the
indemnified party for any period during which the indemnifying party has
failed to assume the defense thereof (other than during the period prior to
the time the indemnified party shall have given notice of the Third Party
Claim as provided above).
If the indemnifying party so elects to assume the defense of any
Third Party Claim, the indemnified party shall cooperate with the indemnifying
party in the defense or prosecution thereof. Such cooperation shall include
the retention and (upon the indemnifying party's request) the provision to the
indemnifying party of records and information which are reasonably relevant to
such Third Party Claim, and making employees available on a mutually
convenient basis to provide additional information and explanation of any
material provided hereunder. Whether or not the indemnifying party shall have
assumed the defense of a Third Party Claim, the indemnified party shall not
admit any liability with respect to, or settle, compromise or discharge, such
Third Party Claim without the indemnifying party's prior written consent
(which consent shall not be unreasonably withheld). If the indemnifying party
shall have assumed the defense of a Third Party Claim, the indemnified party
shall agree to any settlement, compromise or discharge of a Third Party Claim
which the indemnifying party may recommend and which by its terms obligates
the indemnifying party to pay the full amount of the liability in connection
with such Third Party Claim, which releases the indemnifying party completely
in connection with such Third Party Claim and which would not otherwise
adversely affect the Indemnified Party.
(c) Procedures Unique to Tax Claims. With respect to any claim made
by any taxing authority (a "Tax Claim") covered by Section 3(a) hereof, the
Representative shall control all proceedings and may make all decisions taken
in connection with such Tax Claim (including selection of counsel) and,
without limiting the foregoing, may in its sole discretion pursue or forego
any and all administrative appeals, proceedings, hearings and conferences with
any taxing authority with respect thereto, and may, in its sole discretion,
either pay the Tax claimed and ▇▇▇ for a refund where applicable law permits
such refund suits or contest the Tax Claim in any permissible manner;
provided, however, that the Representative must first consult in good faith
with RSI before taking any action with respect to the conduct of a Tax Claim.
Notwithstanding the foregoing, (i) the Representative shall not settle any Tax
Claim without the prior written consent of RSI, which consent shall not be
unreasonably withheld, (ii) RSI, and counsel of its own choosing, shall have
the right to participate fully in all aspects of the defense of such Tax
Claim, (iii) the Representative shall inform RSI, reasonably promptly in
advance, of the date, time and place of all administrative and judicial
meetings, conferences, hearings and other proceedings relating to such Tax
Claim, (iv) RSI shall be entitled to have its representatives (including
counsel, accountants and consultants) attend and participate in any such
administrative and judicial meetings, conferences, hearings and other
proceedings relating to such Tax Claim and (v) the Representative shall
provide to RSI all information, document requests and responses, proposed
notices of deficiency, notices of deficiency, revenue agent's reports,
protests, petitions and any other documents relating to such Tax Claim
promptly upon receipt from, or in advance of submission to (as the case may
be), the relevant taxing authority.
With respect to any Tax Claim covered by Section 3(b) hereof, RSI
shall control all proceedings and may make all decisions taken in connection
with such Tax Claim (including selection of counsel) and, without limiting the
foregoing, may in its sole discretion pursue or forego any and all
administrative appeals, proceedings, hearings and conferences with any taxing
authority with respect thereto, and may, in its sole discretion, either pay
the Tax claimed and ▇▇▇ for a refund where applicable law permits such refund
suits or contest the Tax Claim in any permissible manner; provided, however,
that RSI must first consult in good faith with the Representative before
taking any action with respect to the conduct of a Tax Claim. Notwithstanding
the foregoing, (i) RSI shall not settle any Tax Claim without the prior
written consent of the Representative, which consent shall not be unreasonably
withheld, (ii) the Representative, and counsel of its own choosing, shall have
the right to participate fully in all aspects of the defense of such Tax
Claim, (iii) RSI shall inform the Representative, reasonably promptly in
advance, of the date, time and place of all administrative and judicial
meetings, conferences, hearings and other proceedings relating to such Tax
Claim, (iv) the Representative shall be entitled to have its representatives
(including counsel, accountants and consultants) attend and participate in any
such administrative and judicial meetings, conferences, hearings and other
proceedings relating to such Tax Claim and (v) RSI shall provide to the
Representative all information, document requests and responses, proposed
notices of deficiency, notices of deficiency, revenue agent's reports,
protests, petitions and any other documents relating to such Tax Claim
promptly upon receipt from, or in advance of submission to (as the case may
be), the relevant taxing authority.
