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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported); DECEMBER 20, 1995
HEALTH AND RETIREMENT PROPERTIES TRUST
(Exact name of registrant as specified in its charter)
MARYLAND 1-9317 04-6558834
(State or other (Commission file (IRS employer
jurisdiction of number) identification no.)
incorporation)
400 CENTRE STREET, NEWTON, MASSACHUSETTS 02158
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: 617-332-3990
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ITEM 5. OTHER EVENTS
Legal Proceedings
Reference is made to the Company's Reports on Form 8-K dated July 27, 1995
and December 18, 1995, describing certain litigation involving a foreclosure
action commenced by the Company against a former tenant/mortgagor and
counterclaims and a third party complaint brought by the defendants in the
foreclosure action and parties related thereto against the Company, Advisors,
two Trustees of the Company, Messrs. Portnoy and Martin, and others, including
Sullivan & Worcester, counsel to the Company. On December 19, 1995, the Company
learned that the foreclosure defendants and related parties have filed a new
complaint in the United States District Court for the District of Massachusetts
realleging many of the same allegations made in the counterclaims and
third-party complaints previously brought by them in response to the Company's
original foreclosure action, and adding allegations of violations of Sections
10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5
promulgated thereunder and violations of RICO. Neither the Company nor to the
Company's knowledge the other named defendants has yet been served with the new
complaint. Although the outcome of the new litigation is currently
indeterminable, each of the Company and each other defendant named in the new
complaint believes the claims which have been asserted against it are without
merit and intends to defend and deny the allegations in the new complaint and
the Company intends to pursue the original foreclosure action.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits.
1 Underwriting Agreement
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HEALTH AND RETIREMENT PROPERTIES TRUST
By: /s/ Ajay Saini
----------------------------------
Ajay Saini
Treasurer and Chief Financial Officer
Date: December 20, 1995
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EXHIBIT 1
6,500,000 Shares
HEALTH AND RETIREMENT PROPERTIES TRUST
Common Shares of Beneficial Interest
UNDERWRITING AGREEMENT
December 18, 1995
SMITH BARNEY INC.
DEAN WITTER REYNOLDS INC.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
MERRILL LYNCH, PIERCE, FENNER &
SMITH INCORPORATED
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
c/o SMITH BARNEY INC.
388 Greenwich Street
New York, New York 10013
Dear Sirs:
Health and Retirement Properties Trust, a real estate investment trust
organized under the laws of the State of Maryland, proposes to issue and sell
an aggregate of 6,500,000 common shares of beneficial interest (the "Firm
Shares"), $0.01 par value, to the several Underwriters named in Schedule I
hereto (the "Underwriters"). The Company also proposes to sell to the
Underwriters, upon the terms and conditions set forth in Section 2 hereof, up
to an additional 975,000 common shares of beneficial interest (the "Additional
Shares"). The Firm Shares and the Additional Shares are hereinafter
collectively referred to as the "Shares".
The Company wishes to confirm as follows its agreement with you in
connection with the several purchases of the Shares by the Underwriters.
1. Registration Statement and Prospectus. The Company has
prepared and filed with the Securities and Exchange Commission (the
"Commission") in accordance with the provisions of the Securities Act of 1933,
as amended, and the rules and regulations of the Commission thereunder
(collectively, the "Act"), a registration statement on Form S-3 (No. 33-53173)
under the Act (the "registration statement"), including a prospectus, for the
registration of debt securities, preferred shares of beneficial interest,
common shares of beneficial interest and/or warrants to purchase common shares
of beneficial interest. Such registration statement has been declared
effective under the
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Act. The term "Registration Statement" as used in this Agreement means the
registration statement (including all financial schedules and exhibits), as
supplemented or amended prior to the execution of this Agreement. If it is
contemplated, at the time this Agreement is executed, that a post-effective
amendment to the registration statement will be filed and must be declared
effective before the offering of the Shares may commence, the term
"Registration Statement" as used in this Agreement means the registration
statement as amended by said post-effective amendment. The term "Prospectus"
as used in this Agreement means the prospectus in the form included in the
Registration Statement, as supplemented by the final prospectus supplement
relating to the Shares (the "Prospectus Supplement"). The term "Preliminary
Prospectus Supplement" as used in this Agreement means the Prospectus
Supplement subject to completion at the time of the initial filing of the
Prospectus Supplement with the Commission, and as such Prospectus Supplement
shall have been supplemented from time to time prior to the filing of the final
Prospectus Supplement with the Commission pursuant to Rule 424 under the Act.
Any reference in this Agreement to the registration statement, the Registration
Statement, the Preliminary Prospectus Supplement, the final Prospectus
Supplement or the Prospectus shall be deemed to refer to and include the
documents incorporated by reference therein pursuant to Item 12 of Form S-3
under the Act, as of the date of the registration statement, the Registration
Statement, the Preliminary Prospectus Supplement, the final Prospectus
Supplement or the Prospectus, as the case may be, and any reference to any
amendment or supplement to the registration statement, the Registration
Statement, the Preliminary Prospectus Supplement, the final Prospectus
Supplement or the Prospectus shall be deemed to refer to and include any
documents filed after such date under the Securities Exchange Act of 1934, as
amended (the "Exchange Act") which, upon filing, are incorporated by reference
therein, as required by paragraph (b) of Item 12 of Form S-3. As used herein,
the term "Incorporated Documents" means the documents which at the time are
incorporated by reference in the registration statement, the Registration
Statement, the Preliminary Prospectus Supplement, the final Prospectus
Supplement, the Prospectus, or any amendment or supplement thereto.
2. Agreements to Sell and Purchase. The Company hereby agrees,
subject to all the terms and conditions set forth herein, to issue and sell to
each Underwriter and, upon the basis of the representations, warranties and
agreements of the Company herein contained and subject to all the terms and
conditions set forth herein, each Underwriter agrees, severally and not
jointly, to purchase from the Company, at a purchase price of $15.15 per Share
(the "purchase price per share"), the number of Firm Shares set forth opposite
the name
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of such Underwriter in Schedule I hereto (or such number of Firm Shares
increased as set forth in Section 10 hereof).
The Company also agrees, subject to all the terms and conditions set
forth herein, to sell to the Underwriters, and, upon the basis of the
representations, warranties and agreements of the Company herein contained and
subject to all the terms and conditions set forth herein, the Underwriters
shall have the right to purchase from the Company, at the purchase price per
share, pursuant to an option (the "over-allotment option") which may be
exercised at any time and from time to time prior to 9:00 P.M., New York City
time, on the 30th day after the date of the Prospectus Supplement (or, if such
30th day shall be a Saturday or Sunday or a holiday, on the next business day
thereafter when the New York Stock Exchange is open for trading), up to an
aggregate of 975,000 Additional Shares. Additional Shares may be purchased
only for the purpose of covering over-allotments made in connection with the
offering of the Firm Shares. Upon any exercise of the over-allotment option,
each Underwriter, severally and not jointly, agrees to purchase from the
Company the number of Additional Shares (subject to such adjustments as you may
determine in order to avoid fractional shares) which bears the same proportion
to the number of Additional Shares to be purchased by the Underwriters as the
number of Firm Shares set forth opposite the name of such Underwriter in
Schedule I hereto (or such number of Firm Shares increased as set forth in
Section 10 hereof) bears to the aggregate number of Firm Shares.
3. Terms of Public Offering. The Company has been advised by you
that the Underwriters propose to make a public offering of their respective
portions of the Shares as soon after the filing of the final Prospectus
Supplement as in your judgment is advisable and initially to offer the Shares
upon the terms set forth in the Prospectus.
4. Delivery of the Shares and Payment Therefor. Delivery to the
Underwriters of and payment for the Firm Shares shall be made at the offices of
Sullivan & Worcester, A Registered Limited Liability Partnership ("Sullivan &
Worcester"), One Post Office Square, Boston, Massachusetts, at 10:00 A.M., New
York City time, on December 21, 1995 (the "Closing Date"). The place of
closing for the Firm Shares and the Closing Date may be varied by agreement
between you and the Company.
