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): October 1, 1996
HEALTH AND RETIREMENT PROPERTIES TRUST
(Exact name of registrant as specified in 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 7. Financial Statements, Pro Forma Financial Information
and Exhibits.
(c) Exhibits.
1.1 Form of underwriting agreement among Health and Retirement
Properties Trust (the "Company") and NatWest Securities
Limited and Merrill Lynch & Co. relating to the offering of
the Company's 7.5% Convertible Subordinated Debentures, due
2003, Series A (the "Series A Debentures").
1.2 Form of placement agreement between the Company and National
Westminster Bank PLC, New York branch relating to the offering
of the Company's 7.25% Convertible Subordinated Debentures,
due 2001 (the "7.25% Debentures").
4.1 First Supplemental Indenture between the Company and Fleet
National Bank ("Fleet"), as trustee, relating to the Series A
Debentures (including form of Series A Debenture).
4.2 Third Supplemental Indenture between the Company and Fleet
National Bank ("Fleet"), as trustee, relating to the 7.5%
Debentures (including form of 7.5% Debenture).
8.1 Opinion of Sullivan & Worcester LLP with regard to certain tax
matters affecting the Company.
10.1 Amended and Restated Promissory Note, dated July 29, 1996,
from Connecticut Subacute Corporation to the Company.
23.1 Consent of Sullivan & Worcester LLP, included as a part of
Exhibit 8.1.
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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: October 1, 1996
EXHIBIT 1.1
HEALTH AND RETIREMENT PROPERTIES TRUST
$70,000,000
7.50% Convertible Subordinated Debentures Due 2003, Series A
UNDERWRITING AGREEMENT
October 2, 1996
NATWEST SECURITIES LIMITED
MERRILL LYNCH, PIERCE, FENNER &
SMITH INCORPORATED
as Representatives of the
several Underwriters
c/o Natwest Securities Limited
135 Bishopsgate
London EC2M 3XT
England
Ladies and Gentlemen:
Health and Retirement Properties Trust, a Maryland real estate
investment trust (the "Company"), proposes to issue and sell to the underwriters
named on Schedule I hereto (the "Underwriters") for whom you are acting as
representatives (the "Representatives"), $70,000,000 aggregate principal amount
of 7.50% Convertible Subordinated Debentures due 2003, Series A (the "Firm
Debentures"), which are convertible into common shares of beneficial interest of
the Company, par value $.01 per share (the "Common Shares"), at a conversion
price of $18.00 per Common Share, subject to adjustment under certain
circumstances, and having such other terms as set forth on Schedule III hereto.
In addition, the Company hereby grants to you and the other Underwriters an
option (the "Option") to purchase up to an additional $10,500,000 aggregate
principal amount of 7.50% Convertible Subordinated Debentures due 2003, Series
A, on the terms and conditions and for the purposes set forth in Section 2 (the
"Option Debentures"). The Firm Debentures and, if purchased, the Option
Debentures are hereinafter collectively referred to as the "Debentures." The
issuance and sale of the Debentures is hereinafter referred to as the
"Offering." The Debentures are to be issued pursuant to that certain indenture
dated as of September 20, 1996 (the "Base Indenture") between the Company and
Fleet National Bank (or such other money center bank acceptable to the Company
and the Representatives), as trustee (the "Trustee"), as amended by that certain
First Supplemental Indenture, dated as of October 7, 1996 (the "Supplemental
Indenture"), between the Company and the Trustee (as so amended, the
"Indenture"). The Company will deliver copies of the Base Indenture and
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Supplemental Indenture to each of the Underwriters prior to the Initial Closing
(as defined below). The Common Shares issuable upon conversion of the Debentures
are hereinafter collectively referred to as the "Conversion Shares." The
Debentures are to be sold to each Underwriter, acting severally and not jointly,
in such amounts as are listed in Schedule I opposite the name of each
Underwriter. The Debentures are more fully described in the Final Prospectus
referred to below. If the firm or firms listed in Schedule I hereto include only
the firm or firms to which this Agreement is addressed above, then the terms
"Underwriters" and "Representatives," as used herein, each shall be deemed to
refer to such firm or firms.
The Company hereby confirms its agreement with the several Underwriters
as follows:
1. Agreement to Sell and Purchase.
(a) On the basis of the representations and warranties contained
in, and subject to the terms and conditions of, this Agreement, (i) the Company
agrees to issue and sell to each Underwriter the Firm Debentures and (ii) each
Underwriter, severally and not jointly, agrees to purchase from the Company the
Firm Debentures, on the Initial Closing Date (as defined in Section 3) at a
purchase price of 97.6% of the principal amount of the Firm Debentures set forth
opposite such Underwriter's name on Schedule I hereto, plus accrued interest, if
any, from the Initial Closing Date.
(b) The Company hereby grants the Option to the several
Underwriters to purchase, severally and not jointly, the Option Debentures at
the same price per Option Debenture as the Underwriters shall pay for the Firm
Debentures. The Underwriters shall not be under any obligation to purchase any
of the Option Debentures prior to any exercise of such option. The Option may be
exercised only to cover over-allotments in the sale of the Firm Debentures by
the Underwriters and may be exercised in whole or in part at any time and from
time to time on or before the date that is 30 days after the date hereof (or the
next business day if the 30th day is not a business day) upon notice (the
"Option Debentures Notice") in writing or by telephone (confirmed in writing) by
the Representatives to the Company no later than 5:00 p.m., New York City time,
at least two and no more than seven business days before the date specified for
closing in the Option Debentures Notice setting forth the aggregate principal
amount of the Option Debentures to be purchased and the date of each such
purchase (each such date, an "Option Closing Date"). The Initial Closing Date
and Option Closing Dates are sometimes herein referred to respectively as the
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related "Closing Dates". On each Option Closing Date, the Company will issue and
sell to the Underwriters the principal amount of Option Debentures set forth in
the related Option Debentures Notice and, subject to the terms and conditions
and in reliance upon the representations and warranties set forth herein, each
Underwriter, severally and not jointly, will purchase such percentage of the
related Option Debentures as is equal to the percentage of Firm Debentures that
such Underwriter is to purchase on the Initial Closing Date, as adjusted by the
Representatives in such manner as they may agree is advisable to avoid
fractional Debentures.
2. Reserved.
3. Delivery and Payment. The closing for the purchase and sale of the
Firm Debentures shall occur at the offices of Sullivan & Worcester, One Post
Office Square, Boston, Massachusetts 02109, at 10:00 a.m., Boston time, on
October 7, 1996 or at such other time or on such other date as may be agreed
upon by the Company and the Representatives (such date is hereinafter referred
to as the "Initial Closing Date"). The purchase price in respect of the Firm
Debentures will be paid by the several Underwriters through the Representatives
to the Company (to such account as the Company shall, at least two business days
prior thereto, have instructed the Representatives to make payment) on the
Initial Closing Date in same-day funds cleared through the New York Clearing
House Interbank Payments System. Such payment shall be made only against
delivery of the Firm Debentures to the Representatives.
To the extent the Option is exercised, delivery of the Option
Debentures against payment by the Underwriters (in the manner specified above)
will take place at the offices specified above for the Initial Closing Date at
the time and date (which may be the Firm Closing Date) specified in the Option
Debentures Notice.
Certificates evidencing the Debentures shall be in definitive form,
registered in such names and in such denominations as the Representatives may
request not less than two full business days in advance of the Initial Closing
Date or the Option Closing Date, as the case may be.
The Company agrees to have the Debentures available for inspection,
checking and packaging by the Representatives in New York, New York, not later
than 1:00 p.m. on the business day prior to the Initial Closing Date or the
Option Closing Date, as the case may be.
4. Representations and Warranties of the Company. The Company
represents, warrants and covenants as of the date hereof and, as set forth in
Section 8(c) will represent, warrant and covenant as of the Initial Closing Date
and each Option Closing Date, to each Underwriter that:
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(a) The Company and the transaction contemplated hereby meet the
requirements for use of Form S-3 under the Securities Act of 1933, as amended
(the "Securities Act"), and the rules and regulations (the "Securities Act Rules
and Regulations") of the Securities and Exchange Commission (the "Commission")
thereunder, and the Company has filed a registration statement on such Form
(Registration No. 333-02863) which has become effective, for the registration of
the Debentures and the Conversion Shares under the Securities Act and the
Securities Act Rules and Regulations. Such registration statement, as amended at
the date of this Agreement, meets the requirements set forth in Rule 415(a)(1)
of the Securities Act Rules and Regulations and complies in all other material
respects with said Rule. The Company proposes to file with the Commission
pursuant to Rule 424 of the Securities Act Rules and Regulations a supplement to
the form of prospectus included in such registration statement relating to the
Debentures and the Conversion Shares and the plan of distribution of the
Debentures and has previously advised you of all further information (financial
and other) with respect to the Company to be set forth therein. Such
registration statement, including the exhibits thereto, as amended at the date
of this Agreement, is hereinafter called the "Registration Statement"; such
prospectus in the form in which it appears in the Registration Statement is
hereinafter called the "Basic Prospectus"; and such supplemented form of final
prospectus, in the form in which it shall be filed with the Commission pursuant
to Rule 424 (including the Basic Prospectus as so supplemented) is hereinafter
called the "Final Prospectus." Any preliminary form of the Final Prospectus
which has heretofore been filed pursuant to Rule 424 hereinafter is called the
"Preliminary Final Prospectus." Any reference herein to the Registration
Statement, the Basic Prospectus, any Preliminary Final Prospectus or the Final
Prospectus shall be deemed to refer to and include the documents incorporated by
reference therein pursuant to Item 12 of Form S-3 which were filed under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), on or before
the date of this Agreement, or the issue date of the Basic Prospectus, any
Preliminary Final Prospectus or the Final Prospectus, as the case may be (the
"Incorporated Documents"); and any reference herein to the terms "amend,"
"amendment" or "supplement" with respect to the Registration Statement, the
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Basic Prospectus, and the Preliminary Final Prospectus or the Final Prospectus
shall be deemed to refer to and include the filing of any document under the
Exchange Act after the date of this Agreement, or the issue date of the Basic
Prospectus, any Preliminary Final Prospectus or the Final Prospectus, as the
case may be, and deemed to be incorporated therein by reference.
(b) As of each of the following dates or times: (1) the date
hereof, (2) when the Final Prospectus is first filed pursuant to Rule 424 of the
Securities Act Rules and Regulations, (3) when, prior to the Firm Closing Date
(as hereinafter defined) or any Option Closing Date (as hereinafter defined), as
the case may be, any amendment to the Registration Statement becomes effective
(including the filing of any document incorporated by reference in the
Registration Statement), (4) when any supplement to the Final Prospectus is
filed with the Commission, (5) at the Firm Closing Date, and (6) at any Option
Closing Date, (i) the Registration Statement as amended as of any such time, and
the Final Prospectus, as amended or supplemented as of any such time, will
comply in all material respects with the applicable requirements of the
Securities Act, the Securities Act Rules and Regulations, the Exchange Act and
the rules and regulations under the Exchange Act (the "Exchange Act Rules and
Regulations"), (ii) the Registration Statement, as amended as of any such time,
will not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein not misleading, and (iii) the Final Prospectus, as amended or
supplemented as of any such time, will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided, however,
that the Company makes no representations or warranties as to the information
contained in or omitted from the Registration Statement or the Final Prospectus
or any amendment thereof or supplement thereto in reliance upon and in
conformity with information relating to any Underwriter furnished in writing to
the Company by or on behalf of any Underwriter through the Representatives
specifically for use in connection with the preparation of the Registration
Statement and the Final Prospectus.
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(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 Exchange Act Rules and Regulations, 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 Exchange
Act Rules and Regulations; 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 material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
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, in light of the circumstances under which they were made, not
misleading.
(d) The Company is a Maryland real estate investment trust in good
standing under the laws of the State of Maryland. Each of its subsidiaries (as
hereinafter defined) has been duly organized, is validly existing as a
corporation in good standing under the laws of its jurisdiction of incorporation
or organization. Each of the Company and its subsidiaries has full power and
authority (corporate and other) to carry on its business as described in the
Registration Statement and the Final Prospectus and to own, lease and operate
its properties. Each of the Company and its subsidiaries is duly qualified and
is in good standing as a foreign corporation or trust, as the case may be,
authorized to do business in each jurisdiction in which the nature of its
business or its ownership or leasing of property requires such qualification,
except where the failure to be so qualified would not have a material adverse
effect on the Company and its subsidiaries, taken as a whole. The only
subsidiaries (as defined in the Securities Act Rules and Regulations) of the
Company which are actively engaged in business are the subsidiaries listed on
Schedule II hereto (the "subsidiaries").
(e) No injunction, stop order, restraining order or order of any
nature by a federal, state or foreign court of competent jurisdiction has been
issued that would prevent or interfere with the issuance of the Debentures
(including, but not limited to, any order suspending the use of the Final
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Prospectus or any Preliminary Final Prospectus or suspending the registration or
qualification of the Conversion Shares); no proceedings with the purpose of
preventing or interfering with the Offering are pending, threatened or, to the
Company's knowledge, contemplated by any securities or other governmental
authority in any jurisdiction (including, without limitation, the Commission);
and no order suspending the qualification or exemption from qualification of the
Debentures or the Conversion Shares under the securities or "Blue Sky" laws of
any jurisdiction is in effect and no proceeding for such purpose is pending
before or threatened or, to the Company's knowledge, contemplated by the
authorities of any such jurisdiction.
(f) The historical and pro forma financial statements of the
Company and its subsidiaries and, to the knowledge of the Company, of Marriott
International, Inc. (the "Operator"), together with the related schedules and
notes thereto, included or incorporated by reference in the Registration
Statement, the Final Prospectus and any Preliminary Final Prospectus comply as
to form in all material respects with the requirements of the Securities Act.
Such historical financial statements present fairly the consolidated financial
position, results of operations, shareholders' equity and changes in financial
position of the Company and its subsidiaries at the respective dates or for the
respective periods therein specified. Such statements have been prepared in
accordance with generally accepted accounting principles consistently applied
throughout the periods involved. The other financial and statistical information
and data of the Company set forth in or incorporated by reference in the
Registration Statement, the Final Prospectus and any Preliminary Final
Prospectus are, in all material respects, accurately presented and prepared on a
basis consistent with such financial statements and the books and records of the
Company and its subsidiaries. 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.
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(g) The accountants who have certified the financial statements of
the Company and, to the Company's knowledge, of the Operator and its
subsidiaries, incorporated by reference into the Registration Statement and the
Final Prospectus are independent certified accountants as required by the
Securities Act and the Securities Act Rules and Regulations. The statements
included in or incorporated by reference in the Registration Statement, the
final Prospectus and any Preliminary Final Prospectus with respect to such
accountants pursuant to Rule 509 of Regulation S-K of the Securities Act Rules
and Regulations are true and correct in all material respects.
(h) Since the respective dates as of which information is given in
the Final Prospectus, and except as otherwise disclosed therein, (i) there has
been no material adverse change in the business, operations, earnings,
prospects, properties or condition (financial or otherwise) of the Company and
its subsidiaries, taken as a whole, or, to the Actual Knowledge (as defined in
Section 4(k) hereof) of the Company, of the Operator (as defined in Section 4(k)
hereof) or the Advisor (as defined in Section 4(k) hereof), in any case whether
or not arising in the ordinary course of business, (ii) there have been no
material transactions entered into by the Company and its subsidiaries, on a
consolidated basis, or, to the Actual Knowledge of the Company, the Operator or
the Advisor other than transactions in the ordinary course of business, (iii)
neither the Company nor its subsidiaries nor, to the Actual Knowledge of the
Company, the Operator or the Advisor has incurred any material liabilities or
obligations, direct or contingent, (iv) the Company and its subsidiaries, on a
consolidated basis, have not (A) declared, paid or made a dividend or
distribution of any kind on any class of its capital stock, (B) issued any
capital stock of the Company or any of its subsidiaries or any options,
warrants, convertible securities or other rights to purchase the capital stock
of the Company or any of its subsidiaries or (C) repurchased or redeemed capital
stock, and (v) there has not been (A) any material decrease in the Company's net
worth or (B) any material increase in the short-term or long- term debt
(including capitalized lease obligations) of the Company and its subsidiaries,
on a consolidated basis.
(i) The Company and each of its subsidiaries maintains a system of
internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
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authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (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
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(j) Except as otherwise disclosed in the Final Prospectus, neither
the Company nor any of its subsidiaries nor, to the Actual Knowledge of the
Company, any of the Operator or the Advisor is in violation of its respective
charter or by-laws or other organizational documents 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 other agreement,
indenture or instrument to which the Company or any of its subsidiaries or, to
the Actual Knowledge of the Company, the Operator or the Advisor, is a party or
by which any of their respective properties or assets 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 Operator 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.
(k) Except as disclosed in the Registration Statement or the Final
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"), the Operator 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
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the Actual Knowledge of the Company, of the Operator 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 Operator or the Advisor, or (C) relates
to environmental matters involving the Company or, to the Actual Knowledge of
the Company, of the Operator 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 Operator or the Advisor, or (E) concerns
the Company or, to the Actual Knowledge of the Company, of the Operator or the
Advisor, and is required to be disclosed in the Final Prospectus, or (F) could
adversely affect the consummation of this Agreement, the Indenture or the
Debentures. No contract or other document is required to be described in the
Registration Statement or the Final Prospectus or to be filed as an exhibit to
the Registration Statement (except for (i) the Supplemental Indenture, (ii) this
Agreement, (iii) the Third Supplemental Indenture to be dated as of October 7,
1996 by and between the Company and the Trustee pursuant to which the Company's
7.25% Convertible Subordinated Debentures due 2001 (the "7.25% Debentures") will
be issued, and (iv) the placement agency agreement dated the date hereof by and
between the Company and National Westminster Bank PLC, New York Branch (the
"Placement Agency Agreement") pursuant to which the 7.25% Debentures will be
placed, copies of which will be filed with the Commission on the date hereof)
that is not described therein or filed as required.
(l) The Company has the requisite power and authority to execute,
deliver and perform its obligations under this Agreement, the Base Indenture,
the Supplemental Indenture and the Debentures, and to issue, sell and deliver
the Debentures and the Conversion Shares in accordance with and upon the terms
and conditions set forth in this Agreement, the Base Indenture, the Supplemental
Indenture and the Debentures, as the case may be. All necessary proceedings of
the Company have been duly taken to authorize the execution, delivery and
performance by the Company of this Agreement and the Base Indenture, the
Supplemental Indenture and the issuance, sale and delivery by the Company of the
Debentures and the Conversion Shares.
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(m) This Agreement has been duly and validly authorized, executed
and delivered by or on behalf of the Company and is a legal, valid and binding
agreement of the Company, enforceable in accordance with its terms (i) subject
to applicable bankruptcy, insolvency, reorganization, fraudulent transfer and
similar laws affecting creditors' rights, generally, (ii) subject to general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law), and (iii) except insofar as the enforceability
of the indemnity and contribution provisions contained in this Agreement may be
limited by federal or state securities laws and the public policy underlying
such laws.
(n) The Base Indenture and the Supplemental Indenture have been
duly and validly authorized by the Company and on the Initial Closing Date will
have been duly executed and delivered by the Company and (assuming the due
authorization, execution and delivery hereof by the Trustee) each of them will
constitute a valid and legally binding instrument of the Company, enforceable
against the Company in accordance with its terms, subject, as to enforcement, to
bankruptcy, insolvency, reorganization, fraudulent conveyance or similar laws
relating to or affecting the rights of creditors generally and by equitable
principles. The Base Indenture and the Supplemental Indenture will conform to
the description thereof set forth in the Registration Statement and the Final
Prospectus. The Indenture has been duly qualified under the Trust Indenture Act
of 1939, as amended (the "Trust Indenture Act").
(o) The Debentures have been duly and validly authorized and when
the Debentures have been authenticated by the Trustee and issued, executed,
delivered and sold by the Company in accordance with the Indenture, will have
been duly and validly executed, authenticated, issued and delivered and will (i)
constitute valid and legally binding obligations of the Company enforceable
against the Company in accordance with their terms and entitled to the benefits
of the Indenture to bankruptcy, insolvency, reorganization, fraudulent
conveyance or similar laws relating to or affecting the rights of creditors
generally and to equitable principles, and (ii) be convertible into the
Conversion Shares in accordance with the terms thereof and of the Indenture. The
Conversion Shares have been duly and validly authorized and reserved for
issuance upon conversion of the Debentures and, when issued and delivered upon
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such conversion, will be duly and validly issued and outstanding, fully paid and
nonassessable and will not have been issued in violation of or subject to any
preemptive or other similar rights. The Debentures and the Conversion Shares,
when issued, will conform to the respective descriptions thereof set forth in
the Registration Statement and the Final Prospectus.
(p) The execution, delivery and performance by the Company of this
Agreement, the Base Indenture, the Supplemental Indenture and the Debentures,
the issuance, offering and sale by the Company of the Debentures as contemplated
by the Registration Statement and the Final Prospectus, the issuance by the
Company of the Conversion Shares upon exercise of the conversion rights
contained in the Indenture and the Debentures and the consummation of the
transactions contemplated hereby and thereby and compliance with the terms and
provisions hereof and thereof, will not violate or conflict with or constitute a
breach of any of the terms or provisions of, or a default under, (i) the Amended
and Restated Declaration of Trust or Bylaws of the Company or the charter or
bylaws or other organizational documents of any subsidiaries of the Company or,
to the Actual Knowledge of the Company, the respective charter or bylaws or
other organizational documents of the Operator or the Advisor, or (ii) except as
disclosed in the Final Prospectus, any agreement, indenture or other instrument
to which the Company or any of its subsidiaries or, to the Actual Knowledge of
the Company, the Operator or the Advisor is a party or by which the Company or
any of its subsidiaries or, to the Actual Knowledge of the Company, the Operator
or the Advisor or their respective property or assets is bound, or (iii) any
laws, administrative regulations or rulings or decrees applicable to the Company
or any of its subsidiaries or, to the Actual Knowledge of the Company, the
Operator or the Advisor or their respective properties or assets may be subject.
(q) No consent, approval, authorization, order, registration,
filing, qualification, license or permit of or with any court or any public,
governmental or regulatory agency or body having jurisdiction over the Company
or any of its subsidiaries or any of their respective properties or assets is
required for the execution, delivery and performance of this Agreement, the
Indenture and the Debentures and the consummation of the transactions
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contemplated hereby and thereby, including, without limitation, the issuance,
sale and delivery of the Debentures pursuant to this Agreement, except such as
have been obtained and such as may be required under (i) foreign and state
securities or "Blue Sky" laws and (ii) the bylaws and rules of the National
Association of Securities Dealers, Inc. (the "NASD").
(r) Except as otherwise disclosed in the Registration Statement
and the Final 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 Final 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
Final Prospectus), legal opinions and property insurance 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.
(s) The Company and each of the subsidiaries owns, or possesses
adequate rights to use, all patents, trademarks, trade names, service marks,
copyrights, licenses and other rights necessary for the conduct of their
respective businesses as described in the Registration Statement and the Final
Prospectus, and neither the Company nor any of its subsidiaries has received any
notice of conflict with, or infringement of, the asserted rights of others with
respect to any such patents, trademarks, trade names, service marks, copyrights,
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licenses and other such rights (other than conflicts or infringements that, if
proven, would not have a material adverse effect on the business, operations,
earnings, prospects, properties or condition (financial or otherwise) of the
Company and its subsidiaries, taken as a whole), and neither the Company nor any
of its subsidiaries knows of any basis therefor.
(t) All material tax returns required to be filed by the Company
and each of its subsidiaries in any jurisdiction have been timely filed, other
than those filings being contested in good faith, and all material taxes,
including withholding taxes, penalties and interest, assessments, fees and other
charges due pursuant to such returns or pursuant to any assessment received by
the Company or any of its subsidiaries have been paid other than those being
contested in good faith and for which adequate reserves have been provided.
(u) 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
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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 government or
quasi-government 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 time to time be amended; and (b) any petroleum products, asbestos,
lead-based paint, polychlorinated biphenyls, flammable explosives or radioactive
materials.
(v) Each of the Company, its subsidiaries and, to the Actual
Knowledge of the Company, the Operator and the Advisor has such permits,
licenses, franchises and authorizations of governmental or regulatory
authorities ("permits"), including, without limitation, under any applicable
Environmental Laws, as are necessary to own, lease and operate its properties
and 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 Operator or the Advisor and neither the
Company nor, to the Actual Knowledge of the Company, the Operator 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; each of the Company, its
subsidiaries and, to the Actual Knowledge of the Company, the Operator and the
Advisor has fulfilled and performed all of its obligations with respect to such
permits and no event has occurred which allows, or after notice or lapse of
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time would allow, revocation or termination thereof or results in any other
material impairment of the rights of the holder of any such permit; and, except
as described in the Registration Statement and the Final Prospectus, such
permits contain no restrictions that are materially burdensome to the Company,
any of its subsidiaries or, to the Actual Knowledge of the Company, the Operator
or the Advisor.
(w) To the best knowledge of the Company, no labor problem exists
or is imminent with employees of the Company or any of its subsidiaries that
could have a material adverse effect on the business, operations, earnings,
prospects, properties or condition (financial or otherwise) of the Company and
its subsidiaries, taken as a whole.
(x) Neither the Company nor any of its subsidiaries nor, to the
best of the Company's knowledge, any officer of director purporting to act on
behalf of the Company or any of its subsidiaries has at any time: (i) made any
contributions to any candidate for political office, or failed to disclose fully
any such contributions, in violation of law, (ii) made any payment of funds to,
or received or retained any funds from, any state, federal or foreign
governmental officer or official, or other person charged with similar public or
quasi-public duties, other than payments required or allowed by applicable law,
or (iii) engaged in any transactions, maintained any bank account or used any
corporate funds except for transactions, bank accounts and funds which have been
and are reflected in the normally maintained books and records of the Company
and its subsidiaries.
(y) The authorized, issued and outstanding capital stock of the
Company, and the capital stock reserved or committed for issuance, is as set
forth under the captions "Capitalization" and "Description of Capital Stock" in
the Registration Statement and the Final Prospectus. All of the issued and
outstanding indebtedness of the Company and Common Shares are duly and validly
authorized and issued, and all of the issued and outstanding Common Shares are,
and the Conversion Shares when acquired on the terms and conditions specified in
the Debentures and the Indenture will be, fully paid and nonassessable. The
Company has a sufficient number of authorized but unissued Common Shares to
enable the Company to issue, without further stockholder action, all the
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Conversion Shares. There are no preemptive rights or other rights to subscribe
for or to purchase, or any restriction upon the voting or transfer of, any
Common Shares pursuant to the Company's declaration of trust, bylaws or any oral
or written agreement or other instrument to which the Company or any of its
subsidiaries is a party or by which either the Company or any of its
subsidiaries is bound that is not described in the Registration Statement and
the Final Prospectus. Neither the offering and sale of the Debentures, as
contemplated by this Agreement, nor the issuance or delivery of the Conversion
Shares, as contemplated by the Indenture and the Debentures, gives rise to any
rights, other than those which have been, or which will, prior to the Initial
Closing Date, be, waived in writing or satisfied, for or relating to the
registration or offering of any shares of capital stock or other securities of
the Company. The Common Shares of the Company conform and, upon the issuance of
the Conversion Shares in connection with the conversion of the Debentures, the
Conversion Shares will conform, in all material respects to the statements
relating thereto in the Registration Statement and the Final Prospectus.
(z) All of the outstanding shares of capital stock of, or other
ownership interests in, each of the Company's subsidiaries have been duly
authorized and validly issued and are fully paid and non-assessable, and, except
as disclosed in the Registration Statement and the Final Prospectus, are owned
by the Company free and clear of any security interest, claim, lien, encumbrance
or adverse interest of any nature.
(aa) None of the subsidiaries of the Company owns any shares of
stock or any other securities of any corporation or has any equity interest in
any firm, partnership, association or other entity except as referred to or
described in the Registration Statement and the Final Prospectus and the Company
does not own, directly or indirectly, any shares of stock or any other
securities of any corporation or have any equity interest in any firm,
partnership, association or other entity other than the issued capital stock of
its subsidiaries, except in each case for non-controlling positions acquired in
the ordinary course of business.
(ab) Except as disclosed in the Registration Statement and the
Prospectus, there are no material outstanding loans or advances or material
guarantees of indebtedness by the Company or any of its subsidiaries to or for
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the benefit of any of the officers or directors of the Company or any of its
subsidiaries or any of the members of the families of any of them.
(ac) The Company and each of its subsidiaries maintains insurance,
duly in force, with insurers of recognized financial responsibility; such
insurance insures against such losses and risks as are adequate in accordance
with customary industry practice to protect the Company and its subsidiaries and
their respective businesses; and neither the Company nor any such subsidiary has
any reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business at a cost that
would not materially and adversely affect the business, operations, earnings,
prospects, properties or condition (financial or otherwise) of the Company and
its subsidiaries, taken as a whole, except as disclosed in or contemplated by
the Registration Statement and the Final Prospectus.
(ad) Neither the Company nor any of its officers and directors (as
defined in the Securities Act Rules and Regulations) has taken or will take,
directly or indirectly, prior to the termination of the Offering contemplated by
this Agreement and the Registration Statement and Final Prospectus any action
designed to stabilize or manipulate the price of any security of the Company, or
which has caused or resulted in, or which might in the future reasonably be
expected to cause or result in, stabilization or manipulation of the price of
any security of the Company, to facilitate the sale or resale of the Debentures
or the Conversion Shares.
(ae) In connection with the Offering, the Company has not offered
and will not offer Debentures, its Common Shares or any other securities
convertible into or exchangeable or exercisable for Common Shares in a manner in
violation of the Securities Act. The Company has not distributed and will not
distribute any offering material in connection with the Offering other than the
Registration Statement, the Final Prospectus and any Preliminary Final
Prospectus. No securities of the same class as the Debentures have been issued
and sold by the Company within the six-month period immediately prior to the
date hereof.
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(af) Neither the Company nor any of its subsidiaries is an
"investment company" or an "affiliated person" of, or "promoter" or "principal
underwriter" for an "investment company" as such terms are defined in the
Investment Company Act of 1940, as amended, or an "investment advisor" as such
term is defined in the Investment Advisors Act of 1940, as amended.
(ag) Any certificate signed by an officer of the Company and
delivered to the Underwriters or to counsel for the Underwriters pursuant to
this Agreement shall be deemed a representation and warranty by the Company to
each Underwriter as to the matters covered thereby.
(ah) The Company has dealt with no broker, finder, commission
agent or other person in connection with the sale of the Debentures and the
transactions contemplated by this Agreement, the Registration Statement and the
Final Prospectus, other than the Underwriters, and the Company is under no
obligation to pay any broker's fee or commission in connection with such
transactions, other than the commission to the Underwriters contemplated hereby.
(ai) Neither the Company nor any affiliate of the Company does
business with the government of Cuba or with any person or affiliate located in
Cuba and the Company and each affiliate thereof has complied, to the extent
necessary, with all provisions of Section 517.075, Florida Statutes, and
applicable rules and regulations thereunder.
(aj) There are no outstanding subscriptions, rights, warrants,
options, calls, convertible securities, commitments of sale or liens related to
or entitling any person to purchase or otherwise to acquire any shares of the
capital stock of, or other ownership interest in, the Company or any subsidiary
thereof except as otherwise disclosed in the Registration Statement and the
Final Prospectus.
(ak) The Company is organized in conformity with the requirements
for qualification, and, as of the date hereof the Company operates, and as of
the Initial Closing Date and any Option Closing Date the Company will operate,
in a manner that qualifies the Company, as a "real estate investment trust" (a
"REIT") under the Internal Revenue Code of 1986, as amended (the "Code"), and
the rules and regulations thereunder, for 1996 and subsequent years. The Company
qualified as a real estate investment trust for its 1987, 1988, 1989, 1990,
1991, 1992, 1993, 1994 and 1995 taxable years.
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(al) No default exists, and no event has occurred which, with
notice or lapse of time or both, would constitute a default in the due
performance and observance of any term, covenant or condition of any indenture,
mortgage, deed of trust, lease or other agreement or instrument to which the
Company or any of its subsidiaries is a party or by which the Company or any of
its subsidiaries or any of their respective properties is bound or may be
affected in any material adverse respect with regard to property, business or
operations of the Company and its subsidiaries, considered as a whole, except as
disclosed in the Registration Statement and the Final Prospectus.
(am) The Debentures and the Conversion Shares have been approved
for listing on the New York Stock Exchange, subject only to notice of issuance,
and the Company knows of no reason or set of facts which is likely to adversely
affect such approval.
(an) The Advisory Agreement (as defined in the Final 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.
5. Agreements of the Company. The Company covenants and agrees with
each of the Underwriters as follows:
(a) Prior to the termination of the offering of the Debentures,
the Company will not file any amendment of the Registration Statement or
supplement (including the Final Prospectus) to the Basic Prospectus unless the
Company has furnished you a copy for your review prior to filing and will not
file any such proposed amendment or supplement to which you reasonably object.
Subject to the foregoing sentence, the Company will cause the Final Prospectus
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to be transmitted to the Commission for filing pursuant to Rule 424 by EDGAR and
will cause the Final Prospectus to be filed with the Commission pursuant to said
Rule. The Company will advise the Representatives promptly (i) when the Final
Prospectus shall have been filed pursuant to Rule 424, (ii) when any amendment
to the Registration Statement relating to the Debentures shall have become
effective, (iii) of any request by the Commission for any amendment of the
Registration Statement or amendment of or supplement to the Final Prospectus or
for any additional information, (iv) of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement or the
institution or threatening of any proceeding for that purpose and (v) of the
receipt by the Company of any notification with respect to the suspension of the
qualification of the Debentures for sale in any jurisdiction or the initiation
or threatening of any proceeding for such purpose. The Company will make every
reasonable effort to prevent the issuance of any such stop order and, if issued,
to obtain as soon as possible the withdrawal thereof.
(b) If, at any time when a prospectus relating to the Debentures
is required to be delivered under the Securities Act or the Securities Act Rules
and Regulations in connection with sales by an Underwriter or dealer, any event
occurs as a result of which the Final Prospectus as then amended or supplemented
would include any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein in light of the
circumstances under which they were made not misleading, or if it shall be
necessary to amend or supplement the Final Prospectus to comply with the
Securities Act, the Securities Act Rules and Regulations, the Exchange Act or
the Exchange Act Rules and Regulations, the Company promptly will prepare and
file with the Commission, subject to the first sentence of subparagraph (a) of
this Section 5, an amendment or supplement which will correct such statement or
omission or an amendment which will effect such compliance.
(c) The Company will make generally available to its security
holders and to the Representatives as soon as practicable after the close of the
period covered thereby, an earnings statement (in form complying with the
provisions of Rule 158 of the Securities Act Rules and Regulations) covering a
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twelve month period beginning not later than the first day of the Company's
fiscal quarter next following the "effective date" (as defined in said Rule 158)
of the Registration Statement.
(d) The Company will furnish to the Representatives and counsel
for the Underwriters, without charge, copies of the Registration Statement
(including exhibits thereto) and each amendment thereto which shall become
effective on or prior to the Initial Closing Date or any Option Closing Date, as
the case may be, and, so long as delivery of a prospectus by an Underwriter or
dealer may be required by the Securities Act or the Securities Act Rules and
Regulations, as many copies of any Preliminary Final Prospectus and the Final
Prospectus and any amendments thereof and supplements thereto as the
Representatives may reasonably request.
