Registration No. 33-________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
HEALTH AND RETIREMENT PROPERTIES TRUST
(Exact Name of Registrant as Specified in Its Charter)
MARYLAND 04-6558834
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification Number)
400 Centre Street
Newton, Massachusetts 02158
(617) 332-3990
(Address, Including Zip Code, and
Telephone Number, Including Area
Code, of Registrant's Principal Executive Offices)
MARK J. FINKELSTEIN
400 Centre Street
Newton, Massachusetts 02158
(617) 332-3990
(Name, Address, Including Zip Code, and
Telephone Number, Including Area
Code, of Agent For Service)
Copy to:
Lena G. Goldberg, Esq.
SULLIVAN & WORCESTER
One Post Office Square
Boston, Massachusetts 02109
Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date
of this Registration Statement
If any of the securities being registered on this form are
to be offered on a delayed or continuous basis pursuant to Rule
415 under the Securities Act of 1933, check the following box.
/ /
If the registrant elects to deliver its latest annual report
to security holders, or a complete and legible facsimile thereof,
pursuant to Item 11(a)(1) of this Form, check the following box.
/ /
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Title of Amount to Proposed Proposed Amount of
Shares to be be Registered Maximum Maximum Registration
Registered Offering Aggregate Fee
Price Per Offering
Unit Price
Series A 2,000,000 $15.00 $30,000,000 $6,000.00
Preferred
Shares of
Beneficial
Interest, $.01
par value
Common Shares
of Beneficial (1) ------ ------- ------
Interest, $.01
par value<PAGE>
_________
</TABLE)
(1) Such indeterminate number of common shares of beneficial
interest as may be issued upon conversion of the Series A
Preferred Shares of Beneficial Interest being registered
hereunder.
The Registrant hereby amends this Registration Statement on
such date or dates as may be necessary to delay its effective
date until the Registrant shall file a further amendment which
specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement
shall become effective on such date as the Securities and
Exchange Commission, acting pursuant to said Section 8(a), may
determine.
<PAGE>
HEALTH AND RETIREMENT PROPERTIES TRUST
2,000,000 Series A Preferred Shares of Beneficial Interest
Cross Reference Sheet
Item Description in Form S-2 Caption in
No. Prospectus
1. Forepart of the Registration Cover Page; Outside
Statement and Outside Front Cover Front Cover
Page of Prospectus . . . . . . .
2. Inside Front and Outside Back Incorporation of
Cover Pages of Prospectus. . . . Certain Information
by Reference;
Available
Information; Inside
Front Cover
3. Summary Information, Risk Factors Ratio of Earnings
and Ratio of Earnings to Fixed to Combined Fixed
Charges . . . . . . . . . . . . . Charges and
Preferred
Stock Dividends
4. Use of Proceeds . . . . . . . . . The Company - The
Chapple Transaction
5. Determination of Offering Price The Company - The
Chapple Transaction
6. Dilution . . . . . . . . . . . . N/A
7. Selling Security Holders . . . . N/A
8. Plan of Distribution . . . . . . The Company - The
Chapple Transaction
9. Description of Securities to be Description of
Registered . . . . . . . . . . . Capital Stock
10. Interests of Named Experts and Legal Matters;
Counsel. . . . . . . . . . . . . Experts
11. Information with Respect to the The Company;
Registrant . . . . . . . . . . Description of
Capital Stock;
Incorporation of
Certain Information
by Reference
12. Incorporation of Certain
Information by Reference . . . Incorporation of
Certain Information
by Reference
13. Disclosure of Commission Position N/A
on Indemnification for Securities
Act Liabilities
<PAGE>
SUBJECT TO COMPLETION, DATED OCTOBER 11, 1994
PROSPECTUS
2,000,000 Series A Preferred Shares of Beneficial Interest
HEALTH AND RETIREMENT PROPERTIES TRUST
Health and Retirement Properties Trust (the "Company" or
"HRP") is a real estate investment trust which invests primarily in
retirement communities, assisted living centers, nursing homes and
other long term care facilities. On October 5, 1994, the last
reported sale price for the Company's common shares of beneficial
interest, $.01 par value per share (the "Common Shares"), as
reported on the New York Stock Exchange, was $14-1/8.
This Prospectus relates to the offer and sale by the Company
of 2,000,000 shares of the Company's Series A Preferred Shares of
Beneficial Interest, $.01 par value per share (the "Preferred
Shares") and the Common Shares into which such shares are
convertible (together, the "Offered Shares") to the Chapple
Entities (as defined herein) in connection with the acquisition by
the Company of nine nursing facilities from the Chapple Entities.
No brokerage commissions will be paid in connection with the sale
of the Shares.
The Company will pay expenses of this offering estimated to
be approximately $_________. No expenses or other compensation
will be paid to any underwriter in connection with this offering.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT.
A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE
SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR
TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS
PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF
THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR
SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER
THE SECURITIES LAWS OF ANY SUCH STATE.
October __, 1994
<PAGE>
No dealer, sales person or other individual has been
authorized to give any information or make any representations not
contained in the Prospectus in connection with the offering covered
by this Prospectus. If given or made, such information or
representations must not be relied upon as having been authorized
by the Company. This Prospectus does not constitute an offer to
sell or a solicitation of an offer to buy any securities other than
the registered securities to which it relates in any jurisdiction
where, or to any person to whom, it is unlawful to make such offer
or solicitation. Neither the delivery of this Prospectus nor any
sale made hereunder shall, under any circumstances, create an
implication that there has not been any change in the facts set
forth in this Prospectus or in the affairs of the Company since the
date hereof.
TABLE OF CONTENTS
Page
Available Information. . . . . . . . . . 2
Incorporation of Certain Information by
Reference. . . . . . . . . . . . . . . . 3
The Company. . . . . . . . . . . . . . . 4
Ratio of Earnings to Combined Fixed
Charges
and Preferred Stock Dividends . . . . . 5
Federal Income Tax and ERISA
Considerations . . . . . . . . . . . . . 5
Description of Capital Stock . . . . . . 6
Legal Matters. . . . . . . . . . . . . . 9
Experts. . . . . . . . . . . . . . . . . 10
AVAILABLE INFORMATION
Health and Retirement Properties Trust (the "Company") has
filed with the Securities and Exchange Commission (the
"Commission") in Washington, D.C., a registration statement on
Form S-2 (together with all amendments thereto, the "Registration
Statement") under the Securities Act of 1933, as amended, with
respect to the securities of the Company offered hereby. This
Prospectus, which is part of the Registration Statement, does not
contain all of the information set forth in the Registration
Statement and the exhibits and schedules thereto. For further
information concerning the Company and the securities offered
hereby, reference is made to the Registration Statement, including
the exhibits and schedules thereto. Copies of the Registration
Statement together with such exhibits and schedules may be obtained
from the Commission at its principal office in Washington, D.C.
upon payment of a prescribed fee.
The Company is subject to the informational requirements of
the Securities Exchange Act of 1934 (the "Exchange Act") and, in
accordance therewith, files reports and other information with the
Commission. Reports, proxy statements and other information filed
by the Company with the Commission can be inspected and copied at
the public reference facilities maintained by the Commission at
Judiciary Plaza, Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the following regional offices of the
Commission: Chicago Regional Office, Suite 1400, 500 West Madison
Street, Chicago, Illinois 60661-2511; and New York Regional Office,
Seven World Trade Center, New York, New York 10048. Copies of such
material can be obtained at prescribed rates from the Public
Reference Section of the Commission at its principal office at 450
Fifth Street, N.W., Washington, D.C. 20549. In addition, the
Company's common shares of beneficial interest are listed on the
New York Stock Exchange, and reports, proxy material and other
information concerning the Company may be inspected at the offices
of The New York Stock Exchange located at 20 Broad Street, New
York, New York 10005.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents, which have been filed with the
Commission pursuant to the Exchange Act, are hereby incorporated in
this Prospectus and specifically made a part hereof by this
reference: (i) the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1993, dated March 22, 1994, as
amended by an Amendment No. 1 on Form-10K/A, dated March 29, 1994
(the "Form 10-K"); (ii) the Company's Quarterly Reports on Form
10-Q for the quarters ended March 31, 1994 and June 30, 1994,
copies of which accompany this Prospectus; and (iii) the Company's
Current Report on Form 8-K dated July 1, 1994; and (iv) the
Company's Registration Statement No. 33-53173 on Form S-3,
dated April 19, 1994, as amended. The consolidated
financial statements of Greenery Rehabilitation Group, Inc.
("Greenery") at and for the fiscal year ended September 30, 1993,
are incorporated herein by reference from Greenery's Annual Report
on Form 10-K for the fiscal year ended September 30, 1993; the
consolidated financial statements of Horizon Healthcare Corporation
("Horizon") at and for the fiscal year ended May 31, 1994; the
consolidated financial statements of GranCare, Inc. ("GranCare") at
and for the year ended December 31, 1993 and the quarters ended
March 31, 1994 and June 30, 1994 are incorporated herein by
reference from GranCare's Annual Report on Form 10-K for the year
ended December 31, 1993 and its Quarterly Reports on Form 10-Q for
the quarters ended March 31, 1994 and June 30, 1994; and the
consolidated financial statements of Marriott International, Inc.
("Marriott") at and for the fiscal year ended December 31, 1993 and
the fiscal quarters ended March 25, 1994 and June 17, 1994 are
incorporated herein by reference from Marriott's Annual Report on
Form 10-K for the year ended December 31, 1993 and its Quarterly
Reports on Form 10-Q for the quarters ended March 25, 1994 and June
17, 1994.
The Company will provide without charge to each person to whom
this Prospectus is delivered, upon the written or oral request of
such person, a copy of any and all of the information that has been
incorporated by reference in this Prospectus (excluding exhibits to
the information that is incorporated herein by reference unless
such exhibits are specifically incorporated by reference into the
information that this Prospectus incorporates). Requests for such
copies should be made to the Company at its principal executive
offices, 400 Centre Street, Newton, Massachusetts 02158, Attention:
Investor Relations, telephone (617) 332-3990.
All documents filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of
this Prospectus and prior to the termination of the offering of the
Shares shall be deemed incorporated by reference into this
Prospectus and to be a part hereof from the respective dates of
filing of such documents. Any statement contained herein or in a
document incorporated or deemed to be incorporated herein by
reference shall be deemed to be modified or superseded for purposes
of this Prospectus to the extent that a statement contained herein,
or in any other subsequently filed document that also is or is
deemed to be incorporated herein by reference, modifies or
supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus.
THE DECLARATION OF TRUST ESTABLISHING THE COMPANY, DATED
OCTOBER 9, 1986, A COPY OF WHICH, TOGETHER WITH ALL AMENDMENTS
THERETO (THE "DECLARATION"), IS DULY FILED IN THE OFFICE OF THE
DEPARTMENT OF ASSESSMENTS AND TAXATION OF THE STATE OF MARYLAND,
PROVIDES THAT THE NAME "HEALTH AND RETIREMENT PROPERTIES TRUST"
REFERS TO THE TRUSTEES UNDER THE DECLARATION COLLECTIVELY AS
TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY, AND THAT NO TRUSTEE,
OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF THE TRUST SHALL BE HELD
TO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION
OF, OR CLAIM AGAINST THE TRUST. ALL PERSONS DEALING WITH THE
TRUST, IN ANY WAY, SHALL LOOK ONLY TO THE ASSETS OF THE TRUST FOR
THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION.
<PAGE>
THE COMPANY
The Company is a real estate investment trust which invests in
income producing health care related real estate. The Company
presently has gross real estate investments and commitments,
including the investment in the properties described below under
the heading "The Chapple Transaction", totalling approximately $872
million in 158 Properties located in 29 states. The Company was
organized in October 1986 as a Maryland real estate investment
trust and commenced operations in December 1986. Its principal
executive offices are located at 400 Centre Street, Newton,
Massachusetts, and its telephone number is (617) 332-3990.
The Chapple Transaction
The Company has entered into an Agreement and Plan of
Reorganization (the "Agreement") with Bennington C. C., Inc., a
Vermont corporation, Berlin C. C., Inc., a Vermont corporation, St.
Johnsbury C. C., Inc., a Vermont corporation, Rochester C. C.,
Inc., a New Hampshire corporation, Springfield C. C., Inc., a
Vermont corporation, Burlington C. C., Inc., a Vermont corporation,
The LP Corporation, a Vermont corporation, and American Health
Care, Inc., a Vermont corporation (collectively, the "Chapple
Entities") involving the purchase by the Company of nine nursing
facilities owned by the Chapple Entities (the "Chapple
Properties"). These nine facilities contain an aggregate of 916
licensed beds located in Vermont (eight facilities with 808 beds)
and New Hampshire (one facility with 108 beds). The purchase price
to be paid by the Company for the Chapple Properties is
$35,000,000, subject to an adjustment equal to the amount of
certain existing liens on the properties, which the Company has
agreed to assume at the closing of the transaction. The purchase
price is to be paid by HRP at the closing in Preferred Shares,
based on a value of $15.00 per Preferred Share. This purchase
price was negotiated by the Company and the Chapple Entities on an
arms' length basis. Factors considered by the Company in
connection with these negotiations were the current and anticipated
cash flow from the Chapple Properties and its adequacy to meet
operational needs and financing obligations and to provide a
competitive market return on investment to the Company; the growth,
tax and regulatory environment of the communities in which the
Chapple Properties are located; occupancy and demand for similar
health care facilities in the same or nearby communities; the mix
of private and government sponsored patients; the mix of cost-based
and charge-based revenues; the construction quality, condition and
design of each facility; and the geographic area and type of
property. The terms and conditions of the Preferred Shares (see
"Description of Capital Stock -- Description of Series A Preferred
Shares") were also determined by arms' length negotiation among the
parties. The Chapple Transaction is subject to conditions and
contingencies customary in transactions of this type, including
health care and other regulatory approvals. Although no assurance
can be given that the Chapple Transaction will be consummated, the
Company expects that the closing will occur on or prior to December
31, 1994.
The Company intends to lease the Chapple Properties located in
Vermont to Vermont Subacute Corporation, a Delaware corporation
("VSA") and to lease the Chapple Property located in New Hampshire
to New Hampshire Subacute Corporation, a Delaware corporation
("NHSA"). Both VSA and NHSA are wholly owned by Barry M. Portnoy
and Gerard M. Martin, Trustees of the Company, and Mark J.
Finkelstein, President of the Company, who also serves as President
of Connecticut Subacute Corporation ("CSC"), Connecticut Subacute
Corporation II ("CSC II"), VSA and NHSA. If the Chapple
Transaction is consummated, it is presently contemplated that Mr.
Finkelstein will resign as President of the Company.
The Company anticipates that the leases will be triple net
leases with an initial term of approximately fourteen years
(expiring December 31, 2008) plus three successive ten year renewal
options, for a maximum term of 44 years. Such renewal options may
be exercised for all, but not less than all, of the Chapple
Properties. Minimum rent in the first year will be set at $306,250
per month. Additional rent will be payable commencing in 1996
based upon increases in net patient revenues realized at each
facility. The obligation of VSA and NHSA under the leases shall be
secured by a first lien on all tangible personal property used in
connection with the operation of the Chapple Properties. At the
expiration of the leases (including the expiration of any renewals
thereof), VSA and NHSA will have an option to purchase all, but not
less than all, of the Chapple Properties from the Company for a
purchase price equal to the greater of (i) the fair market value of
such properties at the time of the exercise of the option (or, if
the parties cannot agree on the fair market value, by appraisal)
and (ii) $35,000,000. In addition, VSA and NHSA will have a right
of first refusal in the event the Company determines to sell any or
all of the Chapple Properties.
Although the lease terms for the Chapple Properties were
negotiated between related parties, such terms have been approved
by the Company's Independent Trustees, and the Company believes
that such terms are at least as favorable to the Company as those
which could be obtained from a third party.
For the year ended December 31, 1993, based on information
furnished to the Company by the Chapple Entities, net revenues for
the Chapple Properties aggregated approximately $31.3 million, of
which 25% were charge based revenues. Average occupancy for the
three-year period ended June 30, 1994 was 96%.
</TABLE>
<TABLE>
<CAPTION>
RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
<S> <C> <C> <C> <C> <C> <C>
Year Ended December 31, Six Months
Ended
1989 1990 1991 1992 1993 6/30/94
EARNINGS
Income before gain on sale of
properties and extraordinary items 7,900 14,280 22,079 27,243 37,738 26,984
Adjustment for fixed charges 9,930 9,997 12,305 10,419 6,529 2,760
Total 17,830 24,277 34,384 37,662 44,267 29,744
FIXED CHARGES
Interest expense 9,554 9,511 11,741 9,466 6,217 2,328
Amortization and deferred
finance charges 376 486 564 953 312 432
Preferred stock dividends -- -- -- -- -- --
Total Fixed Charges 9,930 9,997 12,305 10,419 6,529 2,760
Ratio of Earnings to Combined Fixed
Charges and Preferred Stock
Dividends 1.8 2.4 2.8 3.6 6.8 10.8
</TABLE>
FEDERAL INCOME TAX AND ERISA CONSIDERATIONS
The following description of certain federal income tax
matters and the Employee Retirement Income Security Act of 1974, as
amended, ("ERISA") considerations relating to the Company is
qualified in its entirety by reference to the more detailed
description thereof contained in the Form 10-K, which is
incorporated herein by reference. Sullivan & Worcester, Boston,
Massachusetts, has rendered its opinion that the discussion in this
section and in the Form 10-K in the sections captioned "Federal
Income Tax Considerations" and "ERISA Plans, Keogh Plans and
Individual Retirement Accounts" in all material respects is
accurate and fairly summarizes the federal income tax and ERISA
issues which are material to an investment in the Company's shares
of beneficial interest (the "Shares") and that the opinions of
counsel referred to in those sections represent Sullivan &
Worcester's opinions on those subjects. Specifically, subject to
qualifications and assumptions contained in its opinion and in the
Form 10-K, Sullivan & Worcester has opined to the effect (a) that
the Company has been organized in conformity with the requirements
for federal tax qualifications as a REIT, has qualified as a REIT
for its 1987, 1988, 1989, 1990, 1991 and 1992 taxable years, and
that the Company's current and anticipated investments and its plan
of operation will enable it to continue to meet the requirements
for federal tax qualification and taxation as a REIT and (b) that,
under the "plan assets" regulations promulgated by the Department
of Labor under ERISA, the Common Shares are publicly offered
securities and the assets of the Company will not be deemed to be
"plan assets" under ERISA.
The Company is and intends to remain qualified as a REIT under
the Internal Revenue Code of 1986, as amended, (the "Code"). As a
REIT, the Company's net income which is distributed as dividends to
shareholders will be exempt from federal taxation. Distributions
to the Company's shareholders generally will be includable in their
income; however, dividends distributed which are in excess of
current or accumulated earnings will be treated for tax purposes as
a return of capital to the extent of a shareholder's basis, and
will reduce the basis of shareholders' Shares. Approximately 26%
of dividends distributed in calendar 1993 were treated as a return
of capital.
The Company intends to conduct its affairs so that the assets
of the Company will not be deemed to be "plan assets" of any
individual retirement account, employee benefit plan subject to
Title I of ERISA, or other qualified retirement plan subject to
Section 4975 of the Code which acquires its Shares.
EACH PROSPECTIVE PURCHASER OF THE SHARES OFFERED HEREBY IS
ADVISED TO CONSULT HIS, HER OR ITS OWN PROFESSIONAL ADVISOR
REGARDING THE SPECIFIC FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX
AND ERISA CONSEQUENCES TO HIM, HER OR IT OF THE PURCHASE, OWNERSHIP
AND SALE OF THE SHARES OFFERED HEREBY.
DESCRIPTION OF CAPITAL STOCK
The following description of the Shares does not purport to be
complete but contains a summary of certain portions of the
Declaration and By-laws of the Company.
Description of Shares of Beneficial Interest
The Company is authorized to issue an aggregate of 150,000,000
Shares in two classes: 100,000,000 common shares of beneficial
interest, $.01 par value per share, and 50,000,000 preferred shares
of beneficial interest. All the Shares presently outstanding are
Common Shares. The Board of Trustees is authorized to cause the
issuance, without shareholder approval, of classes or series of
preferred shares from time to time and to set (or change, if the
class or series has previously been established) the preferences,
conversion or other rights, voting powers, restrictions,
limitations as to dividends, qualifications or terms and conditions
of redemption of such preferred shares. Pursuant thereto, and in
connection with the Chapple Transaction, the Company will issue the
Preferred Shares, which have the terms and conditions described
below under the heading "Description of Series A Preferred Shares".