Delivery to the Underwriters of and payment for any Additional Shares
to be purchased by the Underwriters shall be made at the aforementioned offices
of Sullivan & Worcester at such time on such date (the "Option Closing Date"),
which may be the same as the Closing Date but shall in no event be earlier than
the Closing Date nor earlier than two nor later than ten business days after
the giving of the notice hereinafter referred to, as shall be specified in a
written
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notice from you on behalf of the Underwriters to the Company of the
Underwriters' determination to purchase a number, specified in such notice, of
Additional Shares. The place of closing for any Additional Shares and the
Option Closing Date for such Shares may be varied by agreement between you and
the Company.
Certificates for the Firm Shares and for any Additional Shares to be
purchased hereunder shall be registered in such names and in such denominations
as you shall request prior to 9:30 A.M., New York City time, on the second
business day preceding the Closing Date or any Option Closing Date, as the case
may be. Such certificates shall be made available to you in New York City for
inspection and packaging not later than 9:30 A.M., New York City time, on the
business day next preceding the Closing Date or the Option Closing Date, as the
case may be. The certificates evidencing the Firm Shares and any Additional
Shares to be purchased hereunder shall be delivered to you on the Closing Date
or the Option Closing Date, as the case may be, against payment of the purchase
price therefor by certified or official bank check or checks payable in New
York Clearing House (next day) funds to the order of the Company.
5. Agreements of the Company. The Company agrees with the
several Underwriters as follows:
(a) If, at the time this Agreement is executed and delivered,
it is necessary for a post-effective amendment to the Registration Statement to
be declared effective before the offering of the Shares may commence, the
Company will endeavor to cause such post-effective amendment to become effective
as soon as possible and will advise you promptly and, if requested by you, will
confirm such advice in writing, when such post-effective amendment has become
effective.
(b) The Company will advise you promptly and, if requested by
you, will confirm such advice in writing: (i) of any request by the Commission
for amendment of or a supplement to the Registration Statement, the Preliminary
Prospectus Supplement, the final Prospectus Supplement or the Prospectus or for
additional information; (ii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or of the suspension
of qualification of the Shares for offering or sale in any jurisdiction or the
initiation of any proceeding for such purpose; and (iii) within the period of
time referred to in paragraph (f) below, of any change in the Company's
condition (financial or other), business, prospects, properties, net worth or
results of operations, or of the happening of any event, which makes any
statement of a material fact made in the Registration Statement or the
Prospectus (as then amended or supplemented) untrue or which requires the making
of any additions to or changes in the Registration Statement or the
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Prospectus (as then amended or supplemented) in order to state a material fact
required by the Act or the regulations thereunder to be stated therein or
necessary in order to make the statements therein not misleading, or of the
necessity to amend or supplement the Prospectus (as then amended or
supplemented) to comply with the Act or any other law. If at any time the
Commission shall issue any stop order suspending the effectiveness of the
Registration Statement, the Company will make every reasonable effort to obtain
the withdrawal of such order at the earliest possible time.
(c) The Company will furnish to you, without charge (i) seven
conformed copies of the registration statement as originally filed with the
Commission and of each amendment thereto, including financial statements and all
exhibits to the registration statement, (ii) such number of conformed copies of
the registration statement as originally filed and of each amendment thereto,
but without exhibits, as you may request, (iii) such number of copies of the
Incorporated Documents, without exhibits, as you may request, and (iv) seven
copies of the exhibits to such Incorporated Documents.
(d) The Company will not file any amendment to the
Registration Statement or make any amendment or supplement to the Prospectus or,
prior to the end of the period of time referred to in the first sentence in
subsection (f) below, file any document which, upon filing becomes an
Incorporated Document, of which you shall not previously have been advised or to
which, after you shall have received a copy of the document proposed to be
filed, you shall reasonably object.
(e) Prior to the execution and delivery of this Agreement,
the Company has delivered to you, without charge, in such quantities as you have
requested, copies of each form of the Preliminary Prospectus Supplement. The
Company consents to the use, in accordance with the provisions of the Act and
with the securities or Blue Sky laws of the jurisdictions in which the Shares
are offered by the several Underwriters and by dealers, prior to the date of the
Prospectus, of each Preliminary Prospectus Supplement so furnished by the
Company.
(f) As soon after the execution and delivery of this
Agreement as possible and thereafter from time to time for such period as in
the opinion of counsel for the Underwriters a prospectus is required by the Act
to be delivered in connection with sales by any Underwriter or dealer, the
Company will expeditiously deliver to each Underwriter and each dealer, without
charge, as many copies of the Prospectus (and of any amendment or supplement
thereto) as you may request. The Company consents to the use of the Prospectus
(and of any amendment or supplement thereto) in accordance with the provisions
of the Act and with the
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securities or Blue Sky laws of the jurisdictions in which the Shares are
offered by the several Underwriters and by all dealers to whom Shares may be
sold, both in connection with the offering and sale of the Shares and for such
period of time thereafter as the Prospectus is required by the Act to be
delivered in connection with sales by any Underwriter or dealer. If during
such period of time any event shall occur that in the judgment of the Company
or in the opinion of counsel for the Underwriters is required to be set forth
in the Prospectus (as then amended or supplemented) or should be set forth
therein in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it is necessary
to supplement or amend the Prospectus (or to file under the Exchange Act any
document which, upon filing, becomes an Incorporated Document) in order to
comply with the Act or any other law, the Company will forthwith prepare and,
subject to the provisions of paragraph (d) above, file with the Commission an
appropriate supplement or amendment thereto (or to such document), and will
expeditiously furnish to the Underwriters and dealers a reasonable number of
copies thereof. In the event that the Company and you agree that the
Prospectus should be amended or supplemented, the Company, if requested by you,
will promptly issue a press release announcing or disclosing the matters to be
covered by the proposed amendment or supplement.
(g) The Company will cooperate with you and with counsel for
the Underwriters in connection with the registration or qualification of the
Shares for offering and sale by the several Underwriters and by dealers under
the securities or Blue Sky laws of such jurisdictions as you may designate and
will file such consents to service of process or other documents necessary or
appropriate in order to effect such registration or qualification; provided that
in no event shall the Company be obligated to qualify to do business in any
jurisdiction where it is not now so qualified or to take any action which would
subject it to service of process in suits, other than those arising out of the
offering or sale of the Shares, in any jurisdiction where it is not now so
subject.
(h) The Company will make generally available to its security
holders a consolidated earnings statement, which need not be audited, covering a
twelve-month period commencing after the date of the final Prospectus Supplement
and ending not later than 15 months thereafter, as soon as practicable after the
end of such period, which consolidated earnings statement shall satisfy the
provisions of Section 11(a) of the Act.
(i) During the period of five years hereafter, the Company
will furnish to you (i) as soon as available, a copy of each report of the
Company mailed to holders of shares of
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beneficial interest or filed with the Commission, and (ii) from time to time
such other information concerning the Company as you may request.
(j) If this Agreement shall terminate or shall be terminated
after execution pursuant to any provision hereof (otherwise than pursuant to the
second paragraph of Section 10 hereof or by notice given by you terminating this
Agreement pursuant to Section 10 or Section 11 hereof) or if this Agreement
shall be terminated by the Underwriters because of any failure or refusal on the
part of the Company to comply with the terms or fulfill any of the conditions of
this Agreement, the Company agrees to reimburse the Underwriters for all
out-of-pocket expenses (including fees and expenses of counsel for the
Underwriters) incurred by you in connection herewith.
(k) The Company will apply the net proceeds from the sale of
the Shares substantially in accordance with the description set forth in the
Prospectus Supplement.
(l) The Company will timely file any document which it is
required to file pursuant to the Exchange Act prior to the termination of the
offering of the Shares.
(m) Except as provided in this Agreement, the Company will
not, and has agreed to cause its affiliates not to, directly or indirectly,
offer, sell, contract to sell or otherwise dispose of any Shares or any
securities convertible into or exercisable or exchangeable for Shares, or grant
any options or warrants to purchase common shares of beneficial interest, for a
period of 90 days after the date of the final Prospectus Supplement, without the
prior written consent of Smith Barney Inc.; provided, however, that the Company
may issue Shares pursuant to the Company's 1992 Incentive Share Award Plan and
upon the exercise of any outstanding options, and may issue and sell Shares
pursuant to this Agreement; and provided, further, that Shares owned
beneficially and of record by HRPT Advisors, Inc. subject to or which become
subject to certain pledge agreements may be sold by the pledgees thereunder
subject to the terms and conditions of such pledge agreements.
