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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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) February 8, 1999 (December 11,
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1998)
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HEALTHCARE FINANCIAL PARTNERS, INC.
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(Exact Name of Registrant as Specified in Charter)
Delaware O-21425 58-1844418
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
2 Wisconsin Circle, Fourth Floor, Chevy Chase, Maryland 20815
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (301) 961-1640
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Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
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Item 5. Other Events.
Effective December 11, 1998, HealthCare Financial Partners, Inc. (the
"Company") and HealthCare Financial Partners REIT, Inc. (the "REIT") terminated
the Management Agreement dated as of May 6, 1998, pursuant to which the Company
provided certain management and origination services to the REIT, and entered
into an Origination Agreement dated as of December 11, 1998 (the "Origination
Agreement"), pursuant to which the Company has undertaken to originate
healthcare real estate related investments on behalf of the REIT for an
origination fee of 2.5% for investments which are funded by the REIT.
A copy of the Origination Agreement is attached hereto as Exhibit 99.1, is
incorporated by reference herein, and the foregoing description is qualified in
its entirety by reference to such exhibit.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
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(c) Exhibits
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99.1 Origination Agreement dated as of December 11, 1998, between
HealthCare Financial Partners, Inc. and HealthCare Financial
Partners REIT, Inc., without Exhibit A thereto. The
Registrant agrees to furnish supplementally a copy of Exhibit
A to the Commission upon request.
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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.
HEALTHCARE FINANCIAL PARTNERS, INC.
Date: February 8, 1999 By: /s/ Edward P. Nordberg, Jr.
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Edward P. Nordberg, Jr.
Chief Financial Officer
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EXHIBIT INDEX
Exhibit
Number Description
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99.1 Origination Agreement dated as of December 11, 1998, between
HealthCare Financial Partners, Inc. and HealthCare Financial Partners
REIT, Inc., without Exhibit A thereto. The Registrant agrees to
furnish supplementally a copy of Exhibit A to the Commission upon
request.
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EXHIBIT 99.1
AGREEMENT
THIS AGREEMENT, dated as of December 11, 1998 by and between HEALTHCARE
FINANCIAL PARTNERS REIT, INC., a Maryland corporation (the "Company"), and
HEALTHCARE FINANCIAL PARTNERS, INC., a Delaware corporation ("HCF");
WITNESSETH:
WHEREAS, the Company invests in income producing real estate and real estate
related assets in the healthcare industry ("REIT Investments") and expects to
qualify for the tax benefits of a real estate investment trust (a "REIT")
accorded by Sections 856 through 860 of the Internal Revenue Code of 1986, as
amended (the "Code"); and
WHEREAS, pursuant to the terms of a Management Agreement dated as of May 6,
1998 (the "Management Agreement") between the Company and HCFP REIT Management,
Inc., a wholly-owned subsidiary of HCF (the "Manager"), the Company retained the
Manager to advise and counsel the Company as to the acquisition and sale of, and
to otherwise manage, the REIT Investments and to perform administrative services
for the Company; and
WHEREAS as of December 11, 1998, the Company and HCF determined that it was
in the best interests of both the Company and HCF to terminate the Management
Agreement and to enter into this Agreement pursuant to which HCF, either
directly or through one or more of its subsidiaries, will undertake to originate
REIT Investments for the Company and the Company will pay to HCF or its nominee
an amount equal to 2.5% of the principal amount of each mortgage loan originated
by HCF or its subsidiary and funded by the Company and 2.5% of the purchase
price of each real property investment originated by HCF or its subsidiary and
acquired by the Company, all in the manner and on the terms set forth herein;
NOW THEREFORE, in consideration of the mutual agreements herein set forth,
the parties hereto agree as follows:
SECTION 1. Definitions. Capitalized terms used herein and not otherwise
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defined shall have the following meanings:
(a) "Agreement" means this Agreement, as amended from time to time.