Except as otherwise determined by the Board of Trustees with
respect to any class or series of preferred shares, all of the
Company's Shares: (i) will participate equally in dividends payable
to shareholders when, as and if declared by the Board of Trustees
and ratably in net assets available for distribution to
shareholders on liquidation or dissolution; (ii) will have one vote
per Share on all matters submitted to a vote of the shareholders;
(iii) will not have cumulative voting rights in the election of
Trustees; (iv) will have no preference, conversion, exchange or
preemptive rights; and (v) will be validly issued, fully paid and
nonassessable by the Company upon issuance.
Description of Series A Preferred Shares
Immediately prior to the consummation of the Chapple
Transaction, the Trustees will file Articles Supplementary to the
Declaration with the State Department of Assessments and Taxation
of Maryland. These Articles Supplementary will establish the
Company's Series A Preferred Shares of Beneficial Interest and set
forth the terms and conditions thereof. The form of the Articles
Supplementary has been filed with the Securities and Exchange
Commission as an exhibit to the Registration Statement of which
this Prospectus forms a part, and the summary description of the
terms and conditions of the Preferred Shares set forth below is
qualified in its entirety by reference to such exhibit. Although
the Company does not intend to list the Preferred Shares on any
exchange, the issuance of the Preferred Shares is subject to the
waiver by the New York Stock Exchange of certain guidelines
pertaining to preferred stock for companies whose securities are
listed for trading thereon.
A total of 2,000,000 of the 50,000,000 preferred shares of
beneficial interest authorized by the Declaration will be
designated as Preferred Shares. Each Preferred Share will have, as
to all matters submitted to a vote of the shareholders of the
Company, one-tenth the number of votes to which such Preferred
Share would be entitled if it were a Common Share. The holders of
Preferred Shares will not be entitled to vote separately as a class
on any matter.
The holders of the Preferred Shares will participate equally
with holders of Common Shares in all dividends (other than
dividends paid in Common Shares, which dividends will be paid in
Preferred Shares based upon the Conversion Ratio, as defined below)
payable to shareholders of the Company, when, as and if declared by
the Trustees, except that the holders of the Preferred Shares (a)
shall not be entitled to receive any dividend declared by the
Trustees in respect of the Company's operations during the fiscal
quarter ending immediately prior to the date of issuance of the
Preferred Shares, and (b) shall be entitled to receive only a
prorated portion (pursuant to a formula set forth in the Articles
Supplementary) of any dividend declared by the Trustees in respect
of the Company's operations during the fiscal quarter during which
the Preferred Shares are issued.
Upon any liquidation, dissolution or winding up of the
Company, after payment or provision for payment of all debts and
other obligations and liabilities of the Company, the holders of
Preferred Shares shall be entitled, before any distribution or
payment is made upon any other shares of the capital stock of the
Company (other than preferred shares of beneficial interest having
a senior or equal priority to the Preferred Shares), to be paid an
amount equal to $15.00 per Preferred Share, after which the holders
of the Preferred Shares will not be entitled to any further
payment. If the assets of the Company are insufficient to permit
the payment in full of such preferential amounts, then the entire
amount of assets of the Company available for distribution shall be
distributed ratably among the holders of the Preferred Shares and
the holders of any other preferred shares of beneficial interest
now or hereafter outstanding having equal priority.
As set forth above under the caption "The Company -- The
Chapple Transaction", the Preferred Shares will be issued to the
Chapple Entities (the "Initial Holders") in connection with the
Company's acquisition of the Chapple Properties from the Initial
Holders. The Articles Supplementary provide that the Initial
Holders may not sell, transfer or make any disposition or
conversion of any Preferred Shares prior to the day after the
record date for the dividend declared by the Trustees in respect of
the Company's operations during the fiscal quarter during which the
Preferred Shares are issued (or the day after the Trustees announce
that no such dividend will be declared). At any time after such
date, an Initial Holder may (a) transfer Preferred Shares to any
bona fide transferee who or which is unaffiliated with such Initial
Holder, in which case the transferred Preferred Shares will
automatically be converted into Common Shares on the basis of one
Common Share for each Preferred Share transferred (the "Conversion
Ratio"), or (b) transfer any Preferred Shares to any bona fide
transferee who or which is affiliated with such Initial Holder, in
which case the transferred Preferred Shares will remain Preferred
Shares in the hands of the transferee. If the Company at any time
subdivides (by stock split, stock dividend, or otherwise) its
outstanding Common Shares into a greater number of shares, the
Conversion Ratio in effect immediately prior to such subdivision
will be proportionately increased. If the Company at any time
combines (by reverse stock split or otherwise) its outstanding
Common Shares into a smaller number of shares, the Conversion Ratio
in effect immediately prior to such combination will be
proportionately reduced.
The Trustees may at any time declare that all, but not less
than all, outstanding Preferred Shares are to be converted into
Common Shares at the Conversion Ratio then in effect, by written
notice mailed to each holder of Preferred Shares not less than 10
nor more than 90 days prior to a proposed conversion date. No
Preferred Share will be entitled to any dividends accruing after
the conversion date specified in such notice, and on such
conversion date all rights of the holders of Preferred Shares as
such holders shall cease. There is no requirement for or
restriction on repurchase or redemption of the Preferred Shares by
the Company in the Articles Supplementary.
Limitation of Liability; Shareholder Liability
Maryland law permits a REIT to provide, and the Declaration
provides, that no Trustee, officer, shareholder, employee or agent
of the Company shall be held to any personal liability, jointly or
severally, for any obligation of, or claim against, the Company,
and that, as far as practicable, each written agreement of the
Company is to contain a provision to that effect. Despite these
facts counsel has advised the Company that in some jurisdictions
the possibility exists that shareholders of a non-corporate entity
such as the Company may be held liable for acts or obligations of
the Company. Counsel has advised the Company that the State of
Texas may not give effect to the limitation of shareholder
liability afforded by Maryland law, but that Texas law would likely
recognize contractual limitations of liability such as those
discussed above. The Company intends to conduct its business in a
manner designed to minimize potential shareholder liability by,
among other things, inserting appropriate provisions in written
agreements of the Company; however, no assurance can be given that
shareholders can avoid liability in all instances in all
jurisdictions.
The Declaration provides that, upon payment by a shareholder
of any such liability, the shareholder will be entitled to
indemnification by the Company. There can be no assurance that, at
the time any such liability arises, there will be assets of the
Company sufficient to satisfy the Company's indemnification
obligation. The Trustees intend to conduct the operations of the
Company, with the advice of counsel, in such a way as to minimize
or avoid, as far as practicable, the ultimate liability of the
shareholders of the Company. The Trustees do not intend to provide
insurance covering such risk to the shareholders.
Redemption and Business Combinations
For the Company to qualify as a REIT under the Code, in any
taxable year, not more than 50% in value of its outstanding Shares
may be owned, directly or indirectly, by five or fewer individuals,
and the Shares must be owned by 100 or more persons during at least
335 days of a taxable year or a proportionate part of a taxable
year less than 12 months. In order to meet these and other
requirements, the Trustees have the power to redeem or prohibit the
transfer of a sufficient number of Shares to maintain or bring the
ownership of the Shares into conformity with such requirements. In
connection with the foregoing, if the Trustees shall, at any time
and in good faith, be of the opinion that direct or indirect
ownership of Shares representing more than 8.5% in value of the
total Shares outstanding (the "Excess Shares") has or may become
concentrated in the hands of one beneficial owner, other than
"Excepted Persons" (as defined in the Declaration), the Trustees
shall have the power (i) to purchase from any shareholder of the
Company such Excess Shares, and (ii) to refuse to transfer or issue
Shares to any person whose acquisition of such Shares would, in the
opinion of the Trustees, result in the direct or indirect
beneficial ownership by any person of Shares representing more than
8.5% in value of the outstanding Shares. Any transfer of Shares,
options, or other securities convertible into Shares that would
create a beneficial owner (other than any of the Excepted Persons)
of Shares representing more than 8.5% in value of the total shares
outstanding shall be deemed void ab initio and the intended
transferee shall be deemed never to have had an interest therein.
Further, the Declaration provides that transfers or purported
acquisitions, directly, indirectly or by attribution, of Shares, or
securities convertible into Shares, that could result in
disqualification of the Company as a REIT are null and void and
permits the Trustees to repurchase Shares or other securities to
the extent necessary to maintain the Company's status as a REIT.
The purchase price for any Shares so purchased shall be determined
by the price of the Shares on the principal exchange on which they
are then traded or, if no such price is available, then the
purchase price shall be equal to the net asset value of such Shares
as determined by the Trustees in accordance with applicable law.
From and after the date fixed for purchase by the Trustees, and so
long as payment of the purchase price for the Shares to be so
redeemed shall have been made or duly provided for, the holder of
any Excess Shares so called for purchase shall cease to be entitled
to distributions, voting rights and other benefits with respect to
such Shares, except the right to payment of the purchase price for
the Shares.
The Declaration also requires that, except in certain
circumstances, "Business Combinations" (as defined therein) between
the Company and a beneficial holder of 10% or more of the
outstanding Shares, other than HRPT Advisors, Inc. (the "Advisor")
or any wholly-owned subsidiary thereof, be approved by the
affirmative vote of the holders of at least 75% of the outstanding
Shares.
Under the Declaration, the number of Trustees may be fixed
from time to time by two-thirds of the Trustees or by amendment of
the Declaration by the shareholders of the Company, with a minimum
of three and a maximum of 12 Trustees, a majority of whom must be
Independent Trustees. The Declaration fixes the current number of
Trustees of the Company at five and divides the Board of Trustees
into three groups. Trustees in each group are elected to
three-year terms. As the Trustees' terms expire, replacements are
elected by a majority vote of the outstanding Shares. The
classified nature of the Board of Trustees may make it more
difficult for the shareholders to remove the management of the
Company than if all Trustees were elected on an annual basis.
Vacancies may be filled by a majority of the remaining Trustees,
except that a vacancy among the Independent Trustees must be filled
by a majority of the remaining Independent Trustees or by majority
vote of the Company's shareholders. Any Trustee may be removed for
cause by all of the remaining Trustees, or with or without cause by
vote of two-thirds of the Shares then outstanding and entitled to
vote thereon.
The provisions regarding business combinations and the
classified nature of the Trustees and certain other matters may not
be repealed or amended without the affirmative vote of the holders
of at least 75% of the outstanding Shares, provided that the
Trustees, by two-thirds vote, may, without the approval or consent
of the shareholders adopt any amendment that they in good faith
determine to be necessary to permit the Company to qualify as a
REIT under the Code.
The foregoing provisions may have the effect of discouraging
unilateral tender offers or other takeover proposals which certain
shareholders might deem in their interests or pursuant to which
they might receive a substantial premium for their Shares. The
provisions could also have the effect of insulating current
management against the possibility of removal and could, by
possibly reducing temporary fluctuations in market price caused by
accumulations of shares, deprive shareholders of opportunities to
sell at a temporarily higher market price. However, the Trustees
believe that inclusion of the business combination provisions in
the Declaration may help assure fair treatment of shareholders and
preserve the assets of the Company.
Control Share Acquisition
Maryland law provides for a limitation of voting rights in a
"control share acquisition." The Maryland statute defines a
"control share acquisition" at the 20%, 33-1/3% and 50% acquisition
levels, and requires a two-thirds stockholder vote (excluding
shares owned by the acquiring person and certain members of
management) to accord voting rights to stock acquired in a control
share acquisition. The statute would require the target to hold a
special meeting at the request of an actual or proposed control
share acquiror or subject to compliance with certain conditions by
such acquiror. In addition, unless the charter, declaration of
trust or by-laws provide otherwise, the statute gives the Company,
within certain time limitations, various redemption rights if there
is a stockholder vote on the issue and the grant of voting rights
is not approved, or if an "acquiring person statement" is not
delivered to the target within 10 days following a control share
acquisition. Moreover, unless the charter, declaration of trust or
by-laws provide otherwise, the statute provides that if, before a
control share acquisition occurs, voting rights are accorded to
control shares which results in the acquiring person having
majority voting power, then minority stockholders have appraisal
rights. An acquisition of shares may be exempted from the control
share statute provided that a charter, declaration of trust or
by-law provision is adopted for such purpose prior to the control
share acquisition. There are presently no such provisions in the
Declaration or by-laws of the Company.
Transfer Agent and Registrar
State Street Bank and Trust Company is the transfer agent and
registrar of the Common Shares.
New York Stock Exchange
The Company's Common Shares are traded on the New York Stock
Exchange. The Company does not intend to list the Preferred Shares
for trading on any exchange.
LEGAL MATTERS
Certain legal matters with respect to the Shares offered
hereby will be passed upon for the Company by Sullivan & Worcester,
Boston, Massachusetts. Sullivan & Worcester will rely, as to all
matters of Maryland law, upon the opinion of Piper & Marbury,
Baltimore, Maryland. Sullivan & Worcester has also given its
opinion as to certain federal income tax matters and certain ERISA
considerations relating to the Company, which matters are discussed
in the Form 10-K. See "Federal Income Tax and ERISA
Considerations". Barry M. Portnoy, a partner in the firm of
Sullivan & Worcester, is a Trustee of the Company and a director
and 50% shareholder of each of the Advisor, CSC, CSCII, a director
and 33-1/3% shareholder of VSA and NHSA, and a director of Horizon
Healthcare ("Horizon"). Sullivan & Worcester represents the
Advisor, CSC, CSCII, VSA and NHSA on various matters. CSC, CSCII
and Horizon are (and VSA and NHSA, upon consummation of the Chapple
Transaction, will be) tenants of the Company.
EXPERTS
The financial statements of the Company appearing in the
Company's Annual Report (Form 10-K) for the year ended December 31,
1993; the consolidated financial statements of Greenery appearing
in the Greenery Annual Report (Form 10-K) for the year ended
September 30, 1993; and the consolidated financial statements of
GranCare appearing in the GranCare Annual Report (Form 10-K) for
the year ended December 31, 1993 have been audited by Ernst & Young
LLP, independent auditors, as set forth in their reports thereon
included therein and are incorporated herein by reference. Such
financial statements are incorporated herein in reliance upon such
reports given upon the authority of such firm as experts in
auditing and accounting.
The audited consolidated financial statements and schedules of
Horizon incorporated by reference in this Prospectus and elsewhere
in the registration statement to the extent and for the periods
indicated in their reports, have been audited by Arthur Andersen
LLP, independent public accountants, and are included herein in
reliance upon the authority of said firms as experts in giving said
reports.
The consolidated financial statements and schedules of
Marriott incorporated by reference in this Prospectus and elsewhere
in the registration statement have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their report
with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in giving said report. Reference
is made to said report, which includes an explanatory paragraph
with respect to the change in the method of accounting for income
tax as discussed in "Income Taxes" in the notes to the consolidated
financial statements.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
Set forth below is an estimate of the amount of fees and
expenses to be incurred in connection with the issuance and
distribution of the Shares registered hereby.
Registration Fee under Securities Act . . . $ 6,000.00
Legal Fees. . . . . . . . . . . . . . . . . *
Accounting Fees . . . . . . . . . . . . . . *
Transfer Agent Fees . . . . . . . . . . . . *
Miscellaneous Fees. . . . . . . . . . . . . *
Total. . . . . . . . . . . . . . . . . $
________
* To be filed by amendment.
Item 15. Indemnification of Trustees and Officers.
Section 7.5 of the Company's Declaration of Trust,
incorporated by reference as Exhibit 3.1 to this Registration
Statement, which provides for indemnification of Trustees and
officers of the Company, is hereby incorporated by reference.
Item 16. Exhibits.
2.1 Agreement and Plan of Reorganization. (*)
2.2 Letter of Intent between CSC and the Company dated
September 1, 1994. (*)
3.2 Form of Articles Supplementary establishing the Preferred
Shares. (*)
5.1 Opinion and Consent of Sullivan & Worcester regarding
legality. (#)
5.2 Opinion and Consent of Piper & Marbury. (#)
7.1 Opinion and Consent of Piper & Marbury regarding
liquidation preference. (#)
8.1 Opinion and Consent of Sullivan & Worcester regarding tax
matters. (#)
10.1 Advisory Agreement, as amended. (2)(+)
10.2 Second Amendment to Advisory Agreement. (7)(+)
10.3 Incentive Share Award Plan. (5)(+)
10.4 AMS Properties Security Agreement. (3)
10.5 AMS Subordination Agreement. (3)
10.6 AMS Guaranty. (3)
10.7 AMS Pledge Agreement (pledging shares of AMSP). (3)
10.8 AMS Holding Co. Pledge Agreement (pledging shares of AMS).
(4)
10.9 Indemnification Agreement. (5)
10.10 Amended and Restated Voting Trust Agreement. (5)
10.11 Amended and Restated HRP Shares Pledge Agreement. (5)
10.12 Guaranty, Cross-Default and Cross-Collateralization
Agreement. (5)
10.13 Purchase Agreement among HMC Retirement Properties, Inc.,
HMH Properties, Inc. and the Company dated March 17, 1994,
as amended. (6)
10.14 Amended and Restated (June 1994) Revolving Credit Facility.
(7)
10.15 Amendment to Amended and Restated Revolving Credit Facility
dated as of September 30, 1994. (*)
12.1 Statement re Computation of Ratios. (*)
23.1 Consent of Sullivan & Worcester (included in their opinions
to be filed as Exhibits 5.1 and 8.1 to this Registration
Statement). (#)
23.2 Consent of Piper & Marbury (included in their opinions to
be filed as Exhibits 5.2 and 7.1 to this Registration
Statement). (#)
23.3 Consent of Ernst & Young LLP (included as page II-4 of this
Registration Statement). (*)
23.4 Consents of Arthur Andersen LLP (included as pages II-5 and
II-6 of this Registration Statement). (*)
24.1 Power of Attorney (included as page II-8 of this
Registration Statement). (*)
__________________________________
(*) Filed herewith.
(+) Management contract or compensatory plan or arrangement.
(#) To be filed by amendment.
(1) Incorporated by reference to the Company's Registration
Statement No. 33-9412 on Form S-11 dated October 10, 1986 and
amendments thereto.
(2) Incorporated by reference to the Company's Registration
Statement No. 33-16799 on Form S-11 dated August 27, 1987 and
amendments thereto.
(3) Incorporated by reference to the Company's Current Report on
Form 8-K dated December 28, 1990.
(4) Incorporated by reference to the Company's Annual Report on
Form 10-K for its fiscal year ended December 31, 1991.
(5) Incorporated by reference to the Company's Registration
Statement No. 33-55684 on Form S-11 dated December 23, 1992 and
amendments thereto.
(6) Incorporated by reference to the Company's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1994.
(7) Incorporated by reference to the Company's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1994.
Item 17. Undertakings.
The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of
1933, each filing of the registrant's annual report pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and,
where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial bona
fide offering thereof.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a trustee, officer
or controlling person of the Registrant in the successful defense
of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
<PAGE>
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption
"Experts" in the Registration Statement (Form S-2) and related
Prospectus of Health and Retirement Properties Trust for the
registration of 2,000,000 of its preferred shares of beneficial
interest and the common shares of beneficial interest into which
such preferred shares are convertible and to the incorporation by
reference therein of (a) our report dated February 11, 1994 with
respect to the financial statements schedules of Health and Retirement
Properties Trust included in its Annual Report (Form 10-K) for the
year ended December 31, 1993, (b) our report dated December 30,
1993 with respect to the consolidated financial statements and
schedules of Greenery Rehabilitation Group, Inc. included in
Greenery's Annual Report (Form 10-K) for the year ended September
30, 1993, and (c) our report dated March 4, 1994 with respect to
the consolidated financial statements and schedules of GranCare,
Inc. included in GranCare's Annual Report (Form 10-K) for the year
ended December 31, 1993, all filed with the Securities and Exchange
Commission.