(n) The Company currently intends to continue to elect to
qualify as a "real estate investment trust" under the Internal Revenue Code of
1986, as amended (the "Code"), and use its best efforts to continue to meet the
requirement to qualify as a "real estate investment trust".
(o) Except as stated in this Agreement and in the Preliminary
Prospectus Supplement and the Prospectus, the Company has not taken, nor will it
take, directly or indirectly, any action designed to or that might reasonably be
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expected to cause or result in stabilization or manipulation of the price of
the Shares to facilitate the sale or resale of the Shares.
(p) The Company will use its best efforts to have the Shares
which it agrees to sell under this Agreement listed, subject to notice of
issuance, on the New York Stock Exchange on or before the Closing Date.
6. Representations and Warranties of the Company.
(i) The Company represents and warrants to each Underwriter that:
(a) The Preliminary Prospectus Supplement filed pursuant to
Rule 424 under the Act, complied when so filed in all material
respects with the provisions of the Act. The Commission has not
issued any order preventing or suspending the use of the Preliminary
Prospectus Supplement.
(b) The Company and the transactions contemplated by this
Agreement meet the requirements for using Form S-3 under the Act. The
registration statement in the form in which it became effective and
also in such form as it may be when any post-effective amendment
thereto shall become effective and the prospectus and any supplement
or amendment thereto when filed with the Commission under Rule 424
under the Act, complied or will comply in all material respects with
the provisions of the Act and will not at any such times contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading, except that this representation and warranty
does not apply to statements in or omissions from the registration
statement or the prospectus made in reliance upon and in conformity
with information relating to any Underwriter furnished to the Company
in writing by or on behalf of any Underwriter through you expressly
for use therein.
(c) The Incorporated Documents heretofore filed, when they
were filed (or, if any amendment with respect to any such document was
filed, when such amendment was filed), conformed in all material
respects with the requirements of the Exchange Act and the rules and
regulations thereunder, any further Incorporated Documents so filed
will, when they are filed, conform in all material respects with the
requirements of the Exchange Act and the rules and regulations
thereunder; no such document when it was filed (or, if an amendment
with respect to any such document was filed, when such amendment was
filed), contained an untrue statement of a
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material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein
not misleading; and no such further document, when it is filed, will
contain an untrue statement of a material fact or will omit to state a
material fact required to be stated therein or necessary in order to
make the statements therein not misleading.
(d) All the outstanding common shares of beneficial interest
of the Company have been duly authorized and validly issued, are fully
paid and nonassessable and are free of any preemptive or similar
rights; the Shares have been duly authorized and, when issued and
delivered to the Underwriters against payment therefor in accordance
with the terms hereof, will be validly issued, fully paid and
nonassessable and free of any preemptive or similar rights; and the
shares of beneficial interest of the Company conform to the description
thereof in the Registration Statement and the Prospectus.
(e) The Company is duly organized and validly existing as a
real estate investment trust in good standing under the laws of the
State of Maryland with full trust power and authority to own, lease and
operate its properties and to conduct its business as described in the
Registration Statement and the Prospectus, and is duly registered and
qualified to conduct its business and is in good standing in each
jurisdiction or place where the nature of its properties or the conduct
of its business requires such registration or qualification, except
where the failure so to register or qualify does not have a material
adverse effect on the condition, financial or otherwise, on the
earnings, business affairs or business prospects, of the Company; the
Company owns or possesses all licenses and permits necessary for the
conduct of its business and the ownership, leasing and operation of its
properties, except such licenses and permits as to which the failure to
own or possess would not in the aggregate have a material adverse
effect on the condition, financial or otherwise, on the earnings,
business affairs or business prospects of the Company; and the Company
has no subsidiaries; and, except as disclosed in the Prospectus, the
Company neither owns nor controls, directly or indirectly, any capital
stock or other equity interest in any corporation, partnership or other
entity.
(f) The authorized, issued and outstanding shares of
beneficial interest of the Company are correctly set forth in the
Registration Statement and the Prospectus under the caption
"Capitalization".
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(g) Except as disclosed in the Registration Statement and the
Prospectus, there is not now pending or, to the knowledge of the
Company, threatened, any litigation, action, suit or proceeding to
which the Company or, to the actual knowledge of the Company without
independent inquiry ("Actual Knowledge"), Horizon/CMS Healthcare Corp.,
Marriott International, Inc. and GranCare, Inc. (collectively, the
"Operators") or HRPT Advisors, Inc. (the "Advisor") is or will be a
party before or by any court or governmental agency or body, which (A)
might result in any material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs or business
prospects of the Company or, to the Actual Knowledge the Company, of
the Operators or the Advisor or (B) might materially and adversely
affect the property or assets of the Company or, to the Actual
Knowledge of the Company, of the Operators or the Advisor, or (C)
relates to environmental matters involving the Company or, to the
Actual Knowledge of the Company, of the Operators or the Advisor, or
(D) relates to discrimination on the basis of age, sex, religion or
race, relating to the Company or, to the Actual Knowledge of the
Company, of the Operators or the Advisor, or (E) concerns the Company
or, to the Actual Knowledge of the Company, of the Operators or the
Advisor, and is required to be disclosed in the Prospectus.
(h) Except as otherwise disclosed in the Registration
Statement and the Prospectus, the Company has good and marketable
title or ground leases, free and clear of all liens, claims,
encumbrances and restrictions, except liens for taxes not yet due and
payable and other liens and encumbrances which do not, either
individually or in the aggregate, adversely affect the current use or
value thereof, to all property and assets described in the
Registration Statement and the Prospectus as being owned by it. All
leases to which the Company is a party relating to real property, and
all other leases which are material to the business of the Company,
are valid and binding and no default (to the Company's knowledge in
the case of leases to which the Company is a party as lessor) has
occurred or is continuing thereunder, and the Company enjoys peaceful
and undisturbed possession under all such leases to which it is a
party as lessee. With respect to all properties owned or leased by
the Company, the Company has such documents, instruments,
certificates, opinions and assurances, including without limitation,
fee, leasehold owners or mortgage title insurance policies (disclosing
no material encumbrances or title exceptions except as otherwise set
forth in the Registration Statement and the Prospectus), legal
opinions and property insurance
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policies in each case in form and substance as are usual and customary
in transactions involving the purchase of similar real estate and are
appropriate for the Company to have obtained. Each of the Company
and, to the Actual Knowledge of the Company, the Operators and the
Advisor has all governmental licenses, certificates, permits,
authorizations, approvals, franchises or other rights necessary to
engage in the business currently conducted by it, except such licenses
and permits as to which the failure to own or possess will not in the
aggregate have a material adverse effect on the condition, financial
or otherwise, or the earnings, business affairs or business prospects
of the Company, or, to the Actual Knowledge of the Company, the
Operators or the Advisor and neither the Company nor, to the Actual
Knowledge of the Company, the Operators or the Advisor has any reason
to believe that any governmental body or agency is considering
limiting, suspending or revoking any such license, certificate,
permit, authorization, approval, franchise or right.
(i) The Company has filed all federal, state and foreign
income tax returns which have been required to be filed and has paid
all taxes indicated by said returns and all assessments received by it
to the extent that such taxes have become due.