(b) "Closing Date" means the date agreed to by the Company and HCF for the
closing of a REIT Investment originated hereunder by HCF, which shall be no
later than the date of recordation of such REIT Investment.
(c) "Company" means Healthcare Financial Partners REIT, Inc., a Maryland
corporation.
(d) "Company Subsidiary" means any Subsidiary of the Company.
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(e) "Governing Instruments" means the charter and bylaws in the case of a
corporation, or the partnership or operating agreement in the case of a
partnership or a limited liability company.
(f) "HCF" means HealthCare Financial Partners, Inc., a Delaware
corporation.
(g) "HCF Subsidiary" means any Subsidiary of HCF.
(h) "Person" means an individual, corporation, partnership, trust, limited
liability company, or unincorporated organization, or a government or any
agency or political subdivision thereof.
(i) "Subsidiary" means, as applied to any Person, (a) any corporation of
which 50% or more of the outstanding stock (other than directors' qualifying
shares) having ordinary voting power to elect a majority of its board of
directors (or other governing body), regardless of the existence at the time of
a right of the holders of any class or classes (however designated) of
securities of such corporation to exercise such voting power by reason of the
happening of any contingency, or any partnership or limited liability company of
which 50% or more of the outstanding partnership interests or limited liability
company interest is, at the time, owned directly or indirectly by such Person,
or by one or more Subsidiaries of such Person, or by such Person or one or more
Subsidiaries of such Person, and (b) any other entity which is directly or
indirectly controlled or capable or being controlled by such Person, or by one
or more Subsidiaries of such Person, or by such Person and one or more
Subsidiaries of such Person.
SECTION 2. Duty of HCF to Originate REIT Investments.
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(a) During the term of this Agreement, HCF will use its best efforts to
originate, either directly or through an HCF Subsidiary, on behalf of the
Company, REIT Investments and will employ, or cause HCF Subsidiaries to employ,
at least two individuals who have experience with respect to the healthcare
industry, mortgage loans, and real estate-related assets and whose primary
duties are to originate REIT Investments on behalf of the Company
(b) The obligation of HCF to originate REIT Investments shall include,
without limitation, an obligation on the part of HCF to provide marketing
services on behalf of the Company, to identify appropriate REIT Investments to
be made by the Company which meet the investment criteria formulated by the
Board of Directors of the Company and described on Exhibit A attached hereto, to
provide the Company with information and documents concerning each such
potential REIT Investment originated on behalf of the Company as is reasonably
necessary for the Company to underwrite such REIT Investment, and to use all
reasonable efforts to assist the Company in its evaluation and underwriting of
each such potential REIT Investment. A potential REIT Investment shall be
deemed to have been originated by HCF hereunder only after written notice
identifying such investment is given by HCF to the Company.
(c) HCF, either directly or through an HCF Subsidiary, shall present to
the Company during each year this Agreement is in effect at least ten proposed
REIT Investments which meet the criteria set forth on Exhibit A attached hereto
and which have an aggregate value of at least
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$50,000,000.00, computed in the case of mortgage loans at the principal amount
thereof, and, in the case of real estate proposed to be acquired, at the
purchase price thereof.
SECTION 3. Closing Fee.
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(a) On each Closing Date the Company shall pay to HCF a fee (the "Closing
Fee") in the following amount: (i) if the REIT Investment consummated on such
Closing Date is a mortgage loan funded by the Company or a Company Subsidiary,
such Closing Fee shall be an amount equal to 2.5% of the principal amount of
such mortgage loan, and (ii) if the REIT Investment consummated on such Closing
Date includes the acquisition by the Company or a Company Subsidiary of real
estate, such Closing Fee shall be an amount equal to 2.5% of the purchase price
paid by the Company or the Company Subsidiary for such real estate.
(b) Each Closing Fee paid by the Company hereunder shall be earned
immediately by HCF on the applicable Closing Date and be paid to HCF in
immediately available funds in the manner directed in writing by HCF to the
Company within ten business days thereafter.