Boston, Massachusetts ERNST & YOUNG LLP
October 7, 1994
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this registration statement of our
report dated July 22, 1994 included in Horizon Healthcare
Corporation's Form 10-K for the year ended May 31, 1994, dated
August 8, 1994, and to all references to our Firm included in this
registration statement.
ARTHUR ANDERSEN LLP
Albuquerque, New Mexico
October 6, 1994<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this registration statement (filed
October 11, 1994) of our report dated January 28, 1994 included in
the Marriott International, Inc. Form 10-K for the year ended
December 31, 1993 and to all references to our Firm included in
this registration statement.
ARTHUR ANDERSEN LLP
Washington, D.C.
October 7, 1994
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-2 and has duly caused
this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Newton,
Commonwealth of Massachusetts on October 7, 1994.
HEALTH AND RETIREMENT PROPERTIES TRUST
By: /s/ Mark J. Finkelstein
Mark J. Finkelstein, President
and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signatures Title Date
<S> <C> <C>
/s/ Mark J. Finkelstein President and October 7, 1994
Mark J. Finkelstein Chief Executive
Officer
/s/ David J. Hegarty Executive Vice October 7, 1994
David J. Hegarty President and
Chief Financial and
Accounting Officer
/s/ John L. Harrington Trustee October 7, 1994
John L. Harrington
/s/ Arthur G. Koumantzelis Trustee October 7, 1994
Arthur G. Koumantzelis
/s/ Rev. Justinian Manning, C.P.Trustee October 7, 1994
Rev. Justinian Manning, C.P.
/s/ Gerard M. Martin Trustee October 7, 1994
Gerard M. Martin
/s/ Barry M. Portnoy Trustee October 7, 1994
Barry M. Portnoy
/TABLE
<PAGE>
POWER OF ATTORNEY
The undersigned Officers and Trustees of Health and Retirement
Properties Trust hereby severally constitute Mark J. Finkelstein, David
J. Hegarty, Gerard M. Martin and Barry M. Portnoy, and each of them, to
sign for us and in our names in the capacities indicated below, the
Registration Statement on Form S-2 herewith filed with the Securities and
Exchange Commission, and any and all amendments thereto, hereby ratifying
and confirming our signatures as they may be signed by our said attorneys
to the Registration Statement and any and all amendments to the
Registration Statement.
Witness our hands and seals on the dates set forth below.
<TABLE>
<CAPTION>
Signatures Title Date
<S> <C> <C>
/s/ Mark J. Finkelstein President and October 7, 1994
Mark J. Finkelstein Chief Executive
Officer
/s/ David J. Hegarty Executive Vice October 7, 1994
David J. Hegarty President and
Chief Financial and
Accounting Officer
/s/ John L. Harrington Trustee October 7, 1994
John L. Harrington
/s/ Arthur G. Koumantzelis Trustee October 7, 1994
Arthur G. Koumantzelis
/s/ Rev. Justinian Manning, C.P.Trustee October 7, 1994
Rev. Justinian Manning, C.P.
/s/ Gerard M. Martin Trustee October 7, 1994
Gerard M. Martin
/s/ Barry M. Portnoy Trustee October 7, 1994
Barry M. Portnoy
</TABLE>
AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
BERLIN C.C., INC.,
A VERMONT CORPORATION,
ST. JOHNSBURY C.C., INC.,
A VERMONT CORPORATION,
ROCHESTER C.C., INC.,
A NEW HAMPSHIRE CORPORATION,
SPRINGFIELD C.C., INC.
A VERMONT CORPORATION,
BURLINGTON C.C., INC.,
A VERMONT CORPORATION
BENNINGTON C.C., INC.,
A VERMONT CORPORATION
THE LP CORPORATION,
A VERMONT CORPORATION,
AMERICAN HEALTH CARE, INC.,
A VERMONT CORPORATION
("SELLERS")
and
HEALTH AND RETIREMENT PROPERTIES TRUST,
A MARYLAND REAL ESTATE INVESTMENT TRUST,
("HRP")
___________________________
September 1, 1994<PAGE>
TABLE OF CONTENTS
Section 1. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . 1
Section 2. CLOSING. . . . . . . . . . . . . . . . . . . . . . . . . 4
2.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 3. CONDITIONS TO HRP'S OBLIGATION TO CLOSE. . . . . . . . . 4
3.1 Closing Documents . . . . . . . . . . . . . . . . . . . . 5
3.2 Condition of Properties . . . . . . . . . . . . . . . . . 5
3.3 Title Policies. . . . . . . . . . . . . . . . . . . . . . 6
3.4 Opinions of Counsel . . . . . . . . . . . . . . . . . . . 6
3.5 Hart-Scott-Rodino . . . . . . . . . . . . . . . . . . . . 6
3.6 HRP Shares . . . . . . . . . . . . . . . . . . . . . . . 6
3.7 Rate Setting . . . . . . . . . . . . . . . . . . . . . . 7
3.8 VSA/NHSA Agreement . . . . . . . . . . . . . . . . . . . 7
3.9 Board Approval . . . . . . . . . . . . . . . . . . . . . 7
3.10 Other Properties . . . . . . . . . . . . . . . . . . . . 7
3.11 Other Approvals . . . . . . . . . . . . . . . . . . . . . 7
3.12 Deposit . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 4. CONDITIONS TO SELLERS' OBLIGATION TO CLOSE. . . . . . . . 8
4.1 HRP Shares . . . . . . . . . . . . . . . . . . . . . . . 8
4.2 Closing Documents . . . . . . . . . . . . . . . . . . . . 8
4.3 Opinion of Counsel . . . . . . . . . . . . . . . . . . . 8
4.4 Satisfaction of Other Conditions . . . . . . . . . . . . 8
Section 5. REPRESENTATIONS AND WARRANTIES OF SELLERS. . . . . . . . 8
5.1 Status and Authority of the Sellers . . . . . . . . . . . 8
5.2 Action of the Sellers . . . . . . . . . . . . . . . . . . 9
5.3 No Violations of Agreements . . . . . . . . . . . . . . . 9
5.4 Litigation . . . . . . . . . . . . . . . . . . . . . . . 9
5.5 Existing Leases, Agreements, Etc . . . . . . . . . . . . 9
5.6 Disclosure . . . . . . . . . . . . . . . . . . . . . . . 10
5.7 Utilities, Etc. . . . . . . . . . . . . . . . . . . . . . 10
5.8 Compliance With Law . . . . . . . . . . . . . . . . . . . 10
5.9 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.10 Special Districts . . . . . . . . . . . . . . . . . . . . 11
5.11 Not A Foreign Person . . . . . . . . . . . . . . . . . . 11
5.12 Hazardous Substances . . . . . . . . . . . . . . . . . . 11
Section 6. REPRESENTATIONS AND WARRANTIES OF HRP . . . . . . . . . . 11
6.1 Status and Authority of HRP . . . . . . . . . . . . . . . 11
6.2 Action of HRP . . . . . . . . . . . . . . . . . . . . . . 12
6.3 No Violations of Agreements . . . . . . . . . . . . . . . 12
6.4 Litigation . . . . . . . . . . . . . . . . . . . . . . . 12
6.5 Capitalization . . . . . . . . . . . . . . . . . . . . . 12
Section 7. COVENANTS OF THE SELLERS. . . . . . . . . . . . . . . . . 13
7.1 Compliance with Laws, Etc. . . . . . . . . . . . . . . . 13
7.2 Operation of the Facilities . . . . . . . . . . . . . . . 13
7.3 Approval of Agreements . . . . . . . . . . . . . . . . . 13<PAGE>
-ii-
7.4 Compliance with Agreements . . . . . . . . . . . . . . . 13
7.5 Notice of Material Changes or Untrue Representations . . 13
7.6 Title Matters . . . . . . . . . . . . . . . . . . . . . . 13
7.7 Survey Matters . . . . . . . . . . . . . . . . . . . . . 14
7.8 Other Diligence Materials . . . . . . . . . . . . . . . . 15
7.9 Other Activities During the Period Prior to Closing . . . 15
Section 8. ADJUSTMENTS. . . . . . . . . . . . . . . . . . . . . . . 16
8.1 Adjustments Based on Existing Liens . . . . . . . . . . . 16
8.2 Adjustments Based on Expenses of Operations, etc . . . . 16
8.3 Closing Costs. . . . . . . . . . . . . . . . . . . . . . 17
Section 9. DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . . 17
9.1 Default by the Sellers . . . . . . . . . . . . . . . . . 17
9.2 Default by HRP . . . . . . . . . . . . . . . . . . . . . 18
Section 10. INDEMNIFICATION. . . . . . . . . . . . . . . . . 18
10.1 Indemnification by the Sellers . . . . . . . . . . . . 18
10.2 Indemnification by HRP . . . . . . . . . . . . . . . . 18
10.3 Notice and Payment of Claims . . . . . . . . . . . . . 19
Section 11. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . 19
11.1 Expenses . . . . . . . . . . . . . . . . . . . . . . . . 19
11.2 Brokerage Commissions . . . . . . . . . . . . . . . . . 19
11.3 Publicity. . . . . . . . . . . . . . . . . . . . . . . . 20
11.4 Execution of Additional Documents. . . . . . . . . . . . 20
11.5 Notices . . . . . . . . . . . . . . . . . . . . . . . . 20
11.6 Waivers, Etc. . . . . . . . . . . . . . . . . . . . . . 21
11.7 Assignment; Successors and Assigns . . . . . . . . . . . 22
11.8 Severability. . . . . . . . . . . . . . . . . . . . . . 22
11.9 Counterparts, Etc. . . . . . . . . . . . . . . . . . . . 22
11.10 Governing Law . . . . . . . . . . . . . . . . . . . . . 22
11.11 Jurisdiction. . . . . . . . . . . . . . . . . . . . . . 23
11.12 Performance on Business Days . . . . . . . . . . . . . 23
11.13 Attorneys Fees . . . . . . . . . . . . . . . . . . . . 23
11.14 Section and Other Headings . . . . . . . . . . . . . . 23
11.15 Entire Agreement . . . . . . . . . . . . . . . . . . . 23
11.16 Obligations of Sellers After the Closing . . . . . . . 24
11.17 Limitation of Liability. . . . . . . . . . . . . . . . 24<PAGE>
-iii-
Schedule A - List of Sellers
Schedule B - Allocation of HRP Shares
Schedule C-1 - Berlin Health and Rehab Center
Schedule C-2 - St. Johnsbury Health and Rehab Center
Schedule C-3 - Springfield Health and Rehab Center
Schedule C-4 - Bennington Health and Rehab Center
Schedule C-5 - Hanson Court Convalescent Home
Schedule C-6 - Redstone Villa
Schedule C-7 - Rowan Court Health and Rehab Center
Schedule C-8 - Rochester Manor
Schedule C-9 - Burlington Health and Rehab Center
Schedule D - Liens and Encumbrances
Schedule E - Opinion of Sellers' Counsel
Schedule F - Contracts and Agreements; Licensed Bed
Capacity and Medicare/Medicaid Status
Schedule G - Opinion of HRP's Counsel
Schedule H - Compliance with Law
Schedule I - Hazardous Substances
Schedule J - Capitalization of HRP
Schedule K - Form of Surveyor's Certificate<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION is made as of the 1st day
of September, 1994, by and among the Sellers listed on Schedule A hereto
(collectively, the "Sellers") and HEALTH AND RETIREMENT PROPERTIES
TRUST, a Maryland real estate investment trust ("HRP").
WITNESSETH:
WHEREAS, Sellers are the owners and holders of the Properties (this
and other capitalized terms used and not otherwise defined herein having
the meanings ascribed to such terms in Section 1); and
WHEREAS, the Sellers wish to transfer substantially all of their
assets to HRP, solely in exchange for voting shares of HRP and the
assumption by HRP of certain of the liabilities of Sellers in a
transaction intended to qualify as a Reorganization within the meaning
of Section 368(a)(1)(C) of the Code;
WHEREAS, it is contemplated by Sellers and HRP that, upon the
consummation of such Reorganization, each Seller will distribute the HRP
Shares received by such Seller to its shareholders in complete
liquidation of such Seller, and will thereafter dissolve as a
corporation;
WHEREAS, HRP wishes to acquire substantially all of Sellers' assets
and agrees to assume certain liabilities of Sellers on the terms and
conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the mutual receipt
and legal sufficiency of which are hereby acknowledged, the Sellers and
HRP hereby agree as follows:
Section 1. DEFINITIONS.
Capitalized terms used in this Agreement shall have the meanings
set forth below or in the Section of this Agreement referred to below:
1.1 "Agreement" shall mean this Agreement and Plan of
Reorganization, together with Schedules A through K, attached hereto, as
it and they may be amended from time to time as herein provided.
1.2 "Business Day" shall mean any day other than a Saturday,
Sunday or any other day on which banking institutions in The
Commonwealth of Massachusetts, the State of Vermont or the State of New
Hampshire are authorized by law or executive action to close.
1.3 "Closing" shall have the meaning given such term in Section
2.1.<PAGE>
-2-
1.4 "Closing Date" shall have the meaning given such term in
Section 2.1.
1.5 "Code" means the United States Internal Revenue Code of 1986,
as amended.
1.6 "Declaration" shall mean the Declaration of Trust of HRP,
dated October 9, 1986, as the same has been and may be amended and
restated from time to time.
1.7 "Deposit" shall mean the sum of Two Hundred Fifty Thousand
Dollars ($250,000) paid by HRP to the Sellers and held by the Escrow
Agent for the benefit of the Sellers prior to the date of this
Agreement, receipt of which is hereby acknowledged by the Sellers.
1.8 "Escrow Agent" shall mean Miller, Eggleston and Rosenberg,
Ltd.
1.9 "Facilities" shall mean, collectively, the nursing homes,
retirement centers, congregate living facilities, pharmacies and/or
other facilities offering other related health care products or services
being operated by the Sellers at the Properties.
1.10 "HRP" shall have the meaning given such term in the preamble
to this Agreement.
1.11 "HRP Shares" shall mean Series A Preferred Shares, $.01 par
value per share, of HRP, (i) the offering and sale of which (and the
offering and sale of the common shares of beneficial interest, $.01 par
value per share, of HRP ("Common Shares") into which such Series A
Preferred Shares are convertible), in connection with the transaction
contemplated by this Agreement, shall have been registered under the
Securities Act of 1933, as amended, and any applicable state "blue-sky"
laws, prior to the Closing Date, and (ii) which shall have the following
terms: (a) each Series A Preferred Share shall have one-tenth the voting
power to which it would otherwise be entitled if such share were a
Common Share; (b) Series A Preferred Shares shall be convertible into
Common Shares on a one-for-one basis and shall automatically convert
upon an arms- length sale thereof by any Seller or at the discretion of
HRP's Board of Trustees; and (c) the Series A Preferred Shares shall be
entitled to a liquidation preference.
1.12 "Properties" shall mean, collectively, those certain real
properties, the improvements thereon, all fixtures, machinery, systems,
equipment, furniture and furnishings owned by the Sellers attached or
appurtenant thereto or used in connection therewith and all easements,
privileges, licenses, rights and appurtenances relating thereto, located
in (i) Berlin, Vermont and known as Berlin Health and Rehab Center, as
more particularly described in Schedule C-1, attached hereto and made a
part hereof; (ii) St. Johnsbury, Vermont and known as St. Johnsbury
Health and Rehab Center, as more particularly described in Schedule C-2,
attached hereto and made a part hereof; (iii) Springfield, Vermont and<PAGE>
-3-
known as Springfield Health and Rehab Center, as more particularly
described in Schedule C-3, attached hereto and made a part hereof; (iv)
Bennington, Vermont and known as Bennington Health and Rehab Center, as
more particularly described in Schedule C-4, attached hereto and made a
part hereof; (v) Springfield, Vermont and known as Hanson Court
Convalescent Home, as more particularly described in Schedule C-5,
attached hereto and made a part hereof; (vi) St. Albans, Vermont and
known as Redstone Villa, as more particularly described in Schedule C-6,
attached hereto and made a part hereof; (vii) Barre, Vermont and known
as Rowan Court Health and Rehab Center, as more particularly described
in Schedule C-7, attached hereto and made a part hereof; (viii)
Rochester, New Hampshire and known as Rochester Manor, as more
particularly described in Schedule C-8, attached hereto and made a part
hereof; and (ix) Burlington, Vermont and known as Burlington Health and
Rehab Center, as more particularly described in Schedule C-9, attached
hereto and made a part hereof.
1.13 "Registration Statement" shall mean a registration statement
filed by HRP with the Securities and Exchange Commission in order to
register the offering and sale of HRP Shares to the Sellers pursuant to
the terms of this Agreement.
1.14 "Sellers" shall have the meaning given such term in the
preamble to this Agreement.
1.15 "Surveys" shall have the meaning given such term in Section
7.6.
1.16 "Title Commitments" shall have the meaning given such term in
Section 7.6.
1.17 "Title Company" shall mean Lawyer's Title Company or such
other title insurance company as shall have been approved by HRP.
1.18 "VSA/NHSA Agreement" shall mean that certain Purchase and Sale
Agreement, dated the date hereof, among the Sellers, Vermont Subacute
Corporation ("VSA") and New Hampshire Subacute Corporation ("NHSA").
Section 2. CLOSING.
2.1 Closing. (a) The transfer and delivery of the Properties to
HRP and the issuance and delivery of HRP Shares to the Sellers shall be
consummated at a closing (the "Closing") to be held at the offices of
Sullivan & Worcester, One Post Office Square, Boston, Massachusetts, or
at such other location as the Sellers and HRP may agree, at 10:00 a.m.,
local time, on a date (the "Closing Date") ten (10) days after the later
to occur of (i) the expiration of any applicable waiting periods
required under or in connection with the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, or the receipt from the Federal
Trade Commission and any other applicable governmental agency having
jurisdiction of valid and enforceable waivers thereof, (ii) the<PAGE>
-4-
declaration of the effectiveness of the Registration Statement by the
Securities and Exchange Commission, (iii) the approval for listing on
the New York Stock Exchange of the shares into which the HRP Shares are
convertible and the waiver (if any is required) by the New York Stock
Exchange of any of the terms and conditions of the HRP Shares, and (iii)
the receipt of all other applicable approvals and licenses from any
applicable governmental bodies including, without limitation,
certificates or determinations of need, if required. In the event that
the Closing shall not have occurred on or before December 31, 1994,
provided that no action for specific performance shall have been
commenced by any party to enforce this Agreement, any party shall have
the right, by the giving of written notice, to terminate this Agreement
and, in such event, the Deposit, together with interest thereon, shall
be refunded to HRP in accordance with Section 9.1.
(b) At the Closing, the Sellers shall transfer and deliver to HRP
all of the Properties, and HRP shall accept delivery of the Properties.
In exchange for the Properties, HRP shall cause to be delivered to the
Sellers that number of HRP Shares, the value of which (as determined
pursuant to the following sentence) shall be equal to $35,000,000;
provided, however, that such amount shall be adjusted as may be required
pursuant to Section 8. The value given to each HRP Share shall be equal
to $15.00 per share. At the Closing, the portion of such HRP Shares
allocated to each Seller on Schedule B hereto shall be issued to such
Seller by delivery of a certificate or certificates representing that
number of HRP Shares set forth opposite such Seller's name on such
Schedule B, in such manner as each such Seller shall specify to HRP not
later than three (3) Business Days prior to the Closing.
Section 3. CONDITIONS TO HRP'S OBLIGATION TO CLOSE.