(j) Neither the Company nor, to the Actual Knowledge of the
Company, the Operators or the Advisor is in violation of its charter
documents or bylaws or in default in the performance of any obligation,
agreement or condition contained in any bond, debenture, note or any
other evidence of indebtedness or in any indenture, instrument or
agreement to which the Company or, to the Actual Knowledge of the
Company, the Operators or the Advisor is a party or by which any of
their respective properties may be bound or affected, except for any
such violation that would not have a material adverse effect on the
condition, financial or otherwise, or in the respective earnings,
business affairs or business prospects of any of them. Neither the
Company nor, to the Actual Knowledge of the Company, the Operators or
the Advisor is in violation of any law, ordinance, governmental rule or
regulation or court decree to which it is subject, except for any such
violations that would not, individually or in the aggregate, have a
material adverse effect on the condition, financial or otherwise, or in
the respective earnings, business affairs or business prospects of any
of them. The execution, delivery and performance of this Agreement,
compliance by the Company with all provisions hereof, and the
consummation of the transactions contemplated hereby, will not violate
or conflict with or constitute a breach of any of the terms or
provisions of, or constitute a
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default under, (i) the Declaration of Trust of the Company or, to the
Actual Knowledge of the Company, the respective charter documents of
the Operators or the Advisor, or (ii) any bond, debenture, note or
other evidence of indebtedness or any material indenture, instrument
or agreement to which the Company or, to the Actual Knowledge of the
Company, the Operators or the Advisor is a party or which binds the
Company or its properties or, to the Actual Knowledge of the Company,
the Operators or the Advisor or any of their respective properties, or
(iii) (assuming compliance with all applicable state securities or
Blue Sky laws) any law, regulation or ruling or any order, judgment or
decree to which the Company or its properties or, to the Actual
Knowledge of the Company, the Operators or the Advisor or any of their
respective properties may be subject.
(k) Each approval, consent, order, authorization,
designation, declaration or filing by or with any regulatory,
administrative or other governmental body necessary in connection with
the execution and delivery by the Company of this Agreement, and the
consummation of the transactions herein contemplated or may be
necessary to qualify the Shares for public offering by the
Underwriters under state securities or Blue Sky laws) has been
obtained or made and is in full force and effect.
(l) The Company owns or possesses adequate licenses or other
rights to use all patents, trademarks, service marks, trade names,
copyrights and know-how (including trade secrets, and other proprietary
and confidential information, systems or procedures) necessary to
conduct the businesses now operated by it as described in the
Registration Statement and the Prospectus, and, except as disclosed to
the Underwriters in writing, the Company has not received any notice of
infringement of or conflict with (and no officer or trustee of the
Company knows of any such infringement of or conflict with) asserted
rights of others with respect to any patents, trademarks, service
marks, trade names, copyrights or know-how.
(m) The organization of the Company is in conformity with the
requirements of the Code for qualification as a real estate investment
trust, and the Company's present ownership, business and operations as
described in the Registration Statement and the Prospectus enable it to
meet the present requirements of the Code for such qualification for
1995 and subsequent years. The Company qualified as a real estate
investment trust for its 1987, 1988, 1989, 1990, 1991, 1992, 1993 and
1994 taxable years.
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<PAGE> 13
(n) The Company is not required to register as an "investment
company" within the meaning of the Investment Company Act of 1940, as
amended.
(o) Except for non-compliance which in the aggregate does not
have a material adverse effect on the condition, financial or
otherwise, or the earnings, business affairs or business prospects of
the Company, and except for Hazardous Materials (as defined below) or
substances which are handled and/or disposed of in compliance with all
applicable federal, state and local requirements, to the Company's
knowledge, after due investigation, the real property owned, leased or
otherwise utilized by the Company in connection with the operation of
its business, including, without limitation, any subsurface soils and
ground water (the "Realty"), is free of contamination from any
Hazardous Materials. To the Company's knowledge, after due
investigation, the Realty does not contain any underground storage or
treatment tanks, active or abandoned water, gas or oil wells, or any
other underground improvements or structures, other than the
foundations, footings or other supports for the improvements located
thereon which based on present knowledge could presently or at any time
in the future cause a material detriment to or materially impair the
beneficial use thereof by the Company or constitute or cause a
significant health, safety or other environmental hazard to occupants
or users thereof without regard to any special conditions of such
occupants or users. The Company represents that, after due
investigation, it has no knowledge of any material violation, with
respect to the Realty, of any Environmental Law, or of any material
liability on the part of the Company, with respect to the Realty,
resulting from the presence, use, release, threatened release,
emission, disposal, pumping, discharge, generation or processing of any
Hazardous Materials. As used herein, "Environmental Law" means any
federal, state or local statute, regulation, judgment, order or
authorization relating to emissions, discharges, releases or threatened
releases of Hazardous Materials into ambient air, surface water, ground
water, publicly owned treatment works, septic systems or land, or
otherwise relating to the pollution or protection of health or the
environment. As used herein, "Hazardous Materials" means any
substance, material or waste which is regulated by any federal, state
or local governmental or quasi-governmental authority, and includes,
without limitation, (a) any substance, material or waste defined, used
or listed as a "hazardous waste", "hazardous substance", "toxic
substance", "medical waste", "infectious waste" or other similar terms
as defined or used in any Environmental Law, as such Environmental Law
may from
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<PAGE> 14
time to time be amended, and; (b) any petroleum products asbestos,
lead-based paint, polychlorinated biphenyls, flammable explosives or
radioactive materials.
(p) The Advisory Agreement (as defined in the Prospectus) has
been duly authorized, executed and delivered by the parties thereto and
constitutes the valid agreement of the parties thereto, enforceable in
accordance with its terms, except as limited by (a) the effect of
bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting the rights or remedies of creditors or
(b) the effect of general principles of equity, whether enforcement is
considered in a proceeding in equity or at law, and the discretion of
the court before which any proceeding therefore may be brought.
(q) The Company is in compliance with all of the provisions
of Section 517.075 of the Florida statutes, and all rules and
regulations promulgated thereunder relating to issuers doing business
in Cuba.
(r) The accountants who have certified the financial
statements of the Company, and, to the Company's knowledge, of
Horizon/CMS Healthcare Corp. and its subsidiaries, Marriott
International, Inc. and GranCare, Inc. and its subsidiaries,
incorporated by reference into the Registration Statement and the
Prospectus are independent certified accountants as required by the
Act and rules and regulations thereunder. The historical and pro
forma financial statements of the Company and, to the Company's
knowledge, of other entities, together with related schedules and
notes, incorporated by reference into the Registration Statement and
the Prospectus comply as to form in all material respects with the
requirements of the Act. Such historical financial statements fairly
present the consolidated financial position of the Company purported
to be shown thereby at the respective dates indicated and the results
of operations and their cash flows for the respective periods
indicated, in accordance with generally accepted accounting principles
consistently applied throughout such periods. Such pro forma
financial statements have been prepared on a basis consistent with
such historical statements, except for the pro forma adjustments
specified therein, and give effect to assumptions made on a reasonable
basis and present fairly the pro forma condensed combined financial
position of the Company at the date indicated and the pro forma
results of its operations for the period indicated.
(s) The execution and delivery of, and the performance by the
Company of its obligations under, this
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<PAGE> 15
Agreement have been duly and validly authorized by the Company, and
this Agreement has been duly executed and delivered by the Company and
constitutes the valid and legally binding agreement of the Company,
enforceable against the Company in accordance with its terms, except
as rights to indemnity and contribution hereunder may be limited by
federal or state securities laws.
(t) Since the dates as of which information is given in the
Registration Statement, except as otherwise stated or contemplated
therein (i) there has been no material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs or
business prospects of the Company or, to the Actual Knowledge of the
Company, of the Operators or the Advisors, whether or not arising in
the ordinary course of business, (ii) there have been no material
transactions entered into by the Company or, to the Actual Knowledge of
the Company, the Operators or the Advisor, other than transactions in
the ordinary course of business, that would be materially adverse to,
or have a material adverse effect on, the Company, (iii) neither the
Company nor, to the Actual Knowledge of the Company, the Operators or
the Advisor has incurred any obligation, contingent or otherwise, that
would be materially adverse to, or have a material adverse effect on,
the Company, (iv) there has been no change in the shares of beneficial
interest or debt of the Company and (v) there has been no dividend or
distribution of any kind declared, paid or made by the Company on its
shares of beneficial interest.
(u) The Company has not distributed and, prior to the later
to occur of (i) the Closing Date and (ii) completion of the
distribution of the Shares, will not distribute any offering material
in connection with the offering and sale of the Shares other than the
Registration Statement, the Preliminary Prospectus Supplement, the
Prospectus or other materials, if any, permitted by the Act.
(v) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurances that (i)
transactions are executed in accordance with management's general or
specific authorization; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain
accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and
(iv) the recorded accountability for assets is compared with existing
assets at reasonable intervals and
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<PAGE> 16
appropriate action is taken with respect to any differences.