The Representative and RSI shall jointly control and participate in
all proceedings taken in connection with any Tax Claim relating to Taxes of
HQGW and its Subsidiaries for a Straddle Period. Neither the Representative
nor RSI shall settle any such Tax Claim without the prior written consent of
the other.
RSI, on the one hand, and each Shareholder, on the other hand, shall,
reasonably cooperate in contesting any Tax Claim, which cooperation shall
include the retention and, upon request, the provision to the requesting
person of records and information which are reasonably relevant to such Tax
Claim, and making employees available on a mutually convenient basis to
provide additional information or explanation of any material provided
hereunder or to testify at proceedings relating to such Tax Claim.
8. Escrow Disbursements in Respect of Valid Claims.
(a) Upon receipt of (i) a written notice signed jointly by a duly
authorized officer of the Representative and a duly authorized officer of RSI
or (ii) a certified copy of a final, non-appealable judgment of a court of
competent jurisdiction accompanied by a certificate of the prevailing party
reasonably satisfactory to the Escrow Agent to the effect that said judgment
is final and non-appealable, specifying the amount of Loss to be paid by RSI
or the Shareholders, as the case may be, the Escrow Agent shall distribute to
the RSI Indemnitee or the Shareholder Indemnitee, as the case may be, from the
Escrow Account, a number of Indemnification Shares (each such share being
deemed to have a value equal to the Market Value) and any Cash Collateral
equal in value to such Shareholders' or RSI's, as the case may be, share of
the total amount of Loss specified in such notice, which notice shall take
into account the limitations set forth in Section 5(b) hereof. If the
Indemnification Shares (based on the Market Value) and Cash Collateral
contributed by a Shareholder or RSI remaining in the Escrow Account are
insufficient to satisfy such Shareholder's or RSI's share of the total amount
of Loss specified in such notice, the Escrow Agent shall distribute to the RSI
Indemnitee or the Shareholder Indemnitee, as the case may be, all remaining
Indemnification Shares and Cash Collateral deposited by such Shareholder or
RSI, as the case may be, held in the Escrow Account in accordance with written
instructions from the RSI Indemnitee or Shareholder Indemnitee, as the case
may be, upon which the Escrow Agent shall be entitled to conclusively rely.
(b) Notwithstanding anything herein to the contrary, to the extent
that Indemnification Shares and/or Cash Collateral are to be distributed to
the RSI Indemnitee or the Shareholder Indemnitee, as the case may be, to pay a
Loss, in the absence of instructions pursuant to the proviso to this sentence
(of which the Escrow Agent shall have no duty or obligation to inquire about)
given through written notice to the Escrow Agent by the Shareholder or RSI
with respect to the Indemnification Shares and Cash Collateral in the Escrow
Account, the Escrow Agent will satisfy the portion of such Loss payable by
such Shareholder or RSI, as the case may be, (i) first, by distributing to the
RSI Indemnitee or the Shareholder Indemnitee, as the case may be, the
Indemnification Shares deposited by such Shareholder or RSI, as the case may
be, in the Escrow Account on the Closing Date, and (ii) second, by
distributing any Cash Collateral deposited by such Shareholder or RSI, as the
case may be, in the Escrow Account; provided, that any Shareholder or RSI, as
the case may be, by written notice to the Escrow Agent, may direct that Cash
Collateral referred to in clause (ii) above be distributed from the Escrow
Account prior to the distribution of Indemnification Shares. This provision
shall be controlling at all times unless such instructions have been received
prior to such distributions.