(e) The Company will use its reasonable efforts to arrange for the
qualification of the Debentures and the Conversion Shares for offer and sale
under the laws of such jurisdictions as the Representatives may reasonably
designate and will maintain such qualifications in effect so long as required
for the distribution of the Debentures; provided, however, that the Company
shall not be required 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 general or
unlimited service of process of any jurisdiction where it is not now so subject.
(f) The Company will apply the net proceeds from the sale of the
Debentures, the International Debentures (as defined below) and the 7.25%
Debentures as set forth under "Use of Proceeds" in the Final Prospectus.
(g) The Company will not at any time, directly or indirectly, take
any action intended, or which might reasonably be expected, to cause or result,
in, or which will constitute, under the Securities Act or otherwise,
stabilization of the price of any security of the Company to facilitate the sale
or resale of the Debentures.
(h) During the period commencing on the Initial Closing Date and
ending three years from the last Closing Date, the Company will furnish to the
Representatives copies of such financial statements and other periodic and
special reports as the Company may from time to time distribute generally to the
holders of any class of its capital stock or file with the Commission, the New
York Stock Exchange ("NYSE") or any national securities exchange, and will
furnish to each Underwriter who may so request a copy of each annual or other
report it shall be required to file therewith.
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(i) 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.
(j) The Company currently intends to continue to elect to qualify
as a "real estate investment trust" under the Code and use its best efforts to
continue to meet the requirement to qualify as a REIT.
6. Representations and Warranties of NatWest. NatWest represents and
warrants to the Company and agrees that:
(a) It has (i) not offered or sold and will not, prior to the
expiry of the period six months from the last Closing Date, offer or sell in the
United Kingdom, by means of any document, any Debentures other than to persons
whose ordinary business it is to buy or sell shares or debentures (whether as
principal or agent) or in circumstances which do not constitute an offer to the
public within the meaning of the Public Offers of Securities Regulations 1995;
(ii) complied and will comply with all applicable provisions of the Financial
Services Act 1986 with respect to anything done by them in relation to the
Debentures in, from or otherwise involving the United Kingdom; and (iii) issued
or passed on and will issue or pass on to any person in the United Kingdom any
document received by them in connection with the issuance of the Debentures only
if that person is of a kind described in Article 11(3) of the Financial Services
Act 1986 (Investment Advertisements) (Exemptions) Order 1996, as amended, or is
a person to whom the document may otherwise lawfully be issued or passed on.
7. Expenses.
(a) Whether or not the transactions contemplated by this Agreement
are consummated or this Agreement is terminated, the Company will pay, or
reimburse if paid by the Representatives with the Company's prior approval, all
costs and expenses incident to the performance of the obligations of the Company
under this Agreement, including but not limited to costs and expenses of or
relating to (i) the preparation and distribution of the Registration Statement,
Preliminary Final Prospectus, the Final Prospectus and any amendments or
supplements thereto, (ii) the preparation, printing, issue, exchange and
delivery of the Registration Statement, the Preliminary Final Prospectus, the
Final Prospectus, the Debentures and the Conversion Shares, (iii) the printing
(or reproduction) and delivery of the Indenture, this Agreement, the preliminary
and supplemental Blue Sky Memoranda and all other agreements or documents
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printed (or reproduced) and delivered in connection with the Offering, (iv)
furnishing (including costs of shipping and mailing) such copies of the
Preliminary Final Prospectus, the Final Prospectus, and all amendments and
supplements thereto, as may be required thereunder, (v) the listing of the
Debentures on the NYSE and the listing of the Conversion Shares issuable upon
conversion of the Debentures on the NYSE, (vi) any filings required to be made
by the Underwriters with the NASD in connection with the Offering, and (vii) all
other costs and expenses incident to the performance of the obligations of the
Company hereunder and under the Indenture which are not otherwise provided for
in this paragraph.
(b) If (i) the sale of the Debentures is not consummated because
any condition to the obligations of the Underwriters set forth in Section 8
hereof is not satisfied, (ii) this Agreement shall be terminated pursuant to any
of the provisions hereof (other then by the Company pursuant to Section 10
hereof or pursuant to Section 12 (iii), (iv) or (v) hereof) or if for any reason
the Company shall be unable to perform its obligations hereunder (other than as
a result of any Underwriter's failure to perform any of its obligations
hereunder), the Company will reimburse the several Underwriters for all
out-of-pocket expenses (including, the fees, disbursements and other charges of
counsel to the Underwriters) reasonably incurred by them in connection herewith.
The Company shall not under any circumstances, including a breach of this
Agreement by the Company, be liable to the Underwriters for the loss of
anticipated profits from the transactions covered by this Agreement.
8. Conditions to Obligations of Underwriters. The obligations of the
Underwriters to purchase the Firm Debentures shall be subject to the accuracy of
the representations and warranties on the part of the Company contained herein
as of the date hereof, as of the date of the effectiveness of any amendment to
the Registration Statement filed prior to the Initial Closing Date (including
the filing of any document incorporated by reference therein) and as of the
Initial Closing Date, to the accuracy of the statements of the Company made in
any certificates pursuant to the provisions hereof, to the performance by the
Company of its obligations hereunder and to the following additional conditions:
(a) No stop order suspending the effectiveness of the Registration
Statement, as amended from time to time, shall have been issued and no
proceedings for that purpose shall have been instituted or threatened by the
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Commission; no order suspending the effectiveness of the Registration Statement
or the qualification or exemption from qualification of the Debentures or the
Conversion Shares under the securities or "Blue Sky" laws of any jurisdiction
shall be in effect and no proceeding for such purpose shall be pending before or
threatened or contemplated by the authorities of any such jurisdiction; any
request for additional information on the part of the staff of the Commission or
such authorities shall have been complied with to the satisfaction of the staff
of the Commission or such authorities; after the date hereof no amendment or
supplement to the Registration Statement, any Preliminary Final Prospectus or
the Final Prospectus shall have been prepared unless a copy thereof was first
submitted to the Representatives and the Representatives shall not have objected
thereto in good faith.
(b) Since the respective dates as of which information is given in
the Registration Statement and the Final Prospectus, except as may otherwise be
stated therein (or in any amendment or supplement thereto), (i) there shall not
have been any material adverse change in the business, operations, earnings,
prospects, properties or condition (financial or otherwise) of the Company and
its subsidiaries, taken as a whole, whether or not arising from transactions in
the ordinary course of business, and (ii) neither the Company nor any of its
subsidiaries shall have sustained any material loss or interference with its
business or properties from fire, explosion, flood or other casualty, whether or
not covered by insurance, or from any labor dispute or any court or legislative
or other governmental action, order or decree, if in the judgment of the
Representatives any such development makes it impracticable or inadvisable to
consummate the sale and delivery of the Debentures by the Underwriters.
(c) (i) The Company shall have furnished to the Underwriters the
opinion of Sullivan & Worcester LLP, counsel for the Company, dated the Initial
Closing Date, which opinion shall be in such form as shall be satisfactory to
the Representatives; and (ii) the Company shall have furnished to the
Underwriters the opinion of Sherin & Lodgen, counsel for the Company, dated the
Initial Closing Date, which opinion shall be in such form as shall be
satisfactory to the Representatives. With respect to matters governed by
Maryland law, Sullivan & Worcester LLP may rely on an opinion, dated as of the
Initial Closing Date, of Piper & Marbury, LLP.
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(d) The Underwriters shall have received the opinion, dated the
related Closing Date, of Stroock & Stroock & Lavan, counsel for the
Underwriters, in form and substance reasonably satisfactory to the
Representatives. With respect to matters governed by Maryland law, such counsel
may rely upon an opinion, dated as of the Initial Closing Date, of Piper &
Marbury, LLP.
(e) On the date hereof, the Underwriters shall have received from
the Accountants a "comfort" letter, dated the date of this Agreement, in form
and substance reasonably satisfactory to the Representatives and counsel to the
Underwriters with respect to the financial statements and certain financial
information of the Company and its subsidiaries contained in the Registration
Statement and the Final Prospectus (including the Incorporated Documents), (i)
confirming that they are independent accountants with respect to the Company and
its subsidiaries within the meaning of the Securities Act and the Securities Act
Rules and Regulations, and (ii) stating their conclusions and findings with
respect to specified financial and statistical and numerical information
contained in the Registration Statement and the Final Prospectus. At the Initial
Closing Date and, as to the Option Debentures, each Option Closing Date, the
Accountants shall have furnished to the Underwriters a letter, dated the date of
its delivery, which shall reaffirm such conclusions and findings as of the
related Closing Date on the basis of a review conducted in accordance with the
procedures set forth therein.
(f) At the Initial Closing Date and on each Option Closing Date
the Underwriters shall receive a certificate, dated the date of delivery,
executed on its behalf by the Company's President and Chief Financial Officer,
in form and substance satisfactory to the Representatives, to the effect set
forth in Section 8(b) hereof and to the effect that:
(g) Each of the representations and warranties of the Company
contained in this Agreement were, when originally made, and are, at the time
such certificate is delivered, true and correct;
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(h) Each of the covenants required herein to be performed by the
Company on or prior to the date of such certificate has been duly, timely and
fully performed and each condition herein required to be complied with by the
Company on or prior to the delivery of such certificate has been duly, timely
and fully complied with; and
(i) No stop order has been issued, no proceedings for that purpose
have been instituted or threatened, and no order suspending the effectiveness of
the Registration Statement or the qualification or exemption from qualification
of the Debentures or the Conversion Shares under the securities or "Blue Sky"
laws of any jurisdiction shall be in effect and no proceeding for such purpose
shall be pending before or threatened by the authorities of any such
jurisdiction.
(j) The Debentures and Conversion Shares shall have been accepted
for listing on the NYSE, subject only to notice of issuance.
(k) The Company and the Trustee, shall have entered into the
Indenture and the Representatives shall have received a fully executed original
copy thereof.
(l) The Firm Debentures and the Option Debentures, as the case may
be, shall have been made available for inspection and shall have been delivered
to the Representatives or for the accounts of the Underwriters as set forth
herein.
(m) The Underwriters and counsel for the Underwriters shall have
received such further certificates, documents or other information as they may
have reasonably requested from the Company.
(n) The offering and sale by the Company of the International
Debentures contemplated by that certain subscription agreement of even date
herewith by and between the Company and the several managers named therein, for
whom NatWest and Merrill Lynch International are acting as lead managers, shall
close concurrently with the closing contemplated hereunder.
All opinions, certificates, letters and documents delivered pursuant to
this Agreement will comply with the provisions hereof only if they are
reasonably satisfactory in all material respects to the Representatives and
counsel to the Underwriters. The Company shall furnish to the Underwriters such
conformed copies of such opinions, certificates, letters and documents in such
quantities as the Underwriters and counsel for the Underwriters shall reasonably
request.
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The several obligations of the Underwriters to purchase the Option
Debentures 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 herein 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 the Option Debentures.
9. Indemnification and Contribution.
(a) The Company will indemnify and hold harmless each Underwriter,
the directors, officers, employees and agents of each Underwriter and each
person, if any, who controls each Underwriter within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act, from the against any
and all losses, claims, liabilities, expenses and damages (including any and all
investigative, legal and other expenses reasonably incurred in connection with,
and any amount paid in settlement of, any action, suit or proceeding or any
claim asserted), joint or several, to which they, or any of them, may become
subject insofar as such losses, claims, liabilities, expenses or damages arise
out of or are based on (i) any breach of a representation or warranty made by
the Company in Section 4 of this Agreement, (ii) any untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Final
Prospectus or in the Registration Statement or the Final Prospectus or in any
amendment or supplement thereto, or in any application or other document, any
amendment or supplement thereto, executed by the Company or based upon written
information furnished by or on behalf of the Company filed in any jurisdiction
in order to qualify the Debentures or Conversion Shares under the securities or
"Blue Sky" laws thereof (each, an "Application"), or (iii) any omission or
alleged omission to state in any Preliminary Final Prospectus or the
Registration Statement or the Final Prospectus or any amendment or supplement
thereto, or any Application a material fact required to be stated therein or
necessary in order to make the statements therein not misleading and shall
reimburse to each Underwriter and each such controlling person, as incurred, any
legal and other expenses incurred in investigating or defending or preparing to
defend against or appearing as a third party witness in connection with any such
loss, claim, damage, liability or action; provided, however, that (i) the
Company shall not be liable to any Underwriter in any such case to the extent
that any such loss, claim, liability, expense or damage arises out of, or is
based upon, any untrue statement or alleged untrue statement or omission or
alleged omission made in the Preliminary Final Prospectus or the Final
Prospectus, including any amendment or supplement thereto, in reliance upon and
in conformity with information furnished to the Company by or on behalf of such
Underwriter specifically for inclusion therein, and (ii) such indemnity with
respect to the Basic Prospectus or any Preliminary Final Prospectus shall not
inure to the benefit of any Underwriter (or any person controlling such
Underwriter) from whom the person asserting any such loss, claim, liability,
expense or damage purchased the Debentures which are the subject thereof if such
person did not receive a copy of the Final Prospectus (or the Final Prospectus
as amended or supplemented) excluding documents incorporated therein by
reference at or prior to the confirmation of the sale of such Debentures to such
person in any case where such delivery is required by the Securities Act and the
untrue statement or omission of a material fact contained in the Basic
Prospectus or any Preliminary Final Prospectus was corrected in the Final
Prospectus (or the Final Prospectus as amended or supplemented), unless such
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failure was the result of noncompliance by the Company with Section 5(d) hereof.
This indemnity agreement will be in addition to any liability that the Company
might otherwise have.
(b) Each Underwriter, severally and not jointly, agrees to
indemnify and hold harmless the Company, each of its trustees, each of its
officers and each person, if any, who controls the Company within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act against any
losses, claims, damages or liabilities, joint or several, to the same extent as
the foregoing indemnity from the Company to each Underwriter, but only insofar
as such losses, claims, liabilities, expenses or damages are based solely on any
untrue statement or alleged untrue statement or omission or alleged omission
made in the Preliminary Final Prospectus or the Final Prospectus, including any
amendment or supplement thereto, made in reliance upon and in conformity with
information furnished to the Company by or on behalf of such Underwriter through
the Representatives specifically for inclusion therein. This indemnity shall be
in addition to any liability which such Underwriter may otherwise have. The
Company acknowledges that for all purposes of this Agreement the statements set
forth (i) in the last paragraph of the cover page, (ii) in the stabilization
legend on the inside front cover page, and (iii) in the first, third, sixth and
seventh paragraphs under the heading "Underwriting" in any Preliminary Final
Prospectus or the Final Prospectus constitute the only information furnished in
writing by or on behalf of the several Underwriters for inclusion in the
documents referred to in the foregoing indemnity, and the Underwriters confirm
that such statements are correct.
(c) Any party that proposes to assert the right to be indemnified
under this Section 9 will, promptly after receipt of notice of commencement of
any action against such party in respect of which a claim is to be made against
an indemnifying party or parties under this Section 9, notify each such
indemnifying party of the commencement of such action, enclosing a copy of all
papers served, but the omission so to notify such indemnifying party will not
relieve it from any liability that it may have to any indemnified party under
the foregoing provisions of this Section 9 unless, and only to the extent that,
such omission results in the forfeiture of substantive rights or defenses by the
indemnifying party. If any such action is brought against any indemnified party
and it notifies the indemnifying party of its commencement, the indemnifying
party will be entitled to participate in and, to the extent that it so elects by
delivering written notice to the indemnified party promptly after receiving
notice of the commencement of the action from the indemnified party, jointly
with any other indemnifying party similarly notified, to assume the defense of
any such action, with counsel satisfactory to the indemnified party. After
receipt of such notice by the indemnified party from an indemnifying party, no
indemnifying party will be liable to the indemnified party for any legal or
other expenses except as provided below and except for the reasonable costs of
investigation subsequently incurred by the indemnified party in connection with
the defense of such action.
The indemnified party will have the right to employ its own counsel in
any such action, but the fees, expenses and other charges of such counsel will
be at the expense of such indemnified party unless (i) the employment of such
counsel by the indemnified party has been authorized in writing by the
indemnifying party, (ii) the indemnified party has reasonably concluded (based
on advice of counsel) that there may be legal defenses available to it or other
indemnified parties that are different from or in addition to those available to
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the indemnifying party, (iii) a conflict or potential conflict exists (based on
advice of counsel to the indemnified party) between the indemnified party and
the indemnifying party (in which case the indemnifying party will not have the
right to direct the defense of such action on behalf of the indemnified party),
or (iv) the indemnifying party has not in fact employed counsel to assume the
defense of such action within a reasonable time after receiving notice of the
commencement of the action. In any such case, the reasonable fees, disbursements
and other charges of counsel will be at the expense of the indemnifying party or
parties.
It is understood that in no event shall the indemnifying parties be
liable for the fees, disbursements and other charges of more than one counsel
(in addition to any local counsel) for all indemnified parties in connection
with any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances. All
such fees, disbursements and other charges will be reimbursed by the
indemnifying party promptly as they are incurred and upon receipt of
substantiation of such charges as the indemnifying party may reasonably request.
The Company will not, without the prior written consent of each
Underwriter, settle or compromise or consent to the entry of any judgment in any
pending or threatened claim, action, suit or proceeding in respect of which
indemnification may be sought hereunder (whether or not such Underwriter or any
person who controls such Underwriter within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act is a party to each claim,
action, suit or proceeding), unless such settlement, compromise or consent
includes an unconditional release of each Underwriter and each such controlling
person from all liability arising out of such claim, action, suit or proceeding.
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 the written
consent of the Company or if there shall be a final judgment for the plaintiff
in any such action, suit or proceeding, the Company agrees to indemnify and hold
harmless any Underwriter and any such controlling person to the extent set forth
in this Section 9 from and against any loss, claim, damage, liability or expense
by reason of such settlement or judgement. Notwithstanding the immediately
preceding sentence, if in any case where the fees and expenses of counsel are at
the expense of the indemnifying party and an indemnified party shall have
requested the indemnifying party to reimburse the indemnified party for such
fees and expenses of counsel as incurred, such indemnifying party agrees that it
shall be liable for any settlement of any action effected without its written
consent if (i) such settlement is entered into more than ten business days after
the receipt by such indemnifying party of the aforesaid request and (ii) such
indemnifying party shall have failed to reimburse the indemnified party in
accordance with such request for reimbursement prior to the date of such
settlement.
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in the foregoing
paragraphs of this Section 9 is applicable in accordance with its terms but for
any reason is held to be unavailable from the Company or the Underwriters, the
Company and the Underwriters will contribute to the total losses, claims,
liabilities, expenses and damages (including any investigative, legal, and other
expenses reasonably incurred in connection with, any amount paid in settlement
of, any action, suit or proceeding or any claim asserted, but after deducting
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any contribution received by the Company from persons other than the
Underwriters, such as persons who control the Company within the meaning of the
Securities Act or the Exchange Act, officers and directors of the Company, who
also may be liable for contribution) to which the Company and any one or more of
the Underwriters may be subject in such proportion as shall be appropriate to
reflect the relative benefits received by the Company, on the one hand, and the
Underwriters on the other. 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 bears to the total underwriting discounts and
commissions received by the Underwriters, in each case as set forth in Section 1
hereof. If, but only if, the allocation provided by the foregoing sentences is
not permitted by applicable law, the allocation of contribution shall be made in
such proportion as is appropriate to reflect not only the relative benefits
referred to in the foregoing sentence but also the relative fault of the
Company, on the one hand, and the Underwriters, on the other, with respect to
the statements or omissions which resulted in such loss, claim, liability,
expense or damage, or action in respect thereof, as well as any other relevant
equitable considerations with respect to such Offering. Such relative fault
shall be determined by reference to whether the untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a material
fact relates to information supplied by the Company or the Representatives on
behalf of the Underwriters, the intent of the parties and their relative
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this Section 9(d) were to be determined
by pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take into
account the equitable considerations referred to herein. The amount paid or
payable by an indemnified party as a result of the loss, claim, liability,
expense or damage, or action in respect thereof, referred to above in this
Section 9(d) shall be deemed to include, for purposes of this Section 9(d), any
legal or other expenses reasonably incurred by such indemnified parry in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 9(d), (i) no Underwriter
shall be required to contribute, cumulatively, any amount in excess of the
underwriting discounts and commissions received by it less any amounts paid by
such Underwriter and (ii) no person found guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) will be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute as provided in
this Section 9(d) are several in proportion to their respective subscription
obligations and not joint. For purposes of this Section 9(d), any person who
controls a party to this Agreement within the meaning of the Securities Act or
the Exchange Act will have the same rights to contribution as that party, and
each director or officer of the Company will have the same rights to
contribution as the Company, subject in each case to the provisions hereof. Any
party entitled to contribution, promptly after receipt of notice of commencement
of any action against such parry in respect of which a claim for contribution
may be made under this Section 9(d), will notify any such parry or parties from
whom contribution may be sought, but the omission so to notify will not relieve
the party or parties from whom contribution may be sought from any other
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<PAGE>
obligation it or they may have under this Section 9(d). No party will be liable
for contribution with respect to any action or claim settled without its written
consent (which consent will not be unreasonably withheld).
Any party entitled to contribution will, promptly after receipt of
notice of commencement of any action, suit or proceeding against such party in
respect to which a claim for contribution may be made against another party or
parties under this Section 9(d), notify such party or parties from whom
contribution may be sought, but the omission so to notify such party or parties
shall not relieve the party or parties from whom contribution may be sought from
any other obligation (x) it or they may have hereunder or otherwise than under
this Section 9(d) or (y) to the extent that such party or parties were not
adversely affected by such omission. The contribution agreement set forth above
shall be in addition to any liabilities which any indemnifying party may
otherwise have.
10. Default by an Underwriter. If any one or more Underwriters shall
fail on the Initial Closing Date or, with respect to any Option Debentures, on
the Option Closing Date to purchase and pay for any of the Debentures agreed to
be purchased by such Underwriter or Underwriters hereunder and such failure to
purchase shall constitute a default in the performance of its or their
obligations under this Agreement, the remaining Underwriters shall be obligated
severally to take up and pay for (in the respective proportions which the amount
of Debentures set forth opposite their names in Schedule I hereto bear to the
aggregate amount of Debentures set forth opposite the names of all the remaining
Underwriters) the Debentures which the defaulting Underwriter or Underwriters
agreed but failed to purchase; provided, however, that in the event that the
aggregate amount of Debentures which the defaulting Underwriter or Underwriters
agreed but failed to purchase shall exceed 10% of the aggregate amount of
Debentures set forth in Schedule I hereto, the remaining Underwriters shall have
the right to purchase all, but shall not be under any obligation to purchase
any, of the Debentures, and if such non-defaulting Underwriters do not purchase
all the Debentures, this Agreement will terminate without liability to any
non-defaulting Underwriter or the Company. In the event of a default by any
Underwriter as set forth in this Section 10, the Initial Closing Date or, with
respect to any Option Debentures, the Option Closing Date, shall be postponed
for such period, not exceeding seven days, as the Representatives shall
determine in order that the required changes in the Registration Statement and
the Final Prospectus or in any other documents or arrangements may be effected.
Nothing contained in this Agreement shall relieve any defaulting Underwriter of
its liability, if any, to the Company and any non-defaulting Underwriter for
damages occasioned by its default hereunder.
11. Survival. The respective representations, warranties, agreements,
covenants, indemnities and other statements of the Company, its officers and the
several Underwriters set forth in this Agreement or made by or on behalf of
them, respectively, pursuant to this Agreement shall remain in fill force and
effect, regardless of (i) any investigation made by or on behalf of the Company,
any of its officers or directors, any Underwriters or any controlling person
referred to in Section 9 hereof and (ii) delivery of and payment for the
Debentures. The respective agreements, covenants, indemnities and other
statements set forth in Sections 5 and 9 hereof and this Section 11 shall remain
in full force and effect, regardless of any termination or cancellation of this
Agreement.
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<PAGE>
12. Termination. The obligations of the Underwriters under this
Agreement may be terminated at any time prior to the Initial Closing Date or,
with respect to the Option Debentures, on or prior to the related Option Closing
Date, by notice to the Company from the Representatives, without liability on
the part of any Underwriter to the Company, if, prior to delivery and payment
for the Debentures, in the sole discretion of the Underwriters:
(i) the Company shall have failed, refused or been unable to
perform all obligations and satisfy all conditions on its part to be
performed or satisfied hereunder at or prior thereto;
(ii) trading in any equity securities of the Company shall
have been suspended by the Commission or by an exchange that lists the
Common Shares;
(iii) trading in securities generally on the NYSE, the
American Stock Exchange, the Nasdaq Stock Market, the Luxembourg Stock
Exchange or the International Stock Exchange of the United Kingdom and
the Republic of Ireland Limited shall have been suspended or limited or
minimum or maximum prices shall have been generally established on any
such exchange or market, or additional material governmental
restrictions, not in force on the date of this Agreement, shall have
been imposed upon trading in securities generally by any of such
exchanges or markets or by order of the Commission or any court or
other governmental authority;
(iv) a general banking moratorium shall have been declared by
United States federal, New York State, Commonwealth of Massachusetts,
Luxembourg or United Kingdom authorities; or
(v) any material adverse change in the financial or securities
markets in the United States, Luxembourg or the United Kingdom or any
outbreak or escalation of hostilities or declaration by the United
States, Luxembourg or the United Kingdom of a national emergency or war
or other calamity or crisis shall have occurred, the effect of any of
which is such as to make it, in the sole judgment of the
Representatives, impracticable or inadvisable to proceed with the
Offering or the delivery of the Debentures on the terms and in the
manner contemplated by the Final Prospectus.
Any termination pursuant to this Section 11 shall be without liability of any
party to any other party except as provided in sections 7 and 9.
13. 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 Debentures 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.
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<PAGE>
14. Notices. All communications hereunder shall be in writing and, if
sent to the Representative shall be mailed or delivered or telecopied and
confirmed in writing to their address set forth on the first page hereof,
Attention: Melvyn Rowe, and if sent to the Company, shall be mailed, delivered
or telecopied and confirmed in writing to the Company at 400 Centre Street,
Newton, Massachusetts 02158, Attention: Chief Operating Officer.
15. Successors. This Agreement shall inure to the benefit of and shall
be binding upon the several Underwriters, the Company and their respective
successors and legal representatives, and nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any other person any legal
or equitable right, remedy or claim under or in respect of this Agreement, or
any provisions herein contained, this Agreement and all conditions and
provisions hereof being intended to be and being for the sole and exclusive
benefit of such persons and for the benefit of no other person except that (i)
the indemnities of the Company contained in Section 9(a) of this Agreement shall
also be for the benefit of any person named therein and (ii) the indemnities of
the Underwriters contained in Section 9(b) of this Agreement shall also be for
the benefit of the persons named therein. No purchaser of Debentures shall be
deemed a successor because of such purchase. This Agreement shall not be
assignable by any party hereto without the prior written consent of the other
party.
16. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAWS.
17. Counterparts. 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.
18. Waiver of Jury Trial. The Company and the Underwriters each hereby
irrevocably waive any right they may have to a trial by jury in respect of any
claim based upon or arising out of this Agreement or the transactions
contemplated hereby.
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<PAGE>
If the foregoing correctly sets forth the agreement among the Company
and the Underwriters, please indicate your acceptance in the space provided for
that purpose below.
Very truly yours,
HEALTH AND RETIREMENT PROPERTIES TRUST
By:
Name:
Title:
ACCEPTED:
NATWEST SECURITIES LIMITED
MERRILL LYNCH & CO.
by Natwest Securities Limited
For itself and on behalf of the several Underwriters
By:
Name: Melvyn Rowe
Title: Director, Equity Capital Markets
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SCHEDULE I
Principal Amount
of Firm Debentures
Underwriters to be Purchased
------------ ------------------
Natwest Securities Limited $35,000,000
Merrill Lynch & Co. 35,000,000
-----------
Total $70,000,000
<PAGE>
SCHEDULE II
Subsidiaries
1. Church Creek Corporation, a Massachusetts corporation.
2. Hub Properties Trust, a Maryland real estate investment trust.
3. Causeway Holdings, Inc., a Massachusetts corporation.
<PAGE>
SCHEDULE III
Term Sheet
EXHIBIT 1.2
October 2, 1996
National Westminster Bank PLC
New York Branch
175 Water Street
New York, N.Y. 10038
Re: Placement of Securities of Health and Retirement
Properties Trust
Dear Sirs:
This letter (the "Agreement") confirms our agreement to retain National
Westminster Bank PLC, New York Branch (the "Placement Agent") as our exclusive
agent for a period commencing on the date of this letter and terminating on
November 1, 1996, unless extended by the parties, to introduce Health and
Retirement Properties Trust (the "Company"), to certain investors as prospective
purchasers of up to $40,000,000 aggregate principal amount of 7.25% Convertible
Subordinated Debentures due 2001 of the Company (the "Debentures"). The
Debentures are immediately convertible into the Company's common shares of
beneficial interest, $.01 par value per share (the "Conversion Shares"), at a
price of $18.00. The Debentures shall be issued by the Company pursuant to that
certain indenture (the "Base Indenture") dated as of September 20, 1996, between
the Company and Fleet National Bank, as trustee (the "Trustee"), as supplemented
by the Third Supplemental Indenture to be dated as of October 7, 1996 between
the Company and the Trustee (the "Supplemental Indenture" and collectively, the
"Indenture"). The engagement described herein (i) may be terminated by the
Company at any time prior to the closing date of the consummation of the sale of
the Debentures and (ii) shall be in accordance with applicable laws and pursuant
to the following procedures and terms and conditions:
1. The Company will:
(a) Cause the Company's independent public accountants to
address and deliver to the Company and the Placement
Agent a letter or letters (which letters are
frequently referred to as "comfort letters") dated
the date hereof, and a "bring-down" letter dated as
of October 7, 1996 (the "Closing Date"), both of
which letters will at all times be in form and
substance reasonably satisfactory to the Placement
Agent.
<PAGE>
(b) On the Closing Date, cause outside counsel to the
Company, to deliver opinions to the Placement Agent
in form and substance reasonably satisfactory to the
Placement Agent and its counsel.
(c) Apply for listing the Debentures and the Conversion
Shares for trading on the New York Stock Exchange,
Inc. ("NYSE") within two business days from the date
hereof and will use its best efforts to obtain
approval from the NYSE with respect to such listing
on or prior to the Closing Date.
2. The Placement Agent will use reasonable efforts on behalf of the
Company in connection with the Placement Agent's services hereunder. No sales of
Debentures shall be made to any person without the prior approval of such person
by the Company. The Placement Agent's aggregate fee for introducing the
prospective investors will be 1.5% of the aggregate proceeds to the Company from
the sale of the Debentures. Such fee shall be payable by the Company at the
Closing Date. The Company, upon consultation with the Placement Agent, may
establish a minimum amount of Debentures to be sold in the offering contemplated
hereby, which minimum amount shall be reflected in the Prospectus (as defined
below).
3. The Company hereby agrees as follows:
(a) The Company will indemnify and hold harmless the Placement
Agent and each of its respective partners, directors, officers, associates,
affiliates, subsidiaries, employees, consultants, attorneys and agents, and each
person, if any, controlling the Placement Agent or any of its affiliates within
the meaning of either Section 15 of the Securities Act of 1933, as amended (the
"Securities Act") or Section 20 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), from and against any and all losses, claims,
damages, liabilities or costs (and any legal or other expenses incurred by such
Placement Agent in investigating or defending the same or in giving testimony or
furnishing documents in response to a request of any government agency or to a
subpoena) in any way relating to or in any way arising out of the activities of
the Placement Agent contemplated by this letter, or in connection with the
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offering or sale of the Debentures to be sold by the Company as contemplated
hereunder. Such indemnity agreement shall not, however, cover any such loss,
claim, damage, liability, cost or expense which is held in a final judgment of a
court of competent jurisdiction (not subject to further appeal) to have arisen
out of the gross negligence or willful misconduct of the Placement Agent.
(b) The Placement Agent will indemnify and hold harmless the
Company and each of its trustees, officers, associates, affiliates,
subsidiaries, employees, consultants, attorneys, agents, and each person
controlling the Company or any of its affiliates within the meaning of either
Section 15 of the Act or Section 20 of the Exchange Act from and against any and
all losses, claims, damages, liabilities, costs or expenses (and any legal or
other expenses incurred by such indemnitee in investigating or defending the
same or in giving testimony or furnishing documents in response to a request of
any government agency or to a subpoena) (i) which are held in a final judgment
of a court of competent jurisdiction (not subject to further appeal) to have
arisen out of the gross negligence or willful misconduct of such Placement Agent
or (ii) are based upon information furnished in writing to the Company by the
Placement Agent expressly for use in the Prospectus, which information the
parties hereby agree, for purposes of this Agreement, is limited solely to that
set forth under the caption "Plan of Distribution" in the Prospectus Supplement
(as hereinafter defined).
(c) If any action, proceeding or investigation is commenced as to
which the indemnified party hereunder proposes to demand indemnification under
this letter agreement, it will notify the indemnifying party with reasonable
promptness. The indemnified party shall have the right to retain counsel of its
own choice (which choice shall be reasonably satisfactory to the indemnifying
party) to represent it and such counsel shall, to the extent consistent with its
professional responsibilities, cooperate with the indemnifying party and any
counsel designated by the indemnifying party. The indemnifying party will not be
liable under this letter agreement for any settlement of any claim against the
indemnified party made without the indemnifying party's written consent.
In order to provide for just and equitable contribution, if a
claim for indemnification pursuant to this paragraph 3 is made but it is found
in a final judgment by a court of competent jurisdiction (not subject to further
appeal) that such indemnification may not be enforced in such case, even though
the express provisions hereof provided for indemnification in such case, then
the Company, on the one hand, and the Placement Agent, on the other hand, shall
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<PAGE>
contribute to the losses, claims, damages, liabilities or costs to which the
indemnified persons may be subject in accordance with the relative benefits
received from the offering and sale of the Debentures by the Company, on the one
hand, and the Placement Agent, on the other hand, and also the relative fault of
the Company, on the one hand, and the Placement Agent, on the other hand, in
connection with the statements, acts or omissions which resulted in such losses,
claims, damages, liabilities or costs, and the relevant equitable considerations
shall also be considered. No person found liable for a fraudulent
misrepresentation shall be entitled to contribution from any person who is not
also found liable for such fraudulent misrepresentation. Notwithstanding the
foregoing, the Placement Agent shall not be obligated to contribute any amount
hereunder that exceeds the fees received by the Placement Agent in respect of
the offering and sale of the Debentures.
4. The Company represents and warrants to the Placement Agent as of the
date hereof and as of the Closing Date as follows:
(a) The Company and the transaction contemplated hereby meet the
requirements for use of Form S-3 under the Securities Act and the rules and
regulations (the "Securities Act Rules and Regulations") of the Securities and
Exchange Commission (the "Commission") thereunder, and the Company has filed a
registration statement on such Form (Registration No. 333-02863) which has
become effective, for the registration of the Debentures and the Conversion
Shares under the Securities Act and the Securities Act Rules and Regulations.