(w) To the Company's knowledge, neither the Company nor any
employee or agent of the Company has made any payment of funds of the
Company or received or retained any funds in violation of any law, rule
or regulation, which payment, receipt or retention of funds is of a
character required to be disclosed in the Prospectus.
(x) No holder of any security of the Company has any right to
require registration of common shares of beneficial interest or any
other security of the Company because of the filing of the registration
statement or consummation of the transactions contemplated by this
Agreement.
(ii) Any certificate signed by an officer of the Company and delivered
to the Underwriters or to counsel for the Underwriters shall be deemed a
representation and warranty by the Company to each Underwriter as to the matters
covered thereby.
7. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless each of you and each other Underwriter and each
person, if any, who controls any Underwriter within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act from and against any and all losses,
claims, damages, liabilities and expenses (including reasonable costs of
investigation) arising out of or based upon any untrue statement or alleged
untrue statement of a material fact contained in the Preliminary Prospectus
Supplement or in the Registration Statement or the Prospectus or in any
amendment or supplement thereto, or arising out of or based upon any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, except insofar as
such losses, claims, damages, liabilities or expenses arise out of or are based
upon any untrue statement or omission or alleged untrue statement or omission
which has been made therein or omitted therefrom in reliance upon and in
conformity with the information relating to such Underwriter furnished in
writing to the Company by or on behalf of any Underwriter through you expressly
for use in connection therewith; provided, however, that the indemnification
contained in this paragraph (a) with respect to the Preliminary Prospectus
Supplement shall not inure to the benefit of any Underwriter (or to the benefit
of any person controlling such Underwriter) on account of any such loss, claim,
damage, liability or expense arising from the sale of the Shares by such
Underwriter to any person if a copy of the Prospectus shall not have been
delivered or sent to such person within the time required by the Act and the
regulations
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<PAGE> 17
thereunder, and the untrue statement or alleged untrue statement or omission or
alleged omission of a material fact contained in such Preliminary Prospectus
Supplement was corrected in the Prospectus, provided that the Company has
delivered the Prospectus to the several Underwriters in requisite quantity on a
timely basis to permit such delivery or sending. The foregoing indemnity
agreement shall be in addition to any liability which the Company may otherwise
have.
(b) If any action, suit or proceeding shall be brought against any
Underwriter or any person controlling any Underwriter in respect of which
indemnity may be sought against the Company, such Underwriter or such
controlling person shall promptly notify the Company and the Company shall
assume the defense thereof, including the employment of counsel and payment of
all fees and expenses. Such Underwriter or any such controlling person shall
have the right to employ separate counsel in any such action, suit or proceeding
and to participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of such Underwriter or such controlling person
unless (i) the Company has agreed in writing to pay such fees and expenses, (ii)
the Company has failed to assume the defense and employ counsel, or (iii) the
named parties to any such action, suit or proceeding (including any impleaded
parties) include both such Underwriter or such controlling person and the
Company and such Underwriter or such controlling person shall have been advised
by its counsel that representation of such indemnified party and the Company by
the same counsel would be inappropriate under applicable standards of
professional conduct (whether or not such representation by the same counsel has
been proposed) due to actual or potential differing interests between them (in
which case the Company shall not have the right to assume the defense of such
action, suit or proceeding on behalf of such Underwriter or such controlling
person). It is understood, however, that the Company shall, in connection with
any one such action, suit or proceeding or separate but substantially similar or
related actions, suits or proceedings in the same jurisdiction arising out of
the same general allegations or circumstances, be liable for the reasonable fees
and expenses of only one separate firm of attorneys (in addition to any local
counsel) at any time for all such Underwriters and controlling persons not
having actual or potential differing interests with you or among themselves,
which firm shall be designated in writing by Smith Barney Inc., and that all
such fees and expenses shall be reimbursed as they are incurred. The Company
shall not be liable for any settlement of any such action, suit or proceeding
effected without its written consent, but if settled with such written consent,
or if there be a final judgment for the plaintiff in any such action, suit or
proceeding, the Company agrees to indemnify and hold harmless
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<PAGE> 18
any Underwriter, to the extent provided in the preceding paragraph, and any such
controlling person from and against any loss, claim, damage, liability or
expense by reason of such settlement or judgment.
(c) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, its trustees, its officers who sign the
Registration Statement, and any person who controls the Company within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act, to the same
extent as the foregoing indemnity from the Company to each Underwriter, but only
with respect to information relating to such Underwriter furnished in writing by
or on behalf of such Underwriter through you expressly for use in the
Registration Statement, the Prospectus or the Preliminary Prospectus Supplement,
or any amendment or supplement thereto. If any action, suit or proceeding shall
be brought against the Company, any of its trustees, any such officer, or any
such controlling person based on the Registration Statement, the Prospectus or
the Preliminary Prospectus Supplement, or any amendment or supplement thereto,
and in respect of which indemnity may be sought against any Underwriter pursuant
to this paragraph (c), such Underwriter shall have the rights and duties given
to the Company by paragraph (b) above (except that if the Company shall have
assumed the defense thereof such Underwriter shall not be required to do so, but
may employ separate counsel therein and participate in the defense thereof, but
the fees and expenses of such counsel shall be at such Underwriter's expense),
and the Company, its trustees, any such officer, and any such controlling person
shall have the rights and duties given to the Underwriters by paragraph (b)
above. The foregoing indemnity agreement shall be in addition to any liability
which the Underwriters may otherwise have.
(d) If the indemnification provided for in this Section 7 is
unavailable to an indemnified party under paragraphs (a) or (c) hereof in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then an indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities or expenses (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and the Underwriters on the other hand from the offering
of the Shares, or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Company on the one hand and the Underwriters on the other in
connection with the statements or omissions that resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
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<PAGE> 19
equitable considerations. The relative benefits received by the Company on the
one hand and the Underwriters on the other shall be deemed to be in the same
proportion as the total net proceeds from the offering (before deducting
expenses) received by the Company bear to the total underwriting discounts and
commissions received by the Underwriters, in each case as set forth in the table
on the cover page of the Prospectus. The relative fault of the Company on the
one hand and the Underwriters on the other hand shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company on the one hand or by the
Underwriters on the other hand and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.
(e) The Company and the Underwriters agree that it would not be just
and equitable if contribution pursuant to this Section 7 were determined by a
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation that does not take account of
the equitable considerations referred to in paragraph (d) above. The amount paid
or payable by an indemnified party as a result of the losses, claims, damages,
liabilities and expenses referred to in paragraph (d) above shall be deemed to
include, subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
any claim or defending any such action, suit or proceeding. Notwithstanding the
provisions of this Section 7, no Underwriter shall be required to contribute any
amount in excess of the amount by which the total price of the Shares
underwritten by it and distributed to the public exceeds the amount of any
damages which such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations to
contribute pursuant to this Section 7 are several in proportion to the
respective numbers of Firm Shares set forth opposite their names in Schedule I
hereto (or such numbers of Firm Shares increased as set forth in Section 10
hereof) and not joint.
(f) No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
action, suit or proceeding in respect of which any indemnified party is or could
have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement
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<PAGE> 20
includes an unconditional release of such indemnified party from all liability
on claims that are the subject matter of such action, suit or proceeding.
(g) Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section 7 shall be paid by the indemnifying party to the indemnified party as
such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 7 and the
representations and warranties of the Company set forth in this Agreement shall
remain operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of any Underwriter or any person controlling
any Underwriter, the Company, its directors or officers, or any person
controlling the Company, (ii) acceptance of any Shares and payment therefor
hereunder, and (iii) any termination of this Agreement. A successor to any
Underwriter or any person controlling any Underwriter, or to the Company, its
trustees or officers, or any person controlling the Company, shall be entitled
to the benefits of the indemnity, contribution and reimbursement agreements
contained in this Section 7.
8. Conditions of Underwriters' Obligations. The several obligations of
the Underwriters to purchase the Firm Shares hereunder are subject to the
following conditions:
(a) If, at the time this Agreement is executed and delivered,
it is necessary for a post-effective amendment to the Registration Statement to
be declared effective before the offering of the Shares may commence, such
post-effective amendment shall have become effective not later than 5:30 P.M.,
New York City time, on the date hereof, or at such later date and time as shall
be consented to in writing by you, and all filings, if any, required by Rules
424 and 430A under the Act shall have been timely made; no stop order suspending
the effectiveness of the Registration Statement shall have been issued and no
proceeding for that purpose shall have been instituted or, to the knowledge of
the Company or any Underwriter, threatened by the Commission, and any request of
the Commission for additional information (to be included in the Registration
Statement or the Prospectus or otherwise) shall have been complied with to your
satisfaction.