SECTION 4. Non-Compete.
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(a) Nothing herein will limit or restrict the right of HCF or any of its
officers, directors, employees or any HCF Subsidiary to engage in any business
or to render services of any kind to any other person including the purchase of,
or rendering advice to others purchasing, assets that meet the Company's
policies and criteria, except that so long as this Agreement is in effect, HCF
shall not directly or through a Subsidiary acquire any healthcare facilities
(except in connection with the foreclosure of mortgages).
(b) Nothing herein will limit or restrict the right of the Company or any
of its officers, directors, employees or any Company Subsidiary to engage in any
business or to make or acquire REIT Investments which have not been originated
by HCF or an HCF Subsidiary and for which HCF is not entitled to payment of a
Closing Fee, except that so long as this Agreement is in effect, neither the
Company nor any Company Subsidiary shall employ any Person to originate REIT
Investments or whose primary employment responsibilities include the origination
of REIT Investments.
SECTION 5. No Joint Venture. The Company and HCF are not partners or joint
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venturers with each other and nothing herein shall be construed to make them
such partners or joint venturers or impose any liability as such on either of
them.
SECTION 6. Term. This Agreement shall continue in force and effect for an
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initial term (the "Initial Term") expiring on December 31, 2002, subject to
being terminated for cause as provided in Section 7 herein. Thereafter, the
term of this Agreement may be extended by agreement between the Company and HCF.
Each extension shall be executed in writing by all parties hereto before the
expiration of this Agreement or, if applicable, the most recent extension
thereof. Each such extension shall be effective for a period of one year. At
any time after the Initial Term, either HCF or the Company may terminate, or
decline to renew the term of, this Agreement, without cause upon 90 days written
notice to the other party.
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SECTION 7. Termination for Cause. This Agreement, or any extension hereof,
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may be terminated by either party for cause immediately upon written notice to
the other party. Grounds for termination for cause will occur with respect to a
party if:
(i) Such party shall have violated any provision of this Agreement
and, after notice of such violation, shall not have cured such default
within 30 days (except in the case of a default under Section 2(c) hereof
as to which the cure period shall be 90 days); or
(ii) There is entered an order for relief or similar decree or order
with respect to the other party by a court having jurisdiction in an
involuntary case under the federal bankruptcy laws as now or hereafter
constituted or under any applicable federal or state bankruptcy, insolvency
or other similar laws; or the other party (A) admits in writing its
inability to pay its debts as they become due and payable, or makes a
general assignment for the benefit of, or enters into any composition or
arrangement with, creditors; (B) applies for, or consents (by admission of
material allegations of a petition or otherwise) to the appointment of a
receiver, trustee, assignee, custodian, liquidator or sequestrator (or
other similar official) of the other party or of any substantial part of
its properties or assets, or authorizes such an application or consent, or
proceedings seeking such appointment are commenced without such
authorization, consent or application against the other party and continue
undismissed for 30 days; (C) authorizes or files a voluntary petition in
bankruptcy, or applies for or consents (by admission of material
allegations of a petition or otherwise) to the application of any
bankruptcy, reorganization, arrangement, readjustment of debt, insolvency,
dissolution, liquidation or other similar law of any jurisdiction, or
authorizes such application or consent, or proceedings to such end are
instituted against the other party without such authorization, application
or consent and are approved as properly instituted and remain undismissed
for 30 days or results in adjudication of bankruptcy or insolvency; or (D)
permits or suffers all or any substantial part of its properties or assets
to be sequestered or attached by court order and the order remains
undismissed for 30 days.
Each party agrees that if any of the events specified in this Section 7
shall occur, it will give prompt written notice thereof to the other party after
the happening of such event.
If this Agreement is terminated pursuant to this Section 7, such
termination shall be without any further liability or obligation of either party
to the other.
SECTION 8. Assignment.