Such registration statement, as amended at the date of this Agreement, meets the
requirements set forth in Rule 415(a)(1) of the Securities Act Rules and
Regulations and complies in all other material respects with said Rule. The
Company proposes to file with the Commission pursuant to Rule 424 of the
Securities Act Rules and Regulations a supplement to the form of prospectus
included in such registration statement relating to the Debentures and the
Conversion Shares and the plan of distribution of the Debentures and has
previously advised you of all further information (financial and other) with
respect to the Company to be set forth therein. Such registration statement,
including the exhibits thereto, as amended at the date of this Agreement, is
hereinafter called the "Registration Statement"; such prospectus in the form in
which it appears in the Registration Statement is hereinafter called the "Basic
Prospectus"; and such supplemented form of final prospectus, in the form in
which it shall be filed with the Commission pursuant to Rule 424 (including the
Basic Prospectus as so supplemented) is hereinafter called the "Final
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<PAGE>
Prospectus." Any preliminary form of the Final Prospectus which has heretofore
been filed pursuant to Rule 424 hereinafter is called the "Preliminary Final
Prospectus." Any reference herein to the Registration Statement, the Basic
Prospectus, any Preliminary Final Prospectus or the Final Prospectus shall be
deemed to refer to and include the documents incorporated by reference therein
pursuant to Item 12 of Form S-3 which were filed under the Exchange Act on or
before the date of this Agreement, or the issue date of the Basic Prospectus,
any Preliminary Final Prospectus or the Final Prospectus, as the case may be
(the "Incorporated Documents"); and any reference herein to the terms "amend,"
"amendment" or "supplement" with respect to the Registration Statement, the
Basic Prospectus, and the Preliminary Final Prospectus or the Final Prospectus
shall be deemed to refer to and include the filing of any document under the
Exchange Act after the date of this Agreement, or the issue date of the Basic
Prospectus, any Preliminary Final Prospectus or the Final Prospectus, as the
case may be, and deemed to be incorporated therein by reference.
(b) As of each of the following dates or times: (1) the date
hereof, (2) when the Final Prospectus is first filed pursuant to Rule 424 of the
Securities Act Rules and Regulations, (3) when, prior to the Firm Closing Date
(as hereinafter defined) or any Option Closing Date (as hereinafter defined), as
the case may be, any amendment to the Registration Statement becomes effective
(including the filing of any document incorporated by reference in the
Registration Statement), (4) when any supplement to the Final Prospectus is
filed with the Commission, (5) at the Firm Closing Date, and (6) at any Option
Closing Date, (i) the Registration Statement as amended as of any such time, and
the Final Prospectus, as amended or supplemented as of any such time, will
comply in all material respects with the applicable requirements of the
Securities Act, the Securities Act Rules and Regulations, the Exchange Act and
the rules and regulations under the Exchange Act (the "Exchange Act Rules and
Regulations"), (ii) the Registration Statement, as amended as of any such time,
will not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein not misleading, and (iii) the Final Prospectus, as amended or
supplemented as of any such time, will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided, however,
that the Company makes no representations or warranties as to the information
contained in or omitted from the Registration Statement or the Final Prospectus
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or any amendment thereof or supplement thereto in reliance upon and in
conformity with information relating to the Placement Agent furnished in writing
to the Company by the Placement Agent specifically for use in connection with
the preparation of the Registration Statement and the Final Prospectus.
(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 Exchange Act Rules and Regulations, 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 Exchange
Act Rules and Regulations; 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 material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
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, in light of the circumstances under which they were made, not
misleading.
(d) The Company is a Maryland real estate investment trust in good
standing under the laws of the State of Maryland. Each of its subsidiaries (as
hereinafter defined) has been duly organized, is validly existing as a
corporation in good standing under the laws of its jurisdiction of incorporation
or organization. Each of the Company and its subsidiaries has full power and
authority (corporate and other) to carry on its business as described in the
Registration Statement and the Final Prospectus and to own, lease and operate
its properties. Each of the Company and its subsidiaries is duly qualified and
is in good standing as a foreign corporation or trust, as the case may be,
authorized to do business in each jurisdiction in which the nature of its
business or its ownership or leasing of property requires such qualification,
except where the failure to be so qualified would not have a material adverse
effect on the Company and its subsidiaries, taken as a whole. The only
subsidiaries (as defined in the Securities Act Rules and Regulations) of the
Company which are actively engaged in business are the subsidiaries listed on
Schedule I hereto (the "subsidiaries").
(e) No injunction, stop order, restraining order or order of any
nature by a federal, state or foreign court of competent jurisdiction has been
issued that would prevent or interfere with the issuance of the Debentures
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(including, but not limited to, any order suspending the use of the Final
Prospectus or any Preliminary Final Prospectus or suspending the registration or
qualification of the Conversion Shares); no proceedings with the purpose of
preventing or interfering with the offering contemplated hereby are pending,
threatened or, to the Company's knowledge, contemplated by any securities or
other governmental authority in any jurisdiction (including, without limitation,
the Commission); and no order suspending the qualification or exemption from
qualification of the Debentures or the Conversion Shares under the securities or
"Blue Sky" laws of any jurisdiction is in effect and no proceeding for such
purpose is pending before or threatened or, to the Company's knowledge,
contemplated by the authorities of any such jurisdiction.
(f) The historical and pro forma financial statements of the
Company and its subsidiaries and, to the knowledge of the Company, of Marriott
International, Inc. (the "Operator"), together with the related schedules and
notes thereto, included or incorporated by reference in the Registration
Statement, the Final Prospectus and any Preliminary Final Prospectus comply as
to form in all material respects with the requirements of the Securities Act.
Such historical financial statements present fairly the consolidated financial
position, results of operations, shareholders' equity and changes in financial
position of the Company and its subsidiaries at the respective dates or for the
respective periods therein specified. Such statements have been prepared in
accordance with generally accepted accounting principles consistently applied
throughout the periods involved. The other financial and statistical information
and data of the Company set forth in or incorporated by reference in the
Registration Statement, the Final Prospectus and any Preliminary Final
Prospectus are, in all material respects, accurately presented and prepared on a
basis consistent with such financial statements and the books and records of the
Company and its subsidiaries. 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.
(g) The accountants who have certified the financial statements of
the Company and, to the Company's knowledge, of the Operator and its
subsidiaries, incorporated by reference into the Registration Statement and the
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Final Prospectus are independent certified accountants as required by the
Securities Act and the Securities Act Rules and Regulations. The statements
included in or incorporated by reference in the Registration Statement, the
final Prospectus and any Preliminary Final Prospectus with respect to such
accountants pursuant to Rule 509 of Regulation S-K of the Securities Act Rules
and Regulations are true and correct in all material respects.
(h) Since the respective dates as of which information is given in
the Final Prospectus, and except as otherwise disclosed therein, (i) there has
been no material adverse change in the business, operations, earnings,
prospects, properties or condition (financial or otherwise) of the Company and
its subsidiaries, taken as a whole, or, to the Actual Knowledge (as defined in
Section 4(k) hereof) of the Company, of the Operator (as defined in Section 4(k)
hereof) or the Advisor (as defined in Section 4(k) hereof), in any case whether
or not arising in the ordinary course of business, (ii) there have been no
material transactions entered into by the Company and its subsidiaries, on a
consolidated basis, or, to the Actual Knowledge of the Company, the Operator or
the Advisor other than transactions in the ordinary course of business, (iii)
neither the Company nor its subsidiaries nor, to the Actual Knowledge of the
Company, the Operator or the Advisor has incurred any material liabilities or
obligations, direct or contingent, (iv) the Company and its subsidiaries, on a
consolidated basis, have not (A) declared, paid or made a dividend or
distribution of any kind on any class of its capital stock, (B) issued any
capital stock of the Company or any of its subsidiaries or any options,
warrants, convertible securities or other rights to purchase the capital stock
of the Company or any of its subsidiaries or (C) repurchased or redeemed capital
stock, and (v) there has not been (A) any material decrease in the Company's net
worth or (B) any material increase in the short-term or long- term debt
(including capitalized lease obligations) of the Company and its subsidiaries,
on a consolidated basis.
(i) The Company and each of its subsidiaries maintains a system of
internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (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
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
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<PAGE>
(j) Except as otherwise disclosed in the Final Prospectus, neither
the Company nor any of its subsidiaries nor, to the Actual Knowledge of the
Company, any of the Operator or the Advisor is in violation of its respective
charter or by-laws or other organizational documents 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 other agreement,
indenture or instrument to which the Company or any of its subsidiaries or, to
the Actual Knowledge of the Company, the Operator or the Advisor, is a party or
by which any of their respective properties or assets 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 Operator 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.
(k) Except as disclosed in the Registration Statement or the Final
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"), the Operator 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 of the Company, of the Operator 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 Operator or the Advisor, or (C) relates
to environmental matters involving the Company or, to the Actual Knowledge of
the Company, of the Operator 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 Operator or the Advisor, or (E) concerns
the Company or, to the Actual Knowledge of the Company, of the Operator or the
Advisor, and is required to be disclosed in the Final Prospectus, or (F) could
adversely affect the consummation of this Agreement, the Indenture or the
Debentures. No contract or other document is required to be described in the
Registration Statement or the Final Prospectus or to be filed as an exhibit to
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the Registration Statement (except for (i) the Supplemental Indenture, (ii) this
Agreement, (iii) the First Supplemental Indenture to be dated as of October 7,
1996 by and between the Company and the Trustee pursuant to which the Company's
7.50% Convertible Subordinated Debentures due 2003 (the "7.50% Debentures") will
be issued, and (iv) the underwriting agreement dated the date hereof by and
between the Company and several Underwriters named therein (the "Underwriting
Agreement") pursuant to which the 7.50% Debentures will be placed, copies of
which will be filed with the Commission on the date hereof) that is not
described therein or filed as required.
(l) The Company has the requisite power and authority to execute,
deliver and perform its obligations under this Agreement, the Base Indenture,
the Supplemental Indenture and the Debentures, and to issue, sell and deliver
the Debentures and the Conversion Shares in accordance with and upon the terms
and conditions set forth in this Agreement, the Base Indenture, the Supplemental
Indenture and the Debentures, as the case may be. All necessary proceedings of
the Company have been duly taken to authorize the execution, delivery and
performance by the Company of this Agreement and the Base Indenture, the
Supplemental Indenture and the issuance, sale and delivery by the Company of the
Debentures and the Conversion Shares.
(m) This Agreement has been duly and validly authorized, executed
and delivered by or on behalf of the Company and is a legal, valid and binding
agreement of the Company, enforceable in accordance with its terms (i) subject
to applicable bankruptcy, insolvency, reorganization, fraudulent transfer and
similar laws affecting creditors' rights, generally, (ii) subject to general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law), and (iii) except insofar as the enforceability
of the indemnity and contribution provisions contained in this Agreement may be
limited by federal or state securities laws and the public policy underlying
such laws.
(n) The Base Indenture and the Supplemental Indenture have been
duly and validly authorized by the Company and on the Initial Closing Date will
have been duly executed and delivered by the Company and (assuming the due
authorization, execution and delivery hereof by the Trustee) each of them will
constitute a valid and legally binding instrument of the Company, enforceable
against the Company in accordance with its terms, subject, as to enforcement, to
bankruptcy, insolvency, reorganization, fraudulent conveyance or similar laws
relating to or affecting the rights of creditors generally and by equitable
principles. The Base Indenture and the Supplemental Indenture will conform to
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the description thereof set forth in the Registration Statement and the Final
Prospectus. The Indenture has been duly qualified under the Trust Indenture Act
of 1939, as amended (the "Trust Indenture Act").
(o) The Debentures have been duly and validly authorized and when
the Debentures have been authenticated by the Trustee and issued, executed,
delivered and sold by the Company in accordance with the Indenture, will have
been duly and validly executed, authenticated, issued and delivered and will (i)
constitute valid and legally binding obligations of the Company enforceable
against the Company in accordance with their terms and entitled to the benefits
of the Indenture to bankruptcy, insolvency, reorganization, fraudulent
conveyance or similar laws relating to or affecting the rights of creditors
generally and to equitable principles, and (ii) be convertible into the
Conversion Shares in accordance with the terms thereof and of the Indenture. The
Conversion Shares have been duly and validly authorized and reserved for
issuance upon conversion of the Debentures and, when issued and delivered upon
such conversion, will be duly and validly issued and outstanding, fully paid and
nonassessable and will not have been issued in violation of or subject to any
preemptive or other similar rights. The Debentures and the Conversion Shares,
when issued, will conform to the respective descriptions thereof set forth in
the Registration Statement and the Final Prospectus.
(p) The execution, delivery and performance by the Company of this
Agreement, the Base Indenture, the Supplemental Indenture and the Debentures,
the issuance, offering and sale by the Company of the Debentures as contemplated
by the Registration Statement and the Final Prospectus, the issuance by the
Company of the Conversion Shares upon exercise of the conversion rights
contained in the Indenture and the Debentures and the consummation of the
transactions contemplated hereby and thereby and compliance with the terms and
provisions hereof and thereof, will not violate or conflict with or constitute a
breach of any of the terms or provisions of, or a default under, (i) the Amended
and Restated Declaration of Trust or Bylaws of the Company or the charter or
bylaws or other organizational documents of any subsidiaries of the Company or,
to the Actual Knowledge of the Company, the respective charter or bylaws or
other organizational documents of the Operator or the Advisor, or (ii) except as
disclosed in the Final Prospectus any agreement, indenture or other instrument
to which the Company or any of its subsidiaries or, to the Actual Knowledge of
the Company, the Operator or the Advisor is a party or by which the Company or
any of its subsidiaries or, to the Actual Knowledge of the Company, the Operator
or the Advisor or their respective property or assets is bound, or (iii) any
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<PAGE>
laws, administrative regulations or rulings or decrees applicable to the Company
or any of its subsidiaries or, to the Actual Knowledge of the Company, the
Operator or the Advisor or their respective properties or assets may be subject.
(q) No consent, approval, authorization, order, registration,
filing, qualification, license or permit of or with any court or any public,
governmental or regulatory agency or body having jurisdiction over the Company
or any of its subsidiaries or any of their respective properties or assets is
required for the execution, delivery and performance of this Agreement, the
Indenture and the Debentures and the consummation of the transactions
contemplated hereby and thereby, including, without limitation, the issuance,
sale and delivery of the Debentures pursuant to this Agreement, except such as
have been obtained and such as may be required under (i) foreign and state
securities or "Blue Sky" laws and (ii) the bylaws and rules of the National
Association of Securities Dealers, Inc. (the "NASD").
(r) Except as otherwise disclosed in the Registration Statement
and the Final 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 Final 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
Final Prospectus), legal opinions and property insurance 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.
(s) The Company and each of the subsidiaries owns, or possesses
adequate rights to use, all patents, trademarks, trade names, service marks,
copyrights, licenses and other rights necessary for the conduct of their
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respective businesses as described in the Registration Statement and the Final
Prospectus, and neither the Company nor any of its subsidiaries has received any
notice of conflict with, or infringement of, the asserted rights of others with
respect to any such patents, trademarks, trade names, service marks, copyrights,
licenses and other such rights (other than conflicts or infringements that, if
proven, would not have a material adverse effect on the business, operations,
earnings, prospects, properties or condition (financial or otherwise) of the
Company and its subsidiaries, taken as a whole), and neither the Company nor any
of its subsidiaries knows of any basis therefor.
(t) All material tax returns required to be filed by the Company
and each of its subsidiaries in any jurisdiction have been timely filed, other
than those filings being contested in good faith, and all material taxes,
including withholding taxes, penalties and interest, assessments, fees and other
charges due pursuant to such returns or pursuant to any assessment received by
the Company or any of its subsidiaries have been paid other than those being
contested in good faith and for which adequate reserves have been provided.
(u) 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,
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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 government or
quasi-government 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 time to time be amended; and (b) any petroleum products, asbestos,
lead-based paint, polychlorinated biphenyls, flammable explosives or radioactive
materials.
(v) Each of the Company, its subsidiaries and, to the Actual
Knowledge of the Company, the Operator and the Advisor has such permits,
licenses, franchises and authorizations of governmental or regulatory
authorities ("permits"), including, without limitation, under any applicable
Environmental Laws, as are necessary to own, lease and operate its properties
and 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 Operator or the Advisor and neither the
Company nor, to the Actual Knowledge of the Company, the Operator 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; each of the Company, its
subsidiaries and, to the Actual Knowledge of the Company, the Operator and the
Advisor has fulfilled and performed all of its obligations with respect to such
permits and no event has occurred which allows, or after notice or lapse of time
would allow, revocation or termination thereof or results in any other material
impairment of the rights of the holder of any such permit; and, except as
described in the Registration Statement and the Final Prospectus, such permits
contain no restrictions that are materially burdensome to the Company, any of
its subsidiaries or, to the Actual Knowledge of the Company, the Operator or the
Advisor.
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(w) To the best knowledge of the Company, no labor problem exists
or is imminent with employees of the Company or any of its subsidiaries that
could have a material adverse effect on the business, operations, earnings,
prospects, properties or condition (financial or otherwise) of the Company and
its subsidiaries, taken as a whole.
(x) Neither the Company nor any of its subsidiaries nor, to the
best of the Company's knowledge, any officer of director purporting to act on
behalf of the Company or any of its subsidiaries has at any time: (i) made any
contributions to any candidate for political office, or failed to disclose fully
any such contributions, in violation of law, (ii) made any payment of funds to,
or received or retained any funds from, any state, federal or foreign
governmental officer or official, or other person charged with similar public or
quasi-public duties, other than payments required or allowed by applicable law,
or (iii) engaged in any transactions, maintained any bank account or used any
corporate funds except for transactions, bank accounts and funds which have been
and are reflected in the normally maintained books and records of the Company
and its subsidiaries.
(y) The authorized, issued and outstanding capital stock of the
Company, and the capital stock reserved or committed for issuance, is as set
forth under the captions "Capitalization" and "Description of Capital Stock" in
the Registration Statement and the Final Prospectus. All of the issued and
outstanding indebtedness of the Company and Common Shares are duly and validly
authorized and issued, and all of the issued and outstanding Common Shares are,
and the Conversion Shares when acquired on the terms and conditions specified in
the Debentures and the Indenture will be, fully paid and nonassessable. The
Company has a sufficient number of authorized but unissued Common Shares to
enable the Company to issue, without further stockholder action, all the
Conversion Shares. There are no preemptive rights or other rights to subscribe
for or to purchase, or any restriction upon the voting or transfer of, any
Common Shares pursuant to the Company's declaration of trust, bylaws or any oral
or written agreement or other instrument to which the Company or any of its
subsidiaries is a party or by which either the Company or any of its
subsidiaries is bound that is not described in the Registration Statement and
the Final Prospectus. Neither the offering and sale of the Debentures, as
contemplated by this Agreement, nor the issuance or delivery of the Conversion
Shares, as contemplated by the Indenture and the Debentures, gives rise to any
rights, other than those which have been, or which will, prior to the Closing
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Date, be, waived in writing or satisfied, for or relating to the registration or
offering of any shares of capital stock or other securities of the Company. The
Common Shares of the Company conform and, upon the issuance of the Conversion
Shares in connection with the conversion of the Debentures, the Conversion
Shares will conform, in all material respects to the statements relating thereto
in the Registration Statement and the Final Prospectus.
(z) All of the outstanding shares of capital stock of, or other
ownership interests in, each of the Company's subsidiaries have been duly
authorized and validly issued and are fully paid and non-assessable, and, except
as disclosed in the Registration Statement and the Final Prospectus, are owned
by the Company free and clear of any security interest, claim, lien, encumbrance
or adverse interest of any nature.
(aa) None of the subsidiaries of the Company owns any shares of
stock or any other securities of any corporation or has any equity interest in
any firm, partnership, association or other entity except as referred to or
described in the Registration Statement and the Final Prospectus and the Company
does not own, directly or indirectly, any shares of stock or any other
securities of any corporation or have any equity interest in any firm,
partnership, association or other entity other than the issued capital stock of
its subsidiaries, except in each case for non-controlling positions acquired in
the ordinary course of business.
(bb) Except as disclosed in the Registration Statement and the
Prospectus, there are no material outstanding loans or advances or material
guarantees of indebtedness by the Company or any of its subsidiaries to or for
the benefit of any of the officers or directors of the Company or any of its
subsidiaries or any of the members of the families of any of them.
(cc) The Company and each of its subsidiaries maintains insurance,
duly in force, with insurers of recognized financial responsibility; such
insurance insures against such losses and risks as are adequate in accordance
with customary industry practice to protect the Company and its subsidiaries and
their respective businesses; and neither the Company nor any such subsidiary has
any reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business at a cost that
would not materially and adversely affect the business, operations, earnings,
prospects, properties or condition (financial or otherwise) of the Company and
its subsidiaries, taken as a whole, except as disclosed in or contemplated by
the Registration Statement and the Final Prospectus
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.
(dd) Neither the Company nor any of its officers and directors (as
defined in the Securities Act Rules and Regulations) has taken or will take,
directly or indirectly, prior to the termination of the offering contemplated by
this Agreement and the Registration Statement and Final Prospectus any action
designed to stabilize or manipulate the price of any security of the Company, or
which has caused or resulted in, or which might in the future reasonably be
expected to cause or result in, stabilization or manipulation of the price of
any security of the Company, to facilitate the sale or resale of the Debentures
or the Conversion Shares.
(ee) In connection with the offering contemplated by this
Agreement, the Company has not offered and will not offer Debentures, its Common
Shares or any other securities convertible into or exchangeable or exercisable
for Common Shares in a manner in violation of the Securities Act. The Company
has not distributed and will not distribute any offering material in connection
with the offering contemplated by this Agreement other than the Registration
Statement, the Final Prospectus and any Preliminary Final Prospectus. No
securities of the same class as the Debentures have been issued and sold by the
Company within the six-month period immediately prior to the date hereof.
(ff) Neither the Company nor any of its subsidiaries is an
"investment company" or an "affiliated person" of, or "promoter" or "principal
underwriter" for an "investment company" as such terms are defined in the
Investment Company Act of 1940, as amended, or an "investment advisor" as such
term is defined in the Investment Advisors Act of 1940, as amended.
(gg) Any certificate signed by an officer of the Company and
delivered to the Placement Agent or to counsel for the Placement Agent pursuant
to this Agreement shall be deemed a representation and warranty by the Company
to the Placement Agent as to the matters covered thereby.
(hh) The Company has dealt with no broker, finder, commission
agent or other person in connection with the sale of the Debentures and the
transactions contemplated by this Agreement, the Registration Statement and the
Final Prospectus, other than the Placement Agent, and the Company is under no
obligation to pay any broker's fee or commission in connection with such
transactions, other than the fee to the Placement Agent contemplated hereby.
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<PAGE>
(ii) Neither the Company nor any affiliate of the Company does
business with the government of Cuba or with any person or affiliate located in
Cuba and the Company and each affiliate thereof has complied, to the extent
necessary, with all provisions of Section 517.075, Florida Statutes, and
applicable rules and regulations thereunder.
(jj) There are no outstanding subscriptions, rights, warrants,
options, calls, convertible securities, commitments of sale or liens related to
or entitling any person to purchase or otherwise to acquire any shares of the
capital stock of, or other ownership interest in, the Company or any subsidiary
thereof except as otherwise disclosed in the Registration Statement and the
Final Prospectus.
(kk) The Company is organized in conformity with the requirements
for qualification, and, as of the date hereof the Company operates, and as of
the Initial Closing Date and any Option Closing Date the Company will operate,
in a manner that qualifies the Company, as a "real estate investment trust" (a
"REIT") under the Internal Revenue Code of 1986, as amended (the "Code"), and
the rules and regulations thereunder, for 1996 and subsequent years. The Company
qualified as a real estate investment trust for its 1987, 1988, 1989, 1990,
1991, 1992, 1993, 1994 and 1995 taxable years.
(ll) No default exists, and no event has occurred which, with
notice or lapse of time or both, would constitute a default in the due
performance and observance of any term, covenant or condition of any indenture,
mortgage, deed of trust, lease or other agreement or instrument to which the
Company or any of its subsidiaries is a party or by which the Company or any of
its subsidiaries or any of their respective properties is bound or may be
affected in any material adverse respect with regard to property, business or
operations of the Company and its subsidiaries, considered as a whole, except as
disclosed in the Registration Statement and the Final Prospectus.
(mm) The Advisory Agreement (as defined in the Final 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.
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<PAGE>
5. The Placement Agent represents and warrants to the Company that,
assuming compliance by the Company with all relevant provisions of the
Securities Act in connection with the Prospectus, the Placement Agent will
conduct all offers and sales of the Debentures in compliance with the relevant
provisions of the Securities Act and the Regulations and various state
securities laws and regulations.
6. All communications hereunder shall be in writing and, if sent to the
Placement Agent shall be mailed or delivered or telecopied and confirmed in
writing to their address set forth on the first page hereof, Attention: Bradley
Razook, and if sent to the Company, shall be mailed, delivered or telecopied and
confirmed in writing to the Company at 400 Centre Street, Newton, Massachusetts
02158, Attention: Chief Operating Officer.
7. This Agreement shall inure to the benefit of and shall be binding
upon the Placement Agent, the Company and their respective successors and legal
representatives, and nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any other person any legal or equitable
right, remedy or claim under or in respect of this Agreement, or any provisions
herein contained, this Agreement and all conditions and provisions hereof being
intended to be and being for the sole and exclusive benefit of such persons and
for the benefit of no other person except that (i) the indemnities of the
Company contained in Section 3(a) of this Agreement shall also be for the
benefit of any person named therein and (ii) the indemnities of the Placement
Agent contained in Section 3(b) of this Agreement shall also be for the benefit
of the persons named therein. No purchaser of Debentures shall be deemed a
successor because of such purchase. This Agreement shall not be assignable by
any party hereto without the prior written consent of the other party.
8. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
LAWS.
9. 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.
10. The Company and the Placement Agent each hereby irrevocably waive
any right they may have to a trial by jury in respect of any claim based upon or
arising out of this Agreement or the transactions contemplated hereby.
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If the foregoing is in accord with your understanding of our
agreement, please sign in the space provided below and return a signed copy of
this letter to the Company.
Sincerely,
HEALTH AND RETIREMENT PROPERTIES
TRUST
By:
Name:
Title:
Accepted by:
NATIONAL WESTMINSTER BANK PLC,
NEW YORK BRANCH
By:
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SCHEDULE I
Subsidiaries
1. Church Creek Corporation, a Massachusetts corporation.
2. Hub Properties Trust, a Maryland real estate investment trust.
3. Causeway Holdings, Inc., a Massachusetts corporation.
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EXHIBIT 4.1
FIRST SUPPLEMENTAL INDENTURE
Dated as of October 7, 1996
to
INDENTURE
Dated as of September 20, 1996
between
HEALTH AND RETIREMENT PROPERTIES TRUST
and
FLEET NATIONAL BANK
as Trustee
__________________________
7.50% Convertible Subordinated Debentures
Due 2003, Series A
__________________________
<PAGE>
FIRST SUPPLEMENTAL INDENTURE
FIRST SUPPLEMENTAL INDENTURE, dated as of October 7, 1996 (this
"Supplement"), between Health and Retirement Properties Trust, a Maryland real
estate investment trust (the "Company"), and Fleet National Bank, a United
States Bank, as trustee (the "Trustee"), to that certain Indenture, dated as of
September 20, 1996, between the Company and the Trustee (the "Indenture").
WHEREAS, the parties hereto have entered into the Indenture which
provides for the issuance by the Company of the individual series of securities
thereunder, upon the Company and Trustee entering into a supplemental indenture
to the Indenture authorizing such series; and
WHEREAS, the Company wishes to issue its first series of securities
thereunder, designated its 7.50% Convertible Subordinated Debentures Due 2003,
Series A (the "Securities"); and
WHEREAS, all acts necessary to constitute this First Supplemental
Indenture as a valid, binding and legal obligation of the Company have been done
and performed.
NOW, THEREFORE, witnesseth that, in consideration of the premises and
of the covenants contained herein, it is hereby agreed as follows:
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1 Definitions.
Solely for purposes of this Supplement, Section 101 of the Indenture is
hereby amended by inserting, in their appropriate alphabetical locations, each
of the following defined terms:
"Agent" means any Registrar, Paying Agent, Conversion Agent,
co-registrar or agent for service of notices and demands.
"Capital Stock" means any and all shares or other equivalents (however
designated) of capital stock, including all common stock and all preferred
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stock, in the case of corporation, or partnership interests or other equivalents
(however designated) in the case of a partnership or common shares of beneficial
interest or other equivalents (however designated) in the case of a trust.
"Closing Price" means with respect to the shares of Capital Stock of
the Company on any day, (i) the reported last sale price regular way or, in case
no such reported sale takes place on such day, the average of the reported
closing bid and asked prices regular way, in either case on the New York Stock
Exchange, or (ii) if the shares of Capital Stock are not listed or admitted to
trading on the New York Stock Exchange, the reported last sale price regular way
or, in case no such reported sale takes place on such day, the average of the
reported closing bid and asked prices regular way, in either case on the
principal national securities exchange on which the shares of Capital Stock are
listed or admitted to trading, or (iii) if the shares of Capital Stock are not
listed or admitted to trading on any national securities exchange, the average
of the closing bid and asked prices as furnished by any New York Stock Exchange
member firm selected from time to time by the Company for that purpose.
"Common Shares" means the Company's common shares of beneficial
interest, $.01 par value per share, or as such shares may be reconstituted from
time to time.
"Default" means any event which is, or after notice or passage of time
or both would be, an Event of Default.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Indebtedness" as applied to any Person, means, without duplication:
(a) all liabilities and obligations, contingent or otherwise, of such Person (i)
in respect of borrowed money whether or not evidenced by a promissory note,
draft or similar instrument (whether or not the recourse of the lender is to the
whole of the assets of such Person or only to a portion thereof); (ii) evidenced
by bonds, notes, debentures or similar instruments; (iii) evidenced by a letter
of credit or reimbursement obligation of such Person with respect to any letter
of credit; (iv) evidenced by bankers' acceptances or similar instruments issued
or accepted by banks; (v) for the payment of money relating to obligations with
respect to any lease that is properly classified as a liability on a balance
sheet in accordance with generally accepted accounting principles; and (vi)
representing the balance deferred and unpaid for all or any part of the purchase
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<PAGE>
price of property or services (except any such balance that constitutes (a) a
trade payable or an accrued liability arising in the ordinary course of business
or (b) a trade draft or note payable issued in the ordinary course of business
in connection with the purchase of goods or services); (b) all net obligations
of such Person under Interest Swap and Hedging Obligations; (c) all liabilities
of others described in the preceding clauses (a) and (b) which such Person has
guaranteed or for which it is otherwise liable and all obligations to purchase,
redeem or acquire any Capital Stock; and (d) any and all deferrals, amendments,
renewals, extensions, supplements, refinancings or refundings (whether direct or
indirect) of any liability or obligations described in any of the preceding
clauses (a), (b) or (c), or this clause (d), whether or not between or among the
same parties.
"Interest Swap and Hedging Obligation" means any obligation of any
person pursuant to any interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement, interest rate exchange agreement,
currency exchange agreement or any other agreement or arrangement designed to
protect against fluctuations in interest rates or currency values, including,
without limitation, any arrangement whereby, directly or indirectly, such person
is entitled to receive from time to time periodic payments calculated by
applying either a fixed or floating rate of interest on a stated notional amount
in exchange for periodic payments made by such person calculated by applying a
fixed or floating rate of interest on the same notional amount.
"Junior Securities" of any Person means any Capital Stock and any
Indebtedness of such Person that is (i) subordinated in right of payment to the
Securities and has no scheduled installment of principal due, by redemption,
sinking fund payment or otherwise, on or prior to the Stated Maturity of the
Securities and (ii) subordinated in right of payment to all Senior Indebtedness
at least to the same extent as the Securities.
"Officer" means the President, the Chief Operating Officer, any Vice
President, the Treasurer, the Chief Financial Officer, any Assistant Treasurer,
the Secretary or any Assistant Secretary of the Company.
"Securities Act" means the Securities Act of 1933, as amended from time
to time.
"Securities" means the securities in the form of Exhibit A hereto.
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<PAGE>
"Senior Indebtedness" means the principal, premium, if any, and unpaid
interest (including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Company whether or not a claim
for post-filing interest is allowed in such proceeding), fees, charges,
expenses, reimbursement and indemnification obligations, and all other amounts
payable under or in respect of (i) any Indebtedness of the Company and (ii) any
and all deferrals, renewals, extensions, refundings and refinancings (whether
direct or indirect) of any such Indebtedness, whether any such Indebtedness
exists as of the date of this Indenture or shall hereafter be created, incurred,
assumed or guaranteed; provided, however, that Senior Indebtedness shall not
include (A) the Securities, (B) the Series B Debentures or the 7.25% Debentures,
(C) Indebtedness of the Company owed or owing to a Subsidiary or any officer,
director, trustee or employee of the Company or any Subsidiary, (D) Indebtedness
of the Company which, pursuant to the terms of the instrument creating or
evidencing such Indebtedness, is expressly made pari passu with or subordinate
in right of payment to the Securities or (E) any liability for taxes owed or
owing to the Company.
"Series B Debentures" means the Company's 7.50% Convertible
Subordinated Debentures Due 2003, Series B, in the aggregate principal amount of
$149,500,000, issued pursuant to a Second Supplemental Indenture, dated as of
October 7, 1996, between the Company and the Trustee.
"7.25% Debentures" means the Company's 7.25% Convertible Subordinated
Debentures Due 2001, in the aggregate principal amount of up to $40,000,000,
issued pursuant to a Third Supplemental Indenture, dated as of October 7, 1996,
between the Company and the Trustee.
"Trust Officer", when used with respect to the Trustee, means an
officer of the Trustee customarily performing functions in corporate trust
matters or any other officer of the Trustee to whom such matter is referred
because of his knowledge of and familiarity with the particular subject.
SECTION 1.2 Incorporation by Reference to Trust Indenture Act.
Solely for purposes of this Supplement, Article One of the Indenture is
hereby amended to add thereto the following:
SECTION 114. Incorporation by Reference to Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
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<PAGE>
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Securities.
"indenture security holder" means a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the
Trustee.
"obligor" on the indenture securities means the Company or
any other obligor on the indenture securities.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by Commission rules have
the meanings assigned to them therein.
ARTICLE 2
THE SECURITIES
SECTION 2.1 Form; Dating; Incorporation of Form in Indenture.
In accordance with Sections 201 and 301 of the Indenture, there shall
be and is hereby authorized a single series of Securities designated the "7.50%
Convertible Subordinated Debentures Due 2003, Series A" limited in aggregate
principal amount to $80,500,000, except for Securities authenticated and
delivered upon registration of transfer of, or in exchange for, or in lieu of,
other Securities pursuant to Sections 9.5 or 10.1 hereof or pursuant to Sections
304, 305, 306 or 1107 of the Indenture.
Their fixed maturity shall be October 1, 2003, and they shall bear
interest at the rate per annum of 7.50%, from and including the date of issuance
thereof until maturity or earlier redemption, payable semiannually on April 1
and October 1 commencing April 1, 1997, until the principal thereof is paid or
made available for payment.
The principal of and premium, if any, and interest on the Securities
shall be payable at the office or agency of the Company in the City of Boston
maintained for such purpose and at any other office or agency maintained by the
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<PAGE>
Company for such purpose; provided, however, that at the option of the Company
payment of interest may be made by check mailed to the address of the Person
entitled thereto as such address shall appear in the Security Register.
