8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): May 11, 2004

HRPT PROPERTIES TRUST
(Exact name of registrant as specified in its charter)

Maryland
(State or other jurisdiction of incorporation) 1-9317
(Commission file number) 04-6558834
(I.R.S. employer identification number)

400 Centre Street, Newton, Massachusetts
(Address of principal executive offices) 02458
(Zip code)

Registrant’s telephone number, including area code:  617-332-3990

Item 5. Other Events.

As we previously announced, on April 16, 2004, we entered into agreements to acquire Hallwood Realty Partners, L.P. Hallwood Realty is a publicly traded limited partnership which owns a portfolio of office and warehouse/industrial properties located in seven metropolitan areas. On May 11, 2004, the parties amended the agreements to modify the calculation of the consideration to be paid in the acquisition and to make other technical changes. These agreements are Exhibits 2.1 and 2.2 to our Current Report on Form 8-K dated April 16, 2004 and are amended by the amendments filed as Exhibits 2.1 and 2.2 to this report. The following discussion supersedes the description of these matters set forth in our Current Report on Form 8-K dated April 16, 2004.

The agreements provide, among other things, for (1) our subsidiary’s acquisition of 330,432 of Hallwood Realty’s units of limited partner interest, or units, which together represent 20.7% of the currently outstanding units, and the general partnership interest in Hallwood Realty, and (2) the merger of another of our subsidiaries with Hallwood Realty, as a result of which holders of units and holders of options to purchase units will be paid cash consideration. The total cash purchase price for the general and limited partnership interests is approximately $250 million, subject to adjustment in certain circumstances.

In connection with entering into the agreements, HWG, LLC, the sole member of Hallwood Realty’s general partner and the current holder of the 330,432 units to be purchased by us, agreed to vote those units in favor of the merger and against actions or agreements that would violate the agreements or be reasonably expected to impede or discourage the merger. In addition, we were granted a proxy to vote the units in accordance with that agreement.

Upon closing the transaction, we expect to assume approximately $208 million of Hallwood Realty’s outstanding secured debt and to prepay approximately $100 million of the debt at or shortly after the closing. Prepayment of this debt may require premiums according to contractual formulas.

The remaining debt consists of two mortgage loans. One of these loans has an effective interest rate of 8.7% and a scheduled repayment date in October, 2005. The second loan has an effective interest rate of 7.3% and a scheduled repayment date in April, 2008. Beginning three months prior to the scheduled repayment dates, these loans may be repaid without payment of a premium. We intend to repay these loans at or shortly after the date on which they may be prepaid without payment of a premium. The interest rates applicable to the principal amounts of these loans are fixed until the applicable scheduled repayment dates, at which time they increase in accordance with contractual formulas. As of December 31, 2003, the outstanding principal amounts of these loans were approximately $77.9 million and $31.4 million, respectively.

Hallwood Realty’s properties are currently leased to approximately 500 tenants. Eight tenants are individually responsible for more than 1% of the total portfolio rents. The three largest tenants are: (i) the U.S. Government for 23% of the total rents; (ii) Ford Motor Company for 8% of the total rents; and (iii) M&T Bank for 7% of the total rents. Current lease terms vary considerably and expire between 2004 and 2020. As of April 12, 2004, occupancy of the

Hallwood Realty properties was reported to be approximately 87%, and the states in which Hallwood Realty owned real estate and the annualized current rent of the portfolio by state were as follows (dollars in thousands):

Location1	Annualized  Current Rents2
Georgia (2 properties)	$26,440
Michigan (3 properties)	13,045
Maryland (2 properties)	8,988
Washington (3 properties)	6,980
California (4 properties)	5,874
Ohio (1 property)	2,994
TOTALS (15 properties)	$64,321

¹ Some properties include multiple buildings in one location.

² Annualized rent is rents pursuant to signed leases as of April 12, 2004, plus expense reimbursements; includes some triple net lease rents, and excludes FAS 141 lease value amortization.