(b) Subsequent to the effective date of this Agreement, there
shall not have occurred (i) any change, or any development involving a
prospective change, in or affecting the condition (financial or other),
business, properties, net worth, or results of operations of the Company or the
Subsidiaries not contemplated by the Prospectus, which in your opinion, would
materially, adversely affect the market for the Shares, or (ii) any event or
development relating to
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<PAGE> 21
or involving the Company or any officer or trustee of the Company which makes
any statement made in the Prospectus untrue or which, in the opinion of the
Company and its counsel or the Underwriters and their counsel, requires the
making of any addition to or change in the Prospectus in order to state a
material fact required by the Act or any other law to be stated therein or
necessary in order to make the statements therein not misleading, if amending or
supplementing the Prospectus to reflect such event or development would, in your
opinion, adversely affect the market for the Shares.
(c) You shall have received on the Closing Date, an opinion of
Sullivan & Worcester, a Registered Limited Liability Partnership, counsel for
the Company, dated the Closing Date and addressed to you to the effect that:
(i) The Company is duly incorporated and validly
existing as a real estate investment trust in good standing under the
laws of the State of Maryland with full trust power and authority to
own, lease and operate its properties and to conduct its business as
described in the Registration Statement and the Prospectus (and any
amendment or supplement thereto), and is duly registered and qualified
to conduct its business and is in good standing in each jurisdiction or
place where the nature of its properties or the conduct of its business
requires such registration or qualification, except where the failure
so to register or qualify does not have a material adverse effect on
the condition (financial or other), business, properties, net worth or
results of operations of the Company;
(ii) The authorized and outstanding shares of beneficial
interest of the Company is as set forth under the caption
"Capitalization" in the Prospectus; and the authorized shares of
beneficial interest of the Company conform in all material respects as
to legal matters to the description thereof contained in the Prospectus
under the captions "Description of Shares" and "Description of
Preferred Shares";
(iii) All the shares of beneficial interest of the Company
outstanding prior to the issuance of the Shares have been duly
authorized and validly issued, and are fully paid and nonassessable;
(iv) The Shares have been duly authorized and, when
issued and delivered to the Underwriters against payment therefor in
accordance with the terms hereof, will be validly issued, fully paid
and nonassessable and free of any preemptive, or to the best knowledge
of such counsel after reasonable inquiry, similar rights that
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<PAGE> 22
entitle or will entitle any person to acquire any Shares upon the
issuance thereof by the Company;
(v) The form of certificates for the Shares conforms
to the requirements of Maryland law;
(vi) The Company is not required to register as an
"investment company" within the meaning of the Investment Company Act
of 1940, as amended.
(vii) The Registration Statement and all post-effective
amendments, if any, have become effective under the Act and, to the
best knowledge of such counsel after reasonable inquiry, no stop order
suspending the effectiveness of the Registration Statement has been
issued and no proceedings for that purpose are pending before or
contemplated by the Commission; and any required filing of the
Prospectus pursuant to Rule 424 has been made in accordance with Rule
424;
(viii) The Company has trust power and authority to enter
into this Agreement and to issue, sell and deliver the Shares to the
Underwriters as provided herein, and this Agreement has been duly
authorized, executed and delivered by the Company and is a valid, legal
and binding agreement of the Company, enforceable against the Company
in accordance with its terms, except as enforcement of rights to
indemnity and contribution hereunder may be limited by federal or state
securities laws or principles of public policy and subject to the
qualification that the enforceability of the Company's obligations
hereunder may be limited by bankruptcy, fraudulent conveyance,
insolvency, reorganization, moratorium, and other laws relating to or
affecting creditors' rights generally, and by general equitable
principles;
(ix) To such counsel's knowledge, there is no legal or
governmental proceeding pending or threatened against the Company or to
which the Company is a party or to which any of the properties of the
Company is subject which is required to be described in the
Registration Statement or Prospectus which is not so described, or any
contract, lease or other document which is required to be described in
the Registration Statement or Prospectus or is required to be filed as
an exhibit to the Registration Statement which is not so described or
filed as required; any descriptions of such proceedings, contracts and
other documents or references thereto contained in the Registration
Statement or the Prospectus are accurate in all material respects; and,
to such counsel's knowledge, each contract or document so described is
in full force and effect in accordance with its terms or if amended or
terminated, such amendment or termination has been described or
filed to the extent required or is not otherwise material.
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<PAGE> 23
(x) Neither the Company nor the Advisor is in violation
of its charter documents or by-laws or, to such counsel's knowledge, in
default in the performance of any material obligation, agreement or
condition contained in any bond, debenture, note or any other evidence
of indebtedness or in any material indenture, instrument or other
agreement to which the Company or the Advisor is a party or which binds
the Company or the Advisor or any of their property; to such counsel's
knowledge, neither the Company nor the Advisor is in violation of any
law, ordinance, governmental rule or regulation or court decree to
which it is subject except where such violation would not have a
material adverse effect on the condition, financial or otherwise, or
the earnings, business affairs or business prospects of the Company or
the Advisor, as the case may be.
(xi) To such counsel's knowledge, the Company owns or
possesses all licenses and permits necessary for the conduct of its
business and the ownership and leasing of its properties, except in
cases in which the failure to own or possess such licenses and permits
will not in the aggregate have a material adverse effect on the
condition, financial or otherwise, or in the earnings, business affairs
or business prospects of the Company.
(xii) The execution, delivery and performance of this
Agreement and the consummation of the transactions herein contemplated
will not conflict with or constitute a breach or violation of any of
the terms or provision of, or constitute a default under, (A) any bond,
debenture, note or other evidence of indebtedness or any indenture,
instrument or agreement known to such counsel to which the Company or
the Advisor is a party of which binds either of them or any of their
property, (B) the charter documents or by-laws of the Company or the
Advisor or (C) any law, regulation, ruling, judgment, decree or order
known to such counsel to which the Company or the Advisor or any of
their properties may be subject.
(xiii) Except with respect to state securities or blue sky
laws and regulations (as to which such counsel need express no opinion
therein), all proceedings required in connection with the authorization
and issuance of the Shares have been taken and all authorizations,
consents, approvals, licenses or other orders of any regulatory body,
administrative agency or other governmental body required to be
obtained by the Company or the Advisor for the valid issuance and
delivery of the Shares pursuant to this Agreement have been obtained.
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<PAGE> 24
(xiv) The Advisory Agreement has been duly authorized,
executed and delivered by the Company and constitutes a valid and
legally binding agreement of the Company enforceable in accordance with
its terms.
(xv) The Advisory Agreement has been duly authorized,
executed and delivered by the Advisor and constitutes the valid and
legally binding agreement of the Advisor, enforceable in accordance
with its terms.
(xvi) The execution and delivery of the Advisory Agreement
by the Company and the Advisor, their respective performance of the
obligations contained therein and their compliance with the terms
thereof did not conflict with or result in a breach of any of the terms
or provisions of, or constitute a default under the charter documents
or by-laws of, the Company or the Advisor, respectively, or any
material license, permit, agreement, indenture or other instrument
known to such counsel to which the Company or the Advisor,
respectively, is bound, or any law, administrative regulation or court
or governmental decree known by such counsel to be applicable to the
Company or the Advisor; except where such breach or default would not
have a material adverse effect on the condition, financial or
otherwise, or the earnings, business affairs or business prospects of
the Company.
(xvii) The Advisor (A) is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware, and (B) has the requisite corporate power and authority to
conduct its business as described in the Prospectus and to own and
operate its properties used and useful in said business.
(xviii) No facts have come to such counsel's attention that
lead them to believe that the Company does not have insurable title to
each item of real property owned by it as of the date hereof, subject
to such encumbrances and defects as are set forth in the title policies
obtained in connection with the acquisition thereof (or as otherwise
described in the Registration Statement or incorporated therein by
reference), or that the Company's leases are not valid.