The Securities shall be redeemable as provided in Article 3.
The Securities shall be subordinated in right of payment to Senior
Indebtedness, to the extent provided in Article 11 hereof.
The Securities shall be convertible as provided in Article 10 hereof.
The Securities and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit A which is incorporated in and made part of
this Supplement. The Securities may have notations, legends or endorsements
required by law, stock exchange rules, agreements to which the Company is
subject, or usage. The Company shall approve the form of the Securities and any
notation, legend or endorsement on them. Each Security shall be dated the date
of its authentication.
The terms and provisions contained in the Securities shall constitute,
and are hereby expressly made, a part of this Supplement and to the extent
applicable, the Company and the Trustee, by their execution and delivery of this
Supplement, expressly agree to such terms and provisions and to be bound
thereby. The Securities shall be issuable only in registered form without
coupons.
SECTION 2.2 Registrar and Agents.
The Company shall maintain an office or agency where Securities may be
presented for registration of transfer or for exchange ("Registrar"), an office
or agency where the Securities may be presented for payment ("Paying Agent"), an
office or agency where Securities may be presented for conversion ("Conversion
Agent") and an office or agency where notices and demands to or upon the Company
in respect of the Securities and this Supplement may be served. The Registrar
shall keep a register of the Securities (the "Security Register") and of their
transfer and exchange. The Company may have one or more co- registrars, one or
more additional Paying Agents and one or more additional Conversion Agents. The
Company or any Subsidiary may act as Paying Agent and/or Conversion Agent. The
term "Paying Agent" includes any additional paying agent and the term
"Conversion Agent" includes any additional conversion agent.
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<PAGE>
The Company may change any Paying Agent, Registrar, Conversion Agent or
Co-Registrar on sixty (60) days' prior written notice to the Trustee. The
Company shall notify the Trustee in writing of the name and address of any such
Agent. If the Company fails to maintain a Registrar, Paying Agent, Conversion
Agent or agent for service of notices and demands, or fails to give the
foregoing notice, the Trustee shall act as such.
The Company initially appoints the Trustee as Registrar, Paying Agent,
Conversion Agent and agent for service of notices and demands.
SECTION 2.3 Paying Agent to Hold Money in Trust.
On or before 11:00 a.m. (Boston time) on each due date of the principal
of, premium if any, and interest on any Securities, the Company shall deposit
with each Paying Agent a sum sufficient to pay such principal, premium, if any,
and interest so becoming due. The Company shall require each Paying Agent other
than the Trustee to agree in writing that it will hold in trust for the benefit
of Holders of the Securities or the Trustee all money held by the Paying Agent
for the payment of principal of, premium if any, or interest on the Securities
and to notify the Trustee of any default by the Company (or any other obligor on
the Securities) in making any such payment. If the Company or a Subsidiary acts
as Paying Agent, it shall on or before each due date of the principal of,
premium, if any, or interest on any Securities segregate the money and hold it
as a separate trust fund. The Company at any time may require a Paying Agent to
pay all money held by it to the Trustee and the Trustee may at any time during
the continuance of any payment default, upon written request to a Paying Agent,
require such Paying Agent to forthwith pay to the Trustee all sums so held in
trust by such Paying Agent. Upon doing so, the Paying Agent (if other than the
Company or a Subsidiary thereof) shall have no further liability for the money.
SECTION 2.4 Outstanding Securities.
Securities outstanding at any time are all Securities theretofore
authenticated and delivered under this Supplement except: (a) Securities
theretofore canceled by the Trustee or delivered to the Trustee for
cancellation; and (b) Securities in exchange for or in lieu of which other
Securities have been authenticated and delivered pursuant to this Supplement,
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<PAGE>
other than any Securities in respect of which there shall have been presented to
the Trustee proof satisfactory to it that such Securities are held by a bona
fide purchaser in whose hands such Securities are valid obligations of the
Issuer; provided, that in determining whether the Securityholders of the
requisite principal amount of outstanding Securities are present at a meeting of
Securityholders for quorum purposes or have voted or taken or concurred in any
action under this Supplement, including the making of any request, demand,
authorization, direction, notice, consent or waiver hereunder, Securities owned
by the Company or any other obligor upon the Securities or any Affiliate of the
Company or such other obligor shall be disregarded and deemed not outstanding,
except that, in determining whether the Trustee shall be protected in relying
upon any such determination as to the presence of a quorum or upon any such
request, demand, authorization, direction, notice, consent or waiver, only
Securities which a Trust Officer of the Trustee actually knows to be so owned
shall be disregarded.
If a Security is replaced pursuant to Section 306 of the Indenture, it
ceases to be outstanding until the Trustee receives proof satisfactory to it
that the replaced Security is held by a bona fide purchaser.
If the Paying Agent (other than the Company or a Subsidiary) holds on a
Redemption Date or maturity date money deposited with it by or on behalf of the
Company sufficient to pay the principal of, premium, if any, and accrued
interest on Securities payable on that date, then on and after that date such
Securities cease to be outstanding and interest on them ceases to accrue.
A Security does not cease to be outstanding because the Company or an
Affiliate holds the Security.
SECTION 2.5 Securityholder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Securityholders. If the Trustee is not the Registrar, the Registrar shall
furnish to the Trustee at least seven Business Days prior to each semiannual
interest payment date and at such other times as the Trustee may reasonably
request in writing a list in such form and as of such date as the Trustee may
require of the names and addresses of Securityholders upon which the Trustee may
conclusively rely. The Trustee may destroy any such list upon receipt of a
replacement list. The Paying Agent will solicit from each Securityholder a
certification of social security number or taxpayer identification number in
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<PAGE>
accordance with its customary practice and as required by law, unless the Paying
Agent is in possession of such certification. Each Paying Agent is authorized to
impose back-up withholding with respect to payments to be made to
Securityholders to the extent required by law.
SECTION 2.6 CUSIP Number.
The Company shall use a "CUSIP" number when issuing the Securities. The
Trustee may use the CUSIP number in notices of redemption or exchange as a
convenience to Securityholders; provided that any such notice may state that no
representation is made as to the correctness or accuracy of the CUSIP number
printed in the notice or on the Securities and that reliance may be placed only
on the other identification numbers printed on the Securities.
SECTION 2.7 Restrictions on Transfer.
The Securities shall be subject to certain restrictions on transfer,
set forth in Section 24 of the form of Security attached hereto as Exhibit A.
The Security shall bear a legend substantially to the following effect:
IF NECESSARY TO EFFECT COMPLIANCE BY THE COMPANY WITH THE
REQUIREMENTS OF THE INTERNAL REVENUE CODE 1986, AS AMENDED,
RELATING TO REAL ESTATE INVESTMENT TRUSTS, OWNERSHIP OF THE
SECURITY REPRESENTED HEREBY MAY BE RESTRICTED BY THE COMPANY
AND/OR THE TRANSFER HEREOF MAY BE PROHIBITED, AS SET FORTH
MORE FULLY ON THE REVERSE HEREOF.
ARTICLE 3
REDEMPTION
SECTION 3.1 Effect of Notice of Redemption.
The Securities are subject to redemption as provided in Section 3 of
the form of Security attached hereto as Exhibit A. Once notice of redemption is
mailed, Securities called for redemption become due and payable on the
applicable Redemption Date and at the applicable Redemption Price. Upon
surrender to the Paying Agent, such Securities shall be paid at the Redemption
Price, plus accrued interest to the Redemption Date.
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ARTICLE 4
COVENANTS
SECTION 4.1 Payment of the Securities.
Section 1001 of the Indenture is hereby amended by adding thereto the
following:
The Company shall pay interest on overdue principal and premium, if
any, at the rate borne by the Security; it shall pay interest, including
post-petition interest in the event of a proceeding under any Bankruptcy Law, on
overdue installments of interest at the same rate to the extent lawful.
SECTION 4.2 Notice of Default.
Article Ten of the Indenture is hereby amended by adding thereto the
following:
SECTION 1009. Notice of Default. The Company will, so long as any
Securities are outstanding, deliver to the Trustee, within 10 days of becoming
aware of any Default or Event of Default in the performance of any covenant,
agreement or condition in this Indenture, an Officers' Certificate specifying
such Default or Event of Default, the period of existence thereof and what
action the Company is taking or proposes to take with respect thereto.
SECTION 4.3 Limitation on Dividends and Other Distributions.
Article Ten of the Indenture is hereby amended by adding thereto the
following:
SECTION 1010. Limitation on Dividends and Other Distributions. The
Company will not (i) declare or pay any dividend of make any distribution on its
shares of Common Shares or to holders of Common Shares (other than dividends or
distributions payable in Common Shares or other than as the Company determines
in good faith is necessary to maintain its qualification as a real estate
investment trust under the Code) or (ii) purchase, redeem or otherwise acquire
or retire for value any of its Common Shares, if at the time of such action an
Event of Default has occurred and is continuing or would exist immediately after
such action. Notwithstanding the foregoing, the provisions of this Section 1010
will not prevent (i) the payment of any dividend within 60 days after the date
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of declaration when the payment would have complied with the foregoing provision
on the date of declaration, or (ii) the Company's retirement of any of its
Common Shares by exchange for, or out of the proceeds of the substantially
concurrent sale of, other Common Shares.
ARTICLE 5
RESERVED
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.1 Events of Default.
(a) Solely for purposes of this Supplement, Section 501 of the
Indenture is hereby amended by deleting paragraphs (1) and (2) thereof and
replacing said paragraphs in their entirety with the following:
(1) default in the payment of any installment interest upon
any Security or any 7.25% Debenture or any installment of interest upon
or any Additional Amounts payable in respect of any Series B Debenture
or of any coupon appertaining thereto, when such interest, Additional
Amounts or coupon becomes due and payable, and continuance of such
default for a period of 30 days; or
(2) default in the payment of the principal of (or premium, if
any, on) any Security or any 7.25% Debenture or any Series B Debenture
when it becomes due and payable at its Maturity; or
(b) Solely for purposes of this Supplement, Section 501 of the
Indenture is hereby amended by deleting paragraph (3) thereof.
(c) Solely for purposes of this Supplement, Section 501 of the
Indenture is hereby amended by deleting paragraph (8) thereof and replacing it
with the following:
(8) the failure by the Company to perform any conversion of
the Securities or any 7.25% Debenture or the Series B Debentures and
the continuance of such failure for a period of 60 days;
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SECTION 6.2 Rights of Holders to Receive Payment.
Section 508 of the Indenture is hereby amended to add thereto the
following:
Notwithstanding any other provision of this Indenture, the right of any
Holder of any Security to convert such Security or to bring suit for the
enforcement of such right shall not be impaired or affected without the written
consent of the Holder.
ARTICLE 7
TRUSTEE
SECTION 7.1 Duties of Trustee.
Article Six of the Indenture is hereby amended by adding thereto the
following:
SECTION 612. Duties of Trustee.
(1) The duties and responsibilities of the Trustee shall be as provided
by the TIA. If an Event of Default has occurred and is continuing, the Trustee
shall exercise its rights and powers vested in it by this Indenture and use the
same degree of care and skill in their exercise as a prudent Person would
exercise or use under the circumstances in the conduct of his own affairs.
(2) Except during the continuance of an Event of Default and after the
curing or waiving of all such Events of Default which may have occurred:
(a) The Trustee need perform only those duties that are
specifically set forth in this Indenture, and the Trustee shall not be
liable except for the performance of such duties as are specifically
set forth in this Indenture, and no others, and no implied covenants or
obligation shall be read into this Indenture against the Trustee.
(b) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any statements
certificates or opinions furnished to the Trustee and conforming to the
requirements of this Indenture. The Trustee, however, shall examine the
certificates and opinions to determine whether or not they conform to
the requirements of this Indenture.
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(3) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(a) This paragraph does not limit the effect of paragraph (2)
of this Section 612.
(b) The Trustee shall not be liable for any error in judgment
made in good faith by a Trust Officer, unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts.
(c) The Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 512.
(d) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder or in the
exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to
it.
(4) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (1), (2), (3), (5) and (6) of this Section 612
and subject to Sections 315 and 316 of the TIA.
(5) Subject to subsection (3), the Trustee may refuse to perform any
duty or exercise any right or power unless, subject to the provisions of the
TIA, it receives indemnity satisfactory to it against any loss, liability,
expense or fee.
(6) The Trustee shall not be liable for interest on any money received
by it. Money held in trust by the Trustee need not be segregated from other
funds except to the extent required by law.
SECTION 7.2 Eligibility; Disqualification.
Section 607 of the Indenture is hereby amended by adding thereto the
following:
The Trustee shall comply with TIA ss. 310(b), including the optional
provision permitted by the second sentence of TIA ss. 310(b)(9).
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SECTION 7.3 Preferential Collection of Claims Against Company.
The Trustee is subject to TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A Trustee who has resigned or been
removed shall be subject to TIA ss. 311(a) to the extent indicated therein.
ARTICLE 8
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 8.1 Defeasance of the Securities.
The provisions for defeasance of the Securities under Section 1402 of
the Indenture and for covenant defeasance of the Securities under Section 1403
of the Indenture and all related provisions of Article 14 of the Indenture shall
apply with respect to the Securities.
ARTICLE 9
AMENDMENTS AND WAIVERS
SECTION 9.1 Amendments and Waivers with Consent of Holders.
Section 902 of the Indenture is hereby amended to add thereto the
following:
With the written consent of the Holders of not less than a majority in
aggregate principal amount of the Securities at the time outstanding, the
Company, when authorized by Board Resolution, and the Trustee may amend or
supplement this Indenture (any such amendment or supplement to be in a form
satisfactory to the Trustee) or the Securities for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Indenture or of any supplemental indenture or of modifying in any manner
the rights of the Holders of the Securities. The Holders of a majority in
principal amount of the Securities then outstanding may waive compliance in a
particular instance by the Company with any provision of this Indenture or the
Securities without notice to any Securityholder. Subject to Section 904, without
the consent of each Holder of Securities affected, however, an amendment,
supplement or waiver, may not:
(1) make any change in Section 508 of this Indenture;
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(2) make any change that adversely affects the right to
convert any Security; or
(3) make any change in Article 11 of the First Supplemental
Indenture, dated as of October 7, 1996, which adversely affects the
rights of any Securityholder.
SECTION 9.2 Revocation and Effect of Consents.
Section 904 of the Indenture is hereby amended by adding thereto the
following:
Subject to this Indenture, each amendment, supplement or waiver
evidencing other action shall become effective in accordance with its terms.
Until an amendment, supplement or waiver becomes effective, a consent to it by a
Holder of a Security is a continuing consent by the Holder even if notation of
the consent is not made on any Security. Any such Holder or subsequent Holder,
however, may revoke the consent as to his Security or portion of a Security, if
the Trustee receives the notice of revocation before the date the amendment,
waiver or other action becomes effective.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver. If a record date is fixed, then notwithstanding the
provisions of the immediately preceding paragraph, those Persons who were
Holders at such record date (or their duly designated proxies) and only those
Persons, shall be entitled to consent to such amendment, supplement or waiver or
to revoke any consent previously given, whether or not such Persons continue to
be Holders after such record date. No consent shall be valid or effective for
more than 90 days after such record date unless consent from Holders of the
principal amount of Securities then outstanding required hereunder for such
amendment, supplement or waiver to be effective shall have also been given and
not revoked within such 90-day period.
After an amendment, waiver or other action becomes effective, pursuant
to Section 901 or 902, as the case may be, it shall bind every Holder of a
Security.
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ARTICLE 10
CONVERSION OF SECURITIES
SECTION 10.1 Right of Conversion; Conversion Price.
Subject to the provisions of Section 7 of the Securities, the Holder of
any Security or Securities shall have the right, at such Holder's option, at any
time before the close of business on October 1, 2003 (except that, with respect
to any Security or portion of a Security which shall be called for redemption,
such right shall terminate at the close of business on the second Business Day
preceding the Redemption Date fixed for redemption of such Security or portion
of a Security unless the Company shall default in payment due upon redemption
thereof), to convert, subject to the terms and provisions of this Article 10,
the principal of any such Security or Securities or any portion thereof which is
$1,000 principal amount or an integral multiple thereof into Common Shares
initially at the conversion price per share of $18.00 or, in case an adjustment
of such price has taken place pursuant to the provisions of Section 10.4, then
at the price as last adjusted (such price or adjusted price being referred to
herein as the "conversion price"), upon surrender of the Security or Securities,
the principal of which is so to be converted, accompanied by written notice of
conversion duly executed, to the Company, at any time during usual business
hours at the office or agency maintained by it for such purpose, and, if so
required by the Conversion Agent or Registrar, accompanied by a written
instrument or instruments of transfer in form satisfactory to the Conversion
Agent or Registrar duly executed by the Holder or his duly authorized
representative in writing. For convenience, the conversion of any portion of the
principal of any Security or Securities into Common Shares is hereinafter
sometimes referred to as the conversion of such Security or Securities.
SECTION 10.2 Issuance of Shares on Conversion.
As promptly as practicable after the surrender, as herein provided, of
any Security or Securities for conversion, the Company shall deliver or cause to
be delivered at its said office or agency, to or upon the written order of the
Holder of the Security or Securities so surrendered, certificates representing
the number of fully paid and nonassessable Common Shares into which such
Security or Securities may be converted in accordance with the provisions of
this Article 10. Such conversion shall be deemed to have been made as of the
close of business on the date that such Security or Securities shall have been
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surrendered for conversion by delivery thereof with a written notice of
conversion duly executed, so that the rights of the Holder of such Security or
Securities as a Securityholder shall cease at such time and, subject to the
following provisions of this paragraph, the Person or Persons entitled to
receive the Common Shares upon conversion of such Security or Securities shall
be treated for all purposes as having become the record holder or holders of
such Common Shares at such time and such conversion shall be at the conversion
price in effect at such time; provided, however, that no such surrender on any
date when the stock transfer books of the Company shall be closed shall be
effective to constitute the Person or Persons entitled to receive the Common
Shares upon such conversion as the record holder or holders of such Common
Shares on such date, but such surrender shall be effective to constitute the
Person or Persons entitled to receive such Common Shares as the record holder or
holders thereof for all purposes at the close of business on the next succeeding
day on which such stock transfer books are open; and provided, further, that in
such event such conversion shall be at the conversion price in effect on the
date that such Security or Securities shall have been surrendered for conversion
by delivery thereof, as if the stock transfer books of the Company had not been
closed. The Company shall give or cause to be given to the Trustee written
notice whenever the stock transfer books of the Company shall be closed.
Upon Conversion of any Security which is converted in part only, the
Company shall execute and the Trustee shall authenticate and deliver to or on
the order of the Holder thereof, at the expense of the Company, a new Security
or Securities of authorized denominations in principal amount equal to the
unconverted portion of such Security.
SECTION 10.3 No Adjustment for Interest or Dividends.
No payment or adjustment in respect of interest on the Securities or
dividends on the Common Shares shall be made upon the conversion of any Security
or Securities; provided, however, that if a Security or any portion thereof
shall be converted subsequent to any regular record date and on or prior to the
next succeeding interest payment date, the interest falling due on such interest
payment date shall be payable on such interest payment date notwithstanding such
conversion, and such interest (whether or not punctually paid or duly provided
for) shall be paid to the Person in whose name such Security is registered at
the close of business on such regular record date and Securities surrendered for
conversion during the period from the close of business on any regular record
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date to the opening of business on the corresponding interest payment date must
be accompanied by payment of an amount equal to the interest payable on such
interest payment date, unless such interest payment date is October 1, 1999, in
which case such payment in respect of interest is not required to accompany any
such Security.
SECTION 10.4 Adjustment of Conversion Price.
(1) In case the Company shall pay or make a dividend or other
distribution on any class of Capital Stock of the Company in Common Shares, the
conversion price in effect at the opening of business on the day following the
date fixed for the determination of shareholders entitled to receive such
dividend or other distribution shall be reduced so that the same shall equal the
price determined by multiplying such conversion price by a fraction of which the
numerator shall be the number of Common Shares outstanding at the close of
business on the date fixed for such determination and the denominator shall be
the sum of such number of shares and the total number of shares constituting
such dividend or other distribution, such adjustment to become effective
immediately after the opening of business on the day following the date fixed
for such determination and in the event that such dividend or other distribution
is not so made, or is made in part, the conversion price shall again be adjusted
to be the conversion price which would then be in effect (i) if such record date
has not been fixed or (ii) based on the actual number of shares actually issued,
as the case may be.
(2) In case at any time the Company shall (A) subdivide its outstanding
Common Shares into a greater number of shares, (B) combine its outstanding
Common Shares into a smaller number of shares, or (C) issue by reclassification
of its Common Shares (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing corporation) any
shares of Capital Stock, the conversion price in effect at the effective date of
such subdivision, combination or reclassification shall be proportionately
adjusted so that the holder of any Security surrendered for conversion after
such time shall be entitled to receive the aggregate number and kind of shares
which, if such Security had been converted immediately prior to such time, he
would have owned upon such conversion and been entitled to receive upon such
subdivision, combination or reclassification. Such adjustment shall become
effective immediately after the effective date of such subdivision, combination
or reclassification. Such adjustment shall be made successively whenever any
event listed above shall occur.
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(3) In case at any time the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of its Common Shares
entitling them to subscribe for or purchase Common Shares (or securities
convertible into Common Shares) at a price per share less than the current
market price per Common Share on such record date, the conversion price in
effect at the opening of business on the day following such record date shall be
reduced so that the same shall equal the price determined by multiplying such
conversion price by a fraction of which the numerator shall be the number of
Common Shares outstanding at the close of business on such record date plus the
number of Common Shares (or its equivalent) which the aggregate of the offering
price of the total number of shares so offered for subscription or purchase
would purchase at such current market price per Common Share and the denominator
shall be the number of Common Shares outstanding at the close of business on
such record date plus the number of Common Shares (or its equivalent) so offered
for subscription or purchase, such reduction to become effective immediately
after the opening of business on the day following such record date; provided,
however, that no adjustment to the conversion price shall be made pursuant to
this Section 10.4(3) if the holders of Securities receive, or are entitled to
receive upon conversion or otherwise, the same rights, options or warrants as
are issued to the holders of Common Shares, on the same terms and conditions as
such rights, options or warrants are so issued to the holders of Common Shares.
Such reduction shall be made successively whenever such a record date is fixed;
and in the event that such rights, options or warrants are not so issued, or are
issued in part, or are issued but all or part of which expire unexercised, the
conversion price shall again be adjusted to be the conversion price which would
then be in effect (i) if such record date had not been fixed or (ii) based on
the actual number of rights, options or warrants actually issued, as the case
may be.
(4) In case at any time the Company shall fix a record date for the
making of a distribution, by dividend or otherwise, to all holders of its Common
Shares, of shares of beneficial interest in Hospitality Properties Trust, a
Maryland real estate investment trust ("HPT"), then in each such case the
conversion price in effect after such record date shall be determined by
multiplying the conversion price in effect immediately prior to such record date
by a fraction, of which the numerator shall be the total number of outstanding
Common Shares multiplied by the current market price per Common Share on such
record date, less the fair market value (as determined by a Board Resolution,
whose determination shall be conclusive and described in a statement filed with
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the Trustee) of the shares of beneficial interest in HPT so to be distributed,
and of which the denominator shall be the total number of outstanding Common
Shares multiplied by such current market price per Common Share. Such adjustment
shall be made successively whenever such a record date is fixed and shall become
effective immediately after the record date for the determination of
stockholders entitled to receive the distribution; and in the event that such
distribution is not so made, the conversion price shall again be adjusted to be
the conversion price which would then be in effect if such record date has not
been fixed.
(5) For the purpose of any computation under paragraphs (3) and (4) for
this Section, the current market price per share of Common Stock on any date
shall be deemed to be the average of the Closing Prices for the 15 consecutive
Business Days selected by the Company commencing not more than 30 and not less
than 20 Business Days before the date in question.
(6) No adjustment in the conversion price shall be required unless such
adjustment (plus any adjustments not previously made by reason of this paragraph
(6)) would require an increase or decrease of at least 1% in such price;
provided, however, that any adjustments which by reason of this paragraph (6)
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment. All calculations under this paragraph (6) shall be
made to the nearest cent.
(7) The Company may, but shall not be required to, make such reductions
in the conversion price, in addition to those required by paragraph (1), (2),
(3) and (4) of this Section 10.4 as the Company's Board of Directors considers
to be advisable in order to avoid or diminish any income tax to any holders of
shares of Common Stock resulting from any dividend or distribution of stock or
issuance of rights or warrants to purchase or subscribe for stock or from any
event treated as such for income tax purposes or for any other reasons. The
Board of Directors shall have the power to resolve any ambiguity or correct any
error in the adjustments made pursuant to this Section 10.4 and its actions in
so doing shall be final and conclusive.
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(8) The adjustments provided for in this Section 10.4 shall be made
successively whenever any event listed above shall occur.
SECTION 10.5 Notice of Adjustment of Conversion Price.
Whenever the conversion price for the Securities is adjusted as herein
provided:
(1) the Company shall compute the adjusted conversion price in
accordance with Section 10.4 and shall prepare an Officers' Certificate
setting forth the adjusted conversion price and showing in reasonable
detail the facts upon which such adjustment is based and the
computation thereof, and such certificate shall forthwith be filed at
each office or agency maintained for the purpose of conversion of the
Securities pursuant to Section 2.4 and with the Trustee; and
(2) a notice stating that the conversion price has been
adjusted and setting forth the adjusted conversion price shall as soon
as practicable be mailed by the Company to all Holders of the
Securities at their last addresses as they shall appear in the Security
Register.
(3) If the conversion price is adjusted and the Company fails
to file an Officers' Certificate with the Trustee as provided by
Section 10.5(1) and the Trustee is acting as the Conversion Agent, the
Trustee shall be entitled to rely conclusively on the conversion price
set forth in the Officer's Certificate most recently received by the
Trustee (or as set forth in the Securities and this Indenture if the
conversion price shall not have been adjusted).
SECTION 10.6 Notice of Certain Corporate Action.
(1) In case:
(a) the Company shall authorize the granting to holders of its
Common Shares of rights or warrants entitling them to subscribe for or
purchase any shares of Capital Stock of any class or of any other
rights; or
(b) of any reclassification of the Common Shares of the
Company, or of any distribution of any assets of the Company to the
holders of its Common Shares, or of any consolidation or merger to
which the Company is a party and for which approval of any shareholders
of the Company is required, or of the sale or transfer of all or
substantially all of the assets of the Company; or
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(c) of the voluntary or involuntary dissolution, liquidation
or winding up of the Company;
then the Company shall cause to be filed at each office or agency maintained for
the purpose of conversion of the Securities pursuant to Section 2.2 and shall
cause to be mailed to the Trustee and all Holders of the Securities at their
last addresses as they shall appear in the Security Register, at least 20 days
(or 10 days in any case specified in clause (a) or (b) above) prior to the
applicable record date hereinafter specified, a notice stating (x) the date on
which a record is to be taken for the purpose of such dividend, distribution,
rights or warrants, or, if a record is not to be taken, the date as of which the
Holders of Common Shares of record to be entitled to such dividend,
distribution, rights or warrants are to be determined, or (y) the date on which
such reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding up is expected to become effective, and the date as of
which it is expected that holders of Common Shares of record shall be entitled
to exchange their Common Shares for securities, cash or other property
deliverable upon such reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding up. Such notice shall also state whether
such transaction will result in any adjustment in the conversion price
applicable to the Securities and, if so, shall state what the adjusted
conversion price will be and when it will become effective. Neither the failure
to give the notice required by this Section, nor any defect therein, to any
particular Holder shall affect the sufficiency of the notice or the legality or
validity of any such dividend, distribution, right, warrant, reclassification,
consolidation, merger, sale, transfer, liquidation, dissolution or winding-up,
or the vote on any action authorizing such with respect to the other holders.
(2) In case the Company or any Affiliate of the Company shall propose
to engage in a "Rule 13e-3 Transaction" as defined in the Commission's Rule
13e-3 under the Exchange Act, the Company shall, no later than the date on which
any information with respect to such Rule 13e-3 Transaction is first required to
be given to the Commission or any other Person pursuant to such Rule 13e-3,
cause to be mailed to all Holders at their last addresses as they shall appear
in the Security Register, a copy of all information required to be given to the
holders of the Company's Capital Stock pursuant to such Rule 13e-3. The
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information required to be given under this paragraph shall be in addition to
and not in lieu of any other information required to be given by the Company
pursuant to this Section 10.6 or any other provision of the Securities or this
Indenture.
SECTION 10.7 Taxes on Conversions.
The Company will pay any and all stamp or similar taxes that may be
payable in respect of the issuance or delivery of Common Shares on conversion of
the Securities pursuant hereto. The Company shall not, however, be required to
pay any tax which may be payable in respect of any transfer involved in the
issuance and delivery of Common Shares in a name other than that of the Holder
of the Security or Securities to be converted, and no such issuance or delivery
shall be made unless and until the Person requesting such issuance has paid to
the Company the amount of any such tax, or has established to the satisfaction
of the Company that such tax has been paid.
SECTION 10.8 Fractional Shares.
No fractional shares or scrip representing fractional shares shall be
issued upon any conversion of the Securities. If any such conversion would
otherwise require the issuance of a fractional share an amount equal to such
fraction multiplied by the current market price per Common Share (determined as
provided in paragraph (5) of Section 10.4) on the day of conversion shall be
paid to the Holder in cash by the Company.
SECTION 10.9 Cancellation of Converted Securities.
All Securities delivered for conversion shall be delivered to the
Trustee or the Conversion Agent to be canceled by or at the direction of the
Trustee or the Conversion Agent, which shall dispose of the same as provided in
Section 309 of the Indenture.
SECTION 10.10 Provisions in Case of Consolidation, Merger or Sale of Assets.
(1) In case of any consolidation of the Company with, or merger of the
Company into, any Person, or in case of any merger of another Person into the
Company (other than a consolidation or merger which does not result in any
reclassification, conversion, exchange or cancellation of outstanding Common
Shares), or in case of any sale or transfer of all or substantially all of the
assets of the Company, the Person formed by such consolidation or resulting from
such merger or which acquires such assets, as the case may be, shall execute and
deliver to the Trustee a supplemental indenture providing that the Holder of
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each Security then outstanding shall have the right thereafter, during the
period such Security shall be convertible as specified in Section 10.1 to
convert such Security only into the kind and amount of securities, cash and
other property receivable upon such consolidation, merger, sale or transfer by a
holder of the number of Common Shares into which such Security might have been
converted immediately prior to such consolidation, merger, sale or transfer.
Such supplemental indenture shall provide for adjustments which, for events
subsequent to the effective date of such supplemental indenture, shall be as
nearly equivalent as may be practicable to the adjustments provided for in this
Article 10. The above provisions of this Section 10.10 shall similarly apply to
successive consolidations, mergers, sales or transfers.
(2) The Trustee shall not be under any responsibility to determine the
correctness of any provisions contained in any such supplemental indenture
relating either to the kind or amount of shares of stock or securities or
property receivable by Holders upon the conversion of their Securities after any
such reclassification, change, consolidation, merger, sale or conveyance or to
any adjustment to be made with respect thereto.
SECTION 10.11 Disclaimer by Trustee of Responsibility for Certain Matters.
The Trustee and each Conversion Agent (other than the Company or any
Subsidiary) shall not at any time be under any duty or responsibility to any
Holder of the Securities to determine whether any facts exist which may require
any adjustment of the conversion price, how it should be calculated or what it
should be, or with respect to the nature or extent of any such adjustment when
made, or with respect to the method employed, or herein or in any supplemental
indenture provided to be employed, in making the same. The Trustee and each
Conversion Agent (other than the Company or any Subsidiary) shall not be
accountable with respect to the validity, value, kind or amount of any Common
Shares, or of any securities or property, which may at any time be issued or
delivered upon the conversion of any Security; and it makes no representation
with respect thereto. The Trustee and each Conversion Agent (other than the
Company or any Subsidiary) shall not be responsible for any failure of the
Company to issue, transfer or deliver any Common Shares or share certificates or
other securities or property upon the surrender of any Security for the purpose
of conversion or, subject to Section 7.1, to comply with any of the covenants of
the Company contained in this Article 10.
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SECTION 10.12 Covenant to Reserve Shares.
The Company covenants that it will at all times reserve and keep
available, free from preemptive rights, out of its authorized Common Shares,
solely for the purpose of issuance upon conversion of the Securities as herein
provided, such number of Common Shares as shall then be issuable upon the
conversion of all outstanding Securities. The Company covenants that all Common
Shares which shall be so issuable shall be, when issued, duly and validly issued
and fully paid and non-assessable. For purposes of this Section 10.12, the
number of Common Shares which shall be deliverable upon the conversion of all
outstanding Securities shall be computed as if at the time of computation all
outstanding Securities were held by a single holder.
ARTICLE 11
SUBORDINATION
SECTION 11.1 Securities Subordinated to Senior Indebtedness.
The Company and each Holder, by its acceptance of Securities, agree
that (a) the payment of the principal of and interest on the Securities and (b)
any other payment in respect of the Securities, including on account of the
acquisition or redemption of the Securities by the Company is subordinated, to
the extent and in the manner provided in this Article 11, to the prior payment
in full of all Senior Indebtedness of the Company, and all other Obligations in
respect thereof, whether outstanding at the date of this Supplement or
thereafter created, incurred, assumed or guaranteed, and that these
subordination provisions are for the benefit of the holders of Senior
Indebtedness.
This Article 11 shall constitute a continuing offer to all Persons who,
in reliance upon such provisions, become holders of, or continue to hold, Senior
Indebtedness, and such provisions are made for the benefit of the holders of
Senior Indebtedness, and such holders are made obligees hereunder and any one or
more of them may enforce such provisions.
To the extent any provision of this Article 11 conflicts or is
inconsistent with any other provision of the Indenture or this Supplement, the
provisions of this Article 11 shall govern and supersede such inconsistent or
conflicting provision.
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SECTION 11.2 No Payment on Securities in Certain Circumstances.
(a) No payment may be made by the Company on account of the principal
of, premium, if any, interest on the Securities, or to acquire or repurchase any
of the Securities for cash or property, or on account of the redemption
provisions of the Securities, in each case other than payments made with Junior
Securities of the Company, (i) upon the maturity of any Senior Indebtedness of
the Company by lapse of time, acceleration (unless waived) or otherwise, unless
and until all principal of, premium, if any, and interest on such Senior
Indebtedness and all other [Obligations] in respect thereof are first paid in
full (or such payment is duly provided for), or (ii) in the event of default in
the payment of any principal of, premium, if any, or interest on, or any other
Obligation in respect of, any Senior Indebtedness of the Company when it becomes
due and payable, whether at maturity or at a date fixed for prepayment or by
declaration or otherwise (a "Payment Default"), unless and until such Payment
Default has been cured or waived by the holders of such Senior Indebtedness or
otherwise has ceased to exist.