(c) In each case in which a party seeks the delivery by the Escrow
Agent of Indemnification Shares pursuant to this Agreement, such party shall
provide to the Escrow Agent all information, to the extent applicable, with
respect to the transfer agent thereof, including without limitation, the name
and contact person.
9. Final Distribution. At the close of business on June 30, 2001, any
Indemnification Shares and Cash Collateral remaining in the Escrow Account
shall be returned in whole or in part by the Escrow Agent to the respective
Shareholders or RSI who contributed such Indemnification Shares or Cash
Collateral upon and to the extent set forth in a joint notification by the
Representative and RSI.
10. Limitation of Duties. The duties, responsibilities and
obligations of Escrow Agent shall be limited to those expressly set forth
herein and no duties, responsibilities or obligations shall be inferred or
implied. Escrow Agent shall not be subject to, nor required to comply with,
any other agreement between or among any or all of the Depositors or to which
any Depositor is a party, even though reference thereto may be made herein, or
to comply with any direction or instruction (other than those contained herein
or delivered in accordance with this Agreement) from any Depositor or an
entity acting on its behalf. Escrow Agent shall not be required to expend or
risk any of its own funds or otherwise incur any financial or other liability
in the performance of any of its duties hereunder.
11. Legal Process. (a) If at any time Escrow Agent is served with any
judicial or administrative order, judgment, decree, writ or other form of
judicial or administrative process which in any way affects the Escrow
Property (including but not limited to orders of attachment or garnishment or
other forms of levies or injunctions or stays relating to the transfer of the
Escrow Property), Escrow Agent is authorized to comply therewith in any manner
it or legal counsel of its own choosing deems appropriate; and if Escrow Agent
complies with any such judicial or administrative order, judgment, decree,
writ or other form of judicial or administrative process, Escrow Agent shall
not be liable to any of the parties hereto or to any other person or entity
even though such order, judgment, decree, writ or process may be subsequently
modified or vacated or otherwise determined to have been without legal force
or effect.
Escrow Agent shall not be liable for any action taken or omitted or
for any loss or injury resulting from its actions or its performance or lack
of performance of its duties hereunder in the absence of gross negligence or
willful misconduct on its part. In no event shall Escrow Agent be liable (i)
for acting in accordance with or relying upon any instruction, notice, demand,
certificate or document from any Depositor or any entity acting on behalf of
any Depositor, (ii) for any indirect, consequential, punitive or special
damages, regardless of the form of action and whether or not any such damages
were foreseeable or contemplated, (iii) for the acts or omissions of its
nominees, correspondents, designees, agents, subagents or subcustodians, (iv)
for the investment or reinvestment of any cash held by it hereunder, in each
case in good faith, in accordance with the terms hereof, including without
limitation any liability for any delays (not resulting from its gross
negligence or willful misconduct) in the investment or reinvestment of the
Escrow Property, or any loss of interest incident to any such delays, or (v)
for an amount in excess of the value of the Escrow Property, valued as of the
date of deposit, but only to the extent of direct money damages.
(b) Escrow Agent may consult with its legal counsel as to any matter
relating to this Agreement, and Escrow Agent shall not incur any liability in
acting in good faith in accordance with any advice from such counsel.
(c) Escrow Agent shall not incur any liability for not performing any
act or fulfilling any duty, obligation or responsibility hereunder by reason
of any occurrence beyond the control of Escrow Agent (including but not
limited to any act or provision of any present or future law or regulation or
governmental authority, any act of God or war, or the unavailability of the
Federal Reserve Bank wire or facsimile or other wire or communication
facility).