The transactions are subject to various conditions to closing, including those customary in real estate transactions, approval by holders of a majority of the units and obtaining consents from certain lenders. We currently expect the transactions to close during July, 2004. However, there can be no assurance that the conditions to closing will be satisfied or that the closing will occur. We expect to fund the acquisition with cash on hand and by borrowing under our revolving unsecured bank credit agreement.

WARNING REGARDING FORWARD LOOKING STATEMENTS

THIS FORM 8-K CONTAINS FORWARD LOOKING STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND THE FEDERAL SECURITIES LAWS. THESE FORWARD LOOKING STATEMENTS ARE BASED UPON OUR CURRENT BELIEFS AND EXPECTATIONS, BUT THEY ARE NOT GUARANTEED TO OCCUR. THESE FORWARD LOOKING STATEMENTS MAY NOT OCCUR FOR VARIOUS REASONS. FOR EXAMPLE:

• THE PURCHASE PRICE PAYABLE BY US ON ACCOUNT OF THE PURCHASE OF THE INTERESTS IN HALLWOOD REALTY IS STATED AS $250 MILLION. HOWEVER, THIS PRICE IS SUBJECT TO ADJUSTMENT BASED ON CONTRACT TERMS.

• THE TABLE WHICH DESCRIBES THE ANNUALIZED RENTS AT THE PROPERTIES MAY IMPLY THAT THOSE RENTS AND THE OCCUPANCY OF THOSE PROPERTIES WILL CONTINUE. OCCUPANCIES MAY CHANGE BECAUSE LEASES EXPIRE, TENANTS DEFAULT OR NEW LEASES ARE ENTERED INTO. THE RENTS MAY CHANGE BECAUSE OF CHANGING OCCUPANCY OR BECAUSE OF CHANGING RENT RATES. DURING THE PAST FEW YEARS BOTH THE OCCUPANCIES AND RENTAL RATES FOR OFFICE AND WAREHOUSE/INDUSTRIAL PROPERTIES HAVE GENERALLY DECLINED BECAUSE OF DETERIORATING MARKET CONDITIONS. THESE DECLINES MAY CONTINUE OR EVEN ACCELERATE.

• THE LISTING OF THE LARGEST TENANTS AT THE PROPERTIES AND THEIR ANNUALIZED RENTS MAY IMPLY THAT THESE TENANTS WILL REMAIN AT THESE PROPERTIES AND THAT THEY WILL CONTINUE TO PAY RENTS. SOME OF THESE TENANTS MAY RELOCATE FROM THESE BUILDINGS, AND SOME OF THESE TENANTS MAY BECOME UNWILLING OR UNABLE TO PAY THEIR RENTS. ALSO, MOST OF THE U.S. GOVERNMENT LEASES AFFORD THE GOVERNMENT AN OPTION TO TERMINATE ITS LEASES BEFORE THE STATED EXPIRATIONS, AND WE DO NOT KNOW IF AND WHEN THE GOVERNMENT MAY EXERCISE THESE OPTIONS.

• WE EXPECT TO PREPAY A SIGNIFICANT AMOUNT OF HALLWOOD REALTY’S EXISTING DEBT; HOWEVER, WE MAY DECIDE NOT TO PREPAY, OR MAY BE UNABLE TO PREPAY, SOME OR ALL OF THIS DEBT BECAUSE OF CHANGING MARKET CONDITIONS, BECAUSE LOWER COST FINANCING IS NOT AVAILABLE TO US OR BECAUSE ACCEPTABLE PREPAYMENT TERMS CAN NOT BE NEGOTIATED WITH THE AFFECTED LENDERS.

• WE EXPECT THIS TRANSACTION TO CLOSE IN OR ABOUT JULY, 2004. THE CLOSING OF THIS TRANSACTION MAY BE DELAYED. ALSO, THIS TRANSACTION MAY NOT CLOSE BECAUSE A MAJORITY OF THE HOLDERS OF HALLWOOD REALTY’S UNITS DO NOT APPROVE THIS TRANSACTION,

BECAUSE ANOTHER BUYER MAKES A PROPOSAL WHICH HALLWOOD REALTY PREFERS OR FOR SOME OTHER REASONS.