The obligation of HRP to accept delivery of the Properties and to
deliver the HRP Shares at the Closing shall be subject to the
satisfaction of the following conditions precedent on and as of the
Closing Date:
3.1 Closing Documents. The Sellers shall have delivered to HRP:
(a) a good and sufficient special warranty deed, or its local
equivalent, with respect to each of the Properties, in proper statutory
form for recording, duly executed and acknowledged by the Sellers,
conveying good and marketable title to the applicable Properties, free
from all liens and encumbrances other than (i) liens and encumbrances
approved by HRP in accordance with Sections 7.5 and 7.6 and (ii) liens
set forth on Schedule D which HRP shall assume (subject to a
corresponding reduction in the Purchase Price as set forth in Section
8);
(b) an assignment by the Sellers and an assumption by HRP, in form
and substance reasonably satisfactory to the Sellers and HRP, duly
executed and acknowledged by the Sellers and HRP, of all of the Sellers'<PAGE>
-5-
right, title and interest in, to and under all licenses, contracts,
permits and agreements affecting the Properties, excluding only those
licenses, contracts, permits or agreements HRP elects not to assume;
(c) an assignment by the Sellers and an assumption by HRP, in form
and substance reasonably satisfactory to, and duly executed and
acknowledged by, the Sellers and HRP of the liabilities set forth on
Schedule D which HRP has agreed to assume;
(d) a certificate of a duly authorized officer of each of the
Sellers confirming the continued truth and accuracy of the
representations and warranties of the Sellers in this Agreement;
(e) to the extent the same are in the Sellers' possession,
original, fully executed copies of all documents and agreements
pertaining to the Properties and, in any event, copies of all such
documents and agreements certified by a responsible officer of Sellers
as conforming to the originals in all respects;
(f) certified copies of all charter documents, applicable
corporate resolutions and certificates of incumbency with respect to
each of the Sellers; and
(g) such other conveyance documents, certificates, deeds and other
instruments as HRP, the Sellers or the Title Company may reasonably
require.
3.2 Condition of Properties. (a) All of the Properties and
Facilities shall be in substantially the same physical condition as on
the date of this Agreement, ordinary wear and tear excepted;
(b) No material default or event which with the giving of notice
and/or lapse of time could constitute a default shall have occurred and
be continuing under any material agreement benefiting or affecting the
Properties or the Facilities;
(c) No material adverse change shall have occurred, and no action
shall be pending or threatened which would adversely affect the
licensing, certification, qualification status, occupancy, eligibility
for participation in federal or state reimbursement programs or material
accreditations of any of the Facilities or, to the extent applicable,
the Properties; and
(d) No action shall be pending or threatened for the condemnation
or taking by power of eminent domain of all or any portion of the
Properties or all or any portion of the Facilities.
3.3 Title Policies. The Title Company shall be prepared, subject
only to payment of the applicable premium, to issue title insurance
policies to HRP, in form and substance satisfactory to HRP in accordance
with Sections 7.5 and 7.6, together with such affirmative coverages as<PAGE>
-6-
HRP may require and shall have been determined available prior to the
Closing.
3.4 Opinions of Counsel. HRP shall have received a written
opinion from Miller, Eggleston and Rosenberg, Ltd., special counsel to
the Sellers (or such additional local counsel as may be reasonably
acceptable to HRP), substantially in the form attached hereto as
Schedule E.
3.5 Hart-Scott-Rodino. The Sellers and HRP shall have complied
with all applicable provisions (if any) of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended.
3.6 HRP Shares. The Registration Statement shall have been
declared effective by the Securities and Exchange Commission, no stop
order suspending the effectiveness of the Registration Statement shall
be in effect and no proceedings for such purpose shall be pending or
threatened before such Commission. In addition, HRP shall have obtained
any necessary waivers from the New York Stock Exchange with respect to
the terms and conditions of the HRP Shares, and the common shares of
beneficial interest into which the HRP Shares are convertible shall have
been approved for listing upon official notice of issuance on the New
York Stock Exchange. Sellers shall have cooperated fully in the
furnishing of all requisite information concerning Sellers, the
Properties and the Facilities and the transactions contemplated by this
Agreement for use in preparation of said Registration Statement and
Sellers shall not have made any material misstatements or omitted to
state any fact necessary to be stated so as not to make any statement
misleading in connection with information furnished in connection
therewith.
3.7 Rate Setting. HRP shall have received such assurances as HRP,
in its sole discretion, shall deem necessary, including, without
limitation, opinions of counsel and/or confirmations from state
agencies, that the transactions contemplated by this Agreement will have
an acceptable effect on Medicaid rates for the Facilities; and HRP and
Sellers shall have entered into an agreement in form and substance
satisfactory to HRP, in its sole discretion, pursuant to which Sellers,
and, if any Seller is liquidated, the shareholders of such Seller, shall
jointly and severally agree to indemnify and hold harmless HRP from and
against any loss, liability, claims, causes of action, costs and
expenses, including, without limitation, reasonable attorney's fees,
incurred or suffered in connection with any Medicaid or Medicare
depreciation recaptures.
3.8 VSA/NHSA Agreement. The transactions contemplated by the
VSA/NHSA Agreement shall have been consummated.
3.9 Board Approval. The Board of Trustees of HRP shall have
approved the transactions contemplated hereby in all respects.<PAGE>
-7-
3.10 Other Properties. HRP (and/or VSA or NHSA) shall have
entered into mutually satisfactory purchase or lease agreements with
John F. Chapple and/or Marlin Management Services with regard to the
following properties: (a) 308 Pearl Street, Burlington, Vermont; (b)
the Mary Newton House, Chester Road, Springfield, Vermont; (c) 150 South
Champlain Street, Burlington, Vermont; (d) approximately 108 acres
located in Berlin, Vermont and known as The Rose's Farm; (e) computer
hardware and software and a high-speed copier owned or leased by Marlin
Management Services; and (f) pharmacy services currently provided to the
Facilities by an affiliate of Sellers.
3.11 Other Approvals. The Sellers and HRP shall have received, in
form and substance reasonably satisfactory to the Sellers and HRP, all
required approvals and waivers, including, without limitation, all
licenses, certificates of need and regulatory and reimbursement permits
and approvals as may be necessary or appropriate to consummate the
transaction contemplated by this Agreement and to use the Properties in
the same manner as they are currently being used by the Sellers, as set
forth on Schedule H hereto.
3.12 Deposit. The Escrow Agent shall have returned the Deposit,
together with interest accrued thereon, to HRP.
Section 4. CONDITIONS TO SELLERS' OBLIGATION TO CLOSE.
The obligation of the Sellers to convey the Properties and the
Facilities to HRP is subject to the satisfaction of the following
conditions precedent on and as of the Closing Date:
4.1 HRP Shares. HRP shall deliver to the Sellers the HRP Shares
in the manner provided in Section 2, adjusted as herein provided.
4.2 Closing Documents. HRP shall have delivered to the Sellers:
(a) A certificate of a duly authorized officer of HRP confirming
the continued truth and accuracy of the representations and warranties
of HRP in this Agreement; and
(b) Certified copies of all charter documents, applicable
resolutions and certificates of incumbency with respect to HRP.
4.3 Opinion of Counsel. The Sellers shall have received a written
opinion from (a) Sullivan & Worcester, special counsel to HRP (or such
additional local counsel as shall be reasonably satisfactory to
Sellers), substantially in the form attached hereto as Schedule E, and
(b) Miller, Eggleston & Rosenberg, special counsel to the Sellers, that
the transactions contemplated hereby qualify as a reorganization within
Section 368(a)(1)(C) of the Code.<PAGE>
-8-
4.4 Satisfaction of Other Conditions. The conditions precedent
described in Sections 3.5, 3.6, 3.7, 3.8 and 3.10 shall have been
satisfied.
Section 5. REPRESENTATIONS AND WARRANTIES OF SELLERS.
To induce HRP to enter into this Agreement, the Sellers jointly and
severally represent and warrant to HRP as follows:
5.1 Status and Authority of the Sellers. Each of the Sellers is a
corporation duly organized, validly existing and in corporate good
standing under the laws of its state of incorporation, and has all
requisite power and authority under the laws of such state and its
respective charter documents to enter into and perform its obligations
under this Agreement and to consummate the transactions contemplated
hereby. Each of the Sellers has duly qualified to transact business in
each jurisdiction in which the nature of the business conducted by it
requires such qualification. Each Seller is acquiring the HRP Shares
solely for investment purposes, and not with a view toward involvement
in the management of HRP.
5.2 Action of the Sellers. Each of the Sellers has taken all
necessary action to authorize the execution, delivery and performance of
this Agreement, and upon the execution and delivery of any document to
be delivered by the Sellers on or prior to the Closing Date, such
document shall constitute the valid and binding obligation and agreement
of each of the Sellers, enforceable against each of the Sellers in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws of
general application affecting the rights and remedies of creditors.
5.3 No Violations of Agreements. Except as set forth on Schedule
D, neither the execution, delivery or performance of this Agreement by
the Sellers, nor compliance with the terms and provisions hereof, will
result in any breach of the terms, conditions or provisions of, or
conflict with or constitute a default under, or result in the creation
of any lien, charge or encumbrance upon any property or assets of the
Sellers pursuant to the terms of any indenture, mortgage, deed of trust,
note, evidence of indebtedness or any other agreement or instrument by
which any of the Sellers is bound.
5.4 Litigation. No investigation, action or proceeding is pending
and, to the Sellers' knowledge, no action or proceeding is threatened
and no investigation looking toward such an action or proceeding has
begun, which (i) questions the validity of this Agreement or any action
taken or to be taken pursuant hereto, (ii) will result in any material
adverse change in the business, operation, licensure, reimbursement,
affairs or condition of any of the Properties or the Facilities, (iii)
result in or subject the Properties or the Facilities to a material
liability, or (iv) involves condemnation or eminent domain proceedings
against any part of the Properties.<PAGE>
-9-
5.5 Existing Leases, Agreements, Etc. The Sellers have not
entered into any contracts or agreements with respect to the Properties,
other than as previously disclosed to HRP and listed on Schedule F
hereto. The copies of such contracts or agreements heretofore made
available by the Sellers to HRP for examination are true, correct and
complete copies thereof, have not been amended except as evidenced by
amendments similarly delivered and constitute the entire agreement
between the Sellers and the respective parties thereto. There are no
defaults under such contracts or agreements; no events have occurred
which with the passage of time or the giving of notice or both would
result in an event of default thereunder; there are no contingent
liabilities under such contracts and agreements except as set forth in
Schedule F; and Sellers are entitled to all benefits of such contracts
and agreements which have not been assigned or encumbered in any way.
Sellers may assign all such contracts and agreements to HRP. There are
no other material agreements affecting the Properties. Schedule F sets
forth a fair and accurate representation of the licensed bed capacity
and Medicare/Medicaid certification status of each of the Facilities.
5.6 Disclosure. There is no fact or condition which materially
and adversely affects the business or condition of the Properties or the
Facilities which has not been set forth in this Agreement, or in the
other documents, certificates or statements furnished to HRP in
connection with the transactions contemplated hereby.
5.7 Utilities, Etc. All utilities and services necessary for the
use and operation of the Properties and the Facilities located thereon
(including, without limitation, road access, gas, water, electricity and
telephone), are available thereto, are of sufficient capacity to meet
adequately all needs and requirements necessary for the use and
operation of the Properties and Facilities for their respective intended
purposes and the Properties and the Facilities are legally entitled to
be served by such utilities at rates typical for similar properties
without further action by the Sellers or any other party. To the
Sellers' knowledge, no fact, condition or proceeding exists which would
result in the termination or impairment of the furnishing of such
utilities to the Properties or the Facilities located thereon.
5.8 Compliance With Law. (i) Except as set forth on Schedule H,
the Properties and the Facilities and the use and operation thereof do
not violate any applicable federal, state, municipal or other
governmental statutes, ordinances, by-laws, rules, regulations or any
other legal requirements, including, without limitation, those relating
to health care, construction, occupancy, zoning, adequacy of parking,
environmental protection, occupational health and safety and fire
safety; and (ii) there are presently in effect all licenses, permits,
and other authorizations necessary for the current use, occupancy and
operation thereof. The Sellers have not been advised in writing of any
threatened request, application, proceeding, plan, study or effort which
would materially adversely affect the present use, zoning of, or
licenses, permits or other authorizations for use of, the Properties or<PAGE>
-10-
the Facilities or which would modify or realign any adjacent street or
highway.
5.9 Taxes. Other than the amounts disclosed by tax bills, no
taxes or special assessments of any kind (special, bond or otherwise)
are or have been levied with respect to the Properties or any portion
thereof, which are outstanding or unpaid, and, to the Sellers'
knowledge, none will be levied prior to the Closing Date. Each of the
Properties is separately and distinctly assessed as a separate tax lot.
To the Sellers' knowledge, each of the Properties, during the most
recent tax fiscal year and the three (3) years prior thereto, have been
duly valued and assessed for property tax purposes in accordance with
applicable law. There is no pending abatement proceeding or, to the
Sellers' knowledge, threatened reassessment of all or any portion of the
Properties.
5.10 Special Districts. No portion of the Properties is within a
Special Flood Hazard Area (or 100-year flood plain) as identified by the
Federal Emergency Management Administration or other governmental agency
or within any specially designated or registered historic, architectural
or taxing district, such as would require any more than normal or
routine local governmental approvals in order to effect interior or
exterior improvements to such Properties or the Facilities, either
cosmetic or structural.
5.11 Not A Foreign Person. None of the Sellers is a "foreign
person" within the meaning of Section 1445 of the United States Revenue
Code of 1986, as amended, and the regulations promulgated thereunder.
5.12 Hazardous Substances. Except as set forth in Schedule H,
neither the Sellers nor any other occupant or user of the Properties or
the Facilities, or any portion thereof, has stored or disposed of (or
engaged in the business of storing or disposing of) or has released or
caused the release of any hazardous waste, contaminants, oil,
radioactive or other material on the Properties or any portion thereof,
the removal of which is required or the maintenance of which is
prohibited or penalized by any applicable Federal, state or local
statutes, laws, ordinances, rules or regulations, and, to the Sellers'
knowledge, the Properties and the Facilities are free from any such
hazardous waste, contaminants, oil, radioactive and other materials.
The representations and warranties made in this Agreement by the
Sellers shall be continuing and shall be deemed remade by the Sellers as
of the Closing Date with the same force and effect as if made on, and as
of, such date. All representations and warranties made by the Sellers
in this Agreement shall survive the Closing for a period of three years
and in the event of the liquidation and dissolution of a Seller shall be
deemed to be representations and warranties of the shareholders of said
Seller who receive distributions in connection with said liquidation and
dissolution.<PAGE>
-11-
Section 6. REPRESENTATIONS AND WARRANTIES OF HRP.
To induce the Sellers to enter in this Agreement, HRP represents
and warrants to the Sellers as follows:
6.1 Status and Authority of HRP. HRP is a real estate investment
trust duly organized, validly existing and in good standing under the
laws of the State of Maryland, and has all requisite power and authority
under the laws of such state and under the Declaration to enter into and
perform its obligations under this Agreement and to consummate the
transactions contemplated hereby. HRP has duly qualified and is in good
standing as a trust or unincorporated business association in each
jurisdiction in which the nature of the business conducted by it
requires such qualification.
6.2 Action of HRP. HRP has taken all necessary action to
authorize the execution, delivery and performance of this Agreement, and
upon the execution and delivery of any document to be delivered by HRP
on or prior to the Closing Date, such document shall constitute the
valid and binding obligation and agreement of HRP, enforceable against
HRP in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws of general application affecting the rights and remedies of
creditors.
6.3 No Violations of Agreements. Neither the execution, delivery
or performance of this Agreement by HRP, nor compliance with the terms
and provisions hereof, will result in any breach of the terms,
conditions or provisions of, or conflict with or constitute a default
under, or result in the creation of any lien, charge or encumbrance upon
any property or assets of HRP pursuant to the terms of any indenture,
mortgage, deed of trust, note, evidence of indebtedness or any other
agreement or instrument by which HRP is bound.
6.4 Litigation. No investigation, action or proceeding is pending
and, to HRP's knowledge, no action or proceeding is threatened and no
investigation looking toward such an action or proceeding has begun,
which questions the validity of this Agreement or any action taken or to
be taken pursuant hereto.
6.5 Capitalization. Schedule J sets forth the authorized capital
stock of HRP and the number of shares of each class thereof outstanding
as of the date hereof. All of such outstanding shares of capital stock
are, and the HRP Shares to be issued to the Sellers hereunder, when
issued pursuant to the terms hereof upon receipt of the consideration
specified herein, will be, duly authorized and validly issued, fully
paid and non-assessable and not subject to any preemptive or similar
rights.
The representations and warranties made in this Agreement by HRP
shall be continuing and shall be deemed remade, subject to updating for
those representations which are made as of the date hereof, by HRP as of<PAGE>
-12-
the Closing Date with the same force and effect as if made by HRP on,
and as of, such date. All representations and warranties made in this
Agreement shall survive the Closing for a period of three years.
Section 7. COVENANTS OF THE SELLERS.
The Sellers hereby jointly and severally covenant with HRP between
the date of this Agreement and the Closing Date as follows:
7.1 Compliance with Laws, Etc. With respect to their respective
Properties and Facilities, to comply in all material respects with (i)
all laws, regulations and other requirements from time to time
applicable of every governmental body having jurisdiction of the
Properties or the use or occupancy of the Facilities located thereon and
(ii) all terms, covenants and conditions of all of the instruments of
record and other agreements affecting the Properties or the Facilities.
7.2 Operation of the Facilities. To operate the Properties and
the Facilities only in the ordinary course of business as conducted, and
to maintain the quality of the Facilities, in all material respects
consistent with past practice; to maintain inventory at normal operating
levels, in all material respects consistent with past practice; and to
use their best efforts to preserve and maintain the Properties and the
Facilities intact, maintain occupancy at present or higher percentages,
keep available the services of their employees, and preserve for HRP
their relationships with suppliers, customers, sales representatives and
others having business relations with the Facilities, and generally
maintain the reputation of the Facilities.
7.3 Approval of Agreements. Except as otherwise authorized by
this Agreement, not to enter into modify, amend or terminate any
material lease, contract or other agreement with respect to the
Properties or the Facilities which would encumber or be binding upon the
Properties or the Facilities from and after the Closing Date, without in
each instance obtaining the prior written consent of HRP.
7.4 Compliance with Agreements. To the extent of their respective
obligations, to comply with each and every material term, covenant and
condition contained in any other document or agreement affecting the
Properties or the Facilities.
7.5 Notice of Material Changes or Untrue Representations. Upon
learning of any material change in any condition with respect to the
Properties, the Facilities or of any event or circumstance which makes
any representation or warranty of the Sellers to HRP under this
Agreement untrue or misleading, promptly to notify HRP thereof (HRP
agreeing, on learning of any such fact or condition, promptly to notify
the Sellers thereof).
7.6 Title Matters. Within ten (10) Business Days after the date
of this Agreement, the Sellers shall deliver to HRP a preliminary title<PAGE>
-13-
report or title commitment, having an effective date after the date of
this Agreement, for an ALTA extended owner's policy of title insurance
with respect to the Properties, together with complete and legible
copies of all instruments and documents referred to as exceptions to
title or as title requirements (collectively, the "Title Commitments").
Within ten (10) Business Days after receipt of the Title
Commitments, HRP shall give the Sellers notice of any title exceptions
to which HRP objects. Sellers shall use their best efforts to take or
cause to be taken such actions as may be required to cause such
exceptions to be removed from the Title Commitments. In the event that
Sellers cannot cause such exceptions to be removed, the Sellers shall
give HRP notice thereof; it being understood and agreed that the failure
of the Sellers to give such notice within five (5) Business Days after
HRP's notice of objection shall be deemed an election by the Sellers to
remedy such matters. If HRP receives such notice from Sellers, HRP may
elect (i) to terminate this Agreement by the giving of written notice
thereof to the Sellers, in which event the Deposit, together with
interest thereon, shall be returned to HRP in accordance with Section
9.1, or (ii) to consummate the transactions contemplated hereby,
notwithstanding such title defect, with an appropriate abatement or
reduction in the number of HRP Shares to be delivered to Sellers on
account thereof, the amount of which shall be determined by good faith
negotiation between the parties. HRP shall make any such election by
written notice to the Sellers given on or prior to the fifth Business
Day after the Sellers' notice of their inability to cure such defect.
Failure of HRP to give such notice shall be deemed an election by it to
proceed in accordance with clause (ii) above.
7.7 Survey Matters. As soon as practicable after the date of this
Agreement, HRP shall arrange for the preparation of an ALTA survey with
respect to each of the Properties (collectively, the "Surveys"), by a
licensed surveyor in the jurisdiction in which the applicable property
is located, which (i) contains an accurate legal description of the
applicable property, (ii) shows the exact location, dimension and
description (including applicable recording information) of all
utilities, easements, encroachments and other physical matters affecting
such property, the number of striped parking spaces located thereon and
all applicable building set-back lines, (iii) states whether the
applicable property is located within a 100-year flood plain and (iv)
includes a certification in the form set forth in Schedule K, addressed
to HRP, the Title Company and any other persons requested by HRP.