(b) Upon (i) the happening of an event of default (other than a Payment
Default) that permits the holders of any Senior Indebtedness or their
representative immediately to accelerate its maturity and (ii) either such event
of default shall be the subject of a judicial proceeding or written notice of
such event of default given to the Company by the requisite holders of such
Senior Indebtedness or their representative (a "Payment Notice"), then, unless
and until such event of default has been cured or waived by the requisite
holders of such Senior Indebtedness or otherwise has ceased to exist, no payment
(by set-off or otherwise) may be made by or on behalf of the Company on account
of the principal of, premium, if any, interest on the Securities, or to acquire
or repurchase any of the Securities for cash or property, or on account of the
redemption provisions of the Securities, in any such case other than payments
made with Junior Securities of the Company.
(c) In furtherance of the provisions of Section 11.1, in the event
that, notwithstanding the foregoing provisions of this Section 11.2, any payment
or distribution of assets of the Company (other than Junior Securities) shall be
received by the Trustee or the Holders or any Paying Agent at a time when such
payment or distribution is prohibited by the provisions of this Section 11.2,
then such payment or distribution shall be received and held in trust by the
Trustee or such Holders or Paying Agent (or, if the Company or any Affiliate of
the Company is acting as its own Paying Agent, money for any such payment or
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distribution shall be segregated or held in trust) for the benefit of the
holders of Senior Indebtedness of the Company, and shall be paid or delivered by
the Trustee or such Holders or such Paying Agent, as the case may be, to the
holders of Senior Indebtedness of the Company remaining unpaid or unprovided for
or their representative or representatives, or to the trustee or trustees under
any indenture pursuant to which any instruments evidencing any of such Senior
Indebtedness of the Company may have been issued, ratably according to the
aggregate amounts remaining unpaid on account of the Senior Indebtedness of the
Company held or represented by each, for application to the payment of all
Senior Indebtedness of the Company in full after giving effect to any concurrent
payment and distribution to the holders of such Senior Indebtedness, but only to
the extent that as to any holder of such Senior Indebtedness, as promptly as
practical following receipt by such holder of written notice from the Trustee to
the holders of such Senior Indebtedness that such prohibited payment has been
received by the Trustee, Holder(s) or Paying Agent (or has been segregated as
provided above), such holder (or a representative therefor) notifies the Trustee
in writing of the amounts then due and owing on such Senior Indebtedness, if
any, held by such holder and only the amounts specified in such notices to the
Trustee shall be paid to the holders of such Senior Indebtedness.
SECTION 11.3 Securities Subordinated to Prior Payment of All Senior Indebtedness
on Dissolution, Liquidation or Reorganization.
Upon any distribution of assets of the Company upon any dissolution,
winding up, total or partial liquidation or reorganization of the Company,
whether voluntary or involuntary, in bankruptcy, insolvency, receivership or a
similar proceeding or upon assignment for the benefit of creditors or any
marshalling of assets or liabilities:
(a) the holders of all Senior Indebtedness of the Company shall first
be entitled to receive payments in full (or have such payment duly provided for)
before the Holders are entitled to receive any payment on account of the
principal of, premium, if any, interest on, and Additional Amounts with respect
to, the Securities (other than Junior Securities);
(b) any payment or distribution of assets of the Company of any kind or
character, whether in cash, property or securities (other than Junior
Securities) to which the Holders or the Trustee on behalf of the Holders would
be entitled (by set-off or otherwise), except for the provisions of this Article
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11, shall be paid by the liquidating trustee or agent or other Person making
such a payment or distribution directly to the holders of Senior Indebtedness of
the Company or their representative to the extent necessary to make payment in
full of all such Senior Indebtedness remaining unpaid, after giving effect to
any concurrent payment or distribution to the holders of such Senior
Indebtedness; and
(c) in the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities (other than Junior Securities), shall be received by the
Trustee or the Holders or any Paying Agent (or, if the Company or any Affiliate
of the Company is acting as its own Paying Agent, money for any such payment or
distribution shall be segregated or held in trust) on account of the principal
of, premium, if any, interest on, or Additional Amounts with respect to, the
Securities before all Senior Indebtedness of the Company is paid in full, such
payment or distribution shall be received and held in trust by the Trustee or
such Holder or Paying Agent (or, if the Company or any Affiliate of the Company
is acting as its own Paying Agent, money for any such payment or distribution
shall be segregated or held in trust) for the benefit of the holders of such
Senior Indebtedness, or their respective representative, or the trustee or
trustees under any indenture pursuant to which any instruments evidencing any of
such Senior Indebtedness of the Company may have been issued, ratably according
to the respective amounts of such Senior Indebtedness held or represented by
each, to the extent necessary to make payment as provided herein of all such
Senior Indebtedness remaining unpaid after giving effect to all concurrent
payments and distributions and all provisions therefor to or for the holders of
such Senior Indebtedness, but only to the extent that as to any holder of such
Senior Indebtedness, as promptly as practical following receipt by such holder
of written notice from the Trustee to the holders of such Senior Indebtedness
that such prohibited payment has been received by the Trustee, Holder(s) or
Paying Agent (or has been segregated as provided above), such holder (or a
representative therefor) notifies the Trustee in writing of the amounts then due
and owing on such Senior Indebtedness, if any, held by such holder and only the
amounts specified in such notices to the Trustee shall be paid to the holders of
such Senior Indebtedness.
SECTION 11.4 Securityholders to Be Subrogated to Rights of Holders of Senior
Indebtedness.
Subject to the payment in full of all Senior Indebtedness of the
Company as provided herein, the Holders of Securities shall be subrogated to the
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rights of the holders of such Senior Indebtedness to receive payments or
distributions of assets of the Company applicable to the Senior Indebtedness
until all amounts owing on the Securities shall be paid in full, and for the
purpose of such subrogation no such payments or distributions to the holders of
such Senior Indebtedness by the Company, or by or on behalf of the Holders by
virtue of this Article 11, which otherwise would have been made to the Holders
shall, as between the Company and the Holders, be deemed to be payment by the
Company on account of such Senior Indebtedness, it being understood that the
provisions of this Article 11 are and are intended solely for the purpose of
defining the relative rights of the Holders, on the one hand, and the holders of
such Senior Indebtedness, on the other hand.
If any payment or distribution to which the Holders would otherwise
have been entitled but for the provisions of this Article 11 shall have been
applied, pursuant to the provisions of this Article 11, to the payment of
amounts payable under Senior Indebtedness of the Company, then the Holders shall
be entitled to receive from the holders of such Senior Indebtedness any payments
or distributions received by such holders of Senior Indebtedness in excess of
the amount sufficient to pay all amounts payable under or in respect of such
Senior Indebtedness in full.
SECTION 11.5 Obligations of the Company Unconditional.
Nothing contained in this Article 11 or elsewhere in this Supplement or
in the Securities is intended to or shall impair as between the Company and the
Holders, the obligation of each such Person, which is absolute and
unconditional, to pay to the Holders the principal of, premium, if any, interest
on, and Additional Amounts with respect to, the Securities as and when the same
shall become due and payable in accordance with their terms, or is intended to
or shall affect the relative rights of the Holders and creditors of the Company
other than the holders of the Senior Indebtedness, nor shall anything herein or
therein prevent the Trustee or any Holder from exercising all remedies otherwise
permitted by applicable law upon default under this Indenture, subject to the
rights, if any, under this Article 11, of the holders of Senior Indebtedness in
respect of cash, property or securities of the Company received upon the
exercise of any such remedy. Notwithstanding anything to the contrary in this
Article 11 or elsewhere in this Supplement or in the Securities, upon any
distribution of assets of the Company referred to in this Article 11, the
Trustee, subject to the provisions of Sections 602 and 612 of the Indenture, and
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the Holders shall be entitled to rely conclusively upon any order or decree made
by any court of competent jurisdiction in which such dissolution, winding up,
liquidation or reorganization proceedings are pending, or a certificate of the
liquidating trustee or agent or other Person making any distribution to the
Trustee or to the Holders for the purpose of ascertaining the Persons entitled
to participate in such distribution, the holders of the Senior Indebtedness and
other Indebtedness of the Company, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article 11 so long as such court has been apprised of the
provisions of, or the order, decree or certificate makes reference to, the
provisions of this Article 11. The Trustee shall be entitled to rely
conclusively on the delivery to it of a written notice by a person representing
himself to be a holder of Senior Indebtedness (or a trustee or representative on
behalf of such holder) to establish that such a notice has been given by a
holder of Senior Indebtedness (or a trustee or representative on behalf of such
holder). In the event that the Trustee determines, in good faith, that further
evidence is required with respect to the right of any person as a holder of
Senior Indebtedness to participate in any payment or distribution pursuant to
this Article 11, the Trustee may request such person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness
held by such person, as to the extent to which such person is entitled to
participate in such payment or distribution, and as to other facts pertinent to
the rights of such person under this Article 11, and if such evidence is not
furnished, the Trustee may defer any payment to such person pending judicial
determination as to the right of such person to receive such payment. Nothing in
this Article 11 shall apply to the claims of, or payments to, the Trustee under
or pursuant to Section 606 of the Indenture.
SECTION 11.6 Trustee Entitled to Assume Payments Not Prohibited in Absence of
Notice.
The Trustee or any Paying Agent (other than the Company acting as its
own Paying Agent) shall not at any time be charged with knowledge of the
existence of any facts which would prohibit the making of any payment to or by
the Trustee or such Paying Agent unless and until a Trust Officer of the Trustee
or such Paying Agent (other than the Company acting as its own Paying Agent), as
the case may be, shall have received, no later than one Business Day prior to
such payment, written notice thereof from the Company or from one or more
holders of Senior Indebtedness or from any representative therefor and, prior to
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the receipt of any such written notice, the Trustee, subject to the provisions
of Sections 602 and 612 of the Indenture, and such Paying Agent shall be
entitled in all respects conclusively to assume that no such fact exists.
SECTION 11.7 Application by Trustee of Assets Deposited with It.
Any deposit of assets with the Trustee or the Agent (whether or not in
trust) for the payment of principal of or interest on, or Additional Amounts
with respect to, any Securities shall be subject to the provisions of Sections
11.1, 11.2, 11.3 and 11.4; provided that, if prior to one Business Day preceding
the date on which by the terms of this Supplement any such assets may become
distributable for any purpose (including, without limitation, the payment of
either principal of or interest on any Security) the Trustee or a Paying Agent
shall not have received with respect to such assets the written notice provided
for in Section 11.6, then the Trustee or such Paying Agent shall have full power
and authority to receive such assets and to apply the same to the purpose for
which they were received, and shall not be affected by any notice to the
contrary which may be received by it on or after such date.
SECTION 11.8 Subordination Rights Not Impaired by Acts or Omissions of the
Company or Holders of Senior Indebtedness.
No right of any present or future holders of any Senior Indebtedness to
enforce subordination provisions contained in this Article 11 shall at any time
in any way be prejudiced or impaired by any act or failure to act on the part of
the Company or by any act or failure to act, in good faith, by any such holder,
or by any noncompliance by the Company with the terms of this Supplement,
regardless of any knowledge thereof which any such holder may have or be
otherwise charged with. The holders of Senior Indebtedness may extend, renew,
modify or amend the terms of the Senior Indebtedness or any security therefor
and release, sell or exchange such security and otherwise deal freely with the
Company, all without affecting the liabilities and obligations of the parties to
this Indenture or the Holders.
SECTION 11.9 Securityholders Authorize Trustee to Effectuate Subordination of
Securities.
Each Holder of the Securities by his acceptance thereof authorizes and
expressly directs the Trustee on his behalf to take such action as may be
necessary or appropriate to effectuate the subordination provisions contained in
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this Article 11 and to protect the rights of the Holders pursuant to this
Supplement, and appoints the Trustee its attorney-in-fact for such purpose,
including, in the event of any dissolution, winding up, liquidation or
reorganization of the Company (whether in bankruptcy, insolvency or receivership
proceedings or upon an assignment for the benefit of creditors of the Company),
the making of a timely filing of a claim for the unpaid balance of its
Securities in the form required in said proceedings and cause said claim to be
approved. If the Trustee does not file a proper claim or proof of debt in the
form required in such proceeding prior to 30 days before the expiration of the
time to file such claim or claims, then the holders of the Senior Indebtedness
or their representative are or is hereby authorized to have the right to file
and are or is hereby authorized to file an appropriate claim for and on behalf
of the Holders of said Securities. Nothing herein contained shall be deemed to
authorize the Trustee or the holders of Senior Indebtedness or their
representative to authorize or consent to or accept or adopt on behalf of any
Securityholder any plan of reorganization, arrangement, adjustment or
composition affecting the Securities or the rights of any Holder thereof, or to
authorize the Trustee or the holders of Senior Indebtedness or their
representative to vote in respect of the claim of any Securityholder in any such
proceeding.
SECTION 11.10 Right of Trustee to Hold Senior Indebtedness.
The Trustee shall be entitled to all of the rights set forth in this
Article 11 in respect of any Senior Indebtedness at any time held by it to the
same extent as any other holder of Senior Indebtedness, and nothing in this
Supplement shall be construed to deprive the Trustee of any of its rights as
such holder.
SECTION 11.11 Article 11 Not to Prevent Events of Default.
The failure to make a payment on account of principal of, premium, if
any, interest on, or Additional Amounts with respect to, the Securities by
reason of any provision of this Article 11 shall not be construed as preventing
the occurrence of a Default or an Event of Default under Section 501 of the
Indenture or in any way prevent the Holders or the Trustee from exercising any
right or remedy hereunder or at law or in equity other than the right to receive
payment on the Securities in accordance with the terms of this Article 11.
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SECTION 11.12 No Fiduciary Duty of Trustee to Holders of Senior Indebtedness.
The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness, and shall not be liable to any such holders
(other than for its willful misconduct or negligence) if it shall in good faith
mistakenly pay over or distribute to the Holders of Securities or the Company or
any other Person, cash, property or securities to which any holders of Senior
Indebtedness shall be entitled by virtue of this Article 11 or otherwise.
Nothing in this Section 11.12 shall affect the obligation of any other such
Person to hold such payment for the benefit of, and to pay such payment over to,
the holders of Senior Indebtedness or their representative in accordance with
the provisions hereof.
ARTICLE 12
MISCELLANEOUS
SECTION 12.1 Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or conflicts with
another provision which is required to be included in this Indenture by the TIA,
the required provisions shall control. The provisions of TIA Sections 310
through 317 that impose duties on any Person (including the provisions
automatically deemed included herein unless expressly excluded by this
Indenture) are a part of and govern this Indenture, whether or not physically
contained herein.
SECTION 12.2 Communications by Holders with Other Holders.
Securityholders may communicate pursuant to TIA ss. 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and anyone else shall have
the protection of TIA ss. 312(c).
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SECTION 12.3 Governing Law.
The laws of The Commonwealth of Massachusetts shall govern this
Supplement and the Securities without regard to principles of conflicts of law.
SECTION 12.4 No Adverse Interpretation of Other Agreements.
This Supplement may not be used to interpret another indenture, loan or
debt agreement of the Company or a Subsidiary. Any such indenture, loan or debt
agreement may not be used to interpret this Supplement.
SECTION 12.5 Successors.
All covenants and agreements of the Company in this Supplement and the
Securities shall bind its successors and assigns. All agreements of the Trustee
in this Indenture shall bind its successors and assigns.
SECTION 12.6 Multiple Counterparts.
The parties may sign multiple counterparts of this Supplement. Each
signed counterpart shall be deemed an original, but all of them together
represent the same agreement.
SECTION 12.7 Headings, etc.
The headings of the Articles and Sections of this Supplement have been
inserted for convenience of reference only, are not to be considered a part
hereof, and shall in no way modify or restrict any of the terms or provisions
hereof.
SECTION 12.8 Severability.
In case any provision in this Supplement or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby,
and a Holder shall have no claim therefor against any party hereto.
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IN WITNESS WHEREOF, the parties hereto have caused this Supplement to
be duly executed, all as of the date first written above.
HEALTH AND RETIREMENT PROPERTIES TRUST
a Maryland real estate investment trust
By: __________________________________
Name:
Title:
FLEET NATIONAL BANK,
as Trustee
By: __________________________________
Name:
Title:
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EXHIBIT A
Unless and until it is exchanged in whole or in part for Securities in
definitive form, this Security may not be transferred except as a whole by the
Depository to a nominee of the Depository or by a nominee of the Depository to
the Depository or another nominee of the Depository or by the Depository or any
such nominee to a successor Depository or a nominee of such successor
Depository. Unless this certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation (55 Water Street, New
York, New York) ("DTC"), to the issuer or its agent for registration of
transfer, exchange or payment, and any certificate issued is registered in the
name of Cede & Co. or such other name as may be requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or such other
entity as may be requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.1
IF NECESSARY TO EFFECT COMPLIANCE BY THE COMPANY WITH THE REQUIREMENTS OF THE
UNITED STATES INTERNAL REVENUE CODE OF 1986, AS AMENDED, RELATING TO REAL ESTATE
INVESTMENT TRUSTS, OWNERSHIP OF THE SECURITY REPRESENTED HEREBY MAY BE
RESTRICTED BY THE COMPANY AND/OR THE TRANSFER HEREOF MAY BE PROHIBITED, AS SET
FORTH MORE FULLY ON THE REVERSE HEREOF.
HEALTH AND RETIREMENT PROPERTIES TRUST
7.50% Convertible Subordinated Debenture Due 2003
Series A
HEALTH AND RETIREMENT PROPERTIES TRUST, a Maryland real estate
investment trust, promises to pay to
7.50% S P E C I M E N 7.50%
DUE 2003 DUE 2003
- --------
1 This paragraph should be included only if the Security is issued in global
form.
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or registered assigns, the principal sum of __________ Dollars, on October 1,
2003
Interest Payment Dates: April 1 and October 1
Record Dates: March 15 and September 15
Additional provisions of this Security are set forth on other side of this
Security.
Dated:
HEALTH AND RETIREMENT PROPERTIES TRUST SEAL
By:___________________________________
By:___________________________________
CERTIFICATE OF AUTHENTICATION FLEET NATIONAL BANK, as Trustee, certifies that
this is one of the Securities referred to in the within mentioned Indenture.
By:__________________________________
Authorized Signatory
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[FORM OF REVERSE OF SECURITY]
HEALTH AND RETIREMENT PROPERTIES TRUST
7.50% Convertible Subordinated Debenture Due 2003, Series A
1. Interest. Health and Retirement Properties Trust, a Maryland real
estate investment trust (the "Company"), promises to pay interest on the
principal amount of this Security at the rate per annum shown above. The Company
will pay interest semiannually on April 1 and October 1 of each year beginning
April 1, 1997. Interest on the Securities will accrue from the most recent date
to which interest has been paid or, if no interest has been paid, from October
1, 1996; provided that, if there is no existing Default in the payment of
interest, and if this Security is authenticated between a record date referred
to on the face hereof and the next succeeding interest payment date, interest
shall accrue from such interest payment date. Interest will be computed on the
basis of a 360 day year of twelve 30-day months.
2. Method of Payment. The Company will pay interest on the Securities
(except defaulted interest) to the persons who are the registered Holders of the
Securities at the close of business on the March 15 or September 15 next
preceding the interest payment date. Holders must surrender Securities to a
Paying Agent to collect principal and premium payments. The Company will pay
principal, premium and interest in money of the United States that at the time
of payment is legal tender for payment of public and private debts. The Company,
however, may pay principal, premium and interest by its check payable in such
money. It may mail an interest check to a Holder's registered address.
The payment of principal of and premium, if any, on this Security shall
be payable only upon surrender of this Security at the office or agency of the
Paying Agent in the City of Boston, Commonwealth of Massachusetts. Payments of
principal of, premium, if any, and interest on this Security shall be made at
the office or agency of the Trustee maintained in the Borough of Manhattan, City
and State of New York or the City of Boston, Commonwealth of Massachusetts, or,
in the case of any such payments other than the payment of principal and
premium, if any, at the Company's option, by check mailed to the Person entitled
thereto at such Person's address last appearing on the Company's register.
3. Registrar and Agents. Initially, Fleet National Bank will act as
Registrar, Paying Agent, Conversion Agent and agent for service of notices and
demands. The Company may change any Registrar, co-registrar, Paying Agent,
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Conversion Agent and agent for service of notices and demands on sixty days'
prior written notice to the Trustee. The Company or any of its Subsidiaries may
act as Paying Agent or Conversion Agent. The office of Fleet National Bank for
such purpose is One Federal Street, Boston, Massachusetts 02110, Attn: Corporate
Trust Department.
4. Indenture; Limitations. The Company issued the Securities under an
Indenture, dated as of September 20, 1996 (the "Basic Indenture"), between the
Company and Fleet National Bank (the "Trustee"), as supplemented by a First
Supplemental Indenture, dated as of October 7, 1996, (as used herein, the term
"Indenture" means the Basic Indenture together with the First Supplemental
Indenture). Capitalized terms herein are used as defined in the Indenture unless
otherwise defined herein. The terms of the Securities include those stated in
the Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939 (15 U.S. Code ss.ss. 77aaa-77bbbb) as in effect on the
date of the Indenture. The Securities are subject to all such terms, and the
Holders of the Securities are referred to the Indenture and said Act for a
statement of them.
The Securities are general unsecured obligations of the Company limited
to $86,250,000 principal amount. The Indenture imposes certain limitations on
the ability of the Company to, among other things, make payments in respect of
its Capital Stock, merge or consolidate with any other Person and sell, lease,
transfer or otherwise dispose of its properties or assets.
5. Optional Redemption by the Company. (a) The Company may, at its
option, redeem the Securities (i) at any time and from time to time, in whole or
in part, on and after October 1, 1999, or (ii) in whole or from time to time in
part, prior to October 1, 1999 as deemed necessary by the Board of Trustees of
the Company for the Company to continue to qualify as a real estate investment
trust ("REIT") under Sections 856 through 860 of the Internal Revenue Code of
1986, as amended.
(b) The Securities will be immediately redeemable by the Company to the
extent, but only to the extent, deemed necessary by the Board to prevent the
Holder of such Securities or any other person having an interest therein (if the
Securities were thereupon converted) from being deemed to beneficially own,
directly or indirectly, 8.5% in value or more of the Capital Stock of the
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Company. For purposes of determining a Person's beneficial ownership of Capital
Stock, the Securities beneficially owned by such Person will be deemed converted
and added to the Capital Stock beneficially owned by such Person for purposes of
determining whether such Person beneficially owns in excess of 8.5% in value of
the Capital Stock. For purposes of this paragraph, Capital Stock not owned
directly shall be deemed to be owned indirectly by a Holder if that Holder or a
group including that Holder would be the beneficial owner of such Capital Stock,
as defined as of May 1, 1995, in Rule 13d-3 promulgated by the United States
Securities and Exchange Commission under the Securities Exchange Act of 1934, as
amended, and/or would be considered to own such Capital Stock by reason of the
attribution rules of Section 544 or Section 856(h) of the Code.
(c) The redemption price pursuant to the foregoing clauses (a) and (b)
shall be equal to 100% of the principal amount thereof, plus accrued and unpaid
interest to the date fixed for redemption.
(d) The Company may at any time buy Securities on the open market at
prices which may be greater or less than the redemption prices set forth herein.
6. Notice of Redemption. Notice of redemption will be mailed at least
30 days but not more than 60 days before the Redemption Date to each Holder of
Securities to be redeemed at his registered address. Securities in denominations
larger than $1,000 principal amount may be redeemed in part, but only in whole
multiples thereof. On and after the Redemption Date interest ceases to accrue on
Securities or portions of them called for redemption.
7. Conversion. A Holder of a Security may convert such Security into
Common Shares of the Company after issuance and at any time before the close of
business on October 1, 2003. If the Security is called for redemption, the
Holder may convert it at any time before the close of business on the date fixed
for such redemption. The initial conversion price is $18.00 per share, subject
to adjustment in certain events. To determine the number of shares issuable upon
conversion of a Security, divide the principal amount to be converted by the
conversion price in effect on the conversion date. The Company will deliver a
check for any fractional share.
To convert a Security, a Holder must (1) complete and sign the
conversion notice on the back of the Security, (2) surrender the Security to the
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Conversion Agent, (3) furnish appropriate endorsements and transfer documents if
required by the Registrar or Conversion Agent and (4) pay any transfer or
similar tax if required. No payment or adjustment is to be made on conversion
for interest accrued hereon or for dividends on Common Shares issued on
conversion; provided, however, that if a Security is surrendered for conversion
after the record date for a payment of interest and on or before the interest
payment date, then, notwithstanding such conversion, the interest falling due to
such interest payment date will be paid to the Person in whose name the Security
is registered at the close of business on such record date and any Security
surrendered for conversion during the period from the close of business on any
regular record date to the opening of business on the corresponding interest
payment date must be accompanied by payment of an amount equal to the interest
payable on such interest payment date. A Holder may convert a portion of a
Security if the portion is $1,000 principal amount or an integral multiple
thereof.
If the Company is a party to a consolidation or merger or a transfer or
lease of all or substantially all of its assets, the right to convert a Security
into Common Shares may be changed into a right to convert it into securities,
cash or other assets of the Company or another Person.
8. Subordination. THIS SECURITY IS SUBORDINATED TO ALL SENIOR
INDEBTEDNESS OF THE COMPANY. TO THE EXTENT AND IN THE MANNER PROVIDED IN THE
INDENTURE, SENIOR INDEBTEDNESS MUST BE PAID BEFORE ANY PAYMENT MAY BE MADE TO
ANY HOLDERS OF SECURITIES. ANY SECURITYHOLDER BY ACCEPTING THIS SECURITY AGREES
TO SUCH SUBORDINATION AND AUTHORIZES THE TRUSTEE TO GIVE IT EFFECT.
In addition to all other rights of Senior Indebtedness described in the
Indenture, the Senior Indebtedness shall continue to be Senior Indebtedness and
entitled to the benefits of the subordination provisions irrespective of any
amendment, modification or waiver of any term of any instrument relating to the
Senior Indebtedness or extension or renewal of the Senior Indebtedness.
9. Denominations, Transfer, Exchange. The Securities are in registered
form without coupons in denominations of $1,000 principal amount and integral
multiples thereof. A Holder may register the transfer of or exchange Securities
in accordance with the Indenture. The Registrar may require a Holder, among
other things, to furnish appropriate endorsements and transfer documents and to
pay any taxes and fees required by law or permitted by the Indenture. The
Registrar need not register the transfer of or exchange any Securities selected
for redemption or register the transfer of or exchange any Securities for a
period of 15 days before a selection of Securities to be redeemed.
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10. Persons Deemed Owners. The registered Holder of a Security may be
treated as its owner for all purposes.
11. Unclaimed Money. If money for the payment of principal or interest
on any Securities remains unclaimed for two years, the Trustee and the Paying
Agent will pay the money back to the Company at its written request. After that,
Holders may look only to the Company for payment.
12. Discharge Prior to Redemption or Maturity. The Indenture will be
discharged and canceled except for certain sections thereof upon payment of all
the Securities, or upon the irrevocable deposit with the Trustee of funds or
Government Obligations maturing on or before such payment date or Redemption
Date, sufficient to pay principal, premium, if any, and interest on such payment
or redemption.
13. Amendment and Waiver. Subject to certain exceptions, without notice
to the Holders of the Securities, the Indenture or the Securities may be amended
with the consent of the Holders of at least a majority in principal amount of
the Securities then outstanding and any existing default or compliance with any
provision may be waived with the consent of the Holders of a majority in
principal amount of the Securities then outstanding. Without the consent of or
notice to any Securityholder, the Company may amend or supplement the Indenture
or the Securities to, among other things, provide for uncertificated Securities,
to cure any ambiguity, defect or inconsistency or make any other change that
does not adversely affect the rights of any Securityholder.
14. Successors. When a successor assumes all the obligations of its
predecessor under the Securities and the Indenture, the predecessor will be
released from those obligations.
15. Defaults and Remedies. If an Event of Default, as defined in the
Indenture (other than a Event of Default relating to bankruptcy of the Company),
occurs and is continuing, the Trustee or the Holders of a majority in principal
amount of Securities may declare all the Securities to be due and payable
immediately in the manner and with the effect provided in the Indenture. If an
Event of Default relating to bankruptcy of the Company occurs, then all
Securities shall become immediately due and payable without any declaration or
act on the part of the Trustee or any Holder. Holders of Securities may not
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enforce the Indenture or the Securities except as provided in the Indenture. The
Trustee may require indemnity satisfactory to it, subject to the provisions of
the TIA, before it enforces the Indenture or the Securities. Subject to certain
limitations, Holders of a majority in principal amount of the Securities then
outstanding may direct the Trustee in its exercise of any trust or power. The
Trustee may withhold from Holders of Securities notice of any continuing default
(except a default in payment of principal or interest) if it determines that
withholding notice is in their interests. The Company is required to file
periodic reports with the Trustee as to the absence of any Default or Event of
Default.
16. Trustee Dealings with the Company. Fleet National Bank, the Trustee
under the Indenture, in its individual or any other capacity, may make loans to,
accept deposits from, and perform services for the Company or its Affiliates,
and may otherwise deal with the Company or its Affiliates, as if it were not
Trustee.
17. No Personal Liability. THE AMENDED AND RESTATED DECLARATION OF
TRUST OF THE COMPANY, DATED JULY 1, 1994, 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 COMPANY
SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY
OBLIGATION OF, OR CLAIM AGAINST, THE COMPANY. ALL PERSONS DEALING WITH THE
COMPANY, IN ANY WAY, SHALL LOOK ONLY TO THE ASSETS OF THE COMPANY FOR THE
PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION.
18. Authentication. This Security shall not be valid until the Trustee
signs the certificate of authentication on the other side of this Security.
19. Status as United States Real Property Holding Corporation. To the
best of its knowledge, as of the date of the issuance of this Security, the
Company is not a "United States real property holding corporation" as defined in
Section 897(c)(2) of the United States Internal Revenue Code of 1986, as amended
(the "Code"). A non-United States person disposing of this Security may request
from the Company a statement as to whether this Security constitutes a "United
States real property interest" (as defined in Code Section 897(c)(1)) as of the
date of disposition. It may be necessary to obtain a statement that this
A-8
<PAGE>
Security does not constitute a "United States real property interest" prior to
the time that a tax return would otherwise be required to be filed with the
United States Internal Revenue Service with respect to such disposition in order
to avoid a withholding tax on such disposition. If, at any time while this
Security is outstanding, the Company determines that it is at such time a
"United States real property holding corporation", it shall provide notice of
such determination in accordance with the provisions of Section 13 hereof. The
Holder of this Security can contact the Company at 400 Centre Street, Newton,
Massachusetts 02158 to obtain information as to the United States income tax
consequences of the classification of the Company as a "United States real
property holding corporation."
20. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company will cause
CUSIP numbers to be printed on the Securities as a convenience to the Holders of
the Securities. No representation is made as to the accuracy of such numbers as
printed on the Securities and reliance may be placed only on the other
identification numbers printed hereon.
21. Accounting Terms. All accounting terms not otherwise defined herein
shall have the meanings assigned to them in accordance with generally accepted
accounting principles as applied in the United States.
A-9
<PAGE>
22. Descriptive Headings. The descriptive headings appearing herein are
for convenience of reference only and shall not alter, limit or define the
provisions hereof.
23. Abbreviations. Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as: TEN COM (=tenants in common), TEN ENT
(=tenants by the entireties), JT TEN (=joint tenants with rights of survivorship
and not as tenants in common), CUST (=Custodian), and U/G/M/A (=Uniform Gifts to
Minors Act).
24. Limitations on certain Holders. This Security may not be
transferred (by sale, transfer, gift, assignment, devise or other disposition,
whether voluntarily or involuntarily, whether beneficially or of record, and
whether effected constructively, by operation of law or otherwise) to any Person
if, as a result of such transfer, the Holder hereof or any other Person having
an interest in this Security (other than an Excepted Person, as defined in the
Company's Amended and Restated Declaration of Trust, as amended), would, if this
Security were fully converted, own or be deemed to own, directly or indirectly,
capital stock of the Company representing 8.5% or more in value of the total
capital stock of the Company outstanding (determined in accordance with the
provisions of paragraph (b) of Section 3 above). ANY TRANSFER IN VIOLATION OF
THIS SECTION 24 NEED NOT BE RECOGNIZED BY THE COMPANY, THE TRUSTEE OR ANY AGENT
(AS DEFINED IN THE INDENTURE), AND ANY PERSON WHO, NOTWITHSTANDING THE
FOREGOING, WOULD, IF THIS SECURITY WERE FULLY CONVERTED, OWN OR BE DEEMED TO
OWN, DIRECTLY OR INDIRECTLY, CAPITAL STOCK OF THE COMPANY REPRESENTING 8.5% OR
MORE IN VALUE OF THE TOTAL CAPITAL STOCK OF THE COMPANY OUTSTANDING (DETERMINED
IN ACCORDANCE WITH THE PROVISIONS OF PARAGRAPH (B) OF SECTION 3 ABOVE) SHALL, TO
THE EXTENT OF SUCH EXCESS, NOT BE ENTITLED TO CONVERT THIS SECURITY AS OTHERWISE
PROVIDED HEREIN AND IN THE INDENTURE.
The Company will furnish to any Securityholder upon written request and
without charge a copy for the Indenture. It also will furnish the text of this
Security in larger type. Requests may be made to: Health and Retirement
Properties Trust, 400 Centre Street, Newton, Massachusetts 02158. Attention:
President.
A-10
<PAGE>
TRANSFER NOTICE
If you the Holder wants to assign this Security, fill in the form below and have
your signature guaranteed:
For value received, I or we assign and transfer this Security to
(INSERT ASSIGNEE'S SOCIAL SECURITY OR
TAX IDENTIFICATION NUMBER)
------------------------------------------------
------------------------------------------------
................................................................
................................................................
................................................................
................................................................
(Print or type assignee's name, address and zip code)
...........................................................agent
to transfer this Security on the books of the Company. The
agent may substitute another to act for him.
Date:...........................................................
Your signature:.................................................
(Sign exactly as your name appears on the other
side of this Security)
Signature Guarantee*:...........................................
*Signature must be guaranteed by an eligible guarantor institution within the
meaning of Securities and Exchange Commission Rule 17Ad-15 (including banks,
stock brokers, savings and loan associations, national securities exchanges,
registered securities associations, clearing agencies and credit unions) with
membership or participation in an approved signature guarantee medallion program
if this Security is to be delivered other than to and in the name of the
registered holder.
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<PAGE>
CONVERSION NOTICE
To convert this Security into common shares of beneficial interest, $.01 par
value per share, of the Company, check the box:
-------
-------
To convert only part of this Security, state the principal amount to be
converted (which must be a minimum of $1,000 or any multiple thereof):
------------------------------------------------
$
------------------------------------------------
If you want the Security certificate, if any, made out in another person's name,
fill in the form below:
(INSERT OTHER PERSON'S SOCIAL SECURITY OR
TAX IDENTIFICATION NUMBER)
------------------------------------------------
------------------------------------------------
................................................................
................................................................
................................................................
................................................................
(Print or type assignee's name, address and zip code)
By submitting this certificate, you hereby certify to the Company that, after
giving effect to the conversion specified herein, you will not own or be deemed
to own, directly or indirectly, shares of beneficial interest in the Company
which, together with shares of beneficial interest issuable upon conversion of
any other Securities owned directly or indirectly by you, represents 8.5% or
more in value of the total shares of beneficial interest of the Company
outstanding (determined in accordance with the provisions of paragraph (b) of
Section 5 of this Security).
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<PAGE>
Date:...........................................................
Your Signature:.................................................