THERE ARE LIKELY OTHER REASONS WHY FORWARD LOOKING STATEMENTS IN THIS FORM 8-K MAY NOT OCCUR. INVESTORS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE UPON FORWARD LOOKING STATEMENTS.

Item 7. Financial Statements and Exhibits.

(c)   Exhibits

2.1 First Amendment to Agreement and Plan of Merger, dated as of May 11, 2004, by and among HRPT Properties Trust, HWP LP Acquisition LLC, Hallwood Realty, LLC and Hallwood Realty Partners, L.P. (filed herewith)

2.2 First Amendment to Purchase Agreement, dated as of May 11, 2004, by and among HRPT Properties Trust, HRP GP, LLC, Hallwood Realty, LLC, Hallwood Commercial Real Estate, LLC, HWG, LLC, HWG Realty Investors, LLC, HWG 98 Advisors, Inc., HWG 95 Advisors, Inc. and The Hallwood Group Incorporated. (filed herewith)

SIGNATURES

        Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

HRPT PROPERTIES TRUST


By: /s/ Adam D. Portnoy     
       Name:  Adam D. Portnoy
       Title:   Executive Vice President

Date: May 14, 2004

EX-2.1

Exhibit 2.1

FIRST AMENDMENT TO AGREEMENT AND PLAN OF MERGER

        THIS FIRST AMENDMENT TO AGREEMENT AND PLAN OF MERGER, dated May 11, 2004 (this “Amendment”), among HRPT PROPERTIES TRUST, a Maryland real estate investment trust (“Parent”), HWP LP ACQUISITION LLC, a Delaware limited liability company and a wholly-owned subsidiary of Parent (“Purchaser”), HALLWOOD REALTY PARTNERS, L.P., a Delaware limited partnership (the “Partnership”) and HALLWOOD REALTY, LLC, a Delaware limited liability company and the general partner (the “General Partner”) of the Partnership amends that certain Agreement And Plan Of Merger, dated as of April 16, 2004 (the “Original Agreement”), among Parent, Purchaser, the Partnership and the General Partner. Capitalized terms used in this amendment and not otherwise defined shall have the meanings given in the Original Agreement.

RECITALS:

        The undersigned, being all of the parties to the Original Agreement, have agreed to amend the Original Agreement in order to, inter alia, accurately reflect the parties’ agreement as to the consideration payable in respect of the Merger and the calculation of the Working Capital Adjustment, in each case as set forth in this Amendment.

        NOW, THEREFORE, it is agreed:

ARTICLE 1

AMENDMENTS TO THE ORIGINAL AGREEMENT

        1.01   Section 2.01(b)(i) of the Original Agreement is hereby deleted in its entirety and replaced with the following:

                   (i)        Each Unit issued and outstanding immediately prior to the Effective Time shall be converted into the right to receive an amount in cash (the “Merger Price”) equal to the quotient which results by dividing:

(x)   the sum of (1) 91.5% of the Gross Merger Consideration, plus (2) the aggregate exercise price of all Unit Options outstanding as of April 16, 2004, by

(y)   the sum of (1) the total number of Units outstanding immediately prior to the Effective Time, plus (2) the total number of Units for which Unit Options outstanding immediately prior to the Effective Time would be exercisable.

As used herein, “Gross Merger Consideration” means an amount equal to two hundred fifty million dollars ($250,000,000), increased or decreased, as the case may be, by the Working Capital Adjustment (but not decreased to less than two hundred forty-five million dollars ($245,000,000); any Working Capital Adjustment which would result in a decrease in excess of five million dollars ($5,000,000) will be accounted for in the Purchase Agreement). The Merger Price for each Unit shall be payable upon surrender and exchange of the Certificate representing such Unit, shall not bear interest and shall be reduced by any withholding (as provided in Section 2.02(g)).