Within ten (10) Business Days after receipt of the Surveys, HRP
shall give the Sellers notice of any matters shown thereon to which HRP
objects. Sellers shall use their best efforts to take or cause to be
taken such actions as may be required to remedy the objectionable
matters. In the event the Sellers cannot cause such exceptions to be
removed, the Sellers shall give HRP prompt notice thereof; it being
understood and agreed that the failure of the Sellers to give such
notice within five (5) Business Days after HRP's notice of objection
shall be deemed an election by the Sellers to remedy such matters. If<PAGE>
-14-
HRP receives such notice from the Sellers, HRP may elect (i) to
terminate this Agreement by the giving of written notice thereof to the
Sellers, in which event the Deposit, together with interest thereon,
shall be refunded to HRP in accordance with Section 9.1, or (ii) to
consummate the transactions contemplated hereby, notwithstanding such
defect, with any appropriate abatement or reduction in the number of HRP
Shares to be delivered to the Sellers on account thereof, the amount of
which shall be determined by good faith negotiation between the parties.
HRP shall make any such election by written notice to the Sellers, given
on or prior to the fifth Business Day after the Sellers' notice of their
inability to cure such defect. Failure of HRP to give such notice shall
be deemed an election by HRP to proceed in accordance with clause (ii)
above.
7.8 Other Diligence Materials. Within ten (10) days after the
date of this Agreement, the Sellers shall deliver to HRP all surveys,
environmental assessment reports, building evaluations, licenses,
certificates of need, compliance and other surveys, and other
investigations and materials pertaining to the Properties as are in the
possession of the Sellers. HRP agrees to provide the Sellers with
copies of all material studies and reports relating to the physical
condition of the Properties prepared for HRP (if any) and with a copy of
each of the Title Commitments and the Surveys.
7.9 Other Activities During the Period Prior to Closing. The
Sellers and HRP shall endeavor to agree on the form of all of the
closing documents and opinions of counsel described herein on or prior
to the Closing Date. In addition, the Sellers and HRP shall, prior to
the Closing, cooperate in the preparation and filing of any materials
required (i) in order to obtain all licenses, certifications and
approvals required for the purchase, sale and subsequent operation of
the Properties and the Facilities; (ii) by the Hart-Scott-Rodino
Improvements Act of 1976 and shall respond promptly to any requests by
any governmental agency with respect thereto; or (iii) in connection
with the preparation and filing of the Registration Statement.
All covenants made by the Sellers in this Agreement shall survive
the Closing for a period of three years and shall not be merged into any
instrument or conveyance document delivered at Closing.
Section 8. ADJUSTMENTS.
8.1 Adjustments Based on Existing Liens. At Closing, the number
of HRP Shares to be issued to the Sellers shall be reduced by that
number of HRP Shares the value of which (based on $15.00 per share) is
equal to the amount of liabilities of the Sellers set forth on Schedule
D which HRP has agreed to assume.
8.2 Adjustments Based on Expenses of Operations, etc. (a)
Sellers shall pay or arrange for payment of the following amounts at or
prior to Closing or, at the option of HRP, the number of HRP Shares to<PAGE>
-15-
be issued at the Closing shall be adjusted appropriately based upon an
adjustment at the Closing (provided that official bills therefor,
indicating the interest and penalties, if any, thereon, are furnished by
Sellers at the Closing) as of the close of business on the day
immediately preceding the Closing Date of:
(i) Real estate taxes and assessments, other than special
assessments, based on the rates and assessed valuation applicable in the
fiscal year for which assessed;
(ii) Water rates and charges; and
(iii) Sewer and vault taxes and rents.
If any of the foregoing cannot be apportioned at the Closing because of
the unavailability of the amounts which are to be apportioned, such
items shall be apportioned as soon as practicable after the Closing
Date.
(b) If there are water, gas or electric meters located at the
Properties, the Sellers shall furnish readings thereof to a date not
more than thirty (30) days prior to the Closing Date and the unfixed
water rates and charges, sewer taxes and rents and gas and electricity
charges, if any, based thereon for the intervening time shall be
apportioned on the basis of such last readings. If such readings are
not obtainable by the Closing Date, then, at the Closing, any water
rates and charges, sewer taxes and rents and gas and electricity charges
which are based on such readings shall be prorated based upon the per
diem charges obtained by using the most recent period for which such
readings shall then be available. Upon the taking of subsequent actual
readings, the apportionment of such charges shall be recalculated and
the Sellers or HRP, as the case may be, promptly shall make a payment to
the other based upon such recalculations.
(c) If any refunds of real property taxes or assessments, water
rates and charges or sewer taxes and rents shall be made after the
Closing, the same shall be held in trust by the Sellers or HRP, as the
case may be, and shall first be applied to the unreimbursed costs
incurred in obtaining the same, and the balance, if any, shall be paid
to the Sellers (for the period prior to the Closing Date) and to HRP
(for the period commencing with the Closing Date).
(d) If on the Closing Date the Properties or any part thereof
shall be or shall have been affected by any special or general
assessment or assessments or real property taxes which are or may become
payable in installments of which the first installment is then a charge
or lien and has become payable, the Sellers shall pay or cause to be
paid the unpaid installments of such assessments due prior to the
Closing Date, or their pro rata share thereof, and HRP shall pay or
cause to be paid all installments which are due on or after the Closing
Date. The current installments shall be apportioned at the Closing.<PAGE>
-16-
(e) In the event the adjustments hereinabove provided which are to
be made at the Closing result in a credit balance, such sum shall be
paid at the Closing by an appropriate adjustment in the number of HRP
Shares to be issued to the Sellers at the Closing.
(f) No insurance policies of the Sellers are to be transferred to
HRP, and no apportionment of the premiums therefor shall be made.
8.3 Closing Costs. At Closing, all closing costs for the
transaction contemplated hereby (including, without limitation,
documentary, stamp, and other transfer taxes and fees, recording and
filing fees, premiums, charges, and fees of the Title Company and Survey
costs, but specifically excluding each parties' legal and accounting
fees) shall be equally divided between HRP and Sellers and an
appropriate adjustment in the number of HRP Shares to be issued to
Seller at Closing shall be made.
Section 9. DEFAULT.
9.1 Default by the Sellers. If the Sellers shall have made any
representation or warranty herein which shall be untrue or misleading in
any material respect, or if the Sellers shall fail to perform any of the
material covenants and agreements contained herein to be performed by
them and such failure continues for a period of ten (10) days after
notice thereof from HRP, then HRP may terminate this Agreement and/or
HRP pursue any and all remedies available to it at law or in equity,
including, but not limited to, a suit for specific performance or other
equitable relief. In addition to, and not in limitation of, the
foregoing, HRP may direct the Escrow Agent to return the Deposit,
together with interest accrued thereon with respect to one-half of the
Deposit from July 26, 1994 through the date of refund, and, with respect
to the balance of the Deposit, from the date of this Agreement through
the date of refund.
9.2 Default by HRP. If HRP shall have made any representation or
warranty herein which shall be untrue or misleading in any material
respect, or if HRP shall fail to perform any of the covenants and
agreements contained herein to be performed by it and such failure shall
continue for a period of ten (10) days after notice thereof from the
Sellers, the Sellers may terminate this Agreement and/or the Sellers may
either retain the Deposit as liquidated damages, or may pursue any and
all remedies available to them at law or in equity, including, but not
limited to, a suit for specific performance or other equitable relief.
Section 10. INDEMNIFICATION.
10.1 Indemnification by the Sellers. The Sellers shall indemnify
and hold harmless HRP and its successors and assigns, from and against
any and all damages, claims, losses, liabilities, and expenses,
including without limitation reasonable legal and accounting expenses
(collectively, "Losses"), which may arise out of: (i) any material<PAGE>
-17-
breach or violation of this Agreement by the Sellers; (ii) any material
breach of any of the representations, warranties or covenants made in
this Agreement by Sellers; (iii) any material inaccuracy or
misrepresentation or omission in any certificate or document delivered
by the Sellers in connection with this Agreement; and (iv) any claim or
action asserted by any third party arising out of or in connection with
the Sellers' ownership of the Properties or operation of the Facilities
prior to the Closing Date, including, without limitation, all losses,
liabilities, claims causes of action or costs and expenses with respect
to (a) Medicaid or Medicare depreciation recaptures as provided in
Section 3.7 hereto, and (b) retroactive rate adjustments whether arising
from recoupments, offsets, or otherwise. The representations,
warranties and covenants of the Sellers contained in this Agreement, or
any certificate, document, instrument or agreement delivered pursuant to
this Agreement, shall survive the execution and delivery of this
Agreement, the Closing and the consummation of the transactions
contemplated by this Agreement for a period of three years from the
Closing Date and in the event of the liquidation and dissolution of a
Seller, these representations and warranties shall also be deemed to be
the joint and several representations and warranties of the shareholders
of said Seller.
10.2 Indemnification by HRP. HRP shall indemnify and hold harmless
the Sellers and their successors and assigns from and against any and
all Losses which may arise out of (i) any material breach or violation
of this Agreement by HRP; (ii) any material breach of any of the
representations, warranties or covenants made in this Agreement by HRP;
(iii) any material inaccuracy or misrepresentation or omission in any
certificate or document delivered by HRP in connection with this
Agreement; or (iv) HRP's ownership of the Properties after the Closing
Date. The warranties, representations and covenants of HRP contained in
this Agreement, or any certificate, document, instrument or agreement
delivered pursuant to this Agreement, shall survive the execution and
delivery of this Agreement, the Closing, and the consummation of the
transactions contemplated by this Agreement for a period of three years
from the Closing Date.
10.3 Notice and Payment of Claims. Upon obtaining knowledge
thereof, the party entitled to indemnification (the "Indemnitee") shall
promptly notify the party liable for such indemnification (the
"Indemnitor") in writing of any damage, claim, loss, liability or
expense which the Indemnitee has determined has given or could give rise
to a claim under Sections 10.1 or 10.2 hereof (such written notice being
hereinafter referred to as a "Notice of Claim"). A Notice of Claim
shall specify in reasonable detail the nature and estimated amount of
such claim, the basis on which such claim is asserted, whether such
claim is covered by insurance and whether any rights of indemnification
may exist against any third party with respect to such claim. The
Indemnitor shall satisfy its obligations under Sections 10.1 or 10.2, as
the case may be, or shall advise the Indemnitee that in good faith it
disputes the claim, within 30 days of its receipt of a Notice of Claim.<PAGE>
-18-
Section 11. MISCELLANEOUS.
11.1 Expenses. The Sellers and HRP shall pay their own expenses
incident to the negotiation, preparation and carrying out of this
Agreement, including, without limitation, all fees and expenses of their
respective counsel.
11.2 Brokerage Commissions. Each of the parties hereto represents
to the other parties that it dealt with no broker, finder or like agent
in connection with this Agreement or the transactions contemplated
hereby, and that it reasonably believes that there is no basis for any
other person or entity to claim a commission or other compensation for
bringing about this Agreement or the transactions contemplated hereby.
The Sellers shall indemnify and hold harmless HRP and its legal
representatives, heirs, successors and assigns from and against any
loss, liability or expense, including, reasonable attorneys' fees,
arising out of any claim or claims for commissions or other compensation
for bringing about this Agreement or the transactions contemplated
hereby made by any broker, finder or like agent, if such claim or claims
are based in whole or in part on dealings with the Sellers. HRP shall
indemnify and hold harmless the Sellers and their respective legal
representatives, heirs, successors and assigns from and against any
loss, liability or expense, including, reasonable attorneys' fees,
arising out of any claim or claims for commissions or other compensation
for bringing about this Agreement or the transactions contemplated
hereby made by any broker, finder or like agent, if such claim or claims
are based in whole or in part on dealings with HRP. Nothing contained
in this section shall be deemed to create any rights in any third party.
11.3 Publicity. The parties agree that no party shall, with
respect to this Agreement and the transactions contemplated hereby,
contact or conduct negotiations with public officials, make any public
pronouncements, issue press releases or otherwise furnish information
regarding this Agreement or the transactions contemplated to any third
party without the consent of the other parties except with respect to
HRP as may be required by law or rules of the New York Stock Exchange or
in connection with the Registration Statement, and except as may be
required in order to give governmental notices and secure governmental
approvals or exemptions in connection with health care licenses or
permits and Hart-Scott-Rodino notifications. No party, or its
employees, agents, attorneys, officers, directors or shareholders, shall
trade in the securities of HRP until a public announcement of the
transactions contemplated by this Agreement has been made.
11.4 Execution of Additional Documents. From and after the
Closing, the Sellers and HRP shall, at the cost of the requesting party,
duly execute and deliver to the parties hereto all such instruments and
documents, and shall take or cause to be taken all such other and
further action as any party shall reasonably request to confirm the
ownership and title to the Properties.<PAGE>
-19-
11.5 Notices. (a) Any and all notices, demands, consents,
approvals, offers, elections and other communications required or
permitted under this Agreement shall be deemed adequately given if in
writing and the same shall be delivered either in hand, by telecopier
with written acknowledgment of receipt, or by mail or Federal Express or
similar expedited commercial carrier, addressed to the recipient of the
notice, postpaid and registered or certified with return receipt
requested (if by mail), or with all freight charges prepaid (if by
Federal Express or similar carrier).
(b) All notices required or permitted to be sent hereunder shall
be deemed to have been given for all purposes of this Agreement upon the
date of acknowledged receipt, in the case of a notice by telecopier,
and, in all other cases, upon the date of receipt or refusal, except
that whenever under this Agreement a notice is either received on a day
which is not a Business Day or is required to be delivered on or before
a specific day which is not a Business Day, the day of receipt or
required delivery shall automatically be extended to the next Business
Day.
(c) All such Notices shall be addressed,
if to the Sellers to:
Marlin Management
Box 1103
150 South Champlain Street
Burlington, Vermont 05401
Attn: John F. Chapple, III
Patricia Rickard, Esq.
Telecopier No. (802) 862-6345
with a copy to:
Miller, Eggleston and Rosenberg, Ltd.
150 South Champlain Street
Burlington, Vermont 05401
Attn: Jon Eggleston, Esq.
Telecopier No. (802) 864-0328
If to HRP, to:
Health and Retirement Properties Trust
400 Centre Street
Newton, Massachusetts 02158
Attn: Mr. David J. Hegarty
Telecopier No. (617) 332-2261<PAGE>
-20-
with a copy to:
Sullivan & Worcester
One Post Office Square
Boston, Massachusetts 02109
Attn: Lena G. Goldberg, Esq.
Telecopier No. (617) 338-2880
(d) By notice given as herein provided, the parties hereto and
their respective successors and assigns shall have the right from time
to time and at any time during the term of this Agreement to change
their respective addresses effective upon receipt by the other parties
of such notice and each shall have the right to specify as its address
any other address within the United States of America.
11.6 Waivers, Etc. Any waiver of any term or condition of this
Agreement, or of the breach of any covenant, representation or warranty
contained herein, in any one instance, shall not operate as or be deemed
to be or construed as a further or continuing waiver of any other breach
of such term, condition, covenant, representation or warranty or any
other term, condition, covenant, representation or warranty, nor shall
any failure at any time or times to enforce or require performance of
any provision hereof operate as a waiver of or affect in any manner such
party's right at a later time to enforce or require performance of such
provision or any other provision hereof. This Agreement may not be
amended, nor shall any waiver, change, modification, consent or
discharge be effected, except by an instrument in writing executed by or
on behalf of the party against whom enforcement of any amendment,
waiver, change, modification, consent or discharge is sought.
11.7 Assignment; Successors and Assigns. This Agreement shall not
be assignable by any party without the written consent of the other
parties. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective legal
representatives, successors and permitted assigns. This Agreement is
not intended and shall not be construed to create any rights in or to be
enforceable in any part by any other persons.
11.8 Severability. If any provision of this Agreement shall be
held or deemed to be, or shall in fact be, invalid, inoperative or
unenforceable as applied to any particular case in any jurisdiction or
jurisdictions, or in all jurisdictions or in all cases, because of the
conflict of any provision with any constitution or statute or rule of
public policy or for any other reason, such circumstance shall not have
the effect of rendering the provision or provisions in question invalid,
inoperative or unenforceable in any other jurisdiction or in any other
case or circumstance or of rendering any other provision or provisions
herein contained invalid, inoperative or unenforceable to the extent
that such other provisions are not themselves actually in conflict with
such constitution, statute or rule of public policy, but this Agreement
shall be reformed and construed in any such jurisdiction or case as if
such invalid, inoperative or unenforceable provision had never been<PAGE>
-21-
contained herein and such provision reformed so that it would be valid,
operative and enforceable to the maximum extent permitted in such
jurisdiction or in such case.
11.9 Counterparts, Etc. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. This
Agreement constitutes the entire agreement of the parties hereto with
respect to the subject matter hereof and shall supersede and take the
place of any other instruments purporting to be an agreement of the
parties hereto relating to the subject matter hereof. This Agreement
may not be amended or modified in any respect other than by the written
agreement of all of the parties hereto.
11.10 Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the law (other than the law
governing conflict of law matters) of The Commonwealth of Massachusetts,
except that matters relating to real property law as to the Properties
located in Vermont shall be governed by and construed and enforced in
accordance with the law of the State of Vermont, and matters relating to
real property law as to the Property located in New Hampshire shall be
governed by and construed and enforced in accordance with the law of the
State of New Hampshire.
11.11 Jurisdiction. The parties hereby irrevocably submit to the
jurisdiction of any court sitting in The Commonwealth of Massachusetts
or any United States Federal Court sitting in Boston, Massachusetts in
any action or proceeding arising out of or relating to this Agreement
and the parties hereby irrevocably agree that all claims in respect of
any action or proceeding arising out of or relating to this Agreement
shall be heard and determined in such state or Federal Court. The
parties hereby consent to and grant to any such court jurisdiction over
the person of such parties and over the subject matter of any such
dispute and agree that delivery or mailing of any process or other
papers in the manner provided in Section 11.5 or in such other manner as
may be permitted by law shall be valid and sufficient service thereof.
11.12 Performance on Business Days. In the event the date on
which performance or payment of any obligation of a party required
hereunder is other than a Business Day, the time for payment or
performance shall automatically be extended to the first Business Day
following such date.
11.13 Attorneys Fees. If any lawsuit or arbitration or other
legal proceeding arises in connection with the interpretation or
enforcement of this Agreement, the prevailing party therein shall be
entitled to receive from the other party the prevailing party's costs
and expenses, including reasonable attorneys' fees incurred in
connection therewith, in preparation therefor and on appeal therefrom,
which amounts shall be included in any judgment therein.<PAGE>
-22-
11.14 Section and Other Headings. The headings contained in this
Agreement are for reference purposes only and shall not in any way
affect the meaning or interpretation of this Agreement.
11.15 Entire Agreement. This Agreement (including all schedules
hereto and all agreements, instruments, other documents and certificates
delivered pursuant hereto or thereto) constitutes the entire agreement
between the parties with respect to the subject matter hereof and
supersedes all prior agreements, arrangements, covenants, promises,
conditions, understandings, inducements, representations, and
negotiations, expressed or implied, written or oral, between them as to
such subject matter, including, without limitation, that certain letter
of intent dated July 13, 1994 and accepted by the Sellers on July 18,
1994.
11.16 Obligations of Sellers After the Closing. From and after
the Closing Date, the Sellers will not engage in any business, will each
promptly liquidate and dissolve as a corporation, and will each
distribute the HRP Shares received by it at the Closing to its
shareholders in complete cancellation and redemption of their shares of
such Seller.
11.17 Limitation of Liability. The Declaration is duly filed in
the Office of the Department of Assessments and Taxation of the State of
Maryland, provides that the name "Health and Retirement Properties
Trust" refers to the trustees under the Declaration collectively as
Trustees, but not individually or personally, and that no trustee,
officer, shareholder, employee or agent of HRP shall be held to any
personal liability, jointly or severally, for any obligation of, or
claim against, HRP. All persons dealing with HRP, in any way, shall
look only to the assets of HRP for the payment of any sum or the
performance of any obligation.