(Sign exactly as your name appears on the other side of this
Security)
Signature Guaranteed By:
Note: Signature must be guaranteed
by a member firm of the New York
Stock Exchange or a commercial
bank or trust company.
A-13
EXHIBIT 4.2
THIRD SUPPLEMENTAL INDENTURE
Dated as of October 7, 1996
to
INDENTURE
Dated as of September 20, 1996
between
HEALTH AND RETIREMENT PROPERTIES TRUST
and
FLEET NATIONAL BANK
as Trustee
--------------------------
7.25% Convertible Subordinated Debentures
Due 2001
--------------------------
<PAGE>
THIRD SUPPLEMENTAL INDENTURE
THIRD SUPPLEMENTAL INDENTURE, dated as of October 7, 1996
(this "Supplement"), between Health and Retirement Properties Trust, a Maryland
real estate investment trust (the "Company"), and Fleet National Bank, a United
States Bank, as trustee (the "Trustee"), to that certain Indenture, dated as of
September 20, 1996, between the Company and the Trustee (the "Indenture").
WHEREAS, the parties hereto have entered into the Indenture
which provides for the issuance by the Company of the individual series of
securities thereunder, upon the Company and Trustee entering into a supplemental
indenture to the Indenture authorizing such series; and
WHEREAS, the Company wishes to issue its first series of
securities thereunder, designated its 7.25% Convertible Subordinated Debentures
Due 2001, (the "Securities"); and
WHEREAS, all acts necessary to constitute this First
Supplemental Indenture as a valid, binding and legal obligation of the Company
have been done and performed.
NOW, THEREFORE, witnesseth that, in consideration of the
premises and of the covenants contained herein, it is hereby agreed as follows:
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1 Definitions.
Solely for purposes of this Supplement, Section 101 of the Indenture is
hereby amended by inserting, in their appropriate alphabetical locations, each
of the following defined terms:
"Agent" means any Registrar, Paying Agent, Conversion Agent,
co-registrar or agent for service of notices and demands.
"Capital Stock" means any and all shares or other equivalents (however
designated) of capital stock, including all common stock and all preferred
stock, in the case of corporation, or partnership interests or other equivalents
(however designated) in the case of a partnership or common shares of beneficial
interest or other equivalents (however designated) in the case of a trust.
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<PAGE>
"Closing Price" means with respect to the shares of Capital Stock of
the Company on any day, (i) the reported last sale price regular way or, in case
no such reported sale takes place on such day, the average of the reported
closing bid and asked prices regular way, in either case on the New York Stock
Exchange, or (ii) if the shares of Capital Stock are not listed or admitted to
trading on the New York Stock Exchange, the reported last sale price regular way
or, in case no such reported sale takes place on such day, the average of the
reported closing bid and asked prices regular way, in either case on the
principal national securities exchange on which the shares of Capital Stock are
listed or admitted to trading, or (iii) if the shares of Capital Stock are not
listed or admitted to trading on any national securities exchange, the average
of the closing bid and asked prices as furnished by any New York Stock Exchange
member firm selected from time to time by the Company for that purpose.
"Common Shares" means the Company's common shares of beneficial
interest, $.01 par value per share, or as such shares may be reconstituted from
time to time.
"Default" means any event which is, or after notice or passage of time
or both would be, an Event of Default.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Indebtedness" as applied to any Person, means, without duplication:
(a) all liabilities and obligations, contingent or otherwise, of such Person (i)
in respect of borrowed money whether or not evidenced by a promissory note,
draft or similar instrument (whether or not the recourse of the lender is to the
whole of the assets of such Person or only to a portion thereof); (ii) evidenced
by bonds, notes, debentures or similar instruments; (iii) evidenced by a letter
of credit or reimbursement obligation of such Person with respect to any letter
of credit; (iv) evidenced by bankers' acceptances or similar instruments issued
or accepted by banks; (v) for the payment of money relating to obligations with
respect to any lease that is properly classified as a liability on a balance
sheet in accordance with generally accepted accounting principles; and (vi)
representing the balance deferred and unpaid for all or any part of the purchase
price of property or services (except any such balance that constitutes (a) a
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<PAGE>
trade payable or an accrued liability arising in the ordinary course of business
or (b) a trade draft or note payable issued in the ordinary course of business
in connection with the purchase of goods or services); (b) all net obligations
of such Person under Interest Swap and Hedging Obligations; (c) all liabilities
of others described in the preceding clauses (a) and (b) which such Person has
guaranteed or for which it is otherwise liable and all obligations to purchase,
redeem or acquire any Capital Stock; and (d) any and all deferrals, amendments,
renewals, extensions, supplements, refinancings or refundings (whether direct or
indirect) of any liability or obligations described in any of the preceding
clauses (a), (b) or (c), or this clause (d), whether or not between or among the
same parties.
"Interest Swap and Hedging Obligation" means any obligation of any
person pursuant to any interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement, interest rate exchange agreement,
currency exchange agreement or any other agreement or arrangement designed to
protect against fluctuations in interest rates or currency values, including,
without limitation, any arrangement whereby, directly or indirectly, such person
is entitled to receive from time to time periodic payments calculated by
applying either a fixed or floating rate of interest on a stated notional amount
in exchange for periodic payments made by such person calculated by applying a
fixed or floating rate of interest on the same notional amount.
"Junior Securities" of any Person means any Capital Stock and any
Indebtedness of such Person that is (i) subordinated in right of payment to the
Securities and has no scheduled installment of principal due, by redemption,
sinking fund payment or otherwise, on or prior to the Stated Maturity of the
Securities and (ii) subordinated in right of payment to all Senior Indebtedness
at least to the same extent as the Securities.
"Officer" means the President, the Chief Operating Officer, any Vice
President, the Treasurer, the Chief Financial Officer, any Assistant Treasurer,
the Secretary or any Assistant Secretary of the Company.
"Securities Act" means the Securities Act of 1933, as amended from time
to time.
"Securities" means the securities in the form of Exhibit A hereto.
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<PAGE>
"Senior Indebtedness" means the principal, premium, if any, and unpaid
interest (including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Company whether or not a claim
for post-filing interest is allowed in such proceeding), fees, charges,
expenses, reimbursement and indemnification obligations, and all other amounts
payable under or in respect of (i) any Indebtedness of the Company and (ii) any
and all deferrals, renewals, extensions, refundings and refinancings (whether
direct or indirect) of any such Indebtedness, whether any such Indebtedness
exists as of the date of this Indenture or shall hereafter be created, incurred,
assumed or guaranteed; provided, however, that Senior Indebtedness shall not
include (A) the Securities, (B) the Series A Debentures or the Series B
Debentures, (C) Indebtedness of the Company owed or owing to a Subsidiary or any
officer, director, trustee or employee of the Company or any Subsidiary, (D)
Indebtedness of the Company which, pursuant to the terms of the instrument
creating or evidencing such Indebtedness, is expressly made pari passu with or
subordinate in right of payment to the Securities or (E) any liability for taxes
owed or owing to the Company.
"Series A Debentures" means the Company's 7.5% Convertible Subordinated
Debentures Due 2003, Series B, in the aggregate principal amount of up to
$80,500,000, issued pursuant to a First Supplemental Indenture, dated as of
October 7, 1996, between the Company and the Trustee.
"Series B Debentures" means the Company's 7.5% Convertible Subordinated
Debentures Due 2003, Series B, in the aggregate principal amount of $149,500,000
issued pursuant to a Second Supplemental Indenture, dated as of October 7, 1996,
between the Company and the Trustee.
"Trust Officer", when used with respect to the Trustee, means an
officer of the Trustee customarily performing functions in corporate trust
matters or any other officer of the Trustee to whom such matter is referred
because of his knowledge of and familiarity with the particular subject.
SECTION 1.2 Incorporation by Reference to Trust Indenture Act.
Solely for purposes of this Supplement, Article One of the Indenture is
hereby amended to add thereto the following:
SECTION 114. Incorporation by Reference to Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
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<PAGE>
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Securities.
"indenture security holder" means a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the
Trustee.
"obligor" on the indenture securities means the Company or
any other obligor on the indenture securities.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by Commission rules have
the meanings assigned to them therein.
ARTICLE 2
THE SECURITIES
SECTION 2.1 Form; Dating; Incorporation of Form in Indenture.
In accordance with Sections 201 and 301 of the Indenture, there shall
be and is hereby authorized a single series of Securities designated the "7.25%
Convertible Subordinated Debentures Due 2001" limited in aggregate principal
amount to $40,000,000, except for Securities authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of, other Securities
pursuant to Sections 9.5 or 10.1 hereof or pursuant to Sections 304, 305, 306 or
1107 of the Indenture.
Their fixed maturity shall be October 1, 2001, and they shall bear
interest at the rate per annum of 7.25%, from and including the date of issuance
thereof until maturity or earlier redemption, payable semiannually on April 1
and October 1 commencing April 1, 1997, until the principal thereof is paid or
made available for payment.
The principal of and premium, if any, and interest on the Securities
shall be payable at the office or agency of the Company in the City of Boston
maintained for such purpose and at any other office or agency maintained by the
Company for such purpose; provided, however, that at the option of the Company
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<PAGE>
payment of interest may be made by check mailed to the address of the Person
entitled thereto as such address shall appear in the Security Register.
The Securities shall be redeemable as provided in Article 3.
The Securities shall be subordinated in right of payment to Senior
Indebtedness, to the extent provided in Article 11 hereof.
The Securities shall be convertible as provided in Article 10 hereof.
The Securities and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit A which is incorporated in and made part of
this Supplement. The Securities may have notations, legends or endorsements
required by law, stock exchange rules, agreements to which the Company is
subject, or usage. The Company shall approve the form of the Securities and any
notation, legend or endorsement on them. Each Security shall be dated the date
of its authentication.
The terms and provisions contained in the Securities shall constitute,
and are hereby expressly made, a part of this Supplement and to the extent
applicable, the Company and the Trustee, by their execution and delivery of this
Supplement, expressly agree to such terms and provisions and to be bound
thereby. The Securities shall be issuable only in registered form without
coupons.
SECTION 2.2 Registrar and Agents.
The Company shall maintain an office or agency where Securities may be
presented for registration of transfer or for exchange ("Registrar"), an office
or agency where the Securities may be presented for payment ("Paying Agent"), an
office or agency where Securities may be presented for conversion ("Conversion
Agent") and an office or agency where notices and demands to or upon the Company
in respect of the Securities and this Supplement may be served. The Registrar
shall keep a register of the Securities (the "Security Register") and of their
transfer and exchange. The Company may have one or more co- registrars, one or
more additional Paying Agents and one or more additional Conversion Agents. The
Company or any Subsidiary may act as Paying Agent and/or Conversion Agent. The
term "Paying Agent" includes any additional paying agent and the term
"Conversion Agent" includes any additional conversion agent.
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<PAGE>
The Company may change any Paying Agent, Registrar, Conversion Agent or
Co-Registrar on sixty (60) days' prior written notice to the Trustee. The
Company shall notify the Trustee in writing of the name and address of any such
Agent. If the Company fails to maintain a Registrar, Paying Agent, Conversion
Agent or agent for service of notices and demands, or fails to give the
foregoing notice, the Trustee shall act as such.
The Company initially appoints the Trustee as Registrar, Paying Agent,
Conversion Agent and agent for service of notices and demands.
SECTION 2.3 Paying Agent to Hold Money in Trust.
On or before 11:00 a.m. (Boston time) on each due date of the principal
of, premium if any, and interest on any Securities, the Company shall deposit
with each Paying Agent a sum sufficient to pay such principal, premium, if any,
and interest so becoming due. The Company shall require each Paying Agent other
than the Trustee to agree in writing that it will hold in trust for the benefit
of Holders of the Securities or the Trustee all money held by the Paying Agent
for the payment of principal of, premium if any, or interest on the Securities
and to notify the Trustee of any default by the Company (or any other obligor on
the Securities) in making any such payment. If the Company or a Subsidiary acts
as Paying Agent, it shall on or before each due date of the principal of,
premium, if any, or interest on any Securities segregate the money and hold it
as a separate trust fund. The Company at any time may require a Paying Agent to
pay all money held by it to the Trustee and the Trustee may at any time during
the continuance of any payment default, upon written request to a Paying Agent,
require such Paying Agent to forthwith pay to the Trustee all sums so held in
trust by such Paying Agent. Upon doing so, the Paying Agent (if other than the
Company or a Subsidiary thereof) shall have no further liability for the money.
SECTION 2.4 Outstanding Securities.
Securities outstanding at any time are all Securities theretofore
authenticated and delivered under this Supplement except: (a) Securities
theretofore canceled by the Trustee or delivered to the Trustee for
cancellation; and (b) Securities in exchange for or in lieu of which other
Securities have been authenticated and delivered pursuant to this Supplement,
other than any Securities in respect of which there shall have been presented to
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<PAGE>
the Trustee proof satisfactory to it that such Securities are held by a bona
fide purchaser in whose hands such Securities are valid obligations of the
Issuer; provided, that in determining whether the Securityholders of the
requisite principal amount of outstanding Securities are present at a meeting of
Securityholders for quorum purposes or have voted or taken or concurred in any
action under this Supplement, including the making of any request, demand,
authorization, direction, notice, consent or waiver hereunder, Securities owned
by the Company or any other obligor upon the Securities or any Affiliate of the
Company or such other obligor shall be disregarded and deemed not outstanding,
except that, in determining whether the Trustee shall be protected in relying
upon any such determination as to the presence of a quorum or upon any such
request, demand, authorization, direction, notice, consent or waiver, only
Securities which a Trust Officer of the Trustee actually knows to be so owned
shall be disregarded.
If a Security is replaced pursuant to Section 306 of the Indenture, it
ceases to be outstanding until the Trustee receives proof satisfactory to it
that the replaced Security is held by a bona fide purchaser.
If the Paying Agent (other than the Company or a Subsidiary) holds on a
Redemption Date or maturity date money deposited with it by or on behalf of the
Company sufficient to pay the principal of, premium, if any, and accrued
interest on Securities payable on that date, then on and after that date such
Securities cease to be outstanding and interest on them ceases to accrue.
A Security does not cease to be outstanding because the Company or an
Affiliate holds the Security.
SECTION 2.5 Securityholder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Securityholders. If the Trustee is not the Registrar, the Registrar shall
furnish to the Trustee at least seven Business Days prior to each semiannual
interest payment date and at such other times as the Trustee may reasonably
request in writing a list in such form and as of such date as the Trustee may
require of the names and addresses of Securityholders upon which the Trustee may
conclusively rely. The Trustee may destroy any such list upon receipt of a
replacement list. The Paying Agent will solicit from each Securityholder a
certification of social security number or taxpayer identification number in
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<PAGE>
accordance with its customary practice and as required by law, unless the Paying
Agent is in possession of such certification. Each Paying Agent is authorized to
impose back-up withholding with respect to payments to be made to
Securityholders to the extent required by law.
SECTION 2.6 CUSIP Number.
The Company shall use a "CUSIP" number when issuing the Securities. The
Trustee may use the CUSIP number in notices of redemption or exchange as a
convenience to Securityholders; provided that any such notice may state that no
representation is made as to the correctness or accuracy of the CUSIP number
printed in the notice or on the Securities and that reliance may be placed only
on the other identification numbers printed on the Securities.
SECTION 2.7 Restrictions on Transfer.
The Securities shall be subject to certain restrictions on transfer,
set forth in Section 24 of the form of Security attached hereto as Exhibit A.
The Security shall bear a legend substantially to the following effect:
IF NECESSARY TO EFFECT COMPLIANCE BY THE COMPANY WITH THE
REQUIREMENTS OF THE INTERNAL REVENUE CODE 1986, AS AMENDED,
RELATING TO REAL ESTATE INVESTMENT TRUSTS, OWNERSHIP OF THE
SECURITY REPRESENTED HEREBY MAY BE RESTRICTED BY THE COMPANY
AND/OR THE TRANSFER HEREOF MAY BE PROHIBITED, AS SET FORTH
MORE FULLY ON THE REVERSE HEREOF.
ARTICLE 3
REDEMPTION
SECTION 3.1 Effect of Notice of Redemption.
The Securities are subject to redemption as provided in Section 3 of
the form of Security attached hereto as Exhibit A. Once notice of redemption is
mailed, Securities called for redemption become due and payable on the
applicable Redemption Date and at the applicable Redemption Price. Upon
surrender to the Paying Agent, such Securities shall be paid at the Redemption
Price, plus accrued interest to the Redemption Date.
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<PAGE>
ARTICLE 4
COVENANTS
SECTION 4.1 Payment of the Securities.
Section 1001 of the Indenture is hereby amended by adding thereto the
following:
The Company shall pay interest on overdue principal and premium, if
any, at the rate borne by the Security; it shall pay interest, including
post-petition interest in the event of a proceeding under any Bankruptcy Law, on
overdue installments of interest at the same rate to the extent lawful.
SECTION 4.2 Notice of Default.
Article Ten of the Indenture is hereby amended by adding thereto the
following:
SECTION 1009. Notice of Default. The Company will, so long as any
Securities are outstanding, deliver to the Trustee, within 10 days of becoming
aware of any Default or Event of Default in the performance of any covenant,
agreement or condition in this Indenture, an Officers' Certificate specifying
such Default or Event of Default, the period of existence thereof and what
action the Company is taking or proposes to take with respect thereto.
SECTION 4.3 Limitation on Dividends and Other Distributions.
Article Ten of the Indenture is hereby amended by adding thereto the
following:
SECTION 1010. Limitation on Dividends and Other Distributions. The
Company will not (i) declare or pay any dividend of make any distribution on its
shares of Common Shares or to holders of Common Shares (other than dividends or
distributions payable in Common Shares or other than as the Company determines
in good faith is necessary to maintain its qualification as a real estate
investment trust under the Code) or (ii) purchase, redeem or otherwise acquire
or retire for value any of its Common Shares, if at the time of such action an
Event of Default has occurred and is continuing or would exist immediately after
such action. Notwithstanding the foregoing, the provisions of this Section 1010
will not prevent (i) the payment of any dividend within 60 days after the date
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<PAGE>
of declaration when the payment would have complied with the foregoing provision
on the date of declaration, or (ii) the Company's retirement of any of its
Common Shares by exchange for, or out of the proceeds of the substantially
concurrent sale of, other Common Shares.
ARTICLE 5
RESERVED
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.1 Events of Default.
(a) Solely for purposes of this Supplement, Section 501 of the
Indenture is hereby amended by deleting paragraphs (1) and (2) thereof and
replacing said paragraphs in their entirety with the following:
(1) default in the payment of any installment interest upon
any Security or any Series A Debenture or any installment of interest
upon or any Additional Amounts payable in respect of any Series B
Debenture or of any coupon appertaining thereto, when such interest,
Additional Amounts or coupon becomes due and payable, and continuance
of such default for a period of 30 days; or
(2) default in the payment of the principal of (or premium, if
any, on) any Security or any Series A Debenture or any Series B
Debenture when it becomes due and payable at its Maturity; or
(b) Solely for purposes of this Supplement, Section 501 of the
Indenture is hereby amended by deleting paragraph (3) thereof.
(c) Solely for purposes of this Supplement, Section 501 of the
Indenture is hereby amended by deleting paragraph (8) thereof and replacing it
with the following:
(8) the failure by the Company to perform any conversion of
the Securities, the Series A Debentures or the Series B Debentures and
the continuance of such failure for a period of 60 days;
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SECTION 6.2 Rights of Holders to Receive Payment.
Section 508 of the Indenture is hereby amended to add thereto the
following:
Notwithstanding any other provision of this Indenture, the right of any
Holder of any Security to convert such Security or to bring suit for the
enforcement of such right shall not be impaired or affected without the written
consent of the Holder.
ARTICLE 7
TRUSTEE
SECTION 7.1 Duties of Trustee.
Article Six of the Indenture is hereby amended by adding thereto the
following:
SECTION 612. Duties of Trustee.
(1) The duties and responsibilities of the Trustee shall be as provided
by the TIA. If an Event of Default has occurred and is continuing, the Trustee
shall exercise its rights and powers vested in it by this Indenture and use the
same degree of care and skill in their exercise as a prudent Person would
exercise or use under the circumstances in the conduct of his own affairs.
(2) Except during the continuance of an Event of Default and after the
curing or waiving of all such Events of Default which may have occurred:
(a) The Trustee need perform only those duties that are
specifically set forth in this Indenture, and the Trustee shall not be
liable except for the performance of such duties as are specifically
set forth in this Indenture, and no others, and no implied covenants or
obligation shall be read into this Indenture against the Trustee.
(b) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any statements
certificates or opinions furnished to the Trustee and conforming to the
requirements of this Indenture. The Trustee, however, shall examine the
certificates and opinions to determine whether or not they conform to
the requirements of this Indenture.
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(3) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(a) This paragraph does not limit the effect of paragraph (2)
of this Section 612.
(b) The Trustee shall not be liable for any error in judgment
made in good faith by a Trust Officer, unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts.
(c) The Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 512.
(d) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder or in the
exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to
it.
(4) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (1), (2), (3), (5) and (6) of this Section 612
and subject to Sections 315 and 316 of the TIA.
(5) Subject to subsection (3), the Trustee may refuse to perform any
duty or exercise any right or power unless, subject to the provisions of the
TIA, it receives indemnity satisfactory to it against any loss, liability,
expense or fee.
(6) The Trustee shall not be liable for interest on any money received
by it. Money held in trust by the Trustee need not be segregated from other
funds except to the extent required by law.
SECTION 7.2 Eligibility; Disqualification.
Section 607 of the Indenture is hereby amended by adding thereto the
following:
The Trustee shall comply with TIA ss. 310(b), including the optional
provision permitted by the second sentence of TIA ss. 310(b)(9).
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SECTION 7.3 Preferential Collection of Claims Against Company.
The Trustee is subject to TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A Trustee who has resigned or been
removed shall be subject to TIA ss. 311(a) to the extent indicated therein.
ARTICLE 8
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 8.1 Defeasance of the Securities.
The provisions for defeasance of the Securities under Section 1402 of
the Indenture and for covenant defeasance of the Securities under Section 1403
of the Indenture and all related provisions of Article 14 of the Indenture shall
apply with respect to the Securities.
ARTICLE 9
AMENDMENTS AND WAIVERS
SECTION 9.1 Amendments and Waivers with Consent of Holders.
Section 902 of the Indenture is hereby amended to add thereto the
following:
With the written consent of the Holders of not less than a majority in
aggregate principal amount of the Securities at the time outstanding, the
Company, when authorized by Board Resolution, and the Trustee may amend or
supplement this Indenture (any such amendment or supplement to be in a form
satisfactory to the Trustee) or the Securities for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Indenture or of any supplemental indenture or of modifying in any manner
the rights of the Holders of the Securities. The Holders of a majority in
principal amount of the Securities then outstanding may waive compliance in a
particular instance by the Company with any provision of this Indenture or the
Securities without notice to any Securityholder. Subject to Section 904, without
the consent of each Holder of Securities affected, however, an amendment,
supplement or waiver, may not:
(1) make any change in Section 508 of this Indenture;
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(2) make any change that adversely affects the right to
convert any Security; or
(3) make any change in Article 11 of the Third Supplemental
Indenture, dated as of October 7, 1996, which adversely affects the
rights of any Securityholder.
SECTION 9.2 Revocation and Effect of Consents.
Section 904 of the Indenture is hereby amended by adding thereto the
following:
Subject to this Indenture, each amendment, supplement or waiver
evidencing other action shall become effective in accordance with its terms.
Until an amendment, supplement or waiver becomes effective, a consent to it by a
Holder of a Security is a continuing consent by the Holder even if notation of
the consent is not made on any Security. Any such Holder or subsequent Holder,
however, may revoke the consent as to his Security or portion of a Security, if
the Trustee receives the notice of revocation before the date the amendment,
waiver or other action becomes effective.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver. If a record date is fixed, then notwithstanding the
provisions of the immediately preceding paragraph, those Persons who were
Holders at such record date (or their duly designated proxies) and only those
Persons, shall be entitled to consent to such amendment, supplement or waiver or
to revoke any consent previously given, whether or not such Persons continue to
be Holders after such record date. No consent shall be valid or effective for
more than 90 days after such record date unless consent from Holders of the
principal amount of Securities then outstanding required hereunder for such
amendment, supplement or waiver to be effective shall have also been given and
not revoked within such 90-day period.
After an amendment, waiver or other action becomes effective, pursuant
to Section 901 or 902, as the case may be, it shall bind every Holder of a
Security.
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ARTICLE 10
CONVERSION OF SECURITIES
SECTION 10.1 Right of Conversion; Conversion Price.
Subject to the provisions of Section 7 of the Securities, the Holder of
any Security or Securities shall have the right, at such Holder's option, at any
time before the close of business on October 1, 2003 (except that, with respect
to any Security or portion of a Security which shall be called for redemption,
such right shall terminate at the close of business on the second Business Day
preceding the Redemption Date fixed for redemption of such Security or portion
of a Security unless the Company shall default in payment due upon redemption
thereof), to convert, subject to the terms and provisions of this Article 10,
the principal of any such Security or Securities or any portion thereof which is
$1,000 principal amount or an integral multiple thereof into Common Shares
initially at the conversion price per share of $18.00 or, in case an adjustment
of such price has taken place pursuant to the provisions of Section 10.4, then
at the price as last adjusted (such price or adjusted price being referred to
herein as the "conversion price"), upon surrender of the Security or Securities,
the principal of which is so to be converted, accompanied by written notice of
conversion duly executed, to the Company, at any time during usual business
hours at the office or agency maintained by it for such purpose, and, if so
required by the Conversion Agent or Registrar, accompanied by a written
instrument or instruments of transfer in form satisfactory to the Conversion
Agent or Registrar duly executed by the Holder or his duly authorized
representative in writing. For convenience, the conversion of any portion of the
principal of any Security or Securities into Common Shares is hereinafter
sometimes referred to as the conversion of such Security or Securities.
SECTION 10.2 Issuance of Shares on Conversion.
As promptly as practicable after the surrender, as herein provided, of
any Security or Securities for conversion, the Company shall deliver or cause to
be delivered at its said office or agency, to or upon the written order of the
Holder of the Security or Securities so surrendered, certificates representing
the number of fully paid and nonassessable Common Shares into which such
Security or Securities may be converted in accordance with the provisions of
this Article 10. Such conversion shall be deemed to have been made as of the
close of business on the date that such Security or Securities shall have been
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surrendered for conversion by delivery thereof with a written notice of
conversion duly executed, so that the rights of the Holder of such Security or
Securities as a Securityholder shall cease at such time and, subject to the
following provisions of this paragraph, the Person or Persons entitled to
receive the Common Shares upon conversion of such Security or Securities shall
be treated for all purposes as having become the record holder or holders of
such Common Shares at such time and such conversion shall be at the conversion
price in effect at such time; provided, however, that no such surrender on any
date when the stock transfer books of the Company shall be closed shall be
effective to constitute the Person or Persons entitled to receive the Common
Shares upon such conversion as the record holder or holders of such Common
Shares on such date, but such surrender shall be effective to constitute the
Person or Persons entitled to receive such Common Shares as the record holder or
holders thereof for all purposes at the close of business on the next succeeding
day on which such stock transfer books are open; and provided, further, that in
such event such conversion shall be at the conversion price in effect on the
date that such Security or Securities shall have been surrendered for conversion
by delivery thereof, as if the stock transfer books of the Company had not been
closed. The Company shall give or cause to be given to the Trustee written
notice whenever the stock transfer books of the Company shall be closed.
Upon Conversion of any Security which is converted in part only, the
Company shall execute and the Trustee shall authenticate and deliver to or on
the order of the Holder thereof, at the expense of the Company, a new Security
or Securities of authorized denominations in principal amount equal to the
unconverted portion of such Security.
SECTION 10.3 No Adjustment for Interest or Dividends.
No payment or adjustment in respect of interest on the Securities or
dividends on the Common Shares shall be made upon the conversion of any Security
or Securities; provided, however, that if a Security or any portion thereof
shall be converted subsequent to any regular record date and on or prior to the
next succeeding interest payment date, the interest falling due on such interest
payment date shall be payable on such interest payment date notwithstanding such
conversion, and such interest (whether or not punctually paid or duly provided
for) shall be paid to the Person in whose name such Security is registered at
the close of business on such regular record date and Securities surrendered for
conversion during the period from the close of business on any regular record
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date to the opening of business on the corresponding interest payment date must
be accompanied by payment of an amount equal to the interest payable on such
interest payment date unless such interest payment date is October 1, 1999, in
which case such payment in respect of interest is not required to accompany any
such Securities.
SECTION 10.4 Adjustment of Conversion Price.
(1) In case the Company shall pay or make a dividend or other
distribution on any class of Capital Stock of the Company in Common Shares, the
conversion price in effect at the opening of business on the day following the
date fixed for the determination of shareholders entitled to receive such
dividend or other distribution shall be reduced so that the same shall equal the
price determined by multiplying such conversion price by a fraction of which the
numerator shall be the number of Common Shares outstanding at the close of
business on the date fixed for such determination and the denominator shall be
the sum of such number of shares and the total number of shares constituting
such dividend or other distribution, such adjustment to become effective
immediately after the opening of business on the day following the date fixed
for such determination and in the event that such dividend or other distribution
is not so made, or is made in part, the conversion price shall again be adjusted
to be the conversion price which would then be in effect (i) if such record date
has not been fixed or (ii) based on the actual number of shares actually issued,
as the case may be.
(2) In case at any time the Company shall (A) subdivide its outstanding
Common Shares into a greater number of shares, (B) combine its outstanding
Common Shares into a smaller number of shares, or (C) issue by reclassification
of its Common Shares (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing corporation) any
shares of Capital Stock, the conversion price in effect at the effective date of
such subdivision, combination or reclassification shall be proportionately
adjusted so that the holder of any Security surrendered for conversion after
such time shall be entitled to receive the aggregate number and kind of shares
which, if such Security had been converted immediately prior to such time, he
would have owned upon such conversion and been entitled to receive upon such
subdivision, combination or reclassification. Such adjustment shall become
effective immediately after the effective date of such subdivision, combination
or reclassification. Such adjustment shall be made successively whenever any
event listed above shall occur.
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(3) In case at any time the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of its Common Shares
entitling them to subscribe for or purchase Common Shares (or securities
convertible into Common Shares) at a price per share less than the current
market price per Common Share on such record date, the conversion price in
effect at the opening of business on the day following such record date shall be
reduced so that the same shall equal the price determined by multiplying such
conversion price by a fraction of which the numerator shall be the number of
Common Shares outstanding at the close of business on such record date plus the
number of Common Shares (or its equivalent) which the aggregate of the offering
price of the total number of shares so offered for subscription or purchase
would purchase at such current market price per Common Share and the denominator
shall be the number of Common Shares outstanding at the close of business on
such record date plus the number of Common Shares (or its equivalent) so offered
for subscription or purchase, such reduction to become effective immediately
after the opening of business on the day following such record date; provided,
however, that no adjustment to the conversion price shall be made pursuant to
this Section 10.4(3) if the holders of Securities receive, or are entitled to
receive upon conversion or otherwise, the same rights, options or warrants as
are issued to the holders of Common Shares, on the same terms and conditions as
such rights, options or warrants are so issued to the holders of Common Shares.
Such reduction shall be made successively whenever such a record date is fixed;
and in the event that such rights, options or warrants are not so issued, or are
issued in part, or are issued but all or part of which expire unexercised, the
conversion price shall again be adjusted to be the conversion price which would
then be in effect (i) if such record date had not been fixed or (ii) based on
the actual number of rights, options or warrants actually issued, as the case
may be.
(4) In case at any time the Company shall fix a record date for the
making of a distribution, by dividend or otherwise, to all holders of its Common
Shares, of shares of beneficial interest in Hospitality Properties Trust, a
Maryland real estate investment trust ("HPT"), then in each such case the
conversion price in effect after such record date shall be determined by
multiplying the conversion price in effect immediately prior to such record date
by a fraction, of which the numerator shall be the total number of outstanding
Common Shares multiplied by the current market price per Common Share on such
record date, less the fair market value (as determined by a Board Resolution,
whose determination shall be conclusive and described in a statement filed with
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the Trustee) of the shares of beneficial interest in HPT so to be distributed,
and of which the denominator shall be the total number of outstanding Common
Shares multiplied by such current market price per Common Share. Such adjustment
shall be made successively whenever such a record date is fixed and shall become
effective immediately after the record date for the determination of
stockholders entitled to receive the distribution; and in the event that such
distribution is not so made, the conversion price shall again be adjusted to be
the conversion price which would then be in effect if such record date has not
been fixed.
(5) For the purpose of any computation under paragraphs (3) and (4) for
this Section, the current market price per share of Common Stock on any date
shall be deemed to be the average of the Closing Prices for the 15 consecutive
Business Days selected by the Company commencing not more than 30 and not less
than 20 Business Days before the date in question.
(6) No adjustment in the conversion price shall be required unless such
adjustment (plus any adjustments not previously made by reason of this paragraph
(6)) would require an increase or decrease of at least 1% in such price;
provided, however, that any adjustments which by reason of this paragraph (6)
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment. All calculations under this paragraph (6) shall be
made to the nearest cent.
(7) The Company may, but shall not be required to, make such reductions
in the conversion price, in addition to those required by paragraph (1), (2),
(3) and (4) of this Section 10.4 as the Company's Board of Directors considers
to be advisable in order to avoid or diminish any income tax to any holders of
shares of Common Stock resulting from any dividend or distribution of stock or
issuance of rights or warrants to purchase or subscribe for stock or from any
event treated as such for income tax purposes or for any other reasons. The
Board of Directors shall have the power to resolve any ambiguity or correct any
error in the adjustments made pursuant to this Section 10.4 and its actions in
so doing shall be final and conclusive.
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(8) The adjustments provided for in this Section 10.4 shall be made
successively whenever any event listed above shall occur.
SECTION 10.5 Notice of Adjustment of Conversion Price.
Whenever the conversion price for the Securities is adjusted as herein
provided:
(1) the Company shall compute the adjusted conversion price in
accordance with Section 10.4 and shall prepare an Officers' Certificate
setting forth the adjusted conversion price and showing in reasonable
detail the facts upon which such adjustment is based and the
computation thereof, and such certificate shall forthwith be filed at
each office or agency maintained for the purpose of conversion of the
Securities pursuant to Section 2.4 and with the Trustee; and
(2) a notice stating that the conversion price has been
adjusted and setting forth the adjusted conversion price shall as soon
as practicable be mailed by the Company to all Holders of the
Securities at their last addresses as they shall appear in the Security
Register.
(3) If the conversion price is adjusted and the Company fails
to file an Officers' Certificate with the Trustee as provided by
Section 10.5(1) and the Trustee is acting as the Conversion Agent, the
Trustee shall be entitled to rely conclusively on the conversion price
set forth in the Officer's Certificate most recently received by the
Trustee (or as set forth in the Securities and this Indenture if the
conversion price shall not have been adjusted).
SECTION 10.6 Notice of Certain Corporate Action.