        1.02   Section 2.02(a) of the Original Agreement is hereby deleted in its entirety and replaced with the following:

        (a)  Paying Agent. Prior to the Effective Time, Parent shall select a bank or trust company reasonably acceptable to the Partnership to act as paying agent (the “Paying Agent”) for the payment of the Merger Price upon surrender of Certificates. The Purchaser shall, and Parent shall cause the Purchaser to, deposit with the Paying Agent prior to the Effective Time, an amount in cash which, together with the Deposit, is equal to the aggregate Merger Price payable to holders of all the Units converted pursuant to Section 2.01(b) (other than the Units purchased by the Successor GP pursuant to the Purchase Agreement)(such cash, inclusive of the Deposit, being hereinafter referred to as the “Exchange Fund”). The expenses of the Paying Agent shall not be paid from the Exchange Fund, but shall be paid directly by the Purchaser.

        1.03   Section 5.01(a)(vii) of the Original Agreement is hereby deleted in its entirety and replaced with the following

        (vii)   encumber, sell, lease (as lessor, including renewal or extension of any Partnership Lease), transfer, assign, license, convey or otherwise dispose of (or contract to dispose of) or subject to any Lien (or contract to subject to any Lien), any Material Contract or Partnership Real Property, or amend or terminate any such lease or license, except matters set forth in Section 5.01 of the Partnership Disclosure Letter; provided, however, that the Partnership shall actively attempt to lease vacant Partnership Real Property and may make all necessary tenant improvements and capital expenditures required under the Partnership Leases as in effect on the date of this Agreement

        1.04   The following is hereby inserted after Section 8.01(g) of the Original Agreement:

This Agreement shall be terminated and the merger abandoned if the Purchase Agreement is terminated in accordance with the provisions of Section 6.01(c) thereof.

        1.05   The phrase “by either the Partnership or Parent or Purchaser” in the first sentence of Section 8.02 of the Original Agreement is deleted and nothing substituted therefor.

        1.06   The definition of “Net Working Capital” in Section 9.03 of the Original Agreement is hereby deleted in its entirety and replaced with the following:

        “Net Working Capital” means the amount equal to:

        (a)   the amount by which (i) “cash and cash equivalents,” “accounts receivable,” “receivable from affiliate, net,” “escrow deposits held by lenders,” “prepaid expenses and other assets,” and “effective rent receivable,” (provided that any “accounts receivable” in excess of thirty (30) days past due shall be excluded) exceed (ii) “accounts payable and accrued expenses,” “payable to affiliates,” and “prepaid rent, security deposits and other,” all in each case as reflected on the Partnership’s consolidated balance sheet and determined in accordance with GAAP by a national, independent accounting firm to be agreed upon by the Partnership and Parent (“Accountant”) as of the close of business on the last day of the calendar month immediately preceding the Closing Date (the “Determination Date”), minus

        (b)   the sum of (i) Transaction Costs, (ii) estimated Taxes related to Tax Returns described in Section 6.15(a) hereof, (iii) all unaccrued real estate brokerage fees, “tenant inducements”, “free rent” and other amounts due from the landlord under any Partnership Lease, (iv) the estimated cost required to remedy Rent Defects calculated as set forth in Section 6.03(c)(ii), (v) the estimated cost required to remedy or remove any Defects (other than Rent Defects), Title Defects or Survey Defects pursuant to Section 6.03(c), in each case to the extent the Partnership or any Subsidiary has not then remedied or removed such Defects, Title Defects or Survey Defects and paid all costs in connection therewith prior to the Determination Date, and (vi) the aggregate exercise price of all Unit Options exercised after April 16, 2004, in each case unless reflected on the books of the Partnership on or prior to the Determination Date as “accounts payable and accrued expenses” or “payable to affiliates”,