(d) The Escrow Agent shall be entitled to rely upon any order,
judgment, certification, demand, notice, instrument or other writing delivered
to it hereunder without being required to determine the authenticity or the
correctness of any fact stated therein or the propriety or validity or the
service thereof. The Escrow Agent may act in reliance upon any instrument or
signature believed by it to be genuine and may assume that any person
purporting to give receipt or advice to make any statement or execute any
document in connection with the provisions hereof has been duly authorized to
do so.
12. Authority; Validity. Escrow Agent shall not be responsible in any
respect for the form, execution, validity, value or genuineness of documents
or securities deposited hereunder, or for any description therein, or for the
identity, authority or rights of persons executing or delivering or purporting
to execute or deliver any such document, security or endorsement. The Escrow
Agent shall not be called upon to advise any party as to the wisdom in selling
or retaining or taking or refraining from any action with respect to any
securities or other property deposited hereunder.
13. Duty of Care. The Escrow Agent shall not be under any duty to
give the Escrow Property held by it hereunder any greater degree of care than
it gives its own similar property and shall not be required to invest any
funds held hereunder except as directed in this Agreement. Uninvested funds
held hereunder shall not earn or accrue interest.
14. Liability to Escrow Agent. Depositors, jointly and severally,
shall be liable for and shall reimburse and indemnify Escrow Agent (and any
predecessor Escrow Agent) and hold Escrow Agent harmless from and against any
and all claims, losses, actions. liabilities, costs, damages or expenses
(including reasonable attorneys' fees and expenses) (collectively "Escrow
Agent Losses") arising from or in connection with its administration of this
Agreement, except to the extent such Escrow Agent Losses are caused by its own
gross negligence or willful misconduct. In addition, when the Escrow Agent
acts on any information, instructions or communications, (including, but not
limited to, communications with respect to the delivery of securities or the
wire transfer of funds) sent by telex or facsimile, the Escrow Agent, absent
gross negligence, shall not be responsible or liable in the event such
communication is not an authorized or authentic communication of the
Depositor(s) or is not in the form the Depositor(s) sent or intended to send
(whether due to fraud, distortion or otherwise). The Depositor(s) shall
jointly and severally indemnify the Escrow Agent against any Loss it may incur
with its acting in accordance with any such communication. This paragraph
shall survive the termination of this Agreement or the removal of the Escrow
Agent.
15. Disputes; Ambiguities. (a) In the event of any ambiguity or
uncertainty hereunder or in any notice, instruction or other communication
received by Escrow Agent hereunder, Escrow Agent may, in its sole discretion,
refrain from taking any action other than retain possession of the Escrow
Property, unless Escrow Agent receives written instructions, signed by the
Representative and RSI, which eliminates such ambiguity or uncertainty.
(b) In the event of any dispute between or conflicting claims by or
among the Depositors with respect to any Escrow Property, Escrow Agent shall
be entitled, in its sole discretion, to refuse to comply with any and all
claims, demands or instructions with respect to such Escrow Property so long
as such dispute or conflict shall continue, and Escrow Agent shall not be or
become liable in any way to the Depositors for failure or refusal to comply
with such conflicting claims, demands or instructions. Escrow Agent shall be
entitled to refuse to act until, in its sole discretion, either (i) such
conflicting or adverse claims or demands shall have been determined by a final
order, judgment or decree of a court of competent jurisdiction, which order,
judgment or decree is not subject to appeal, or settled by agreement between
the conflicting parties as evidenced in a writing satisfactory to Escrow Agent
or (ii) Escrow Agent shall have received security or an indemnity satisfactory
to it sufficient to hold it harmless from and against any and all Escrow Agent
Losses which it may incur by reason of so acting. The Escrow Agent shall act
on such court order without further question. Escrow Agent may, in addition,
elect, in its sole discretion, to commence an interpleader action or seek
other judicial relief or orders as it may deem, in its sole discretion,
necessary. The costs and expenses (including reasonable attorneys' fees and
expenses) incurred in connection with such proceeding shall be paid by, and
shall be deemed a joint and several obligation of, the Depositors.