(xix) The Company has qualified to be taxed as a real
estate investment trust pursuant to Sections 856-860 of the Code for
the fiscal years ended December 31, 1987 through December 31, 1994, and
the Company's current anticipated investments and its plan of operation
will enable it to continue to meet the requirements for qualification
and taxation as a real estate investment trust under the Code. Actual
qualification of the
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<PAGE> 25
Company as a real estate investment trust, however, will depend upon
the Company's continued ability to meet, and its meeting, through
actual annual operating results and distributions, the various
qualification tests imposed under the Code.
(xx) The Registration Statement and the Prospectus and
any supplements or amendments thereto (except for the financial
statements and the notes thereto and the schedules and other financial
and statistical data included therein, as to which such counsel need
not express any opinion) comply as to form in all material respects
with the requirements of the Act; and each of the Incorporated
Documents (except for the financial statements and the notes thereto
and the schedules and other financial and statistical data included
therein, as to which counsel need not express any opinion) complies as
to form in all material respects with the Exchange Act and the rules
and regulations of the Commission thereunder;
(xxi) The statements in the Registration Statement and the
Prospectus, insofar as they are descriptions of contracts, agreements
or other legal documents, or refer to statements of law or legal
conclusions, are accurate and present fairly the information required
to be shown; and
(xxii) Although counsel has not undertaken, except as
otherwise indicated in their opinion, to determine independently, and
does not assume any responsibility for, the accuracy or completeness of
the statements in the Registration Statement, such counsel has
participated in the preparation of the Registration Statement and the
Prospectus, including review and discussion of the contents thereof
(including review and discussion of the contents of all Incorporated
Documents), and nothing has come to the attention of such counsel that
has caused them to believe that the Registration Statement (including
the Incorporated Documents) at the time the Registration Statement
became effective, or the Prospectus, as of its date and as of the
Closing Date or the Option Closing Date, as the case may be, contained
an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading or that any amendment or supplement to the
Prospectus, as of its respective date, and as of the Closing Date or
the Option Closing Date, as the case may be, contained any untrue
statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading (it being
understood that
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<PAGE> 26
such counsel need express no opinion with respect to the financial
statements and the notes thereto and the schedules and other financial
and statistical data included in the Registration Statement or the
Prospectus or any Incorporated Document).
In rendering their opinion as aforesaid, Sullivan & Worcester may rely
upon an opinion, dated as of the Closing Date, of Piper & Marbury L.L.P. as to
matters governed by Maryland law, provided that (i) such reliance is expressly
authorized by such opinion and a copy of such opinion is delivered to the
Underwriters and is, in form and substance, satisfactory to them and their
counsel and (ii) Sullivan & Worcester shall state in their opinion that they
believe that they and the Underwriters are justified in relying thereon.
(d) You shall have received on the Closing Date an opinion of Davis
Polk & Wardwell, counsel for the Underwriters, dated the Closing Date and
addressed to you, with respect to the matters referred to in clauses (iv),
(vii), (viii), (xx) (other than with respect to the Incorporated Documents) and
(xxii) of the foregoing paragraph (c) and such other related matters as you may
request. With respect to matters governed by Maryland law, such counsel may rely
upon an opinion, dated as of the Closing Date, of Piper & Marbury, L.L.P.
(e) You shall have received letters addressed to you, and dated the
date hereof and the Closing Date, from Ernst & Young LLP, in form and substance
satisfactory to you, to the effect that (i) they are independent public
accountants as required by the Act and the applicable published rules and
regulations thereunder with respect to the Company; (ii) it is their opinion
that the audited financial statements of the Company, incorporated by reference
in the Registration Statement and the Prospectus and covered by their opinions
therein comply as to form in all material respects with the applicable
accounting requirements of the Act and the related published rules and
regulations thereunder; (iii) they have performed limited procedures, not
constituting an audit, including a reading of the latest available interim
financial statements of the Company, a reading of the minute books of the
Company since December 31, 1994, inquiries of officials of the Company
responsible for financial and accounting matters and such other inquiries and
procedures as may be specified in such letter, and on the basis of such limited
review and procedures nothing came to their attention that caused them to
believe that:
(A) at a specified date not more than five days prior to the
date of such letter, there was any decrease in the shareholders' equity
of the Company, any decrease in total assets or any increase in total
borrowings of
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<PAGE> 27
the Company, as compared with the amounts shown in the latest balance
sheet incorporated by reference in the Registration Statement and the
Prospectus; or
(B) during the period from the date of the latest balance
sheet incorporated by reference in the Registration Statement and the
Prospectus, to a specified date not more than five days prior to the
date of such letter, there were any decreases, as compared with the
corresponding period in the preceding year, in total revenues, net
income or income per share;
except in all cases for increases or decreases which the Registration Statement
and the Prospectus disclose or contemplate have occurred or may occur; (iv) in
addition to the limited procedures referred to in clause (iii) above, they have
carried out certain specified procedures, not constituting an audit, with
respect to certain amounts, percentages and financial information which are
derived from the general accounting records of the Company, which are
incorporated by reference in the Registration Statement and the Prospectus and
which are specified by the Underwriters, and have compared such amounts,
percentages and financial information with the accounting records of the Company
and have found them to be in agreement; and (v) they have read the unaudited pro
forma financial statements which are included in the Registration Statement and
the Prospectus and have performed specified procedures set forth in detail in
such letter and found the amounts resulting from such procedures to be in
agreement with the amounts set forth in such unaudited pro forma financial
statements and nothing has come to their attention which causes them to believe
that the unaudited pro forma financial statements included in the Registration
Statement and the Prospectus, which combine certain financial statements of the
Company with certain transactions set forth in the notes to such pro forma
statements, do not comply as to form in all material respects with Article 11 of
Regulation S-X under the Act.
(f)(i) No stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that purpose shall have
been taken or, to the knowledge of the Company, shall be contemplated by the
Commission at or prior to the Closing Date; (ii) there shall not have been any
change in the shares of beneficial interest of the Company nor any material
increase in the short-term or long-term debt of the Company (other than in the
ordinary course of business) from that set forth or contemplated in the
Registration Statement or the Prospectus (or any amendment or supplement
thereto); (iii) there shall not have been, since the respective dates as of
which information is given in the Registration Statement and the Prospectus (or
any amendment or supplement thereto), except as may otherwise be stated in the
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<PAGE> 28
Registration Statement and the Prospectus (or any amendment or supplement
thereto), any material adverse change in the condition (financial or other),
business, prospects, properties, net worth or results of operations of the
Company; (iv) the Company shall not have any liabilities or obligations, direct
or contingent (whether or not in the ordinary course of business), that are
material to the Company, other than those reflected in the Registration
Statement or the Prospectus (or any amendment or supplement thereto); and (v)
all the representations and warranties of the Company contained in this
Agreement shall be true and correct on and as of the date hereof and on and as
of the Closing Date as if made on and as of the Closing Date, and you shall have
received a certificate, dated the Closing Date and signed by the chief executive
officer and the chief financial officer of the Company (or such other officers
as are acceptable to you), to the effect set forth in this Section 8(f) and in
Section 8(g) hereof.
(g) The Company shall not have failed at or prior to the Closing Date
to have performed or complied with any of its agreements herein contained and
required to be performed or complied with by it hereunder at or prior to the
Closing Date.
(h) Prior to the Closing Date the Shares shall have been listed,
subject to notice of issuance, on the New York Stock Exchange.
(i) The Company shall have furnished or caused to be furnished to you
such further certificates and documents as you shall have requested.
All such opinions, certificates, letters and other documents will be in
compliance with the provisions hereof only if they are satisfactory in form and
substance to you and your counsel.
Any certificate or document signed by any officer of the Company and
delivered to you, or to counsel for the Underwriters, shall be deemed a
representation and warranty by the Company to each Underwriter as to the
statements made therein.
The several obligations of the Underwriters to purchase Additional
Shares hereunder are subject to the satisfaction on and as of any Option Closing
Date of the conditions set forth in this Section 8, except that, if any Option
Closing Date is other than the Closing Date, the certificates, opinions and
letters referred to in paragraphs (c) through (f) shall be dated the Option
Closing Date in question and the opinions called for by paragraphs (c) and (d)
shall be revised to reflect the sale of Additional Shares.