        provided in making the determination under (1) paragraph (b) above, the amount to be deducted for unaccrued real estate brokerage fees, “tenant inducements”, “free rent” and other amounts due from the landlord under any Partnership Lease shall be $4,573,472 and (2) paragraph (a) above, any amounts expended or incurred for real estate brokerage fees, “tenant inducements”, “free rent” and other amounts due from the landlord under any Partnership Lease (A) entered into after April 16, 2004 with the prior written consent of Parent, to the extent such amounts exceed, in the aggregate, $2,829,624, such excess shall not decrease “cash and cash equivalents” if then paid and shall not increase “accounts payable and accrued expenses” or “payable to affiliates” if incurred but not then paid and (B) entered into prior to April 16, 2004 shall not decrease “cash and cash equivalents”, if then paid, and shall not increase “accounts payable and accrued expenses” or “payable to affiliates” if incurred but not then paid, until such amounts paid or incurred exceed, in the aggregate, $4,573,472.

        Net Working Capital shall be determined by the Accountant as of the close of business on the business day immediately prior to the Closing Date and in a manner consistent with the schedule set forth in Section 9.03 of the Partnership Disclosure Letter.

        1.07   The definition of “Working Capital Adjustment” in Section 9.03 of the Original Agreement is hereby deleted in its entirety and replaced with the following:

        “Working Capital Adjustment” means, (i) if Net Indebtedness is greater than $165,185,000, the negative amount which results by subtracting Net Indebtedness from $165,185,000, or (ii) if Net Indebtedness is less than $160,185,000, the positive amount which results by subtracting Net Indebtedness from $160,185,000. The Working Capital Adjustment shall be determined by the Accountant as of the close of business on the business day immediately preceding the Closing Date and in a manner consistent with the schedule set forth in Section 9.03 of the Partnership Disclosure Letter.

        1.08   Section 9.02 of the Original Agreement is hereby deleted in its entirety and replaced with the following:

        9.02   Notices. All notices, requests, claims, demands and other communications under this Agreement shall be in writing and shall be deemed given upon receipt (or upon the next succeeding business day if received after 5:00 p.m. local time on a business day or if received on

a Saturday, Sunday or United States holiday) by the parties at the following addresses or facsimile numbers (or at such other address for a party as shall be specified by like notice):

(a)	if to Parent or Purchaser, to: HRPT Properties Trust 400 Centre Street Newton, MA 02458 Attention: John C. Popeo Facsimile: (617) 332-2261 with a copy to: Sullivan & Worcester LLP One Post Office Square Boston, MA 02109 Attention: Richard Teller Facsimile: (617) 338-2880
(b)	if to the Partnership, to: Hallwood Realty, LLC 3710 Rawlins Suite 1500 Dallas, Texas 75219 Attention: William L. Guzzetti Facsimile: (214) 219-1716 with a copy to: Jenkens & Gilchrist, a Professional Corporation 1445 Ross Avenue Suite 3200 Dallas, Texas 75202 Attention: W. Alan Kailer Facsimile: (801) 912-0716

        1.09   The following clause (i) is hereby added to Section 9.04 of the Original Agreement:

        (i)   Any action, notice, request, claim, demand or other communication which under the terms of this Agreement is required to be taken or given, as applicable, on a Saturday, Sunday or United States holiday, shall be deemed timely provided that such action, notice, request, claim, demand or other communication is taken or given, as applicable, on the next succeeding business day.

        1.10   In all other respects, the Original Agreement shall continue in full force and unmodified.

ARTICLE 2

GENERAL PROVISIONS

        2.01   Severability. If any term or other provision of this Amendment or the Original Agreement as amended by this Amendment is invalid, illegal or incapable of being enforced by any rule or Law, or public policy, all other terms and provisions of this Amendment or the Original Agreement, as amended by this Amendment, as applicable, shall nevertheless remain in full force and effect so long as the economic and legal substance of the Transactions is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Amendment so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that the Transactions are fulfilled to the extent possible.

        2.02   Counterparts. This Amendment may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties.

        2.03   Entire Agreement; No Third-Party Beneficiaries. The Original Agreement, as amended by this Amendment, taken together with the Partnership Disclosure Letter all schedules and the Purchase Agreement, (a) constitutes the entire agreement, and supersedes all prior agreements and understandings, both written and oral, among the parties with respect to the Transactions and (b) except to the extent set forth in the Original Agreement, as amended by this Amendment, is not intended to confer upon any person other than the parties hereto any rights, remedies, obligations or liabilities.