[remainder of this page intentionally left blank]<PAGE>
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as a sealed instrument as of the date first above written.
SELLERS:
BERLIN C.C., INC.
By: /s/ John F. Chapple, III
Its: President
ST. JOHNSBURY C.C., INC.
By: /s/ John F. Chapple, III
Its: President
ROCHESTER C.C., INC.
By: /s/ John F. Chapple, III
Its: President
SPRINGFIELD C.C., INC.
By: /s/ John F. Chapple, III
Its: President
BURLINGTON C.C., INC.
By: /s/ John F. Chapple, III
Its: President
BENNINGTON C.C., INC.
By: /s/ John F. Chapple, III
Its: President<PAGE>
-24-
THE LP CORPORATION
By: /s/ John F. Chapple, III
Its: President
AMERICAN HEALTH CARE, INC.
By: /s/ John F. Chapple, III
Its: President
HRP:
HEALTH AND RETIREMENT PROPERTIES TRUST
By: /s/ Mark J. Finkelstein
Its: President<PAGE>
Schedule A
List of Sellers
Berlin C. C., Inc. Berlin Health and Rehab Center
RR #3, Box 6684
Barre, Vermont 05641
St. Johnsbury C. C., Inc. St. Johnsbury Health and Rehab Center
Hospital Drive
St. Johnsbury, Vermont 05819
Redstone Villa
7 Forest Hills Drive
St. Albans, Vermont 05478
Rochester C. C., Inc. Rochester Manor
40 Whitehall Road
Rochester, New Hampshire 03867
Springfield C. C., Inc. Springfield Health and Rehab Center
105 Chester Road
Springfield, Vermont 05156
Bennington C. C., Inc. Bennington Health and Rehab Center
360 Dewey Street
Bennington, Vermont 05201
Burlington C. C., Inc. Burlington Health and Rehab Center
300 Pearl Street
Burlington, Vermont 05401
The LP Corporation Hanson Court Convalescent Home
365 Summer Street
Springfield, Vermont 05156
American Health Care, Inc. Rowan Court Health and Rehab Center
Upper Prospect Street
Barre, Vermont 05641<PAGE>
Schedule B
Name of Seller Properties Held HRP
Shares
Allocated(1)
Berlin C. C., Inc. Berlin Health and Rehab Center
RR #3, Box 6684
Barre, Vermont 05641
St. Johnsbury C. St. Johnsbury Health and Rehab
C., Inc. Center
Hospital Drive
St. Johnsbury, Vermont 05819
Redstone Villa
7 Forest Hills Drive
St. Albans, Vermont 05478
Rochester C. C., Rochester Manor
Inc. 40 Whitehall Road
Rochester, New Hampshire 03867
Springfield C. C., Springfield Health and Rehab
Inc. Center
105 Chester Road
Springfield, Vermont 05156
Bennington C. C., Bennington Health and Rehab
Inc. Center
360 Dewey Street
Bennington, Vermont 05201
Burlington C. C., Burlington Health and Rehab
Inc. Center
300 Pearl Street
Burlington, Vermont 05401
The LP Corporation Hanson Court Convalescent Home
365 Summer Street
Springfield, Vermont 05156
American Health Rowan Court Health and Rehab
Care, Inc. Center
Upper Prospect Street
Barre, Vermont 05641
(1) Information shall be provided to HRP not later than three (3)
business days prior to closing.<PAGE>
-2-<PAGE>
Schedule C-1
Berlin Health and Rehab Center
Being all of the same land and premises conveyed to Berlin C. C., Inc.,
by Warranty Deed of Berlin Development Associates dated May 10, 1977,
and recorded in Volume 43 at Page 421 of the Land Records of the Town of
Berlin, and being all of the same lands and premises conveyed to Berlin
C. C., Inc. by Warranty Deed of Irving Cohen, Executor of the Estate of
Abraham J. Levinsky, and Bruce J. Levinsky, assignee of Berlin
Development Associates, dated October 27, 1980, of record in Volume 47,
Page 162 of the Land Records of the Town of Berlin and more particularly
described as follows:
Beginning at an iron pin set in the ground at the northeasterly corner
of the Blanche Larose Home lot in the Town of Berlin, said point also
being the southeasterly corner of the Diego Home lot, so-called; thence
North 28 degrees 45 minutes 45 seconds West along the easterly line of
the Diego lot, so-called, 282.9 feet, more or less, to a concrete
monument set in the ground; thence North 80 degrees 09 minutes 30
seconds West 182.94 feet, more or less, to a concrete monument set in
the ground, which monument marks the northwest corner of Diego lot so-
called; and the northeasterly corner of Buxton lot, so-called; thence
North 24 degrees 47 minutes 30 seconds West along the northeasterly line
of the Buxton property 86.06 feet, more or less, to a concrete monument
set in the ground; thence North 61 degrees 14 minutes 15 seconds East
732 feet, more or less, to a concrete monument set in the ground; thence
South 28 degrees 45 minutes 45 seconds East 550.00 feet, more or less,
to a concrete monument set in the ground near a spring house and stone
wall; thence South 61 degrees 14 minutes 15 seconds West a distance of
108.67 feet, more or less, to a concrete monument set in the ground;
thence South 28 degrees 09 minutes 30 seconds East a distance of 151.13
feet, more or less, to a concrete monument set in the ground; thence
South 61 degrees 14 minutes 15 seconds West a distance of 33.15 feet,
more or less, to a concrete monument set in the ground; thence turning
left and proceeding along the circumference of a circle with a radius of
225.00 feet through an arc of 72 degrees 55 minutes 15 seconds for a
distance of 286.36 feet, more or less, to a concrete monument set in the
ground, which monument marks the corner of property of Raymond and Donna
G. Johnson; thence North 79 degrees 59 minutes 15 seconds West a
distance of 386.75 feet, more or less, along the north line of property
of Raymond and Donna G. Johnson to a concrete monument set in the
ground; thence North 04 degrees 37 minutes 15 seconds East a distance of
140.20 feet, more or less, to a concrete monument set in the ground
which marks the point or place of beginning.
Included herein is a right of way from Airport Road, so-called, over
land owned by John F. Chapple, III as conveyed to Berlin Development
Associates by Warranty Deed of Bruce J. Levinsky dated January 22, 1971,
and of record in Volume 39, Page 222 of the Berlin Land Records.
Meaning to convey hereby the 10.6 acre parcel as shown on Plan entitled
"A survey of a portion of land of Bruce J. Levinsky in the Town of
Berlin, Vermont, By Property Design, Montpelier, Vermont, September,<PAGE>
-2-
1979" of record in the Land Records of the Town of Berlin in Map Volume
1, at Page 81-1.<PAGE>
Schedule C-2
St. Johnsbury Health and Rehab Center
Being certain premises consisting of 5.313 acres with a nursing home
building and improvements thereon, located easterly of U. S. Route #5
and further located on the southerly side of the proposed town road
running from U. S. Route #5 to the Breezy Hill Road, so-called; and
being all of the same land and premises conveyed to St. Johnsbury C. C.,
Inc. by Warranty Deed of St. Johnsbury Development Associates, dated May
10, 1977, of record in Volume 158, Page 15 of the Land Records of the
Town of St. Johnsbury; and being all of the same land and premises
conveyed to St. Johnsbury Development Associates by deed of Northeastern
Vermont Regional Hospital, Inc., dated January 15, 1971, and recorded in
Book 139, at Page 226 of the St. Johnsbury Land Records; and being a
part of the same land and premises conveyed to Northeastern Vermont
Regional Hospital, Inc., by deed of Margaret R. Grapes, dated July 18,
1967 and recorded in Book 130, at Pages 372-375 of the St. Johnsbury
Land Records.
There is excepted and reserved from the conveyance of these premises
herein those certain restrictions set out in the above mentioned deed
from Northeastern Vermont Regional Hospital, Inc. to St. Johnsbury
Development Associates concerning the operation of the nursing home on
the premises herein conveyed.
There is further excepted and reserved from the conveyance of these
premises those certain pole line rights of way given over these
premises.
Reference is hereby had and made to the aforesaid deeds and the records
and references thereof and to all prior deeds and their records for a
more particular description of the land and premises herein conveyed.
Excepting from this conveyance all water and sewer rights of way and
rights of way as may exist of record against these land and premises.<PAGE>
Schedule C-3
Springfield Health and Rehab Center
Being all and the same lands and premises conveyed to Springfield C. C.,
Inc., by Warranty Deed of Springfield Development Associates dated May
10, 1977, of record in Volume 72 at Page 560 of the Land Records of the
Town of Springfield, which premises are more particularly described as
follows:
Being a parcel of land of some 4.7 acres, more or less, from the
southeasterly corner of the Mary L. Newton homestead located in the
northerly side of Chester Road so-called, bounded and described as
follows:
Beginning at an iron pin set in the ground at the northerly boundary
line of the highway right-of-way which iron pin is located 3.38 feet
westerly of a Vermont Highway Department Monument, thence North 83
degrees 13 minutes W a distance of 242.59 feet to another Highway
Monument, and continuing in the same line 43.23 feet to an iron pin set
in the ground near or at the end of a section of stone wall; thence
North 18 degrees 57 minutes E a distance of 69.96 feet to an iron pin
set in the ground; thence North 10 degrees 23 minutes E a distance of
58.01 feet to a granite monument; thence North 67 degrees W a distance
of 72.55 feet to a monument; thence North 19 degrees 17 minutes E 295.15
feet to an iron pin set in the ground; thence North 53 degrees 27
minutes 30 seconds E 170.14 feet to an iron pin set in the ground;
thence S 76 degrees 59 minutes 30 seconds E a distance of 141.13 feet to
an iron pin set in the ground; thence S 35 degrees 46 minutes 30 seconds
E a distance of 117.6 feet to an iron pin set in the ground; thence S 26
degrees 24 minutes 30 seconds E 174.60 feet to an iron pin set in the
ground; thence S 28 degrees 21 minutes 30 seconds W 205.68 feet to an
iron pin set in the ground; thence S 41 degrees 23 minutes W 87.33 feet
to an iron pin set in the ground; thence S 52 degrees 26 minutes W 56.52
feet to an iron pin; which iron pin marks the same place of beginning.
EXCEPTING from this conveyance all pole line easements, water and sewer
rights of way as may exist of record against these lands and premises.<PAGE>
Schedule C-4
Bennington Health and Rehab Center
Beginning at a point which marks the intersection of the southerly line
of the Putnam Street right of way, so-called, the northeasterly line of
a proposed street to be called Blackberry Lane, and the southerly and
easterly lines of the right of way of Dewey Street, so-called, said
point marking the northwest corner of the herein conveyed parcel; then
running N 68 degrees 06 minutes E along said southerly line of the
Putnam Street right of way 855.37 feet to a point; thence turning and
running S 19 degrees 30 minutes W 134.4 feet to a point; thence turning
and running S 69 degrees 31 minutes E 198.78 feet to a point; thence
turning and running S 19 degrees 04 minutes W 152.37 feet to a point;
thence turning and running S 50 degrees 38 minutes W 111.17 feet to an
iron pipe; thence turning and running S 44 degrees 13 minutes W 260.46
feet to an iron pipe; thence turning and running N 45 degrees 17 minutes
W 333.46 feet to an iron pipe; thence turning and running S 68 degrees
23 minutes W 211.65 feet to a point; thence turning and running S 52
degrees 52 minutes W 71.07 feet to a point in the northeasterly line of
Blackberry Lane as proposed; thence turning and running N 37 degrees 08
minutes W along said northeasterly line of Blackberry Lane, as proposed,
213.79 feet to the place of beginning.
EXCEPTING from this conveyance all pole line easements, water and sewer
rights of way and rights of way as may exist of record against these
lands and premises. This deed is conveyed subject to the possible
rights of others in and to the uninterrupted flow of a small stream
crossing the extreme northwesterly portion of these lands and premises,
said stream being called "Dewey Brook."
Being all and the same lands and premises conveyed to Bennington C. C.,
Inc. by Warranty Deed of Bennington Development Associates dated May 10,
1977, and recorded in Book 0-217, Page 239 of the Bennington Land
Records.
Included in this conveyance, however, by Notice and Order of
Discontinuance of Highway for the untraveled portion of Putnam Street as
filed by the Bennington Board of Selectmen with the Bennington Town
Clerk on June 5, 1984, a strip of land from a portion of the northerly
line as hereinabove mentioned to the centerline of the untraveled
portion of Putnam Street, as more particularly described in said Notice
and Order.<PAGE>
Schedule C-5
Hanson Court Convalescent Home
The land with the buildings thereon situated in Springfield, Vermont,
and being a certain piece or parcel of land on the southerly side of
Summer Street Extension, so-called, bounded as follows:
BEGINNING at a point on the southerly side of Summer Street Extension
which point marks the northeast corner of the premises described as
Parcel One on a conveyance by Convalescent Homes, Inc. to Jonas R. and
Margaret Welcome, dated January 4, 1963; which is recorded in
Springfield Land Records in Book 58, Page 343;
THENCE turning easterly along the southerly line of said Summer Street
Extension to the northwesterly corner of Lot No. 23 as shown by "Lot
Plan of 'White Acres' for Chas. W. Cutler, Sept. 17, 1953 and Dec. 23,
Springfield, VT" by L. G. Basso, Engineer, a copy of which plan is on
file in the Springfield Town Clerk's Office;
THENCE turning and running southerly on the westerly boundary lines of
Lots No. 23, 22 and 21 as shown by said plan to the southwesterly*
corner of said Lot No. 21. *(incorrectly referenced in prior deed as
southeasterly).
THENCE turning and running westerly along lands described in a
conveyance by Convalescent Homes, Inc. to Gerald E. and Helen S.
McLaughlin dated January 1, 1963, which is recorded in Springfield Land
Records in Book 59, Page 333 to the northeasterly corner of lands of
Benjamin Levine and wife;
THENCE continuing westerly along the northerly boundary line of said
Levine's premises to the southeasterly corner of premises of Richard H.
Lillie, Jr. and wife;
THENCE turning and running northerly along the easterly boundary line of
said Lillie premises and along the easterly boundary of premises of the
aforesaid Welcomes to the place of beginning.
Also conveying the right to drain water in substantially the same manner
as now conducted from the lands of the Convalescent Homes, Inc. over and
upon the lands described as Parcel One in a deed from Convalescent
Homes, Inc. to Jonas R. and Margaret Welcome dated January 4, 1963,
recorded in Springfield Land Records in Book 48, Page 343.
Also conveying the right to enter the premises described as Parcel Two
in the aforesaid deed to Jonas R. and Margaret Welcome all reasonable
times and places for the purpose of repairing, maintaining and relaying
water and sewer lines located thereon.
Also conveying the right to enter the premises described in a deed from
Convalescent Homes, Inc. to Richard H. and Beverly P. Lillie, dated
January 4, 1963, recorded in Springfield Land Records in Book 58, Page<PAGE>
-2-
357 at all reasonable times and places for the purpose of repairing,
maintaining and relaying water and sewer lines located thereon or on
premises conveyed to the aforesaid Jonas R. and Margaret Welcome.
This conveyance is made subject to all of the various exceptions,
reservations and outstanding rights, including rights of way, rights to
discharge culverts, slope rights, pole line rights, water line rights,
sewer pipe rights, all of which are more particularly set forth in the
deed from Jeanne B. Cutler to Convalescent Homes, Inc. dated January 6,
1961, and recorded in Springfield Land Records (Book 58, Page 128) to
the extent that these rights or any of them affect these premises.
Being all and the same land and premises conveyed to The LP Corporation
by Warranty Deed of Idak Convalescent Center of Springfield, Inc. dated
April 1, 1982, of record in Volume 80, Page 406 of the Land Records of
the Town of Springfield.<PAGE>
Schedule C-6
Redstone Villa
A lot of land, together with the buildings thereon, located on the north
side of Forest Hill Drive, so-called; and more fully described as
follows: Beginning at a stake Two Hundred Eighteen (218) feet, more or
less, from the east line of Smith Street, so-called, which stake marks
the northwest corner of the lot herein conveyed; thence running easterly
along the north line of Forest Hill Subdivision One Hundred Fifty-Nine
(159) feet, more or less, to an iron stake which marks the northeast
corner of the lot herein conveyed; thence turning and running southerly
One Hundred Fifty-Six (156) feet Nine (9) inches to an iron stake set in
the north line of "Forest Hill Drive," so-called; thence turning and
running westerly along the north line of said Forest Hill Drive One
Hundred Seventy-Four (174) feet Eight (8) inches, more or less, to an
iron stake; thence turning and running northerly One Hundred Thirty-Six
(136) feet, more or less, to the point or place of beginning.
Reference is further made to a certain Plan of Land captioned "Forest
Hill Subdivision Revision No. 1" dated August 17, 1955, and recorded in
Book 11, Page 316 of the St. Albans City Land Records. The land and
premises herein conveyed consist of all of the large unnumbered lot,
with an outline "Exist. Building," as shown on said Plan of Land, except
that portion of said lot which was conveyed by Ralph O. Hurlburt and
Joan C. Hurlburt to David H. Reissig and Ione C. Reissig by Warranty
Deed dated April 22, 1970, of record in Volume 21, at Page 237 of the
City of St. Albans Land Records.
Central Vermont Public Service Corporation has an easement dated March
17, 1959 and recorded in Book 14, Page 21, of the St. Albans City Land
Records.<PAGE>
Schedule C-7
Rowan Court Health and Rehab Center
Beginning at an iron pin set in the generally easterly line of Prospect
Street in the City of Barre, Vermont; thence turning an angle to the
right and proceeding S 54 degrees E 530.0 feet to an iron pin set in the
ground; thence turning an angle to the right of 100 degrees 17 minutes
and proceeding in a generally southwesterly direction 483.6 feet to an
iron pin set in the ground; thence turning an angle to the right of 86
degrees 18 minutes and proceeding in a generally northwesterly direction
600.0 feet to an iron pin set in the ground; thence turning an angle to
the right of 89 degrees 25 minutes and proceeding in a generally
northeasterly direction 180.4 feet to an iron pin set in the ground;
thence making a minor angle to the right and proceeding in a generally
northeasterly direction 365.0 feet to an iron pin set in the ground,
being the point of beginning. Meaning to convey a parcel having
Prospect Street as a westerly boundary.
Said parcel is part of a larger parcel of land as shown on a Survey Map
prepared by A. B. Delano, Registered No. 1105 in said Survey, entitled
"Plot of Land on Upper Prospect Street, Barre, Vermont Scale 1 inch = 40
feet" recorded June 2, 1971 at Page 4 in Plat Book 2 of the Land Records
of the City of Barre.
Included in this conveyance are all buildings and improvements on said
parcel.
Being all and the same lands and premises conveyed to American Health
Care, Inc. (formerly known as Mirror, Inc.) by Rowan Court - Barre, Inc.
by Warranty Deed dated April 3, 1981., of record in Volume 139 at Page
59 of the Land Records of the City of Barre.<PAGE>
Schedule C-8
Rochester Manor
Being a certain tract or parcel of land situated on the northeasterly
side of Whitehall Road, so-called, in Rochester, County of Strafford,
and State of New Hampshire, bounded and described as follows:
Beginning on the northeasterly side of said Whitehall Road at a steel
stake set in the ground at the southerly corner of land now or formerly
of John Bisson; thence running N 12 degrees E along land of said Bisson
a distance of 150.7 feet, to an iron pipe set in the ground; thence
turning and running N 75 degrees 08 minutes W along land of said Bisson
and along land now or formerly of Albert Creteau and land now or
formerly of Alfred Chauvey a distance of 164.3 feet to a steel stake set
in the ground; thence turning and running N 49 degrees 50 minutes E by
land now or formerly of Gerard A. Burchell, Jr., a distance of 433 feet
to an iron pipe set in the ground at land of the Boston and Maine
Railroad; thence turning and running S 33 degrees 23 minutes E by said
land of the Boston and Maine Railroad a distance of 742.9 feet to a
steel stake set in the ground on the northeasterly side of Whitehall
Road; thence turning and running N 76 degrees 06 minutes W along said
Whitehall Road a distance of 630.6 feet to a steel stake set in the
ground at the point of beginning.
The above described premises are more particularly shown on "Boundary
Plan, Land of Bruce Levinsky and others, Whitehall Road, Rochester, NH,
Berry Construction Co., Inc., David A. Berry, R. L. S., dated August 27,
1971.