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<PAGE> 29
9. Expenses. The Company agrees to pay the following costs and expenses
and all other costs and expenses incident to the performance by it of its
obligations hereunder: (i) the preparation, printing or reproduction, and filing
with the Commission of the registration statement (including financial
statements and exhibits thereto), the Preliminary Prospectus Supplement, the
final Prospectus Supplement, the Prospectus, and each amendment or supplement to
any of them; (ii) the printing (or reproduction) and delivery (including
postage, air freight charges and charges for counting and packaging) of such
copies of the registration statement, the Preliminary Prospectus Supplement, the
final Prospectus Supplement, the Prospectus, the Incorporated Documents, and all
amendments or supplements to any of them, as may be reasonably requested for use
in connection with the offering and sale of the Shares; (iii) the preparation,
printing, authentication, issuance and delivery of certificates for the Shares,
including any stamp taxes in connection with the original issuance and sale of
the Shares; (iv) the printing (or reproduction) and delivery of this Agreement,
the preliminary and supplemental Blue Sky Memoranda and all other agreements or
documents printed (or reproduced) and delivered in connection with the offering
of the Shares; (v) the listing of the Shares on the New York Stock Exchange;
(vi) the registration or qualification of the Shares for offer and sale under
the securities or Blue Sky laws of the several states as provided in Section
5(g) hereof; (vii) the filing fees and the fees and expenses of counsel for the
Underwriters in connection with any filings required to be made with the
National Association of Securities Dealers, Inc.; (viii) the transportation and
other expenses incurred by or on behalf of Company representatives in connection
with presentations to prospective purchasers of the Shares; and (ix) the fees
and expenses of the Company's accountants and the fees and expenses of counsel
(including local and special counsel) for the Company.
10. Effective Date of Agreement. This Agreement shall become
effective: (i) upon the execution and delivery hereof by the parties hereto; or
(ii) if, at the time this Agreement is executed and delivered, it is necessary
for a post-effective amendment to the registration statement to be declared
effective before the offering of the Shares may commence, when notification of
the effectiveness of such post-effective amendment has been released by the
Commission. Until such time as this Agreement shall have become effective, it
may be terminated by the Company, by notifying you, or by you, by notifying the
Company.
If any one or more of the Underwriters shall fail or refuse to
purchase Shares which it or they are obligated to purchase hereunder on the
Closing Date, and the aggregate number of Shares which such defaulting
Underwriter or Underwriters are obligated but fail or refuse to purchase is
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<PAGE> 30
not more than one-tenth of the aggregate number of Shares which the Underwriters
are obligated to purchase on the Closing Date, each non-defaulting Underwriter
shall be obligated, severally, in the proportion which the number of Firm Shares
set forth opposite its name in Schedule I hereto bears to the aggregate number
of Firm Shares set forth opposite the names of all non-defaulting Underwriters
or in such other proportion as you may specify in accordance with Section 20 of
the Master Agreement Among Underwriters of Smith Barney Inc., to purchase the
Shares which such defaulting Underwriter or Underwriters are obligated, but fail
or refuse, to purchase. If any one or more of the Underwriters shall fail or
refuse to purchase Shares which it or they are obligated to purchase on the
Closing Date and the aggregate number of Shares with respect to which such
default occurs is more than one-tenth of the aggregate number of Shares which
the Underwriters are obligated to purchase on the Closing Date and arrangements
satisfactory to you and the Company for the purchase of such Shares by one or
more non-defaulting Underwriters or other party or parties approved by you and
the Company are not made within 36 hours after such default, this Agreement will
terminate without liability on the part of any non-defaulting Underwriter or the
Company. In any such case which does not result in termination of this
Agreement, either you or the Company shall have the right to postpone the
Closing Date, but in no event for longer than seven days, in order that the
required changes, if any, in the Registration Statement and the Prospectus or
any other documents or arrangements may be effected. Any action taken under this
paragraph shall not relieve any defaulting Underwriter from liability in respect
of any such default of any such Underwriter under this Agreement. The term
"Underwriter" as used in this Agreement includes, for all purposes of this
Agreement, any party not listed in Schedule I hereto who, with your approval and
the approval of the Company, purchases Shares which a defaulting Underwriter is
obligated, but fails or refuses, to purchase.
Any notice under this Section 10 may be given by telegram, telecopy or
telephone but shall be subsequently confirmed by letter.
11. Termination of Agreement. This Agreement shall be subject to
termination in your absolute discretion, without liability on the part of any
Underwriter to the Company by notice to the Company, if prior to the Closing
Date or any Option Closing Date (if different from the Closing Date and then
only as to the Additional Shares), as the case may be, (i) trading in securities
generally on the New York Stock Exchange, the American Stock Exchange or The
Nasdaq National Market shall have been suspended or materially limited, (ii) a
general moratorium on commercial banking activities in New York or Massachusetts
shall have been declared by either
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<PAGE> 31
federal or state authorities, or (iii) there shall have occurred any outbreak or
escalation of hostilities or other international or domestic calamity, crisis or
change in political, financial or economic conditions, the effect of which on
the financial markets of the United States is such as to make it, in your
judgment, impracticable or inadvisable to commence or continue the offering of
the Shares at the offering price to the public set forth on the cover page of
the Prospectus or to enforce contracts for the resale of the Shares by the
Underwriters. Notice of such termination may be given to the Company by
telegram, telecopy or telephone and shall be subsequently confirmed by letter.
12. Information Furnished by the Underwriters. The statements set forth
in the last paragraph on the cover page, the stabilization legend on the inside
front cover, and the statements in the first and third paragraphs under the
caption "Underwriting" in the Preliminary Prospectus Supplement and in the final
Prospectus Supplement, constitute the only information furnished by or on behalf
of the Underwriters through you as such information is referred to in Sections
6(b) and 7 hereof.
13. Miscellaneous. Except as otherwise provided in Sections 5, 10 and
11 hereof, notice given pursuant to any provision of this Agreement shall be in
writing and shall be delivered (i) if to the Company, at the office of the
Company at 400 Centre Street, Newton, Massachusetts 02158, Attention: David J.
Hegarty, President; or (ii) if to you, care of Smith Barney Inc., 388 Greenwich
Street, New York, New York 10013, Attention: Manager, Investment Banking
Division.
This Agreement has been and is made solely for the benefit of the
several Underwriters, the Company, its directors and officers, and the other
controlling persons referred to in Section 7 hereof and their respective
successors and assigns, to the extent provided herein, and no other person shall
acquire or have any right under or by virtue of this Agreement. Neither the term
"successor" nor the term "successors and assigns" as used in this Agreement
shall include a purchaser from any Underwriter of any of the Shares in his
status as such purchaser.
14. Applicable Law; Counterparts. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed within the State of New York.
This Agreement may be signed in various counterparts which together
constitute one and the same instrument. If signed in counterparts, this
Agreement shall not become effective unless at least one counterpart hereof
shall have been executed and delivered on behalf of each party hereto.
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<PAGE> 32
Please confirm that the foregoing correctly sets forth the agreement
between the Company and the several Underwriters.
Very truly yours,
HEALTH AND RETIREMENT PROPERTIES
TRUST
By /s/ Ajay Saini
-----------------------------
Authorized Signature
Confirmed as of the date first
above mentioned
SMITH BARNEY INC.
DEAN WITTER REYNOLDS INC.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
MERRILL LYNCH & CO.
PAINWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
By SMITH BARNEY INC.
By /s/ Benjamin D. Lorello
-------------------------
Managing Director
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<PAGE> 33
SCHEDULE I
HEALTH AND RETIREMENT PROPERTIES TRUST
<TABLE>
<CAPTION>
Number of
Underwriter Firm Shares
----------- -----------
<S> <C>
Smith Barney Inc. .......................................................... 1,083,335
Dean Witter Reynolds Inc.................................................... 1,083,333
Donaldson, Lufkin & Jenrette Securities 1,083,333
Corporation.................................................................
Merrill Lynch, Pierce, Fenner & Smith 1,083,333
Incorporated................................................................
PaineWebber Incorporated ................................................... 1,083,333
Prudential Securities Incorporated.......................................... 1,083,333
---------
Total 6,500,000
</TABLE>
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