        2.04   Governing Law. This Amendment shall be governed by, and construed in accordance with, the laws of the State of Delaware, regardless of the laws that might otherwise govern under applicable principles of conflicts of laws thereof.

        2.05   Nonliability of Trustees. THE DECLARATION OF TRUST ESTABLISHING THE PARENT, A COPY OF WHICH, TOGETHER WITH ALL AMENDMENTS THERETO (THE “DECLARATION”), IS DULY FILED WITH THE DEPARTMENT OF ASSESSMENTS AND TAXATION OF THE STATE OF MARYLAND, PROVIDES THAT THE NAME “HRPT PROPERTIES TRUST” REFERS TO THE TRUSTEES UNDER THE DECLARATION COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY, AND THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF THE PARENT SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, THE PARENT. ALL PERSONS DEALING WITH THE PARENT, IN ANY WAY, SHALL LOOK ONLY TO THE ASSETS OF THE PARENT FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION.

[Signature Page Follows]

        IN WITNESS WHEREOF, Parent, Purchaser and the Partnership have duly executed this Amendment, all as of the date first written above.

HRPT PROPERTIES TRUST



By: /s/ Adam Portnoy
Name: Adam D. Portnoy
Title: Executive Vice President

HWP LP ACQUISITION LLC


By:  /s/ Adam Portnoy
Name: Adam D. Portnoy
Title: Executive Vice President

HALLWOOD REALTY PARTNERS, L.P.
By: Hallwood Realty, LLC, its general partner


By:  /s/ John G. Tuthill
Name: John G. Tuthill
Title: Executive Vice President

HALLWOOD REALTY, LLC


By:  /s/ John G. Tuthill
Name: John G. Tuthill
Title: Executive Vice President

EX-2.2

Exhibit 2.2

FIRST AMENDMENT TO PURCHASE AGREEMENT

        THIS FIRST AMENDMENT TO PURCHASE AGREEMENT, dated May 11, 2004 (this “Amendment”), by and among HRPT Properties Trust, a Maryland real estate investment trust (“Parent”), HRP GP, LLC, a Delaware limited liability company and a wholly-owned subsidiary of Parent (the “Successor GP”), Hallwood Realty, LLC, a Delaware limited liability company (the “General Partner”), Hallwood Commercial Real Estate, LLC, a Delaware limited liability company (“HCRE”), HWG, LLC, a Delaware limited liability company (“HWG, LLC”), HWG Realty Investors, LLC, a Delaware limited liability company (“HWG Realty”), HWG 98 Advisors, Inc., a Delaware corporation (“HWG98”), HWG 95 Advisors, Inc., a Delaware corporation (“HWG95”) and The Hallwood Group Incorporated, a Delaware corporation (“Group”) amends that certain Purchase Agreement, dated as of April 16, 2004 (the “Original Agreement”), among Parent, Successor GP, the General Partner, HCRE, HWG, LLC, HWG Realty, HWG98, HWG95 and Group. Capitalized terms used in this Amendment and not otherwise defined shall have the meanings given in the Original Agreement.

RECITALS:

        The undersigned, being all of the parties to the Original Agreement, have agreed to amend the Original Agreement in order to accurately reflect the parties’ agreement as to the Purchase Price payable under the Original Agreement as set forth in this Amendment.