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This Agreement shall terminate automatically in the event of its assignment,
in whole or in part, by HCF, unless such assignment is to a corporation,
association, trust or other organization which is a successor (by merger,
consolidation or purchase of assets) to HCF, or unless such assignment is
consented to in writing by the Company with the consent of a majority of the
Independent Directors. Such an assignment shall bind the assignee hereunder in
the same manner as HCF is bound hereunder and, to further evidence its
obligations hereunder the assignee shall execute and deliver to the Company a
counterpart of this Agreement. This
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Agreement shall not be assignable by the Company without the consent of HCF,
except in the case of assignment by the Company to a REIT or other organization
which is a successor (by merger, consolidation or purchase of assets) to the
Company, in which case such successor organization shall be bound hereunder and
by the terms of said assignment in the same manner as the Company is bound
hereunder.
SECTION 9. Representations and Warranties.
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(a) The Company hereby represents and warrants to HCF as follows:
(i) The Company is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, has the
corporate power to own its assets and to transact the business in which it
is now engaged and is duly qualified as a foreign corporation and in good
standing under the laws of each jurisdiction where its ownership or lease
of property or the conduct of its business requires such qualification,
except for failures to be so qualified, authorized or licensed that could
not in the aggregate have a material adverse effect on the business
operations, assets or financial condition of the Company and its
Subsidiaries, taken as a whole.
(ii) The Company has the corporate power and authority to execute,
deliver and perform this Agreement and all obligations required hereunder
and has taken all necessary corporate action to authorize this Agreement on
the terms and conditions hereof and the execution, delivery and performance
of this Agreement and all obligations required hereunder. No consent of
any other person including, without limitation, stockholders and creditors
of the Company, and no license, permit, approval or authorization of,
exemption by, notice or report to, or registration, filing or declaration
with, any governmental authority is required by the Company in connection
with this Agreement or the execution, delivery, performance, validity or
enforceability of this Agreement and all obligations required hereunder.
This Agreement has been, and each instrument or document required hereunder
will be, executed and delivered by a duly authorized officer of the
Company, and this Agreement constitutes, and each instrument or document
required hereunder when executed and delivered hereunder will constitute,
the legally valid and binding obligation of the Company enforceable against
the Company in accordance with its terms.
(iii) The execution, delivery and performance of this Agreement and
the documents or instruments required hereunder will not violate any
provision of any existing law or regulation binding on the Company or any
of its subsidiaries, or any order, judgment, award or decree of any court,
arbitrator or governmental authority binding on the Company or any of its
Subsidiaries, or the Governing Instruments of, or any securities issued by
the Company or any of its Subsidiaries, or of any mortgage, indenture,
lease, contract or other agreement, instrument or undertaking to which the
Company or any of its Subsidiaries is a party or by which the Company or
any of its Subsidiaries, or any of their respective assets, may be bound,
the violation of which would have a material adverse effect on the business
operations, assets or financial condition of the Company and its
Subsidiaries, taken as a whole, and will not result in, or
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require, the creation or imposition of any lien on any of its property,
assets or revenues pursuant to the provisions of any such mortgage,
indenture, lease, contract or other agreement, instrument or undertaking.
(b) HCF hereby represents and warrants to the Company as follows:
(i) HCF is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation, has the corporate
power to own its assets and to transact the business in which it is now
engaged and is duly qualified to do business and is in good standing under
the laws of each jurisdiction where its ownership or lease of property or
the conduct of its business requires such qualifications, except for
failures to be so qualified, authorized or licensed that could not in the
aggregate have a material adverse effect on the business operations, assets
or financial condition of HCF and its subsidiaries, taken as a whole.