(c) The Escrow Agent shall have no responsibility for the contents of
any writing of the arbitrators or any third party contemplated herein as a
means to resolve disputes and may conclusively rely without any liability upon
the contents thereof.
16. Interest in Escrow Property. The Escrow Agent does not have any
interest in the Escrow Property deposited hereunder but is serving as escrow
holder only and having only possession thereof. The Depositors shall pay or
reimburse the Escrow Agent upon request for any transfer taxes or other taxes
relating to the Escrow Property incurred in connection herewith and shall
indemnify and hold harmless the Escrow Agent from any amounts that it is
obligated to pay in the way of such taxes. Any payments of income from the
Escrow Account shall be subject to withholding regulations then in force with
respect to United States taxes. The Depositors will provide the Escrow Agent
with appropriate W-9 forms for tax I.D., number certifications, or W-8 forms
for non-resident alien certifications. This paragraph shall survive
notwithstanding any termination of this Agreement or the resignation or
removal of the Escrow Agent.
17. Due Authorization. Each Depositor hereby represents and warrants
(a) that this Agreement has been duly authorized, executed and delivered on
its behalf and constitutes its legal, valid and binding obligation and (b)
that the execution, delivery and performance of this Agreement by the
Depositor(s) does not and will not violate any applicable law or regulation.
18. Payments to Escrow Agent. At the time of execution of this
Agreement, Depositors shall pay Escrow Agent an acceptance fee of $10,000. In
addition, Depositors shall pay Escrow Agent a fee of $60,000 per annum or part
thereof payable upon execution of this Agreement and thereafter on each
anniversary date of this Agreement and Depositors agree to reimburse the
Escrow Agent for all reasonable expenses, disbursements and advances incurred
or made by the Escrow Agent in performance of its duties hereunder (including
reasonable fees, expenses and disbursements of its counsel). The obligations
contained in this Section shall be a joint and several obligation of the
Depositors. Without limiting the rights of the Escrow Agent under the
preceding sentence, RSI, on the one hand, and the Shareholders, on the other
hand, agree as between themselves that all fees and related expenses of the
Escrow Agent hereunder (including fees of its legal counsel) shall be paid
one-half by RSI and one-half by the Shareholders.
19. Fractional Shares. No fractional shares shall be delivered to
satisfy any claims. If the Indemnification Shares to be so delivered from the
Escrow Account in respect of any Shareholder or RSI, as the case may be, would
include a fractional share, the parties hereto agree that the Representative
and RSI may round such fraction to the nearest whole share.
20. Notices. All notices or other communications required or
permitted to be given hereunder shall be in writing and shall be delivered by
hand or sent by prepaid telex, cable or telecopy or sent, postage prepaid, by
registered, certified or express mail or reputable overnight courier service
and shall be deemed given when so delivered by hand, telexed, cabled or
telecopied, or if mailed, three days after mailing (one business day in the
case of express mail or overnight courier service), as follows:
If to the Shareholders:
At the address set forth opposite
such Shareholder's name on the
signature page hereto
with a copy to:
▇▇▇▇▇ & ▇▇▇▇▇▇▇, L.L.P.,
Columbia Square
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy No: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇; and
If to RSI:
Reckson Service Industries, Inc.
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy No: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
with copies to:
▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy No: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
J. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
If to the Escrow Agent:
Global Agency and Trust Services Department
Citibank, N.A.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Carmina Day
or such other address as any party may from time to time specify by written
notice to the other parties hereto.