(1) In case:
(a) the Company shall authorize the granting to holders of its
Common Shares of rights or warrants entitling them to subscribe for or
purchase any shares of Capital Stock of any class or of any other
rights; or
(b) of any reclassification of the Common Shares of the
Company, or of any distribution of any assets of the Company to the
holders of its Common Shares, or of any consolidation or merger to
which the Company is a party and for which approval of any shareholders
of the Company is required, or of the sale or transfer of all or
substantially all of the assets of the Company; or
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(c) of the voluntary or involuntary dissolution, liquidation
or winding up of the Company;
then the Company shall cause to be filed at each office or agency maintained for
the purpose of conversion of the Securities pursuant to Section 2.2 and shall
cause to be mailed to the Trustee and all Holders of the Securities at their
last addresses as they shall appear in the Security Register, at least 20 days
(or 10 days in any case specified in clause (a) or (b) above) prior to the
applicable record date hereinafter specified, a notice stating (x) the date on
which a record is to be taken for the purpose of such dividend, distribution,
rights or warrants, or, if a record is not to be taken, the date as of which the
Holders of Common Shares of record to be entitled to such dividend,
distribution, rights or warrants are to be determined, or (y) the date on which
such reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding up is expected to become effective, and the date as of
which it is expected that holders of Common Shares of record shall be entitled
to exchange their Common Shares for securities, cash or other property
deliverable upon such reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding up. Such notice shall also state whether
such transaction will result in any adjustment in the conversion price
applicable to the Securities and, if so, shall state what the adjusted
conversion price will be and when it will become effective. Neither the failure
to give the notice required by this Section, nor any defect therein, to any
particular Holder shall affect the sufficiency of the notice or the legality or
validity of any such dividend, distribution, right, warrant, reclassification,
consolidation, merger, sale, transfer, liquidation, dissolution or winding-up,
or the vote on any action authorizing such with respect to the other holders.
(2) In case the Company or any Affiliate of the Company shall propose
to engage in a "Rule 13e-3 Transaction" as defined in the Commission's Rule
13e-3 under the Exchange Act, the Company shall, no later than the date on which
any information with respect to such Rule 13e-3 Transaction is first required to
be given to the Commission or any other Person pursuant to such Rule 13e-3,
cause to be mailed to all Holders at their last addresses as they shall appear
in the Security Register, a copy of all information required to be given to the
holders of the Company's Capital Stock pursuant to such Rule 13e-3. The
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information required to be given under this paragraph shall be in addition to
and not in lieu of any other information required to be given by the Company
pursuant to this Section 10.6 or any other provision of the Securities or this
Indenture.
SECTION 10.7 Taxes on Conversions.
The Company will pay any and all stamp or similar taxes that may be
payable in respect of the issuance or delivery of Common Shares on conversion of
the Securities pursuant hereto. The Company shall not, however, be required to
pay any tax which may be payable in respect of any transfer involved in the
issuance and delivery of Common Shares in a name other than that of the Holder
of the Security or Securities to be converted, and no such issuance or delivery
shall be made unless and until the Person requesting such issuance has paid to
the Company the amount of any such tax, or has established to the satisfaction
of the Company that such tax has been paid.
SECTION 10.8 Fractional Shares.
No fractional shares or scrip representing fractional shares shall be
issued upon any conversion of the Securities. If any such conversion would
otherwise require the issuance of a fractional share an amount equal to such
fraction multiplied by the current market price per Common Share (determined as
provided in paragraph (5) of Section 10.4) on the day of conversion shall be
paid to the Holder in cash by the Company.
SECTION 10.9 Cancellation of Converted Securities.
All Securities delivered for conversion shall be delivered to the
Trustee or the Conversion Agent to be canceled by or at the direction of the
Trustee or the Conversion Agent, which shall dispose of the same as provided in
Section 309 of the Indenture.
SECTION 10.10 Provisions in Case of Consolidation, Merger or Sale of Assets.
(1) In case of any consolidation of the Company with, or merger of the
Company into, any Person, or in case of any merger of another Person into the
Company (other than a consolidation or merger which does not result in any
reclassification, conversion, exchange or cancellation of outstanding Common
Shares), or in case of any sale or transfer of all or substantially all of the
assets of the Company, the Person formed by such consolidation or resulting from
such merger or which acquires such assets, as the case may be, shall execute and
deliver to the Trustee a supplemental indenture providing that the Holder of
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each Security then outstanding shall have the right thereafter, during the
period such Security shall be convertible as specified in Section 10.1 to
convert such Security only into the kind and amount of securities, cash and
other property receivable upon such consolidation, merger, sale or transfer by a
holder of the number of Common Shares into which such Security might have been
converted immediately prior to such consolidation, merger, sale or transfer.
Such supplemental indenture shall provide for adjustments which, for events
subsequent to the effective date of such supplemental indenture, shall be as
nearly equivalent as may be practicable to the adjustments provided for in this
Article 10. The above provisions of this Section 10.10 shall similarly apply to
successive consolidations, mergers, sales or transfers.
(2) The Trustee shall not be under any responsibility to determine the
correctness of any provisions contained in any such supplemental indenture
relating either to the kind or amount of shares of stock or securities or
property receivable by Holders upon the conversion of their Securities after any
such reclassification, change, consolidation, merger, sale or conveyance or to
any adjustment to be made with respect thereto.
SECTION 10.11 Disclaimer by Trustee of Responsibility for Certain Matters.
The Trustee and each Conversion Agent (other than the Company or any
Subsidiary) shall not at any time be under any duty or responsibility to any
Holder of the Securities to determine whether any facts exist which may require
any adjustment of the conversion price, how it should be calculated or what it
should be, or with respect to the nature or extent of any such adjustment when
made, or with respect to the method employed, or herein or in any supplemental
indenture provided to be employed, in making the same. The Trustee and each
Conversion Agent (other than the Company or any Subsidiary) shall not be
accountable with respect to the validity, value, kind or amount of any Common
Shares, or of any securities or property, which may at any time be issued or
delivered upon the conversion of any Security; and it makes no representation
with respect thereto. The Trustee and each Conversion Agent (other than the
Company or any Subsidiary) shall not be responsible for any failure of the
Company to issue, transfer or deliver any Common Shares or share certificates or
other securities or property upon the surrender of any Security for the purpose
of conversion or, subject to Section 7.1, to comply with any of the covenants of
the Company contained in this Article 10.
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SECTION 10.12 Covenant to Reserve Shares.
The Company covenants that it will at all times reserve and keep
available, free from preemptive rights, out of its authorized Common Shares,
solely for the purpose of issuance upon conversion of the Securities as herein
provided, such number of Common Shares as shall then be issuable upon the
conversion of all outstanding Securities. The Company covenants that all Common
Shares which shall be so issuable shall be, when issued, duly and validly issued
and fully paid and non-assessable. For purposes of this Section 10.12, the
number of Common Shares which shall be deliverable upon the conversion of all
outstanding Securities shall be computed as if at the time of computation all
outstanding Securities were held by a single holder.
ARTICLE 11
SUBORDINATION
SECTION 11.1 Securities Subordinated to Senior Indebtedness.
The Company and each Holder, by its acceptance of Securities, agree
that (a) the payment of the principal of and interest on the Securities and (b)
any other payment in respect of the Securities, including on account of the
acquisition or redemption of the Securities by the Company is subordinated, to
the extent and in the manner provided in this Article 11, to the prior payment
in full of all Senior Indebtedness of the Company, and all other Obligations in
respect thereof, whether outstanding at the date of this Supplement or
thereafter created, incurred, assumed or guaranteed, and that these
subordination provisions are for the benefit of the holders of Senior
Indebtedness.
This Article 11 shall constitute a continuing offer to all Persons who,
in reliance upon such provisions, become holders of, or continue to hold, Senior
Indebtedness, and such provisions are made for the benefit of the holders of
Senior Indebtedness, and such holders are made obligees hereunder and any one or
more of them may enforce such provisions.
To the extent any provision of this Article 11 conflicts or is
inconsistent with any other provision of the Indenture or this Supplement, the
provisions of this Article 11 shall govern and supersede such inconsistent or
conflicting provision.
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SECTION 11.2 No Payment on Securities in Certain Circumstances.
(a) No payment may be made by the Company on account of the principal
of, premium, if any, interest on the Securities, or to acquire or repurchase any
of the Securities for cash or property, or on account of the redemption
provisions of the Securities, in each case other than payments made with Junior
Securities of the Company, (i) upon the maturity of any Senior Indebtedness of
the Company by lapse of time, acceleration (unless waived) or otherwise, unless
and until all principal of, premium, if any, and interest on such Senior
Indebtedness and all other [Obligations] in respect thereof are first paid in
full (or such payment is duly provided for), or (ii) in the event of default in
the payment of any principal of, premium, if any, or interest on, or any other
Obligation in respect of, any Senior Indebtedness of the Company when it becomes
due and payable, whether at maturity or at a date fixed for prepayment or by
declaration or otherwise (a "Payment Default"), unless and until such Payment
Default has been cured or waived by the holders of such Senior Indebtedness or
otherwise has ceased to exist.
(b) Upon (i) the happening of an event of default (other than a Payment
Default) that permits the holders of any Senior Indebtedness or their
representative immediately to accelerate its maturity and (ii) either such event
of default shall be the subject of a judicial proceeding or written notice of
such event of default given to the Company by the requisite holders of such
Senior Indebtedness or their representative (a "Payment Notice"), then, unless
and until such event of default has been cured or waived by the requisite
holders of such Senior Indebtedness or otherwise has ceased to exist, no payment
(by set-off or otherwise) may be made by or on behalf of the Company on account
of the principal of, premium, if any, interest on the Securities, or to acquire
or repurchase any of the Securities for cash or property, or on account of the
redemption provisions of the Securities, in any such case other than payments
made with Junior Securities of the Company.
(c) In furtherance of the provisions of Section 11.1, in the event
that, notwithstanding the foregoing provisions of this Section 11.2, any payment
or distribution of assets of the Company (other than Junior Securities) shall be
received by the Trustee or the Holders or any Paying Agent at a time when such
payment or distribution is prohibited by the provisions of this Section 11.2,
then such payment or distribution shall be received and held in trust by the
Trustee or such Holders or Paying Agent (or, if the Company or any Affiliate of
the Company is acting as its own Paying Agent, money for any such payment or
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distribution shall be segregated or held in trust) for the benefit of the
holders of Senior Indebtedness of the Company, and shall be paid or delivered by
the Trustee or such Holders or such Paying Agent, as the case may be, to the
holders of Senior Indebtedness of the Company remaining unpaid or unprovided for
or their representative or representatives, or to the trustee or trustees under
any indenture pursuant to which any instruments evidencing any of such Senior
Indebtedness of the Company may have been issued, ratably according to the
aggregate amounts remaining unpaid on account of the Senior Indebtedness of the
Company held or represented by each, for application to the payment of all
Senior Indebtedness of the Company in full after giving effect to any concurrent
payment and distribution to the holders of such Senior Indebtedness, but only to
the extent that as to any holder of such Senior Indebtedness, as promptly as
practical following receipt by such holder of written notice from the Trustee to
the holders of such Senior Indebtedness that such prohibited payment has been
received by the Trustee, Holder(s) or Paying Agent (or has been segregated as
provided above), such holder (or a representative therefor) notifies the Trustee
in writing of the amounts then due and owing on such Senior Indebtedness, if
any, held by such holder and only the amounts specified in such notices to the
Trustee shall be paid to the holders of such Senior Indebtedness.
SECTION 11.3 Securities Subordinated to Prior Payment of All Senior Indebtedness
on Dissolution, Liquidation or Reorganization.
Upon any distribution of assets of the Company upon any dissolution,
winding up, total or partial liquidation or reorganization of the Company,
whether voluntary or involuntary, in bankruptcy, insolvency, receivership or a
similar proceeding or upon assignment for the benefit of creditors or any
marshalling of assets or liabilities:
(a) the holders of all Senior Indebtedness of the Company shall first
be entitled to receive payments in full (or have such payment duly provided for)
before the Holders are entitled to receive any payment on account of the
principal of, premium, if any, interest on, and Additional Amounts with respect
to, the Securities (other than Junior Securities);
(b) any payment or distribution of assets of the Company of any kind or
character, whether in cash, property or securities (other than Junior
Securities) to which the Holders or the Trustee on behalf of the Holders would
be entitled (by set-off or otherwise), except for the provisions of this Article
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11, shall be paid by the liquidating trustee or agent or other Person making
such a payment or distribution directly to the holders of Senior Indebtedness of
the Company or their representative to the extent necessary to make payment in
full of all such Senior Indebtedness remaining unpaid, after giving effect to
any concurrent payment or distribution to the holders of such Senior
Indebtedness; and
(c) in the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities (other than Junior Securities), shall be received by the
Trustee or the Holders or any Paying Agent (or, if the Company or any Affiliate
of the Company is acting as its own Paying Agent, money for any such payment or
distribution shall be segregated or held in trust) on account of the principal
of, premium, if any, interest on, or Additional Amounts with respect to, the
Securities before all Senior Indebtedness of the Company is paid in full, such
payment or distribution shall be received and held in trust by the Trustee or
such Holder or Paying Agent (or, if the Company or any Affiliate of the Company
is acting as its own Paying Agent, money for any such payment or distribution
shall be segregated or held in trust) for the benefit of the holders of such
Senior Indebtedness, or their respective representative, or the trustee or
trustees under any indenture pursuant to which any instruments evidencing any of
such Senior Indebtedness of the Company may have been issued, ratably according
to the respective amounts of such Senior Indebtedness held or represented by
each, to the extent necessary to make payment as provided herein of all such
Senior Indebtedness remaining unpaid after giving effect to all concurrent
payments and distributions and all provisions therefor to or for the holders of
such Senior Indebtedness, but only to the extent that as to any holder of such
Senior Indebtedness, as promptly as practical following receipt by such holder
of written notice from the Trustee to the holders of such Senior Indebtedness
that such prohibited payment has been received by the Trustee, Holder(s) or
Paying Agent (or has been segregated as provided above), such holder (or a
representative therefor) notifies the Trustee in writing of the amounts then due
and owing on such Senior Indebtedness, if any, held by such holder and only the
amounts specified in such notices to the Trustee shall be paid to the holders of
such Senior Indebtedness.
SECTION 11.4 Securityholders to Be Subrogated to Rights of Holders of Senior
Indebtedness.
Subject to the payment in full of all Senior Indebtedness of the
Company as provided herein, the Holders of Securities shall be subrogated to the
rights of the holders of such Senior Indebtedness to receive payments or
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distributions of assets of the Company applicable to the Senior Indebtedness
until all amounts owing on the Securities shall be paid in full, and for the
purpose of such subrogation no such payments or distributions to the holders of
such Senior Indebtedness by the Company, or by or on behalf of the Holders by
virtue of this Article 11, which otherwise would have been made to the Holders
shall, as between the Company and the Holders, be deemed to be payment by the
Company on account of such Senior Indebtedness, it being understood that the
provisions of this Article 11 are and are intended solely for the purpose of
defining the relative rights of the Holders, on the one hand, and the holders of
such Senior Indebtedness, on the other hand.
If any payment or distribution to which the Holders would otherwise
have been entitled but for the provisions of this Article 11 shall have been
applied, pursuant to the provisions of this Article 11, to the payment of
amounts payable under Senior Indebtedness of the Company, then the Holders shall
be entitled to receive from the holders of such Senior Indebtedness any payments
or distributions received by such holders of Senior Indebtedness in excess of
the amount sufficient to pay all amounts payable under or in respect of such
Senior Indebtedness in full.
SECTION 11.5 Obligations of the Company Unconditional.
Nothing contained in this Article 11 or elsewhere in this Supplement or
in the Securities is intended to or shall impair as between the Company and the
Holders, the obligation of each such Person, which is absolute and
unconditional, to pay to the Holders the principal of, premium, if any, interest
on, and Additional Amounts with respect to, the Securities as and when the same
shall become due and payable in accordance with their terms, or is intended to
or shall affect the relative rights of the Holders and creditors of the Company
other than the holders of the Senior Indebtedness, nor shall anything herein or
therein prevent the Trustee or any Holder from exercising all remedies otherwise
permitted by applicable law upon default under this Indenture, subject to the
rights, if any, under this Article 11, of the holders of Senior Indebtedness in
respect of cash, property or securities of the Company received upon the
exercise of any such remedy. Notwithstanding anything to the contrary in this
Article 11 or elsewhere in this Supplement or in the Securities, upon any
distribution of assets of the Company referred to in this Article 11, the
Trustee, subject to the provisions of Sections 602 and 612 of the Indenture, and
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the Holders shall be entitled to rely conclusively upon any order or decree made
by any court of competent jurisdiction in which such dissolution, winding up,
liquidation or reorganization proceedings are pending, or a certificate of the
liquidating trustee or agent or other Person making any distribution to the
Trustee or to the Holders for the purpose of ascertaining the Persons entitled
to participate in such distribution, the holders of the Senior Indebtedness and
other Indebtedness of the Company, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article 11 so long as such court has been apprised of the
provisions of, or the order, decree or certificate makes reference to, the
provisions of this Article 11. The Trustee shall be entitled to rely
conclusively on the delivery to it of a written notice by a person representing
himself to be a holder of Senior Indebtedness (or a trustee or representative on
behalf of such holder) to establish that such a notice has been given by a
holder of Senior Indebtedness (or a trustee or representative on behalf of such
holder). In the event that the Trustee determines, in good faith, that further
evidence is required with respect to the right of any person as a holder of
Senior Indebtedness to participate in any payment or distribution pursuant to
this Article 11, the Trustee may request such person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness
held by such person, as to the extent to which such person is entitled to
participate in such payment or distribution, and as to other facts pertinent to
the rights of such person under this Article 11, and if such evidence is not
furnished, the Trustee may defer any payment to such person pending judicial
determination as to the right of such person to receive such payment. Nothing in
this Article 11 shall apply to the claims of, or payments to, the Trustee under
or pursuant to Section 606 of the Indenture.
SECTION 11.6 Trustee Entitled to Assume Payments Not Prohibited in Absence of
Notice.
The Trustee or any Paying Agent (other than the Company acting as its
own Paying Agent) shall not at any time be charged with knowledge of the
existence of any facts which would prohibit the making of any payment to or by
the Trustee or such Paying Agent unless and until a Trust Officer of the Trustee
or such Paying Agent (other than the Company acting as its own Paying Agent), as
the case may be, shall have received, no later than one Business Day prior to
such payment, written notice thereof from the Company or from one or more
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holders of Senior Indebtedness or from any representative therefor and, prior to
the receipt of any such written notice, the Trustee, subject to the provisions
of Sections 602 and 612 of the Indenture, and such Paying Agent shall be
entitled in all respects conclusively to assume that no such fact exists.
SECTION 11.7 Application by Trustee of Assets Deposited with It.
Any deposit of assets with the Trustee or the Agent (whether or not in
trust) for the payment of principal of or interest on, or Additional Amounts
with respect to, any Securities shall be subject to the provisions of Sections
11.1, 11.2, 11.3 and 11.4; provided that, if prior to one Business Day preceding
the date on which by the terms of this Supplement any such assets may become
distributable for any purpose (including, without limitation, the payment of
either principal of or interest on any Security) the Trustee or a Paying Agent
shall not have received with respect to such assets the written notice provided
for in Section 11.6, then the Trustee or such Paying Agent shall have full power
and authority to receive such assets and to apply the same to the purpose for
which they were received, and shall not be affected by any notice to the
contrary which may be received by it on or after such date.
SECTION 11.8 Subordination Rights Not Impaired by Acts or Omissions of the
Company or Holders of Senior Indebtedness.
No right of any present or future holders of any Senior Indebtedness to
enforce subordination provisions contained in this Article 11 shall at any time
in any way be prejudiced or impaired by any act or failure to act on the part of
the Company or by any act or failure to act, in good faith, by any such holder,
or by any noncompliance by the Company with the terms of this Supplement,
regardless of any knowledge thereof which any such holder may have or be
otherwise charged with. The holders of Senior Indebtedness may extend, renew,
modify or amend the terms of the Senior Indebtedness or any security therefor
and release, sell or exchange such security and otherwise deal freely with the
Company, all without affecting the liabilities and obligations of the parties to
this Indenture or the Holders.
SECTION 11.9 Securityholders Authorize Trustee to Effectuate Subordination of
Securities.
Each Holder of the Securities by his acceptance thereof authorizes and
expressly directs the Trustee on his behalf to take such action as may be
necessary or appropriate to effectuate the subordination provisions contained in
this Article 11 and to protect the rights of the Holders pursuant to this
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Supplement, and appoints the Trustee its attorney-in-fact for such purpose,
including, in the event of any dissolution, winding up, liquidation or
reorganization of the Company (whether in bankruptcy, insolvency or receivership
proceedings or upon an assignment for the benefit of creditors of the Company),
the making of a timely filing of a claim for the unpaid balance of its
Securities in the form required in said proceedings and cause said claim to be
approved. If the Trustee does not file a proper claim or proof of debt in the
form required in such proceeding prior to 30 days before the expiration of the
time to file such claim or claims, then the holders of the Senior Indebtedness
or their representative are or is hereby authorized to have the right to file
and are or is hereby authorized to file an appropriate claim for and on behalf
of the Holders of said Securities. Nothing herein contained shall be deemed to
authorize the Trustee or the holders of Senior Indebtedness or their
representative to authorize or consent to or accept or adopt on behalf of any
Securityholder any plan of reorganization, arrangement, adjustment or
composition affecting the Securities or the rights of any Holder thereof, or to
authorize the Trustee or the holders of Senior Indebtedness or their
representative to vote in respect of the claim of any Securityholder in any such
proceeding.
SECTION 11.10 Right of Trustee to Hold Senior Indebtedness.
The Trustee shall be entitled to all of the rights set forth in this
Article 11 in respect of any Senior Indebtedness at any time held by it to the
same extent as any other holder of Senior Indebtedness, and nothing in this
Supplement shall be construed to deprive the Trustee of any of its rights as
such holder.
SECTION 11.11 Article 11 Not to Prevent Events of Default.
The failure to make a payment on account of principal of, premium, if
any, interest on, or Additional Amounts with respect to, the Securities by
reason of any provision of this Article 11 shall not be construed as preventing
the occurrence of a Default or an Event of Default under Section 501 of the
Indenture or in any way prevent the Holders or the Trustee from exercising any
right or remedy hereunder or at law or in equity other than the right to receive
payment on the Securities in accordance with the terms of this Article 11.
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SECTION 11.12 No Fiduciary Duty of Trustee to Holders of Senior Indebtedness.
The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness, and shall not be liable to any such holders
(other than for its willful misconduct or negligence) if it shall in good faith
mistakenly pay over or distribute to the Holders of Securities or the Company or
any other Person, cash, property or securities to which any holders of Senior
Indebtedness shall be entitled by virtue of this Article 11 or otherwise.
Nothing in this Section 11.12 shall affect the obligation of any other such
Person to hold such payment for the benefit of, and to pay such payment over to,
the holders of Senior Indebtedness or their representative in accordance with
the provisions hereof.
ARTICLE 12
MISCELLANEOUS
SECTION 12.1 Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or conflicts with
another provision which is required to be included in this Indenture by the TIA,
the required provisions shall control. The provisions of TIA Sections 310
through 317 that impose duties on any Person (including the provisions
automatically deemed included herein unless expressly excluded by this
Indenture) are a part of and govern this Indenture, whether or not physically
contained herein.
SECTION 12.2 Communications by Holders with Other Holders.
Securityholders may communicate pursuant to TIA ss. 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and anyone else shall have
the protection of TIA ss. 312(c).
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SECTION 12.3 Governing Law.
The laws of The Commonwealth of Massachusetts shall govern this
Supplement and the Securities without regard to principles of conflicts of law.
SECTION 12.4 No Adverse Interpretation of Other Agreements.
This Supplement may not be used to interpret another indenture, loan or
debt agreement of the Company or a Subsidiary. Any such indenture, loan or debt
agreement may not be used to interpret this Supplement.
SECTION 12.5 Successors.
All covenants and agreements of the Company in this Supplement and the
Securities shall bind its successors and assigns. All agreements of the Trustee
in this Indenture shall bind its successors and assigns.
SECTION 12.6 Multiple Counterparts.
The parties may sign multiple counterparts of this Supplement. Each
signed counterpart shall be deemed an original, but all of them together
represent the same agreement.
SECTION 12.7 Headings, etc.
The headings of the Articles and Sections of this Supplement have been
inserted for convenience of reference only, are not to be considered a part
hereof, and shall in no way modify or restrict any of the terms or provisions
hereof.
SECTION 12.8 Severability.
In case any provision in this Supplement or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby,
and a Holder shall have no claim therefor against any party hereto.
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IN WITNESS WHEREOF, the parties hereto have caused this Supplement to
be duly executed, all as of the date first written above.
HEALTH AND RETIREMENT PROPERTIES TRUST
a Maryland real estate investment trust
By:
Name:
Title:
FLEET NATIONAL BANK,
as Trustee
By:
Name:
Title:
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EXHIBIT A
Unless and until it is exchanged in whole or in part for Securities in
definitive form, this Security may not be transferred except as a whole by the
Depository to a nominee of the Depository or by a nominee of the Depository to
the Depository or another nominee of the Depository or by the Depository or any
such nominee to a successor Depository or a nominee of such successor
Depository. Unless this certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation (55 Water Street, New
York, New York) ("DTC"), to the issuer or its agent for registration of
transfer, exchange or payment, and any certificate issued is registered in the
name of Cede & Co. or such other name as may be requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or such other
entity as may be requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.1
IF NECESSARY TO EFFECT COMPLIANCE BY THE COMPANY WITH THE REQUIREMENTS OF THE
UNITED STATES INTERNAL REVENUE CODE OF 1986, AS AMENDED, RELATING TO REAL ESTATE
INVESTMENT TRUSTS, OWNERSHIP OF THE SECURITY REPRESENTED HEREBY MAY BE
RESTRICTED BY THE COMPANY AND/OR THE TRANSFER HEREOF MAY BE PROHIBITED, AS SET
FORTH MORE FULLY ON THE REVERSE HEREOF.
HEALTH AND RETIREMENT PROPERTIES TRUST
7.25% Convertible Subordinated Debenture Due 2001
HEALTH AND RETIREMENT PROPERTIES TRUST, a Maryland real estate
investment trust, promises to pay to
7.25% S P E C I M E N 7.25%
DUE 2001 DUE 2001
- --------
1 This paragraph should be included only if the Security is issued in global
form.
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or registered assigns, the principal sum of__________ Dollars, on October 1,
2001
Interest Payment Dates: April 1 and October 1
Record Dates: March 15 and September 15
Additional provisions of this Security are set forth on other side of this
Security.
Dated:
HEALTH AND RETIREMENT PROPERTIES TRUST SEAL
By:___________________________________
By:___________________________________
CERTIFICATE OF AUTHENTICATION
FLEET NATIONAL BANK, as Trustee,
certifies that this is one of the
Securities referred to in the within
mentioned Indenture.
By:__________________________________
Authorized Signatory
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[FORM OF REVERSE OF SECURITY]
HEALTH AND RETIREMENT PROPERTIES TRUST
7.25% Convertible Subordinated Debenture Due 2001
1. Interest. Health and Retirement Properties Trust, a Maryland real
estate investment trust (the "Company"), promises to pay interest on the
principal amount of this Security at the rate per annum shown above. The Company
will pay interest semiannually on April 1 and October 1 of each year beginning
April 1, 1997. Interest on the Securities will accrue from the most recent date
to which interest has been paid or, if no interest has been paid, from October
1, 1996; provided that, if there is no existing Default in the payment of
interest, and if this Security is authenticated between a record date referred
to on the face hereof and the next succeeding interest payment date, interest
shall accrue from such interest payment date. Interest will be computed on the
basis of a 360 day year of twelve 30-day months.
2. Method of Payment. The Company will pay interest on the Securities
(except defaulted interest) to the persons who are the registered Holders of the
Securities at the close of business on the March 15 or September 15 next
preceding the interest payment date. Holders must surrender Securities to a
Paying Agent to collect principal and premium payments. The Company will pay
principal, premium and interest in money of the United States that at the time
of payment is legal tender for payment of public and private debts. The Company,
however, may pay principal, premium and interest by its check payable in such
money. It may mail an interest check to a Holder's registered address.
The payment of principal of and premium, if any, on this Security shall
be payable only upon surrender of this Security at the office or agency of the
Paying Agent in the City of Boston, Commonwealth of Massachusetts. Payments of
principal of, premium, if any, and interest on this Security shall be made at
the office or agency of the Trustee maintained in the Borough of Manhattan, City
and State of New York or the City of Boston, Commonwealth of Massachusetts, or,
in the case of any such payments other than the payment of principal and
premium, if any, at the Company's option, by check mailed to the Person entitled
thereto at such Person's address last appearing on the Company's register.
3. Registrar and Agents. Initially, Fleet National Bank will act as
Registrar, Paying Agent, Conversion Agent and agent for service of notices and
demands. The Company may change any Registrar, co-registrar, Paying Agent,
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Conversion Agent and agent for service of notices and demands on sixty days'
prior written notice to the Trustee. The Company or any of its Subsidiaries may
act as Paying Agent or Conversion Agent. The office of Fleet National Bank for
such purpose is One Federal Street, Boston, Massachusetts 02110, Attn: Corporate
Trust Department.
4. Indenture; Limitations. The Company issued the Securities under an
Indenture, dated as of September 20, 1996 (the "Basic Indenture"), between the
Company and Fleet National Bank (the "Trustee"), as supplemented by a First
Supplemental Indenture, dated as of October 7, 1996, (as used herein, the term
"Indenture" means the Basic Indenture together with the First Supplemental
Indenture). Capitalized terms herein are used as defined in the Indenture unless
otherwise defined herein. The terms of the Securities include those stated in
the Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939 (15 U.S. Code ss.ss. 77aaa-77bbbb) as in effect on the
date of the Indenture. The Securities are subject to all such terms, and the
Holders of the Securities are referred to the Indenture and said Act for a
statement of them.
The Securities are general unsecured obligations of the Company limited
to $40,000,000 principal amount. The Indenture imposes certain limitations on
the ability of the Company to, among other things, make payments in respect of
its Capital Stock, merge or consolidate with any other Person and sell, lease,
transfer or otherwise dispose of its properties or assets.
5. Optional Redemption by the Company. (a) The Company may, at its
option, redeem the Securities (i) at any time and from time to time, in whole or
in part, on and after October 1, 1999, or (ii) in whole or from time to time in
part, prior to October 1, 1999 as deemed necessary by the Board of Trustees of
the Company for the Company to continue to qualify as a real estate investment
trust ("REIT") under Sections 856 through 860 of the Internal Revenue Code of
1986, as amended.
(b) The Securities will be immediately redeemable by the Company to the
extent, but only to the extent, deemed necessary by the Board to prevent the
Holder of such Securities or any other person having an interest therein (if the
Securities were thereupon converted) from being deemed to beneficially own,
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directly or indirectly, 8.5% or more in value of the Capital Stock of the
Company. For purposes of determining a Person's beneficial ownership of Capital
Stock, the Securities beneficially owned by such Person will be deemed converted
and added to the Capital Stock beneficially owned by such Person for purposes of
determining whether such Person beneficially owns in excess of 8.5% in value of
the Capital Stock. For purposes of this paragraph, Capital Stock not owned
directly shall be deemed to be owned indirectly by a Holder if that Holder or a
group including that Holder would be the beneficial owner of such Capital Stock,
as defined as of May 1, 1995, in Rule 13d-3 promulgated by the United States
Securities and Exchange Commission under the Securities Exchange Act of 1934, as
amended, and/or would be considered to own such Capital Stock by reason of the
attribution rules of Section 544 or Section 856(h) of the Code.
(c) The redemption price pursuant to the foregoing clauses (a) and (b)
shall be equal to 100% of the principal amount thereof, plus accrued and unpaid
interest to the date fixed for redemption.
(d) The Company may at any time buy Securities on the open market at
prices which may be greater or less than the redemption prices set forth herein.
6. Notice of Redemption. Notice of redemption will be mailed at least
30 days but not more than 60 days before the Redemption Date to each Holder of
Securities to be redeemed at his registered address. Securities in denominations
larger than $1,000 principal amount may be redeemed in part, but only in whole
multiples thereof. On and after the Redemption Date interest ceases to accrue on
Securities or portions of them called for redemption.
7. Conversion. A Holder of a Security may convert such Security into
Common Shares of the Company after issuance and at any time before the close of
business on October 1, 2003. If the Security is called for redemption, the
Holder may convert it at any time before the close of business on the date fixed
for such redemption. The initial conversion price is $18.00 per share, subject
to adjustment in certain events. To determine the number of shares issuable upon
conversion of a Security, divide the principal amount to be converted by the
conversion price in effect on the conversion date. The Company will deliver a
check for any fractional share.
To convert a Security, a Holder must (1) complete and sign the
conversion notice on the back of the Security, (2) surrender the Security to the
Conversion Agent, (3) furnish appropriate endorsements and transfer documents if
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required by the Registrar or Conversion Agent and (4) pay any transfer or
similar tax if required. No payment or adjustment is to be made on conversion
for interest accrued hereon or for dividends on Common Shares issued on
conversion; provided, however, that if a Security is surrendered for conversion
after the record date for a payment of interest and on or before the interest
payment date, then, notwithstanding such conversion, the interest falling due to
such interest payment date will be paid to the Person in whose name the Security
is registered at the close of business on such record date and any Security
surrendered for conversion during the period from the close of business on any
regular record date to the opening of business on the corresponding interest
payment date must be accompanied by payment of an amount equal to the interest
payable on such interest payment date. A Holder may convert a portion of a
Security if the portion is $1,000 principal amount or an integral multiple
thereof.
If the Company is a party to a consolidation or merger or a transfer or
lease of all or substantially all of its assets, the right to convert a Security
into Common Shares may be changed into a right to convert it into securities,
cash or other assets of the Company or another Person.
8. Subordination. THIS SECURITY IS SUBORDINATED TO ALL SENIOR
INDEBTEDNESS OF THE COMPANY. TO THE EXTENT AND IN THE MANNER PROVIDED IN THE
INDENTURE, SENIOR INDEBTEDNESS MUST BE PAID BEFORE ANY PAYMENT MAY BE MADE TO
ANY HOLDERS OF SECURITIES. ANY SECURITYHOLDER BY ACCEPTING THIS SECURITY AGREES
TO SUCH SUBORDINATION AND AUTHORIZES THE TRUSTEE TO GIVE IT EFFECT.
In addition to all other rights of Senior Indebtedness described in the
Indenture, the Senior Indebtedness shall continue to be Senior Indebtedness and
entitled to the benefits of the subordination provisions irrespective of any
amendment, modification or waiver of any term of any instrument relating to the
Senior Indebtedness or extension or renewal of the Senior Indebtedness.
9. Denominations, Transfer, Exchange. The Securities are in registered
form without coupons in denominations of $1,000 principal amount and integral
multiples thereof. A Holder may register the transfer of or exchange Securities
in accordance with the Indenture. The Registrar may require a Holder, among
other things, to furnish appropriate endorsements and transfer documents and to
pay any taxes and fees required by law or permitted by the Indenture. The
Registrar need not register the transfer of or exchange any Securities selected
for redemption or register the transfer of or exchange any Securities for a
period of 15 days before a selection of Securities to be redeemed.
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10. Persons Deemed Owners. The registered Holder of a Security may be
treated as its owner for all purposes.