(ii) HCF has the corporate power and authority to execute, deliver
and perform this Agreement and all obligations required hereunder and has
taken all necessary corporate action to authorize, execute and deliver this
Agreement and perform all obligations required hereunder. No consent of any
other person including, without limitation, stockholders and creditors of
HCF, and no license, permit, approval or authorization of, exemption by,
notice or report to, or registration, filing or declaration with, any
governmental authority is required by HCF in connection with this Agreement
or the execution and delivery of this Agreement and the performance all
obligations required hereunder. This Agreement has been, and each
instrument or document required hereunder will be, executed and delivered
by a duly authorized officer of HCF, and this Agreement constitutes, and
each instrument or document required hereunder when executed and delivered
hereunder will constitute, the legally valid and binding obligation of HCF
enforceable against HCF in accordance with its terms.
(iii) The execution, delivery and performance of this Agreement and
the documents or instruments required hereunder will not violate any
provision of any existing law or regulation binding on HCF, or any order,
judgment, award or decree of any court, arbitrator or governmental
authority binding on HCF, or the Governing Instruments of, or any
securities issued by, HCF or of any mortgage, indenture, lease, contract or
other agreement, instrument or undertaking to which HCF is a party or by
which HCF or any of its assets may be bound, the violation of which would
have a material adverse effect on the business operations, assets or
financial condition of HCF and its subsidiaries, taken as a whole, and will
not result in, or require, the creation or imposition of any lien on any of
its property, assets or revenues pursuant to the provisions of any such
mortgage, indenture, lease, contract or other agreement, instrument or
undertaking.
SECTION 10. Notices. Unless expressly provided otherwise herein, all
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notices, requests, demands and other communications required or permitted under
this Agreement shall be in writing and shall be deemed to have been duly given,
made and received when delivered against
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receipt or upon actual receipt of registered or certified mail, postage prepaid,
return receipt requested, addressed as set forth below:
(a) If to the Company:
HealthCare Financial Partners REIT, Inc.
2 Wisconsin Circle
Fourth Floor
Chevy Chase, Maryland 20815
Attention: Edward P. Nordberg, Jr.
Telephone: (301) 664-9823
Fax: (301) 664-9880
(b) If to HCF:
HealthCare Financial Partners, Inc.
2 Wisconsin Circle
Fourth Floor
Chevy Chase, Maryland 20815
Attention: Edward P. Nordberg, Jr.
Telephone: (301) 664-9823
Fax: (301) 664-9880
with a copy given in the manner prescribed above to:
G. William Speer, Esq.
Powell, Goldstein, Frazer & Murphy, LLP
191 Peachtree Street, N.E.
Sixteenth Floor
Atlanta, Georgia 30303
Either party may alter the address to which communications or copies are to
be sent by giving notice of such change of address in conformity with the
provisions of this Section 10 for the giving of notice.
SECTION 11. Entire Agreement. This Agreement contains the entire agreement
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and understanding among the parties hereto with respect to the subject matter
hereof, and supersedes all prior and contemporaneous agreements, understandings,
inducements and conditions, express or implied, oral or written, of any nature
whatsoever with respect to the subject matter hereof. The express terms hereof
control and supersede any course of performance and/or usage of the trade
inconsistent with any of the terms hereof. This Agreement may not be modified
or amended other than by an agreement in writing.
SECTION 12. Binding Nature of Agreement; Successors and Assigns. This
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Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective heirs, personal representatives, successors and assigns as
provided herein.
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SECTION 13. Third Party Beneficiaries. This Agreement shall be binding
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upon and inure solely to the benefit of the parties hereto, and nothing in this
Agreement, express or implied, is intended to confer upon any other rights or
remedies of any nature whatsoever under or by reason of this Agreement.
SECTION 14. Schedules and Exhibits. All Schedules and Exhibits referred to
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herein or attached hereto are hereby incorporated by reference into, and made a
part of, this Agreement.
SECTION 15. Indulgences, Not Waivers. Neither the failure nor any delay on
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the part of a party to exercise any right, remedy, power or privilege under this
Agreement shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, remedy, power or privilege preclude any other or further
exercise of the same or of any other right, remedy, power or privilege, nor
shall any waiver of any right, remedy, power or privilege with respect to any
occurrence be construed as a waiver of such right, remedy, power or privilege
with respect to any other occurrence. No waiver shall be effective unless it is
in writing and is signed by the party asserted to have granted such waiver.