21. No Assignment or Benefit to Third Parties. This Agreement may not
be assigned by operation of law or otherwise, except by RSI to one or more
entities controlled by RSI (with RSI remaining responsible for its obligations
under this Agreement). Notwithstanding the foregoing, the rights or duties of
each of the parties under this Agreement may be assigned by such party in
connection with a sale of all or substantially all of its assets or a merger,
consolidation or other similar business combination transaction. Nothing
expressed or implied in this Agreement is intended, nor shall be construed, to
confer (a) any rights, remedies, obligations or liabilities, legal or
equitable, other than as provided in this Agreement or (b) otherwise
constitute any person (other than the Representative) a third party
beneficiary under or by reason of this Agreement (it being acknowledged that
the Representative is a third party beneficiary of this Agreement and is
entitled to enforce the relevant provisions of this Agreement, including
Section 4(b)(ZZZ) on behalf of Holdco).
22. Headings. The headings of the Sections of this Agreement are for
convenience only and do not constitute a part of this Agreement.
23. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each
party and delivered to the others.
24. Applicable Law. This Agreement shall be construed and enforced in
accordance with, and governed by the laws of the State of New York, without
application of any choice of law provisions that would apply any law other
than the laws of New York.
25. Several Liability. Anything in this Agreement to the contrary
notwithstanding, the representations, warranties, covenants and agreements of
the Shareholders set forth herein are several and not joint, except with
respect to any obligations due and payable to the Escrow Agent.
26. Powers of the Representative. Each Shareholder by executing this
Agreement hereby appoints CarrAmerica as such Shareholder's agent and attorney
in fact (the "Representative") hereunder with full irrevocable power and
authority in the place and stead of such Shareholder and in the name of such
Shareholder to take any and all actions, and to execute any and all
instruments and other documents, which in the sole judgment of the
Representative are necessary or appropriate in handling claims for Losses made
pursuant to Section 3, 4(a)(W), 4(a)(X) and 4(b) of this Agreement. Said power
of attorney shall not be affected by the subsequent incapacity of any
Shareholder. Without limiting the generality of the foregoing, each of the
Shareholders agrees that the Representative (1) has full power and authority
to take such action on behalf of the Shareholders with respect to any
Indemnification Shares and Cash Collateral held by the Escrow Agent and with
respect to any and all claims for Losses (including, without limitation, any
decisions to accept or to challenge any claims for Losses) as the
Representative in its sole discretion may determine (except to the extent that
this Agreement provides for any action with respect to such Indemnification
Shares or Cash Collateral to be taken by the Shareholders themselves) and (2)
shall represent the Shareholders for all purposes in connection with the
claims specified above, including the receipt of notices and the exercise or
wavier of any rights with respect to RSI's obligations under this Agreement,
and resolution of disputes or uncertainties arising hereunder and thereunder
(except to the extent that any such agreement expressly provides for any
action to be taken or other matter to be dealt with by the Shareholders
themselves). The Representative shall forward the Shareholders copies of all
notices of Claims received from any RSI Indemnitee and of the disposition of
all such Claims. The Shareholders also agree that the Shareholders shall be
bound by all decisions of the Representative pursuant to the authority granted
hereunder, and that such authority may not be revoked during the term of this
Agreement.
Except as expressly set forth in this Agreement, it is understood
that the Representative is not assuming any responsibility or liability to any
person by virtue of the powers granted by the Shareholders hereby. The
Representative shall not make any representations with respect to and shall
have no responsibility for the transactions contemplated by the Merger
Agreement, the Stock Purchase Agreement or the UK Agreement or any aspect
thereof except as expressly set forth in such agreements. The Representative
shall not be liable to any other Shareholder for any error of judgment or for
any act done or omitted or for any mistake of fact or law except for such
Representative's own gross negligence or bad faith. Each Shareholder agrees to
indemnify the Representative and to hold the Representative harmless against
any loss, claim, damage or liability incurred by him arising out of or in
connection with acting as the Representative pursuant to this Agreement, as
well as the cost and expense of investigating and defending against any such
loss, claim, damage or liability, except to the extent such loss, claim,
damage or liability is due to the gross negligence or bad faith of the
Representative. Each Shareholder agrees that the Representative may consult
with counsel of its own choice (who may be counsel for CarrAmerica or any
affiliate thereof) and it shall have full and complete authorization and
protection for any action taken or suffered by it hereunder in good faith and
in accordance with the opinion of such counsel. It is understood that the
Representative may, without breaching any express or implied obligation to any
Shareholder hereunder, release, amend or modify any other power of attorney
granted by any other person under any related agreement.