        NOW, THEREFORE, it is agreed:

ARTICLE 1

AMENDMENTS TO THE ORIGINAL AGREEMENT

        1.01   Section 2.01(f) of the Original Agreement is hereby deleted in its entirety and replaced with the following:

        (f)  As the purchase price for Sellers’ Interests conveyed pursuant to this Agreement, Successor GP shall pay to HWG, LLC, on behalf of all the Sellers, an amount equal to the sum of:

(i) 8.5% of the Gross Merger Consideration, plus

(ii) the Merger Price multiplied by 330,432 (in the aggregate, the “Purchase Price”), without interest, less any withholding (as provided in Section 6.16). The parties hereto acknowledge and agree that (a) if the Gross Merger Consideration is $245,000,000, then the Purchase Price shall be reduced by an amount equal to the amount by which the Working Capital Adjustment would have reduced the Gross Merger Consideration to less than $245,000,000 but for the parenthetical in the penultimate sentence of Section 2.01(b)(i) of the Merger Agreement and (b) the Purchase Price shall be reduced by any amounts owed by Group to the Partnership.

        1.02   In all other respects, the Original Agreement shall continue in full force and unmodified.

ARTICLE 2

GENERAL PROVISIONS

        2.01  Severability.  If any term or other provision of this Amendment or the Original Agreement as amended by this Amendment is invalid, illegal or incapable of being enforced by any rule or Law, or public policy, all other terms and provisions of this Amendment or the Original Agreement, as amended by this Amendment, as applicable, shall nevertheless remain in full force and effect so long as the economic and legal substance of the Transactions is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Amendment so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that the Transactions are fulfilled to the extent possible.

        2.02   Counterparts. This Amendment may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties.

        2.03  Entire Agreement; No Third-Party Beneficiaries. The Original Agreement, as amended by this Amendment, and the Merger Agreement constitute the entire agreement, and supersedes all prior agreements and understandings, both written and oral, among the parties with respect to the transactions contemplated by the Original Agreement, as amended by this Amendment, and the Merger Agreement and are not intended to confer upon any Person other than the parties hereto any rights, remedies, obligations or liabilities.

        2.04  Governing Law. This Amendment shall be governed by, and construed in accordance with, the laws of the State of Delaware, regardless of the laws that might otherwise govern under applicable principles of conflicts of laws thereof.

        2.05  Nonliability of Trustees. THE DECLARATION OF TRUST ESTABLISHING THE PARENT, A COPY OF WHICH, TOGETHER WITH ALL AMENDMENTS THERETO (THE “DECLARATION”), IS DULY FILED WITH THE DEPARTMENT OF ASSESSMENTS AND TAXATION OF THE STATE OF MARYLAND, PROVIDES THAT THE NAME “HRPT PROPERTIES TRUST” REFERS TO THE TRUSTEES UNDER THE DECLARATION COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY, AND THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF THE PARENT SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, THE PARENT. ALL PERSONS DEALING WITH THE PARENT, IN ANY WAY, SHALL LOOK ONLY TO THE ASSETS OF THE PARENT FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION.

[Signature Page Follows]

        IN WITNESS WHEREOF, the parties have caused this Amendment to be duly executed as of the day and year first above written.

HRPT PROPERTIES TRUST


By:  /s/ Adam Portnoy
Name: Adam D. Portnoy
Title: Executive Vice President


HRP GP, LLC


By:  /s/ Adam Portnoy
Name: Adam D. Portnoy
Title: Executive Vice President


HALLWOOD REALTY, LLC


By:  /s/ John G. Tuthill
Name: John G. Tuthill
Title: Executive Vice President


HWG, LLC


By:  /s/ John G. Tuthill
Name: John G. Tuthill
Title: Executive Vice President


HWG REALTY INVESTORS, LLC


By:  /s/ John G. Tuthill
Name: John G. Tuthill
Title: Executive Vice President

HWG 98 ADVISORS, INC.


By:  /s/ John G. Tuthill
Name: John G. Tuthill
Title: Executive Vice President


HWG 95 ADVISORS, INC.


By:  /s/ John G. Tuthill
Name: John G. Tuthill
Title: Executive Vice President


HALLWOOD COMMERCIAL REAL ESTATE, LLC


By:  /s/ John G. Tuthill
Name: John G. Tuthill
Title: Executive Vice President


THE HALLWOOD GROUP INCORPORATED


By:  /s/ William L. Guzzetti
Name: William L. Guzzetti
Title: Executive Vice President