SECTION 16. Costs and Expenses. Each party hereto shall bear its own costs
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and expenses (including the fees and disbursements of counsel and accountants)
incurred in connection with the negotiations and preparation of and the closing
under this Agreement, and all matters incidental thereto.
SECTION 17. Titles Not to Affect Interpretation. The titles of paragraphs
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and subparagraphs contained in this Agreement are for convenience only, and they
neither form a part of this Agreement nor are they to be used in the
construction or interpretation hereof.
SECTION 18. Execution in Counterparts. This Agreement may be executed in
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any number of counterparts, each of which shall be deemed to be an original as
against any party whose signature appears thereon, and all of which shall
together constitute one and the same instrument. This Agreement shall become
binding when one or more counterparts hereof, individually or taken together,
shall bear the signatures of all of the parties reflected hereon as the
signatories.
SECTION 19. Provisions Separable. The provisions of this Agreement are
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independent of and separable from each other, and no provision shall be affected
or rendered invalid or unenforceable by virtue of the fact that for any reason
any other or others of them may be invalid or unenforceable in whole or in part.
SECTION 20. Gender. Words used herein regardless of the number and gender
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specifically used, shall be deemed and construed to include any other number,
singular or plural, and any other gender, masculine, feminine or neuter, as the
context requires.
SECTION 21. Professional Fees. If any party becomes involved in litigation
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(including bankruptcy proceedings) or arbitration against any other party
arising out of or relating to this Agreement, the court in the litigation
(including bankruptcy proceedings) or arbitrator in the
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arbitration shall award legal expenses (including, but not limited to attorneys'
fees, court costs and other legal expenses) to the prevailing party. The award
for legal expenses shall not be computed in accordance with any court schedule,
but shall be as necessary to fully reimburse all attorneys' fees and other legal
expenses actually incurred in good faith, regardless of the size of the
judgment, it being the intention of the parties to fully compensate for all the
attorneys' fees and other legal expenses paid in good faith. For the purpose of
this Agreement, the terms "attorneys' fees" or "attorneys' fees and costs" shall
mean the reasonable fees and expenses of counsel to the parties hereto
(including, without limitation, the cost of in-house counsel employed by such
party, such cost to be determined by imputing a cost for those services
commensurate with such counsel's skills and experience), which may include
printing, duplicating and other expenses, air freight charges, and fees billed
for law clerks, paralegals, librarians and others not admitted to the bar but
performing services under the supervision of an attorney. The terms "attorneys'
fees" or "attorneys' fees and costs" shall also include, without limitation, all
reasonable fees and expenses incurred with respect to appeals, arbitrations and
bankruptcy proceedings, and whether or not any action or proceeding is brought
with respect to the matter for which said fees and expenses were incurred.
SECTION 22. Controlling Law. This Agreement and all questions relating to
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its validity, interpretation, performance and enforcement shall be governed by
and construed, interpreted and enforced in accordance with the laws of the State
of Maryland, notwithstanding any Maryland or other conflict-of-law provisions to
the contrary.
SECTION 23. Acknowledgment of Termination of Management Agreement. The
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parties hereto acknowledge that the Management Agreement was terminated as of
December 11, 1998, by consent of the Company and the Manager.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
HEALTHCARE FINANCIAL
PARTNERS REIT, INC.
By: /s/ Edward P. Nordberg, Jr.
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Its: Chief Financial Officer
HEALTHCARE FINANCIAL PARTNERS,
INC.
By: /s/ Edward P. Nordberg, Jr.
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Its: Chief Financial Officer
The undersigned acknowledges that the Management Agreement was
terminated as of December 11, 1998 by consent of the Company and the Manager.
HCFP REIT MANAGEMENT, INC.
By: /s/ Edward P. Nordberg, Jr.
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Its: Chief Financial Officer
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