27. Litigation Costs. If any litigation with respect to the
obligations of the parties under this Agreement results in a final
nonappealable order of a court of competent jurisdiction that results in a
final disposition of such litigation, the prevailing party, as determined by
the court ordering such disposition, shall be entitled to reasonable
attorneys' fees as shall be determined by such court. contingent or other
percentage compensation arrangements shall not be considered reasonable
attorneys' fees.
28. Waiver of Jury Trial. EACH OF THE PARTIES HERETO IRREVOCABLY
WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT.
29. Amendment. This Agreement may be amended by written agreement
signed by the Escrow Agent (other than Sections 3 through 7 inclusive), RSI,
the Representative and each Shareholder that would be adversely affected by
such amendment.
30. Waiver. Any party to this Agreement may extend the time for the
performance of any of the obligations or other acts of any other party hereto,
or waive compliance with any of the agreements of any other party or with any
condition to the obligations hereunder, in each case only to the extent that
such obligations, agreements and conditions are intended for its benefit, each
Shareholder hereby severally agreeing that any such extension or waiver by
such Shareholder may be given by the Representative and each Shareholder
hereby severally confirming that it has appointed the Representative as its
attorney-in-fact to give any such extension or waiver on behalf of such
Shareholder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first written above.
CARRAMERICA REALTY
CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Managing Director
RECKSON SERVICE INDUSTRIES, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Executive Vice President
STRATEGIC OMNI INVESTORS LLC
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇ ▇. Louis
Title: Attorney-in-Fact
SECURITY CAPITAL HOLDINGS S.A.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇ ▇. Louis
Title: Attorney-in-Fact
THE ▇▇▇▇▇▇ ▇▇▇▇ COMPANY
By: /s/ ▇▇▇▇ ▇. Louis
-----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Attorney-in-Fact
▇▇▇▇ HOLDINGS LLC
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇ ▇. Louis
Title: Attorney-in-Fact
Escrow Agent:
CITIBANK, N.A.
By: /s/ Carmmina ▇▇▇▇▇ Day
------------------------------------
Name: Carmmina ▇▇▇▇▇ Day
Title: Assistant Vice President
Additional Indemnitors Listed on Schedule B
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇ ▇. Louis
Title: Attorney-in-Fact
Schedule A
Shareholder Ownership Percentage
CarrAmerica Realty Corporation 86.13836%
Strategic Omni Investors LLC 3.94820%
Security Capital Holdings S.A. 2.88310%
The ▇▇▇▇▇▇ ▇▇▇▇ Company 0.26877%
▇▇▇▇ Holdings LLC 1.13161%
▇▇▇▇ ▇▇▇▇▇ 3.56287%
▇▇▇▇▇▇▇ Beretta 0.10953%
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 0.26918%
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 0.05953%
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 0.04400%
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 0.05953%
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 0.09943%
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ 0.04762%
▇▇▇▇▇ ▇▇▇▇▇▇▇ 0.05953%
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. 0.12105%
▇▇▇▇▇▇▇▇ ▇▇▇▇ 0.05953%
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ 0.12424%
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 0.64287%
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 0.12741%
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ 0.04985%
▇▇▇▇ ▇▇▇▇▇ 0.07229%
▇▇▇▇▇ ▇▇▇▇▇▇ 0.08675%
▇▇▇▇▇▇ ▇▇▇▇▇▇ Rice 0.02900%
----------
100.00000%
Schedule B
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ Beretta
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ Rice
Schedule C
CarrAmerica Realty Corporation