EXCEPTING from this conveyance all pole line easements, water and sewer
rights of way and rights of way as may exist of record against these
lands and premises.
EXCEPTING from this conveyance all rights of others in and to the
uninterrupted flow of a small stream crossing the northwesterly corner
of these lands as disclosed by a survey report by David A. Berry based
on a survey made August 25, 1971, and such other matters occurring after
August 25, 1971, as would be disclosed by an accurate survey and
inspection of the premises.
Being all of the same lands and premises conveyed to Rochester C. C.,
Inc. by Warranty Deed of Rochester Associates, dated May 10, 1977, of
record in Book 996, Page 380 of the Strafford County Registry of Deeds.<PAGE>
Schedule C-9
Burlington Health and Rehab Center
Being a parcel of land situated northerly and westerly of 306-308 Pearl
Street in the City of Burlington, County of Chittenden and State of
Vermont, and bounded and described as follows:
Commencing at a point on the northerly line of Pearl Street which point
is the southwesterly comer of 306-308 Pearl Street and the southeasterly
comer of the property herein conveyed; thence generally westerly along
the northerly sideline of Pearl Street 82.4 feet to a point; thence
turning to the right and proceeding in a generally northerly direction
124.5 feet to a point; thence turning to the left and running in a
generally westerly direction 10.3 feet to a point; thence turning to the
right and running in a generally northerly direction 130.2 feet to a
point; thence turning to the right and proceeding in a generally
easterly direction 47.0 feet to a point; thence turning to the right and
proceeding in a generally southerly direction 15 feet to a point; thence
turning to the left and proceeding a distance of 132.0 feet in a
generally easterly direction to a point; thence turning to the right and
proceeding in a generally southerly direction 25.5 feet to a point;
thence turning to the left and proceeding in a generally westerly
direction 22.7 feet to a point; thence turning to the right and
proceeding in a generally southerly direction 124.0 feet to a point;
thence turning to the right and proceeding in a generally westerly
direction 104.5 feet to a point; thence turning to the left and
proceeding in a generally southerly direction 114.5 feet along the
common boundary line of this parcel and the property known and
designated as 306-308 Pearl Street to the point of beginning.
Being all and the same lands and premises conveyed to Burlington C.C.,
Inc. by Warranty Deed of Antonio B. Pomerleau dated July 2, 1982, of
record in Volume 282, at Page 630 of the City of Burlington Land Records
and by Warranty Deed of Sheraton Vermont Corporation, dated May 11,
1977, of record in Volume 243, Page 428 of the City of Burlington Land
Records.
The property is subject to easements and rights of way of record.
Reference is made to said deeds, the records thereof, the references
therein made, and their respective records and references in further aid
of this description.<PAGE>
Schedule D
Liens & Encumbrances
Liens - Mortgages
Description Date Amount
Facility Bank of Loan Financed Financed
Berlin Vermont First 02/23/88 $1,000,000.00
National Bank Mortgage
#3022465-
003
St. Vermont First 05/24/94 $1,000,000.00
Johnsbury National Bank Mortgage
Rochester Vermont First 04/06/94 $1,270,000.00
National Bank Mortgage
#3033272-
00001
Springfield Vermont First 04/06/94 $1,250,000.00
National Bank Mortgage
#3033248-
00001
Bennington Vermont First 04/06/94 $1,200,000.00
National Bank Mortgage
#3033264-
00001
Burlington Vermont First 03/30/94 $1,053,128.83
National Bank Mortgage
#3015270-
00001
Redstone Paul E. First 04/20/79 $163,664.50
Dussault Mortgage
Frank Cheney Second 12/05/85 $219,467.54
Mortgage
Rowan F.N.M.A. First 11/29/92 $1,172,400.00
#1-44-791176-9 Mortgage
Vermont Second 02/06/92 $850,000.00
National Bank Mortgage
#3018589-00002
Encumbrances
See preliminary title reports.<PAGE>
Schedule E
Opinion of Sellers' Counsel
[to come]<PAGE>
Schedule F
Contracts & Agreements
Licensed Bed Capacity & Medicare/Medicaid
1. Contracts & Agreements
See individual contract sheet for each facility attached.
American Health Care Software Enterprises, Inc. to each facility
(Professional Services Agreement for financial and clinical
software programs)
2. Licensed Bed Capacity
Bed
Facility Capacity SNF ICF Medicare/Medicaid
Berlin Health and 152 48 104 Medicare/Medicaid
Rehab Center
St. Johnsbury Health 110 27 83 Medicare/Medicaid
and Rehab Center
Rochester Manor 108 25 83 Medicare/Medicaid
Springfield Health and 102 26 76 Medicare/Medicaid
Rehab Center
Bennington Health and 100 51 49 Medicare/Medicaid
Rehab Center
Burlington Health and 168 42 126 Medicare/Medicaid
Rehab Center
Hanson Court 42 0 42 Medicaid
Convalescent Home
Redstone Villa 30 0 30 Medicaid
Rowan Court Health and 104 21 83 Medicare/Medicaid
Rehab Center<PAGE>
BERLIN Health and Rehab Center
Effective
Date Type of Contractor Term Date Fee
Service
05/24/94 EQUIPMENT - Green 30 days see contract
Conservation Mountain notice for terms
incentive Power
06/26/87 FIRE ALARM Simplex 60 days $250.00/system
notice
11/17/88 GASOLINE Maplewood
SUPPLIER
02/13/89 PROPANE Agway 02/13/99
or 60 days
05/31/93 SPRINKLER Firetech February, $430.00/year
Sprinkler 1995
Corporation<PAGE>
ST. JOHNSBURY Health and Rehab Center
Effective
Date Type of Contractor Term Date Fee
Service
07/01/94 FIRE ALARM/ Firetech 1 year $295.00/year
SPRINKLER Sprinkler
Corp.
02/13/89 PROPANE Agway 60 days see contract
notice
09/01/94 SNOW PLOWING Jennifer 94-95 $1600.00 for 16
Fleming season plowings<PAGE>
ROCHESTER MANOR
Effective
Date Type of Contractor Term Date Fee
Service
03/17/92 FIRE ALARM New England 30 days $96.00/
Protection notice quarterly
07/01/91 SPRINKLER/ Grinnell 30 days $440.00
SMOKE Fire notice
DETECTORS Protection
05/01/94 GENERATOR Cummins 04/30/95 $445.53/year
MAINTENANCE North
Atlantic
03/12/89 PROPANE Agway 60 days see contract
notice<PAGE>
SPRINGFIELD Health and Rehab Center
Effective
Date Type of Contractor Term Date Fee
Service
10/01/93 PLUMBING Michael completion $15.00/hour +
PROJECT Bodi of proj. materials
Plumbing
02/13/89 PROPANE Agway 60 days (see
notice contract)
07/01/94 SPRINKLER Grinnell 30 days $220.00/year
INSPECTION notice
03/01/93 TELEPHONE Long
Distance
North<PAGE>
BENNINGTON Health and Rehab Center
Effective
Date Type of Contractor Term Date Fee
Service
12/01/93 ELEVATOR Bay State 12/1/94 $163.36/month
INSPECTION
05/19/94 FIRE SCH Alarm 05/19/95 $440.00/year
ALARM/SMOKE Systems
DETECTORS
11/01/89 SPRINKLER Grinnell 30 days $315.00/year
Fire notice
Protection
02/13/89 PROPANE Agway 60 days (see contract)
notice or
02/13/99<PAGE>
BURLINGTON Health and Rehab Center
Effective
Date Type of Contractor Term Date Fee
Service
[none]<PAGE>
HANSON COURT Convalescent Home
Effective
Date Type of Contractor Term Date Fee
Service
09/14/89 PROPANE Agway
SPRINKLER/AL Grinnell
ARM SYS.
TESTING
02/19/94 SPRINKLER Firetech 1 year $250.00
INSPECTION Sprinkler (02/19/95)
Corp.<PAGE>
REDSTONE VILLA
Effective
Date Type of Contractor Term Date Fee
Service
07/10/90 SPRINKLER Cedar Ridge auto.
renewal/
60 days
notice<PAGE>
ROWAN COURT Health and Rehab Center
Effective
Date Type of Contractor Term Date Fee
Service
[none]<PAGE>
Schedule G
Compliance with Law
The Properties and the Facilities were established prior to 1972. The
Sellers therefore do not warrant or represent that the Properties or the
Facilities conform to building codes, zoning ordinances or parking
requirements currently in effect.<PAGE>
Schedule H
Hazardous Substances
Underground propane gas tanks are located at the following properties:
St. Johnsbury Health and Rehab Center
Springfield Health and Rehab Center
Bennington Health and Rehab Center
Hanson Court Convalescent Home<PAGE>
Schedule J
Capitalization of HRP
[to come]<PAGE>
Schedule K
Form of Surveyor's Certificate
TO: _____________________
_____________________
_____________________
_____________________
RE: Survey Entitled "_______________________________________"
dated _________ ___, 1994, prepared by
The undersigned hereby certifies that the above-referenced
survey was prepared from an actual on-the-ground instrument survey of
the subject premises; that the same accurately shows the location of the
boundaries of the subject premises and the location of all streets,
highways, alleys and public ways crossing or abutting said premises;
that the dimensions of the improvements and the locations thereof with
respect to the boundaries are accurately shown as the same were situated
on ____________, 1994; that there are no encroachments by improvements
appurtenant to adjoining premises upon the subject premises, nor from
the subject premises, unless shown thereon; that all buildings and
structures, if any, lie wholly within all applicable building
restriction lines, if any, and do not violate any restriction or other
recorded agreements set forth in the title insurance commitment for the
subject premises dated ___________, 1994, issued to you by
________________________, Commitment No. _______ (the "Title Policy");
that all easements and rights of way which are appurtenant to or burden
the subject premises and (i) are referred to in the Title Commitment or
(ii) are apparent from a visual inspection are delineated thereon, and
are located other than through the existing building shown hereon; that
all parking spaces, if any, are delineated thereon; and that, except as
otherwise shown thereon, the subject premises are not located (x) within
any flood hazard or flood way area or district as designed by Federal,
state or municipal authority or (y) within any area subject to
regulation by Federal, state or municipal authority as inland or coastal
wetlands, beach, estuary or the like.
Access to and egress from the subject premises and the
improvements and structures thereon to ________ Street, a public way,
are provided by the means indicated thereon. Municipal water, storm
sewer facilities and telephone, gas and electric services of public
utilities are available in the locations indicated thereon.
The undersigned hereby certifies that the square footage of
each parcel delineated on the above-referenced survey is as set forth
thereon, that all such parcels are contiguous without any strips, gaps
or gores existing between any of said parcels, and that said parcels,
when combined, form and create one complete and uninterrupted parcel
without any strips, gaps or gores.
This survey is made in accordance with the "Minimum Standard
Detail Requirements for Land Title Surveys" jointly established and
adopted by ALTA and ACSM in 1986.<PAGE>
-2-
Dated: _______ __, 1994 _______________________________
Registered Land Surveyor
__________ #_________________
[Surveyor's Seal]<PAGE>
HEALTH AND RETIREMENT PROPERTIES TRUST
400 Centre Street
Newton, MA 02158
September 1, 1994
Connecticut SubAcute Corporation
955 South Main Street
Middletown, CT 06457
RE: Letter of Intent re Purchase and Lease
of Nine (9) Nursing Homes in Vermont and
New Hampshire
Gentlemen:
Connecticut SubAcute Corporation (CSC) is negotiating with Mr. John
R. Chapple pursuant to a letter dated July 13, 1994 for the purchase of
nine (9) nursing homes in Vermont and New Hampshire. The purpose of
this Letter of Intent is to set forth the terms upon which Health and
Retirement Properties Trust (HRP) is willing to participate with CSC in
this transaction, as follows:
1. Buyer/Lessor: HRP
2. Seller: John R. Chapple or corporations owned by him which
are the current legal owner(s) of the Subject Properties.
3. Tenants: Two (2) newly formed corporations which are or will
be under common control with CSC, one of which will lease and operate
the Subject Properties located in Vermont and one of which will lease
and operate the Subject Property located in New Hampshire. The only
business of the Tenants will be the leasing and operations of the
Subject Properties.
4. Purchase Price: Thirty-Five Million Dollars ($35,000,000).
5. Payment Terms: Cash via wire transfer and/or HRP common
shares valued at current market value which stock will be subject to
such voting and/or resale restrictions and on such other terms and
conditions as may be agreed by HRP and Seller.<PAGE>
Connecticut Subacute Corporation
September 1, 1994
Page 2
6. Subject Properties: All the lands, buildings and equipment
that constitute the following nine (9) nursing homes:
Name/Location No. of Beds
Berlin Health and Rehab Center 152
Barre, Vermont
St. Johnsbury Health and 110
Rehab Center
St. Johnsbury, Vermont
Springfield Health and Rehab 102
Center
Springfield, Vermont
Bennington Health and Rehab 100
Center
Burlington Health and Rehab Center 168
Burlington, Vermont
Hanson Court Convalescent Home 42
Springfield, Vermont
Redstone Villa 30
St. Albans, Vermont
Rowan Court Health and Rehab Center 104
Barre, Vermont
Rochester Manor 108
Rochester, New Hampshire
_____
TOTAL: 916 beds
7. Leases' Term: Approximately fourteen years ending on December
31, 2008.
8. Renewal Options: Tenants shall have options to renew the
Leases for three (3) successive ten (10) year terms by giving written
notice at least one (1) year before the end of the initial Term, or any
extended Terms, as the case may be. The renewal options may be
exercised for all, but not less than all, of the Subject Properties.<PAGE>
Connecticut Subacute Corporation
September 1, 1994
Page 3
9. Rent: Rent shall be composed of Base Rent and Percentage
Rent. Base Rent shall be Three Hundred Six Thousand Two Hundred Fifty
Dollars ($306,250.00) per month. Percentage Rent shall be equal to
three percent (3%) of increases in Net Patient Revenues derived from the
Subject Properties in excess of Net Patient Revenues derived from the
Subject Properties during calendar year 1995. Base Rent shall commence
on the date of Closing and be payable monthly in advance on the Closing
date and thereafter on or before the first day of each calendar month.
Percentage Rent shall commence on January 1, 1996 and shall be payable
quarterly in arrears on or before each April 30, July 31, October 30 and
January 31 thereafter, based upon estimates of Net Patient Revenues
during the calendar quarter ending in the prior month. Annually, on or
before March 31 after each calendar year during which Percentage Rent is
payable, the Percentage Rent shall be adjusted based upon an annual
audit of Net Patient Revenues for the previous calendar year compared to
the audited amount of Net Patient Revenues during 1995. Net Patient
Revenues is defined as all revenues derived by Tenants and their
affiliates from operation of the Subject Properties, less contractual
adjustments and bad debts. Percentage Rent shall be calculated on a
facility by facility basis. Percentage Rent for each of the Subject
Properties payable in any one (1) year shall not exceed three percent
(3%) of the Purchase Price allocated to that Subject Property. After it
is established by annual audit, Percentage Rent for each of the Subject
Properties may not decline in subsequent years.
10. Purchase Options and Rights of First Refusal. Tenants shall
have the options to purchase all, but not less than all, of the Subject
Properties at the end of the initial Term or any extended Terms. This
Purchase Option shall be exercisable upon at least one (1) year's
notice. The Purchase Option price shall be the higher of (i) fair
market value determined by agreement, or failing agreement by appraisal;
or (ii) the Purchase Price set forth above. During the initial Term and
any extended Terms, and so long as there is no default by Tenants,
Tenants shall have a thirty (30) day right of first refusal in the event
Lessor determines to sell any or all of the Subject Properties.
11. Security: Tenants' obligations under the Leases will be
secured as follows:
(a) A first lien on all tangible personal property of the
Tenants (except motor vehicles, if any) used in connection with the
operations of the Subject Properties, provided, however, that after
acquired tangible personal property may be subject to senior purchase
money security interests.<PAGE>
Connecticut Subacute Corporation
September 1, 1994
Page 4
(b) Upon termination of the Leases, Lessor shall have the
option to purchase any tangible and intangible personal property of
Tenants, or of any affiliate of Tenants, which personal property is
located on, or used in connection with the business conducted upon, the
Subject Properties. The purchase option prices shall be equal to the
Tenants' net book value of such property.
(c) All obligations of the Tenants will be cross guaranteed
and subject to cross default. All obligations of the Tenants will be
guaranteed by CSC, by any affiliate of Tenants or CSC which conducts
business upon the Subject Properties, and by any direct or indirect
corporate parent or successor to Tenants which now exists or may
hereafter be created.
12. Other Terms: HRP's obligations to proceed with this
transaction is conditioned on the following additional terms:
(a) Receipt by HRP prior to Closing of an appraisal report,
from an appraiser and in form and substance acceptable to HRP, showing a
value of the Subject Properties at least equal to the Purchase Price.
(b) The Leases will be so called "triple net leases"
requiring Tenants to pay all operating costs including real estate
taxes, insurance, maintenance and repairs, and to make all capital
improvements required during the Leases' Term. Any expenditures which
HRP, in its discretion, may make in response to requests from Tenants,
or as a result of defaults by Tenants, whether to improve or maintain
the Subject Premises, or otherwise, will result in Rent increases.
(c) Prior to Closing, Tenants will provide HRP a copy of all
documentation of the transactions between Seller and Tenants, and these
terms shall be subject to HRP's approval.
(d) The Lease and guaranty documentation will contain
covenants and restrictions which subordinate all payments from Tenants
to affiliated parties to payments due HRP, provided, however, that such
payments (including reasonable management fees or maintenance of a
pooled cash management system among Tenants and its affiliates) may be
made in the ordinary course so long as there is no default in
obligations due HRP.
(e) Assignment, sublease, or change of control of the Tenants
will not be permitted without HRP's consent, in its discretion;
provided, however, Tenants will be permitted to sublease space within
the Subject Properties for incidental nursing home and medical use.
(f) Tenants will be required to obtain and maintain all
appropriate licenses, certifications, Medicare and Medicaid
qualifications and the like throughout the Leases' Term.
(g) Prior to Closing, HRP shall receive all survey,
environmental, engineering, title insurance commitments, opinions of
counsel and other third party reports and documents customary in<PAGE>
Connecticut Subacute Corporation
September 1, 1994
Page 5
transactions of this nature. All such reports and documents shall be in
form and substance and from third parties acceptable to HRP.<PAGE>
Connecticut Subacute Corporation
September 1, 1994
Page 6
(h) Prior to Closing, HRP shall have completed a physical
inspection of the Subject Properties and such further diligence as it
may deem appropriate, and with such results as HRP deems acceptable.
Depending upon the results of such diligence HRP may require as a
condition of Closing that there be an agreement between HRP and Tenants
concerning capital budgets for the Subject Properties and the funding
and timing of improvements.
(i) After the acceptance of this Letter of Intent, CSC,
Tenants and their affiliates and representatives will not solicit other
proposals for the financing or purchase of the Subject Properties from
any party other than HRP unless and until HRP advises CSC that HRP is
unwilling to proceed with this transaction, or twenty (20) days
following written advice from CSC to HRP that any terms or conditions
required by HRP are unacceptable, unless such terms or conditions are
resolved to mutually acceptable terms or conditions within the twenty
(20) day period.
(j) The final form and substance of all documentation must be
acceptable to HRP and its counsel. Except as may be otherwise agreed
between HRP and Sellers or Tenants, all expenses of preparing for and
concluding this transaction shall be borne by Sellers or Tenants
including, but not limited to, the costs and expenses of preparing or
obtaining appraisals and third party reports and documents, any
brokerage fees, all property transfers and recording costs, the cost of
HRP's title insurance, the out-of-pocket costs of HRP's diligence, and
the costs and expenses of HRP's counsel.
(k) It is specifically understood that HRP's undertaking to
proceed with this transaction is conditioned upon final approval of this
transaction by HRP's Board of Trustees.
(l) During the Leases' Term, Tenants, CSC and their
affiliates shall grant HRP a right of first refusal to provide sale
lease or mortgage financing for any health care related facilities
owned, leased, operated or to be acquired by Tenants, CSC, or any
affiliate within the market area of the Subject Properties. The
geographic limits of such market area will be defined in the transaction
documentation, but it is generally expected to be a ten (10) mile radius
from each of the Subject Properties. It is understood that this will be
a right of first refusal, not a right to set terms.