11. Unclaimed Money. If money for the payment of principal or interest
on any Securities remains unclaimed for two years, the Trustee and the Paying
Agent will pay the money back to the Company at its written request. After that,
Holders may look only to the Company for payment.
12. Discharge Prior to Redemption or Maturity. The Indenture will be
discharged and canceled except for certain sections thereof upon payment of all
the Securities, or upon the irrevocable deposit with the Trustee of funds or
Government Obligations maturing on or before such payment date or Redemption
Date, sufficient to pay principal, premium, if any, and interest on such payment
or redemption.
13. Amendment and Waiver. Subject to certain exceptions, without notice
to the Holders of the Securities, the Indenture or the Securities may be amended
with the consent of the Holders of at least a majority in principal amount of
the Securities then outstanding and any existing default or compliance with any
provision may be waived with the consent of the Holders of a majority in
principal amount of the Securities then outstanding. Without the consent of or
notice to any Securityholder, the Company may amend or supplement the Indenture
or the Securities to, among other things, provide for uncertificated Securities,
to cure any ambiguity, defect or inconsistency or make any other change that
does not adversely affect the rights of any Securityholder.
14. Successors. When a successor assumes all the obligations of its
predecessor under the Securities and the Indenture, the predecessor will be
released from those obligations.
15. Defaults and Remedies. If an Event of Default, as defined in the
Indenture (other than a Event of Default relating to bankruptcy of the Company),
occurs and is continuing, the Trustee or the Holders of a majority in principal
amount of Securities may declare all the Securities to be due and payable
immediately in the manner and with the effect provided in the Indenture. If an
Event of Default relating to bankruptcy of the Company occurs, then all
Securities shall become immediately due and payable without any declaration or
act on the part of the Trustee or any Holder. Holders of Securities may not
enforce the Indenture or the Securities except as provided in the Indenture. The
Trustee may require indemnity satisfactory to it, subject to the provisions of
the TIA, before it enforces the Indenture or the Securities. Subject to certain
A-7
<PAGE>
limitations, Holders of a majority in principal amount of the Securities then
outstanding may direct the Trustee in its exercise of any trust or power. The
Trustee may withhold from Holders of Securities notice of any continuing default
(except a default in payment of principal or interest) if it determines that
withholding notice is in their interests. The Company is required to file
periodic reports with the Trustee as to the absence of any Default or Event of
Default.
16. Trustee Dealings with the Company. Fleet National Bank, the Trustee
under the Indenture, in its individual or any other capacity, may make loans to,
accept deposits from, and perform services for the Company or its Affiliates,
and may otherwise deal with the Company or its Affiliates, as if it were not
Trustee.
17. No Personal Liability. THE AMENDED AND RESTATED DECLARATION OF
TRUST OF THE COMPANY, DATED JULY 1, 1994, 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 COMPANY
SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY
OBLIGATION OF, OR CLAIM AGAINST, THE COMPANY. ALL PERSONS DEALING WITH THE
COMPANY, IN ANY WAY, SHALL LOOK ONLY TO THE ASSETS OF THE COMPANY FOR THE
PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION.
18. Authentication. This Security shall not be valid until the Trustee
signs the certificate of authentication on the other side of this Security.
19. Status as United States Real Property Holding Corporation. To the
best of its knowledge, as of the date of the issuance of this Security, the
Company is not a "United States real property holding corporation" as defined in
Section 897(c)(2) of the United States Internal Revenue Code of 1986, as amended
(the "Code"). A non-United States person disposing of this Security may request
from the Company a statement as to whether this Security constitutes a "United
States real property interest" (as defined in Code Section 897(c)(1)) as of the
date of disposition. It may be necessary to obtain a statement that this
Security does not constitute a "United States real property interest" prior to
the time that a tax return would otherwise be required to be filed with the
United States Internal Revenue Service with respect to such disposition in order
to avoid a withholding tax on such disposition. If, at any time while this
A-8
<PAGE>
Security is outstanding, the Company determines that it is at such time a
"United States real property holding corporation", it shall provide notice of
such determination in accordance with the provisions of Section 13 hereof. The
Holder of this Security can contact the Company at 400 Centre Street, Newton,
Massachusetts 02158 to obtain information as to the United States income tax
consequences of the classification of the Company as a "United States real
property holding corporation."
20. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company will cause
CUSIP numbers to be printed on the Securities as a convenience to the Holders of
the Securities. No representation is made as to the accuracy of such numbers as
printed on the Securities and reliance may be placed only on the other
identification numbers printed hereon.
21. Accounting Terms. All accounting terms not otherwise defined herein
shall have the meanings assigned to them in accordance with generally accepted
accounting principles as applied in the United States.
A-9
<PAGE>
22. Descriptive Headings. The descriptive headings appearing herein are
for convenience of reference only and shall not alter, limit or define the
provisions hereof.
23. Abbreviations. Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as: TEN COM (=tenants in common), TEN ENT
(=tenants by the entireties), JT TEN (=joint tenants with rights of survivorship
and not as tenants in common), CUST (=Custodian), and U/G/M/A (=Uniform Gifts to
Minors Act).
24. Limitations on certain Holders. This Security may not be
transferred (by sale, transfer, gift, assignment, devise or other disposition,
whether voluntarily or involuntarily, whether beneficially or of record, and
whether effected constructively, by operation of law or otherwise) to any Person
if, as a result of such transfer, the Holder hereof or any other Person having
an interest in this Security (other than an Excepted Person, as defined in the
Company's Amended and Restated Declaration of Trust, as amended), would, if this
Security were fully converted, own or be deemed to own, directly or indirectly,
capital stock of the Company representing 8.5% or more in value of the total
capital stock of the Company outstanding (determined in accordance with the
provisions of paragraph (b) of Section 3 above). ANY TRANSFER IN VIOLATION OF
THIS SECTION 24 NEED NOT BE RECOGNIZED BY THE COMPANY, THE TRUSTEE OR ANY AGENT
(AS DEFINED IN THE INDENTURE), AND ANY PERSON WHO, NOTWITHSTANDING THE
FOREGOING, WOULD, IF THIS SECURITY WERE FULLY CONVERTED, OWN OR BE DEEMED TO
OWN, DIRECTLY OR INDIRECTLY, CAPITAL STOCK OF THE COMPANY REPRESENTING 8.5% OR
MORE IN VALUE OF THE TOTAL CAPITAL STOCK OF THE COMPANY OUTSTANDING (DETERMINED
IN ACCORDANCE WITH THE PROVISIONS OF PARAGRAPH (B) OF SECTION 3 ABOVE) SHALL, TO
THE EXTENT OF SUCH EXCESS, NOT BE ENTITLED TO CONVERT THIS SECURITY AS OTHERWISE
PROVIDED HEREIN AND IN THE INDENTURE.
The Company will furnish to any Securityholder upon written request and
without charge a copy for the Indenture. It also will furnish the text of this
Security in larger type. Requests may be made to: Health and Retirement
Properties Trust, 400 Centre Street, Newton, Massachusetts 02158. Attention:
President.
A-10
<PAGE>
TRANSFER NOTICE
If you the Holder wants to assign this Security, fill in the form below and have
your signature guaranteed:
For value received, I or we assign and transfer this Security to
(INSERT ASSIGNEE'S SOCIAL SECURITY OR
TAX IDENTIFICATION NUMBER)
------------------------------------------------
------------------------------------------------
................................................................
................................................................
................................................................
................................................................
(Print or type assignee's name, address and zip code)
...........................................................agent
to transfer this Security on the books of the Company. The
agent may substitute another to act for him.
Date:...........................................................
Your signature:.................................................
(Sign exactly as your name appears on the other
side of this Security)
Signature Guarantee*:...........................................
*Signature must be guaranteed by an eligible guarantor institution within the
meaning of Securities and Exchange Commission Rule 17Ad-15 (including banks,
stock brokers, savings and loan associations, national securities exchanges,
registered securities associations, clearing agencies and credit unions) with
membership or participation in an approved signature guarantee medallion program
if this Security is to be delivered other than to and in the name of the
registered holder.
A-11
<PAGE>
CONVERSION NOTICE
To convert this Security into common shares of beneficial interest, $.01 par
value per share, of the Company, check the box:
-------
-------
To convert only part of this Security, state the principal amount to be
converted (which must be a minimum of $1,000 or any multiple thereof):
------------------------------------------------
$
------------------------------------------------
If you want the Security certificate, if any, made out in another person's name,
fill in the form below:
(INSERT OTHER PERSON'S SOCIAL SECURITY OR
TAX IDENTIFICATION NUMBER)
------------------------------------------------
------------------------------------------------
................................................................
................................................................
................................................................
................................................................
(Print or type assignee's name, address and zip code)
By submitting this certificate, you hereby certify to the Company that, after
giving effect to the conversion specified herein, you will not own or be deemed
to own, directly or indirectly, shares of beneficial interest in the Company
which, together with shares of beneficial interest issuable upon conversion of
any other Securities owned directly or indirectly by you, represents 8.5% or
more in value of the total shares of beneficial interest of the Company
outstanding (determined in accordance with the provisions of paragraph (b) of
Section 5 of this Security).
A-12
<PAGE>
Date:...........................................................
Your Signature:.................................................
(Sign exactly as your name appears on the other side of this
Security)
Signature Guaranteed By:
Note: Signature must be guaranteed
by a member firm of the New York
Stock Exchange or a commercial
bank or trust company.
A-14
SULLIVAN & WORCESTER LLP
One Post Office Square
Boston, Massachusetts 02109
October 1, 1996
Health and Retirement Properties Trust
400 Centre Street
Newton, Massachusetts 02158
Ladies and Gentlemen:
In connection with the registration by Health and Rehabilitation
Properties Trust, a Maryland real estate investment trust (the "Company"), of
its Convertible Subordinated Debentures, due 2003, Series A (the "Securities"),
the following opinion is furnished to you to be filed with the Securities and
Exchange Commission (the "SEC") as Exhibit 8 to the Company's Current Report on
Form 8-K under the Securities Exchange Act of 1934, as amended (the "Exchange
Act").
We have acted as counsel for the Company in connection with its
Registration Statement on Form S-3, File No. 333-02836 (the "Registration
Statement") filed under the Securities Act of 1933, as amended (the "Act"), and
we have examined originals or copies, certified or otherwise identified to our
satisfaction, of the Registration Statement, corporate records, certificates and
statements of officers and accountants of the Company and of public officials,
and such other documents as we have considered relevant and necessary in order
to furnish the opinion hereinafter set forth. Specifically, and without limiting
the generality of the foregoing, we have reviewed: (i) the declaration of trust,
as amended and restated, and the by-laws of the Company; (ii) the Registration
Statement; (iii) the final Prospectus dated June 25, 1996 (the "Base
Prospectus") relating to the Registration Statement; and (iv) the final
Prospectus Supplement to the Base Prospectus dated October 2, 1996 (the
"Prospectus Supplement" and the Base Prospectus, as so supplemented, the
"Prospectus"). We have reviewed the section in the Company's Annual Report on
Form 10-K for the year ended December 31, 1995, filed under the Exchange Act
(the "Form 10-K") captioned "Federal Income Tax Considerations", as supplemented
by the statements in the Supplemental Prospectus under the caption "Federal
Income Tax Considerations". With respect to all questions of fact on which such
opinions are based, we have assumed the accuracy and completeness of and have
relied on the information set forth in the Prospectus and in the documents
incorporated therein by reference, and on representations made to us by the
<PAGE>
Health and Retirement Properties Trust
October 1, 1996
Page 2
officers of the Company. We have not independently verified such information;
nothing has come to our attention, however, which would lead us to believe that
we are not entitled to rely on such information.
The opinion set forth below is based upon the Internal Revenue Code of
1986, as amended, the Treasury Regulations issued thereunder, published
administrative interpretations thereof, and judicial decisions with respect
thereto, all as of the date hereof (collectively the "Tax Laws"), and upon the
Employee Retirement Income Security Act of 1974, as amended, the Department of
Labor regulations issued thereunder, published administrative interpretations
thereof, and judicial decisions with respect thereto, all as of the date hereof
(collectively, the "ERISA Laws"). No assurance can be given that the Tax Laws or
the ERISA Laws will not change. In preparing the discussions with respect to
federal income tax matters in the section of the Form 10-K captioned "Federal
Income Tax Considerations", as supplemented by the statements in the
Supplemental Prospectus under the caption "Federal Income Tax Considerations",
we have made certain assumptions and expressed certain conditions and
qualifications therein, all of which assumptions, conditions and qualifications
are incorporated herein by reference.
Based upon and subject to the foregoing, we are of the opinion that the
discussions with respect to federal income tax matters in the section of the
Form 10-K captioned "Federal Income Tax Considerations", as supplemented by the
statements in the Supplemental Prospectus under the caption "Federal Income Tax
Considerations", in all material respects are accurate and fairly summarize the
federal income tax issues and ERISA Laws issues addressed therein, and hereby
confirm that the opinions of counsel referred to in said sections represent our
opinions on the subject matter thereof.
We hereby consent to the incorporation of this opinion by reference as
an exhibit to the Registration Statement and to the reference to our firm in the
Prospectus. In giving such consent, we do not thereby admit that we come within
the category of persons whose consent is required under Section 7 of the Act or
under the rules and regulations of the SEC promulgated thereunder.
Very truly yours,
/s/ Sullivan & Worcester LLP
SULLIVAN & WORCESTER LLP
EXHIBIT 10.1
AMENDED AND RESTATED WORKING CAPITAL PROMISSORY NOTE
$4,000,000.00 July 29, 1996
FOR VALUE RECEIVED, the undersigned, CONNECTICUT SUBACUTE CORPORATION,
a Delaware corporation (the "Borrower"), by this Amended and Restated Working
Capital Promissory Note (this "Note"), absolutely and unconditionally promises
to pay to the order of HEALTH AND RETIREMENT PROPERTIES TRUST, a real estate
investment trust formed under the laws of the State of Maryland (the "Lender"),
on or before the maturity date as defined in paragraph 1 below, the principal
sum of FOUR MILLION DOLLARS ($4,000,000) or so much thereof as may, from time to
time be advanced and remain unpaid hereunder, together with interest thereon, at
a rate per annum equal to the rate published from time to time in The Wall
Street Journal as the "prime rate", plus one percent (1%), with each change in
said prime rate to effect a corresponding change in the rate under this Note;
payable monthly in arrears on the last day of each calendar month, commencing
with the month in which this Note is executed. The entire principal balance,
together with accrued outstanding interest and all other charges arising
hereunder shall be due and payable on the Maturity Date.
1. Maturity Date. The maturity date of this Note (the "Maturity Date")
shall be June 30, 1997.
2. Loan Funding. Upon the terms and subject to the conditions of this
Note, the Lender agrees to lend to the Borrower such sums that the
Borrower may request, from time to time, from the date hereof until but
not including the Maturity Date, provided, that, the Borrower shall not
be in default hereunder and the aggregate principal amount of such
borrowings shall not exceed Four Million Dollars ($4,000,000) at any
one time outstanding. The Borrower shall notify the Lender in writing
or telephonically not later than 2:00 p.m. Boston time at least one
business day prior to the date of the advance being requested
("Drawdown Date"). Subject to the terms hereof, the Lender shall
advance the amount requested to the Borrower's bank account no.
1480-746-5 at State Street Bank and Trust Company, Boston,
Massachusetts, in immediately available funds, or to such other account
or in such other manner as may be mutually agreed by the Borrower and
the Lender, not later than the close of business on such Drawdown Date.
<PAGE>
The Borrower hereby irrevocably authorizes the Lender to make
appropriate notations on Schedule 1 attached hereto, reflecting any
advance to the Borrower of principal and any repayment thereof to the
Lender. Failure of the Lender to make any such notation shall not,
however, affect any obligation of the Borrower hereunder. The aggregate
unpaid principal amount as recorded by the Lender from time to time
shall constitute presumptive evidence or such amount. All payments of
principal, interest and other charges arising hereunder shall be made
to the Lender as its principal place of business at 400 Centre Street,
Newton, Massachusetts 02158, or such other place as the Lender may from
time to time direct.
3. Prepayment. The Borrower may, from time to time, make full or partial
prepayments of the principal amount outstanding hereunder and such
prepayment shall be without premium or penalty.
4. Interest. Interest shall be determined in all instances on the basis of
the actual number of days elapsed divided by 360. Upon default,
interest shall accrue at a rate per annum equal to the aggregate of
five percent (5%) plus the rate provided for herein.
5. Setoff. All payments by the Borrower to the Lender shall be made
without setoff or counterclaim, and free and clear of, and without
deduction of, any kind (unless the Borrower is compelled by law to make
such deduction or withholding). If any such obligation is imposed upon
the Borrower with respect to any amount payable by the Borrower
hereunder, the Borrower will pay to the Lender, on the date on which
such amount becomes due and payable hereunder and in United States
Dollars, such additional amount as shall be necessary to enable the
Lender to receive the same net amount which it would have received on
such due date had no such obligation been imposed upon the Borrower. If
the Borrower shall be required by law to make such deduction or
withholding, the Borrower will deliver to the Lender tax receipts or
other appropriate evidence of payment.
6. Representations and Warranties. The Borrower represents and warrants to
the Lender as follows:
a. Corporate Existence and Good Standing.
i. The Borrower is a corporation validly existing and in
good standing under the laws of the jurisdiction of
its incorporation; and has the corporate power to own
its property and conduct its business substantially
as presently conducted by it;
<PAGE>
ii. The Borrower has the power and authority to enter
into and to perform it obligations under this Note
and carry out the transactions contemplated hereby;
and
iii. The Borrower is qualified to do business in every
jurisdiction in which its property or business as
presently owned, conducted or contemplated makes such
qualification necessary.
b. Corporate Power, Consents; Absence of Conflict with Other
Agreement, Etc. The execution, delivery and performance of
this Note by the Borrower, and the transactions contemplated
hereby and thereby:
i. are within the corporate powers of, and have been
duly authorized by the Board of Directors of, and, to
the extent required, by the stockholders of the
Borrower;
ii. (i) do not require any approval or consent of, or
filing (except for the filing of Uniform Commercial
Code financing statements) with, any governmental
agency or authority bearing on the validity of such
instruments and transactions which is required by law
or the regulations of any agency or authority and
which has not been obtained or made, and (ii) are not
in contravention of law or the terms of the
Borrower's charter documents, by-laws or any
amendment thereof;
iii. will not conflict with or result in any breach or
contravention of or the creation of any lien (except
liens in favor of the Lender) under any indenture,
agreement, promissory note, lease, contract,
instrument or undertaking to which the Borrower is a
party or by which the Borrower or its properties is
bound.
c. Binding Obligation. This Note is and will be the valid and
legally binding obligation of the Borrower, enforceable in
accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium
or similar laws relating to or affecting generally the
enforcement of creditors' rights, and except that the
availability of specific performance, injunctive relief or any
other equitable remedy may be subject to the discretion of the
court before which any proceedings for such remedy may be
brought.
<PAGE>
d. Use of Proceeds. The proceeds of the loans shall be used by
the Borrower for general corporate purposes.
e. No Other Indebtedness. The Borrower has no indebtedness other
than indebtedness previously disclosed in writing to the
Lender.
f. No Default. No default or Event of Default has occurred and is
continuing on or as of the date of this Note or will result
from the funding of the loans hereunder.
g. No Litigation, Etc. Except as previously disclosed in writing
to the Lender, there is no pending or, to the best of the
knowledge of the Borrower, threatened action, suit, proceeding
or investigation before any court, governmental or regulatory
body, agency, commission or official, board of arbitration or
arbitrator against or affecting the Borrower, the outcome of
which could materially adversely affect the financial
position, business, operations or prospects of the Borrower or
which could significantly impair the ability of the Borrower
to perform its obligations under this Note.
h. No Liens. None of the property, assets, income or revenue of
the Borrower is subject to any liens, pledges, charges,
security interests or other encumbrances of any kind, other
than such as would be permitted by the provisions of Section 7
of this Note.
i. No Untrue Representations. No representation or warranty made
by the Borrower in this Note or in any other document
furnished to the Lender by or on behalf of the Borrower in
connection with the transactions contemplated hereby or
thereby contains any untrue statement of a material fact or
omits to state a material fact necessary in order to make the
statements contained herein or therein not misleading in light
of the circumstances in which they are made.
7. Covenants. The Borrower hereby covenants to the Lender that, so long as
any amount remains outstanding under this Note:
a. Maintain Existence. The Borrower will maintain its legal
existence and good standing under the laws of its jurisdiction
of organization, maintain its qualification to do business in
each state in which the failure to do so would have a material
adverse effect on the condition, financial or otherwise, of
the Borrower, and maintain all of its rights and corporate
privileges reasonably necessary to the conduct of its
business.
<PAGE>
b. No Consolidations. The Borrower will not consolidate with or
merge with or into or enter into or undertake any plan or
agreement of consolidation or merger with any person or
persons. The Borrower will not at any time sell, assign,
transfer, lease (as lessor) or otherwise transfer all or any
substantial part of its properties or assets to any person or
persons (either by or through a single transaction or by or
through a series of separate but related transactions).
c. No Indebtedness. The Borrower will not at any time create,
incur or assume, or become or be liable (directly or
indirectly) in respect of, any indebtedness, other than:
i. Oligations of the Borrower to the Lender;
ii. The liabilities of the Borrower for taxes,
assessments and other governmental charges or levies,
to the extent that payment thereof is not yet due or
to the extent that such liabilities are being
contested by the Borrower in good faith by
appropriate proceedings and adequate reserves
therefor are being maintained in accordance with
generally accepted accounting principles:
iii. The liabilities of the Borrower as the endorser of
negotiable instruments received by it in the ordinary
course of its business and presented by commercial
banks for collection or deposit;
iv. Current liabilities (exclusive of indebtedness for
borrowed money) of the Borrower for trade payables
and expense accruals and contractual obligations
incurred by it in the ordinary course of its
business; and
v. Indebtedness of the Borrower existing on the date
hereof and previously disclosed to Lender.
d. No Liens. The Borrower will not at any time create, assume,
incur or permit to exist, any mortgage, lien, pledge, charge,
security interest or other encumbrance of any kind in respect
of any of its property, assets, income or revenues of any
character, whether heretofore or hereafter acquired by it,
other than:
i. Security interests and other encumbrances in favor of
the Lender;
<PAGE>
ii. Liens for taxes, assessments or other governmental
charges or levies not yet due and payable by the
Borrower;
iii. Any materialmen's, mechanics', workmen's,
repairmen's, landlords' or other like liens arising
in the ordinary course of the business of the
Borrower and not yet due and payable or with respect
to which adequate reserves have been created and
which do not exceed in the aggregate $50,000;
iv. any other minor title encumbrances which shall not,
either individually or in the aggregate, restrict the
use, marketability, or value of such property,
assets, income or revenue;
v. the security interest granted to the Lender hereby;
and
vi. liens incurred or pledges and deposits made in the
ordinary course of business in connection with
worker's compensation, unemployment insurance,
pensions and other social security or governmental
insurance benefits or to secure the performance of
tenders, statutory obligations, surety and appeal
bonds, bids, operating leases, government contracts
and franchises, payment and performance bonds and
other similar non-material obligations incurred in
the ordinary course of business (exclusive of
obligations in respect of the payment of borrowed
money.
e. Investments. The Borrower will not make any investments in any
person by loan, advance, guarantee of any indebtedness or
creation or assumption of any other liability in respect of
any indebtedness of any person, the acquisition by the
Borrower of all or a substantial part of the stock, assets or
properties of any person, or the transfer or sale of any
property to any other person for less than payment in full in
cash of the transfer or sale price or the fair value thereof
(whichever of such price or value is higher).
f. Dividends. The Borrower will not make any declaration or
payment of any dividend or distribution on or in respect of
any shares of any class of its capital stock or other equity
interest or the capital stock or other equity interest of any
other person (or any options, warrants, or rights to purchase
or subscribe for the same), other than dividends or
distributions payable solely in shares of common stock or
similar common equity interests of the Borrower or of such
<PAGE>
other person; or the purchase, redemption, or other retirement
of any shares of any class of capital stock or other equity
interest of the Borrower or any other person (or any options,
warrants, or rights to purchase or subscribe for the same),
directly or indirectly through a subsidiary or otherwise; the
return of capital by the Borrower or any other person to its
shareholders or equity holders as such; and any other
distribution on or in respect of any shares of any class of
capital stock or other equity interest of the Borrower or any
other person.
g. Compromise of Accounts. The Borrower shall not compromise or
adjust any accounts receivable (or extend the time for payment
thereof) or grant any discounts, allowances or credits
thereon.
h. Books and Records. The Borrower shall at all times and from
time to time allow the Lender, by or through any of its
officers, agents, attorneys, or accountants, to examine,
inspect or make extracts from the Borrower's books and
records, and those of any related person and arrange for
verification of accounts receivable, under reasonable
procedures, directly with account debtors or by other methods;
shall furnish to the Lender upon request additional statements
of any accounts receivable, together with all notes or other
papers evidencing the same and any guaranty, securities or
other documents or information relating thereto; and shall do,
make, execute and deliver all such additional and further
acts, things, deeds, assurances and instruments as the Lender
may require more completely to vest in and assure to the
Lender its rights hereunder.
8. Default. The Lender, at its option, may declare the entire unpaid
principal balance of this Note, together with charges, and accrued
unpaid interest thereon to be immediately due and payable without
demand, notice or protest (which are hereby waived) upon the occurrence
of any one or more of the following events ("Events of Default")
remaining uncured for ten (10) days with respect to items (a) and (b)
below and remaining uncured for thirty (30) days after notice with
respect to events (c) through (p) below:
(a) The failure by the Borrower to pay upon demand (or when due if not
payable on demand) any of the Borrower's liabilities, obligations, and
indebtedness to the Lender (herein, the "Liabilities"); (b) the failure by the
Borrower promptly, punctually, and faithfully to perform, discharge, or comply
with any of the Borrower's Liabilities; (c) the determination by the Lender that
any representation or warranty heretofore, now, or hereafter made by the
Borrower to the Lender in any document, instrument, agreement, or paper was not
<PAGE>
true or accurate when made; (d) the occurrence of any event of default under any
agreement between the Lender and the Borrower, or instrument or paper given the
Lender by the Borrower, whether such agreement, instrument, or paper now exists
or hereafter arises (notwithstanding that the Lender may not have exercised its
rights upon default under any such other agreement, instrument, or paper); (e)
any act by, against, or relating to the Borrower, or its property or assets,
which act constitutes the application for, consent to, or sufferance of the
appointment of a receiver, trustee, or other person, pursuant to court action or
otherwise, over all, or any part of the Borrower's property; the granting of any
trust mortgage or execution of an assignment for the benefit of the creditors of
the Borrower, or the occurrence of any other voluntary or involuntary
liquidation or extension of debt agreement for the Borrower: the failure by the
Borrower generally to pay the debts of the Borrower as they mature; adjudication
of bankruptcy or insolvency relative to the Borrower; the entry of an order for
relief or similar order with respect to the Borrower in any proceeding pursuant
to the Bankruptcy Reform Act of 1978 (commonly referred to as the Bankruptcy
Code) or any other federal bankruptcy law; the filing of any complaint,
application, or petition by or against the Borrower initiating any matter in
which the Borrower is or may be granted any relief from the debts of the
Borrower pursuant to the Bankruptcy Act or any other insolvency statute or
procedure; the calling or sufferance of a meeting of creditors of the Borrower;
the meeting by the Borrower with a formal or informal creditors' committee; the
offering by, or entering into by, the Borrower of any composition, extension, or
any other arrangement seeking relief or extension for the debts of the Borrower,
or the initiation of any other judicial or nonjudicial proceeding or agreement
by, against, or including the Borrower which seeks or intends to accomplish a
reorganization or arrangement with creditors; (f) the occurrence of any event or
circumstance with respect to the Borrower such that the Lender deems itself
insecure; (g) any change in the identity, authority, or responsibilities of the
Borrower, its directors or officers or any individual having management or
policy authority with respect to the Borrower without the prior consent of the
Lender; (h) the termination of existence, dissolution, winding up, or
liquidation of the Borrower; (i) the merger or consolidation of the Borrower
with or into any other corporation or other entity; (j) the occurrence of any of
the foregoing Events of Default with respect to any guarantor, endorser, or
surety to the Lender of the Liabilities; or the occurrence of any of the
foregoing Events of Default with respect to any parent, subsidiary, or affiliate
of the Borrower, as if such guarantor, endorser, surety, parent, subsidiary, or
affiliate were the "Borrower" described herein; (k) the termination of any
guaranty by any guarantor of the Liabilities; (l) the imposition of any lien
upon any assets of the Borrower or the entry of any judgment against the
Borrower which is not covered by insurance or remains unpaid for a period of
more than thirty (30) days; (m) the entry of any court order which enjoins,
<PAGE>
restrains or in any way prevents the Borrower from conducting all or any part of
its business affairs in the ordinary course; (n) the service of any process upon
the Lender seeking to attach by mesne or trustee process any funds of the
Borrower on deposit with the Lender; (o) the occurrence of any loss, theft,
damage, destruction, encumbrance to or of any of the assets of the Borrower; and
(p) any act by or against, or relating to the Borrower or its assets pursuant to
which any creditor of the Borrower seeks to reclaim or repossess or reclaims or
repossesses all or any portion of the Borrower's assets. If item (a) preceding
remains uncured for ten (10) days, a late charge equal to five percent (5%) of
the outstanding installment shall accrue.
In addition, at the Lender's option and without demand, notice or
protest, the occurrence of any Event of Default shall also constitute a default
under all other agreements between the Lender and the Borrower and under all
other instruments and papers given the Lender by the Borrower.
9. Lender's Right of Setoff. Regardless of the adequacy of any collateral,
during the continuance of an Event of Default, any deposits or other
sums credited by or due from the Lender to the Borrower and any
securities or other property of the Borrower in the possession of the
Lender may be applied to or set off against the payment of any
Liabilities or obligations of the Borrower under this Note and any and
all other liabilities, direct, or indirect, absolute or contingent, due
or to become due, now existing or hereafter arising, of the Borrower to
the Lender.
10. Security Interests. The Borrower's obligations hereunder shall be
secured, and Borrower does hereby grant a security interest in, all
accounts, accounts receivable, notes, drafts, instruments, contract
rights, chattel paper, documents, securities, money and general
intangibles now owned or hereafter received or acquired by or belonging
or owing to the Borrower (including to the Borrower under any trade
names, divisions or affiliates thereof) arising out of services
rendered by the Borrower or from any other transaction relating to any
facility owned or operated by the Borrower, (including, without
limitation, any such obligation which would be characterized as an
account, general intangible or chattel paper under the UCC) and all
rights to receive payment under all third party reimbursement or
payment agreements between the Borrower and any and all private
insurance carriers or employee assistance programs, Blue Cross and/or
Blue Shield, CHAMPUS, all Managed Care Plans, Medicare and Medicaid and
any and all collateral or depository accounts with any bank into which
proceeds of all or any portion of the foregoing may be deposited, and
all of the Borrower's rights to any goods represented by any of the
<PAGE>
foregoing and all moneys due or to become due to the Borrower under all
contracts for the performance of services by the Borrower or in
connection with any other transaction, now in existence or hereafter
arising, together with all proceeds and products of each item of
collateral in the foregoing categories.
11. Outstanding Amount. The Borrower and the Lender acknowledge and agree
that, on and as of June 30, 1996, the outstanding principal amount of
this Note is One Million, Three Hundred and Sixty-Five Thousand Dollars
($1,365,000).
12. Expenses. The Borrower will reimburse and indemnify the Lender for all
out-of-pocket expenses, including, but not limited to, attorneys' fees
and disbursements, incurred or expended in connection with the
preparation or interpretation of this Note or any amendment hereof or
thereof or with the enforcement of any obligations or the satisfaction
of any indebtedness of the Borrower hereunder, or in connection with
any litigation, proceeding or dispute hereunder in any way relating to
the loans evidenced hereby.
13. Notices. All notices and other communications pursuant to this Note
shall be in writing either delivered in hand or sent by certified or
registered U.S. mail, postage prepaid and addressed as follows:
(a) if to the Borrower, at 955 South Main Street, Middletown,
Connecticut 06457, Attention: Treasurer;
(b) if to the Lender, at 400 Centre Street, Newton, Massachusetts
02158, marked Attention: Treasurer;
or in either case, to such other address as the party to receive any such notice
or other communication shall have designated by written notice to the other
party. All periods of notice shall be measured from the date of delivery
thereof, is delivered in hand, or from the date of mailing thereof, if mailed.
14. Governing Law. This Note shall take effect as an instrument under seal
to be governed by and construed in accordance with the laws of The
Commonwealth of Massachusetts.
15. Usury. Notwithstanding any provision contained herein or contained in
any mortgage, conditional assignment of rents, security agreement or
other instrument or agreement now or hereafter executed in connection
with the loan evidenced hereby, the maximum amount of interest and
other charges in the nature thereof contracted for, or payable
hereunder or thereunder, shall not exceed the maximum amount which may
be lawfully contracted for, charged and received in this loan
transaction all as determined by the final judgment of a court of
competent jurisdiction, including all appeals therefrom.
<PAGE>
16. Miscellaneous. (a) The rights and remedies herein expressed are
cumulative and are not exclusive of any other rights which the Lender
would otherwise have. All of the terms and provisions of this Note
shall be binding upon and inure to the benefit of and be enforceable by
the respective successors and assigns of the Lender; provided, however,
that, without limiting the generality of the foregoing, the Lender may
assign or transfer its rights hereunder, in whole or in part, to any
other person, by way of sales of undivided participations, or any other
interest in the loans, or other similar means.
(b) THE BORROWER WARRANTS, REPRESENTS, COVENANTS AND AGREES, AS A
MATERIAL INDUCEMENT TO THE GRANTING OF THE LOAN EVIDENCED HEREBY, THAT ALL OF
THE PROCEEDS OF THIS NOTE AND SAID LOAN SHALL BE USED FOR BUSINESS OR COMMERCIAL
PURPOSES, AND NO PART OF SAID PROCEEDS SHALL BE USED FOR THE PURCHASE OF
SECURITIES, OR FOR PERSONAL, FAMILY, HOUSEHOLD OR AGRICULTURAL PURPOSES.
(c) The captions in this Note are for convenience of reference only and
shall not define or limit the provisions hereof. This Note may be amended, and
the performance or observance by the Borrower of any terms of this Note or any
other instrument relating hereto or the continuance of any default or Event of
Default may be waived (either generally or in a particular instance and either
retroactively or prospectively) with, but only with, the written consent of the
Lender. No waiver shall extend to or affect any obligation not expressly waived
or impair any right consequent thereon. No course of dealing or delay or
omission shall act as a waiver thereof or otherwise be prejudicial thereto. No
notice to or demand upon the Borrower shall entitle the Borrower to other or
further notice or demand in similar or other circumstances.
(d) This Note is given to amend and restate, and not in payment or
satisfaction of, the Working Capital Promissory Note, dated October 15, 1992, in
the original principal amount of $7,000,000, as amended, as a consequence of and
to effect the changes set forth in this Note.
IN WITNESS WHEREOF, the Borrower has caused this Note to be signed in
its name by its duly authorized officer under seal on and as of the date first
set forth above.
CONNECTICUT SUBACUTE CORPORATION
Attest:
/s/Deborah DiCostanzo By: /s/Mark J. Finkelstein
Its: President