(m) Prior to Closing, the Purchase Price and the Base Rent
shall be allocated among the separate Subject Properties on a basis
mutually agreeable to HRP, Sellers and Tenants.
13. Closing: The Closing of this transaction will take place at
the offices of Sullivan & Worcester, One Post Office Square, Boston,
Massachusetts on September 30, 1994 or another mutually acceptable date.<PAGE>
Connecticut Subacute Corporation
September 1, 1994
Page 7
If the terms outlined in this Letter of Intent are acceptable
please sign and return a copy of this Letter to the undersigned.
Very truly yours,
/s/ David J. Hegarty
David J. Hegarty
Executive Vice President
ACCEPTED
CONNECTICUT SUBACUTE CORPORATION
By /s/ Mark J. Finkelstein
Print: Mark J. Finkelstein
Title: President
Dated: September 19, 1994<PAGE>
ARTICLES SUPPLEMENTARY
TO THE DECLARATION OF TRUST OF
HEALTH AND RETIREMENT PROPERTIES TRUST
Pursuant to Section 8-203(b) of Title 8
of the Corporations and Associations Article
of the Annotated Code of Maryland
Health and Retirement Properties Trust, a Maryland real estate
investment trust (the "Trust"), hereby certifies to the State Department
of Assessments and Taxation of Maryland that:
FIRST: Pursuant to authority expressly vested in the Board of
Trustees of the Trust by Article VI of the Declaration of Trust of the
Trust, the Board of Trustees has duly divided and classified 2,000,000
shares of the Preferred Shares of Beneficial Interest of the Trust into
a series designated Series A Preferred Shares and has provided for the
issuance of such series.
SECOND: The terms of the Series A Preferred Shares are set by the
Board of Trustees as follows:
SERIES A PREFERRED SHARES
SECTION I. Designation and Amount; Number of Shares.
There is hereby established a series of the Trust's Preferred
Shares of Beneficial Interest, par value $.01 per share ("Preferred
Shares") consisting of 2,000,000 Preferred Shares. The designation of
such series shall be "Series A Preferred Shares" (hereinafter "Series A
Preferred Shares").
SECTION II. Voting Rights.
Each Series A Preferred Share shall have, as to all matters
submitted to a vote of the shareholders of the Trust, one-tenth the
number of votes to which such share would be entitled if it were a
common share of beneficial interest, $.01 par value per share, of the
Trust (a "Common Share"). The holders of the Series A Preferred Shares
shall not be entitled to vote separately as a class as to any matter.<PAGE>
-2-
SECTION III. Dividends.
Except as otherwise provided in this Section III, the holders of
the Series A Preferred Shares shall participate equally with holders of
Common Shares in all dividends (other than dividends paid in Common
Shares of the Trust, which dividends shall be paid in Series A Preferred
Shares based upon the conversion ratio provided below) payable to
shareholders of the Trust, when, as and if declared by the Board of
Trustees. The holders of the Series A Preferred Shares shall not be
entitled to receive any dividend declared by the Trust's Board of
Trustees in respect of the Trust's operations during the fiscal quarter
ending immediately prior to the date of issuance of the Series A
Preferred Shares. The holders of the Series A Preferred Shares shall be
entitled to receive only a portion of any dividend declared by the Board
of Trustees on the Common Shares in respect of the Trust's operations
during the fiscal quarter during which the Series A Preferred Shares are
issued, prorated based on the following formula:
P = (D/X) x N;
where P = the dividend payable per Series A Preferred Share, D = the
dividend payable per Common Share declared by the Board of Trustees, X =
the number of days in the fiscal quarter during which the Series A
Preferred Shares are issued, and N = the number of days during the
fiscal quarter on which the Series A Preferred Shares were issued and
outstanding.
SECTION IV. Liquidation.
Upon any liquidation, dissolution or winding up of the Trust, after
payment or provision for payment of all debts and other obligations and
liabilities of the Trust, the holders of the Series A Preferred Shares
shall be entitled, before any distribution or payment is made upon any
other shares of the capital stock of the Trust (other than Preferred
Shares which have a senior or equal priority to the Series A Preferred
Shares), to be paid an amount equal to $15.00 per Series A Preferred
Share, and the holders of the Series A Preferred Shares shall not be
entitled to any further payment. Upon any such liquidation, dissolution
or winding up of the Trust, after the holders of the Series A Preferred
Shares shall have been paid in full the amounts to which they shall be
entitled, the remaining net assets of the Trust may be distributed to
the holders of Preferred Shares subordinated to the Series A Preferred
Shares or to the holders of the Common Shares.
If, upon any such liquidation, dissolution or winding up of the
Trust, the assets of the Trust distributable as aforesaid among the
holders of the Series A Preferred Shares, and any other Preferred Shares
having equal priority, at the time outstanding, shall be insufficient to
permit the payment to them of the full preferential amounts to which
they are entitled, then the entire assets of the Trust so available for
distribution shall be distributed ratably among the holders of the
Series A Preferred Shares, and any other Preferred Shares having equal
priority, at the time outstanding, so that an equal amount (rounded down
to the nearest whole cent) is paid with respect to each such Preferred<PAGE>
-3-
Share.<PAGE>
-4-
Neither the consolidation nor merger of the Trust into or with any
other trust, corporation or corporations, nor the sale or transfer by
the Trust of all or any part of its assets, nor the reorganization or
recapitalization of the Trust, nor the reduction of the capital stock of
the Trust, shall, in and of itself, be deemed to be a liquidation,
dissolution or winding up of the Trust within the meaning of any of the
provisions of this section; provided, however, that Section V.B. hereof
may apply to such a transaction.
SECTION V. Transfer of Shares; Conversion.
A. Transfer and Conversion Procedures.
1. The Series A Preferred Shares will be issued by the Trust
in connection with the Trust's acquisition of certain properties to the
sellers of such properties. Such sellers shall hereafter be referred to
as "Initial Holders". The Initial Holders may not sell, transfer or
make any disposition or conversion of any Preferred Shares prior to the
first to occur of (a) the day after the record date for the dividend
declared by the Board of Trustees of the Trust in respect of the Trust's
operations during the fiscal quarter during which the Series A Preferred
Shares are initially issued, or (b) the day after the Board of Trustees
of the Trust announces that no dividend will be declared for such fiscal
quarter.
2. At any time on or after the date specified in Section
V.A.1., an Initial Holder of any Series A Preferred Shares may transfer
Series A Preferred Shares to any bona fide transferee who or which is
unaffiliated with such Initial Holder, provided, however, that upon such
transfer, the transferred Series A Preferred Shares shall automatically
be converted into Common Shares on the basis of one (1) Common Share for
each Series A Preferred Share (the "Conversion Ratio").
3. Each conversion of Series A Preferred Shares will be
deemed to have been effected simultaneously with the sale, transfer or
other disposition in accordance with the terms of Section V.A.1. or
V.A.2. At such time as the conversion of any Series A Preferred Share
has been effected, the rights of the holder of such Series A Preferred
Share as such holder will cease and the person or persons in whose name
or names any certificate or certificates for Common Shares are to be
issued upon such conversion will be deemed to have become the holder or
holders of record of the number of Common Shares represented thereby.
4. As soon as practicable after a conversion has been
effected, the Trust will deliver to the holder of such shares:
a. a certificate or certificates representing the number
of Common Shares issuable by reason of such conversion, in such
name or names and such denomination or denominations as the Initial
Holder has specified; and<PAGE>
-5-
5. a certificate representing any Series A Preferred Shares
which were represented by the certificate or certificates delivered to
the Trust in connection with such conversion but which were not
converted.
6. Failure of the Initial Holder to deliver to the Trust a
certificate for Series A Preferred Shares converted pursuant to this
Section V shall not affect the conversion of such Series A Preferred
Shares which subsequent to such conversion shall for all purposes be and
be treated as Common Shares.
7. The issuance of certificates for Common Shares upon
conversion of Series A Preferred Shares will be made without charge to
the holders of such Series A Preferred Shares for any issuance tax in
respect thereof or other cost incurred by the Trust in connection with
such conversion and the related issuance of Common Shares.
8. No voluntary or involuntary sale, transfer or other
disposition of Series A Preferred Shares may be made or suffered to
exist by an Initial Holder except in accordance with this Section V.
B. Subdivision or Combination of Common Shares.
If the Trust at any time subdivides (by any stock split, stock
dividend or otherwise) its outstanding Common Shares into a greater
number of shares, the Conversion Ratio in effect immediately prior to
such subdivision will be proportionately increased, and if the Trust at
any time combines (by reverse stock split or otherwise) its outstanding
Common Shares into a smaller number of shares, the Conversion Ratio in
effect immediately prior to such combination will be proportionately
reduced.
C. Reservation of Common Shares.
So long as any Series A Preferred Shares remain outstanding, the
Trust shall reserve and keep available out of its authorized but
unissued Common Shares, solely for effecting the conversion of Series A
Preferred Shares, the full number of Common Shares then deliverable upon
the conversion of all Series A Preferred Shares outstanding.
D. Notices.
As soon as practicable after any adjustment of the Conversion
Ratio, the Trust will send written notice thereof to all holders of
Series A Preferred Shares, at their addresses as shown on the stock
transfer records of the Trust.
E. Mandatory Conversion.<PAGE>
-6-
1. The Board of Trustees of the Trust, at any time, may
declare that all, but not less than all, outstanding Series A Preferred
Shares shall be converted into Common Shares at the Conversion Ratio
then in effect.
2. The Trust will mail to each holder of Series A Preferred
Shares, at such holder's address as shown on the stock transfer records
of the Trust, written notice of a conversion pursuant to this paragraph
not less than 10 and not more than 90 days before the date on which the
Series A Preferred Shares are to be converted. Such notice will (a)
make specific reference to this Section, (b) set forth the facts on
which the conversion hereunder is based, and (c) state the date of the
conversion (the "Mandatory Conversion Date").
3. Any Series A Preferred Share not surrendered for
conversion on or prior to the Mandatory Conversion Date will be deemed
to have been converted on the Mandatory Conversion Date. No Series A
Preferred Share will be entitled to any dividends accruing after such
Mandatory Conversion Date and on such Mandatory Conversion Date all
rights of the holder of such Series A Preferred Share as such holder
will cease, and such Series A Preferred Share will not be deemed to be
outstanding thereafter.
4. The Trust shall, within 20 days after the Mandatory
Conversion Date (or as soon thereafter as the holder has tendered the
certificate or certificates representing the Series A Preferred Shares),
send or deliver to each former holder of Series A Preferred Shares, at
such holder's address as shown on the stock transfer records of the
Trust:
a. a certificate or certificates representing the number
of whole Common Shares issuable by reason of the conversion of such
holder's Series A Preferred Shares, in such name or names and such
denomination or denominations as the converting holder has
specified, or, if the converting holder has not so specified, a
single certificate representing such number of whole shares, in the
name of such holder; and
b. payment in cash in lieu of any fractional Common
Share to which the converting holder would be entitled if such
fractional share was issuable, based upon the closing price on the
New York Stock Exchange (or such other exchange on which the Common
Shares are then listed) for a Common Share as of such Mandatory
Conversion Date (or, if no Common Shares were traded on such date,
the most recent date on which Common Shares were traded).<PAGE>
-7-
IN WITNESS WHEREOF, the Trust has caused these presents to be
signed in its name and on its behalf by the members of the Board of
Trustees of the Trust and witnessed by its Secretary on __________,
1994.
WITNESS: HEALTH AND RETIREMENT
PROPERTIES TRUST
_________________________ ______________________________
Secretary John L. Harrington, Trustee
_____________________________
Arthur G. Koumantzelis, Trustee
____________________________
Rev. Justinian Manning, C.P., Trustee
____________________________
Gerard M. Martin, Trustee
___________________________
Barry M. Portnoy, Trustee<PAGE>
EXECUTION COPY
HEALTH AND RETIREMENT PROPERTIES TRUST
SECOND AMENDMENT TO AMENDED AND RESTATED REVOLVING LOAN AGREEMENT
DATED AS OF SEPTEMBER 27, 1994
This SECOND AMENDMENT TO AMENDED AND RESTATED REVOLVING LOAN
AGREEMENT (this "Amendment") is dated as of September 27, 1994, among
HEALTH AND RETIREMENT PROPERTIES TRUST (formerly known as Health and
Rehabilitation Properties Trust), a real estate investment trust formed
under the laws of the State of Maryland ("Borrower"), the several
lenders listed on the signature pages hereof (the "Lenders"), KLEINWORT
BENSON LIMITED, a bank organized under the laws of England, as agent for
itself and the other Lenders (in such capacity, together with any
successor in such capacity in accordance with the terms of the Loan
Agreement, as defined below, "Agent"), WELLS FARGO BANK, NATIONAL
ASSOCIATION, a bank organized under the laws of the United States of
America, as administrative agent (in such capacity, together with any
successor in such capacity in accordance with the terms of the Loan
Agreement, "Administrative Agent"), and NATIONAL WESTMINSTER BANK, USA,
a national banking association, as co-agent (in such capacity, "Co-
Agent"), and is made with reference to the Amended and Restated
Revolving Loan Agreement dated as of June 15, 1994, among Borrower, the
Lenders, Agent, Administrative Agent and Co-Agent, as amended and
supplemented to the date hereof (as so amended and supplemented, the
"Loan Agreement"). Capitalized terms used herein without definition
shall have the same meanings herein as set forth in the Loan Agreement.
WHEREAS, Borrower and Lenders desire to amend the Loan Agreement to
change the definition of "EBI" and to amend Section 9.4, both as set
forth herein.
NOW, THEREFORE, in consideration of the premises and the
agreements, provisions and covenants herein contained, the parties
hereto agree as follows:
1. Amendment to Loan Agreement.
(a) The definition of "EBI" set forth in Section 1.1 of the
Loan Agreement is hereby amended to read in its entirety as follows:<PAGE>
" "EBI" means, with respect to Borrower and its Subsidiaries,
if any, for any period of time, without duplication of counting, the sum
of (i) the net income on a consolidated basis (determined in accordance
with GAAP for such period), plus (ii) any losses for such period from
the sale of assets (on a tax effected basis) outside the ordinary course
of business, plus (iii) any non-cash extraordinary expenses from such
period, minus, (iv) any gains for such period from the sale of assets
(on a tax effected basis) outside the ordinary course of business, minus
(v) any extraordinary gains from such period, plus (vi) to the extent
deducted from gross income to calculate net income, Interest Charges of
Borrower and its Subsidiaries, if any, on a consolidated basis for such
period."
(b) Section 9.4 of the Loan Agreement is hereby amended by
inserting therein after the amount "$5,000,000" the following:
"(or any lesser amount in the case of an assignment by
one Lender to another Lender)".
2. Representations and Warranties. In order to induce the
Lenders to enter into this Amendment and to amend the Loan Agreement in
the manner provided herein, Borrower represents and warrants to each
Lender that the following statements are true, correct and complete:
(a) Borrower has the power and authority to enter into this
Amendment and to carry out the transactions contemplated by, and perform
its obligations under, the Loan Agreement as amended by this Amendment
(the "Amended Agreement").
(b) The execution and delivery of this Amendment and the
performance of the Amended Agreement have been authorized by all
necessary action on the part of borrower.
(c) The execution and delivery by Borrower of this Amendment
and the performance by Borrower of the Amended Agreement do not violate
any Requirement of Law or Contractual Obligation of Borrower and will
not result in, or require, the creation or imposition of any Lien on any
of its properties or revenues pursuant to any Requirement of Law or
Contractual Obligation of Borrower, other than the Liens for the benefit
of Lenders expressly contemplated by the Loan Agreement.
(d) The Amendment and the Amended Agreement have been duly
executed and delivered by Borrower and are the legally valid and binding
obligations of Borrower, enforceable against Borrower in accordance with
their respective terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the enforcement of creditors' rights generally.
(e) The representations and warranties contained in Section 3
of the Loan Agreement are and will be true, correct and complete in all
material respects on and as of the date hereof to the same extent as
though made on and as of that date, except to the extent such
representations and warranties specifically relate to an earlier date,
in which case they were true, correct and complete in all material
respects on and as of such earlier date.<PAGE>
(f) No event has occurred and is continuing or will result
from the consummation of the transactions contemplated by this Amendment
that would constitute a Default or an Event of Default.
(g) The Declaration of Trust, By-Laws and other
organizational documents of the Borrower have not been amended since
June 15, 1994, except for an amendment to the Borrower's Declaration of
Trust filed with the State of Maryland's Department of Assessments and
Taxation on July 1, 1994 to effect the change of the Borrower's name.
3. Reference to and Effect on the Loan Agreement and Other Loan
Documents. Except as specifically amended hereby, the terms, provisions
and conditions of the Loan Agreement and the other Loan Documents shall
remain in full force and effect and are hereby ratified and confirmed.
4. Fees and Expenses. The Borrower agrees to pay to the Agent on
demand all reasonable costs, fees and expenses incurred by the Agent
(including without limitation legal fees and expenses) with respect to
this Amendment and the documents and transactions contemplated hereby.
5. Execution in Counterparts; Effectiveness. This Amendment may
be executed in any number of counterparts, and by different parties
hereto in separate counterparts, each of which when so executed and
delivered shall be deemed an original, but all such counterparts taken
together shall constitute but one and the same instrument. This
Amendment shall become effective upon the execution of a counterpart
hereof by the Borrower and the Majority Lenders and receipt by the Agent
of written or telephonic notification of such execution and
authorization of delivery hereof.
6. Headings. Section headings in this Amendment are included
herein for convenience of reference only and shall not constitute a part
of this Amendment for any other purpose or be given any substantive
effect.
7. APPLICABLE LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
8. Limitation of Amendment. Without limiting the generality of
the provisions of Section 9.4 of the Loan Agreement, the amendments set
forth above shall be limited precisely as written, and nothing in this
Amendment shall be deemed to prejudice any right or remedy that any
Lender may now have (except to the extent such right or remedy was based
upon existing defaults that will not exist after giving effect to this
Amendment) or may have in the future under or in connection with the
Loan Agreement or any other instrument or agreement referred to therein.
[Remainder of page intentionally left blank.]<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be duly executed and delivered by their respective officers thereunto
duly authorized as of the date first written above.
HEALTH AND RETIREMENT
PROPERTIES TRUST
By: /s/ John G. Murray
Title: Treasurer
KLEINWORT BENSON LIMITED, as
Agent and as a Lender
\ By: /s/ Patrick Donelan
Title: Director
WELLS FARGO BANK, NATIONAL
ASSOCIATION, as Administrative
Agent and as a Lender
By: /s/ Kathleen J. Harrison
Title: Vice President
NATIONAL WESTMINSTER BANK, USA,
as Co-Agent and as a Lender
By: /s/ Paul Chau
Title: Assistant Vice President
THE DAIWA BANK, LIMITED, as a
Lender
By: /s/ Daniel G. Eastman
Title: Vice President and Manager
By: /s/ Stephen O'Sullivan
Title: Executive Officer <PAGE>
FLEET BANK OF MASSACHUSETTS, as a
Lender
By: /s/ Ginger Stolzenthaler
Title: Vice President
MITSUI LEASING (USA) INC., as a
Lender
By: /s/ T. Nagano
Title: Executive Vice President
BANK HAPOALIM B.M., as a Lender
By: /s/ Nancy Lushan
Title: Vice President
By: /s/ Martin B. Goodstein
Title: Vice President
DRESDNER BANK
New York and Grand Cayman
Branches, as a Lender
By: /s/ Peter Becker
Title: Vice President
By: /s/ Richard W. Conroy
Title: Vice President
KREDIETBANK N.V., as a Lender
By: /s/ Diane Grimmig
Title: Vice President
By: /s/ Robert Snauffer
Title: Vice President <PAGE>
CREDIT LYONNAIS
Cayman Island Branch,
as a Lender
By: /s/ Xavier Ratouis
Title:____________________________
<PAGE>
EXHIBIT 12.1
STATEMENT OF COMPUTATION OF RATIO OF EARNINGS
TO FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
The information required for this exhibit has been included
in the prospectus contained within this registration statement at
page 5.
