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): July 2, 1997 (June 26, 1997)
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 5. Other Information.
Advisory Agreement. On June 26, 1997 the Company and HRPT Advisors, Inc.
(the "Advisor") entered into the Third Amendment to the Advisory Agreement
between the Company and the Advisor. The Third Amendment alters the method of
calculating any annual Incentive Fee (as defined in the Advisory Agreement)
payable by the Company to the Advisor as follows: The Incentive Fee shall equal
15% of the annual increase in the Company's Funds from Operations per share (but
in no event more than $.01 per share), times the fully diluted weighted average
number of shares outstanding in such year. "Funds from Operations" are the
Company's consolidated net income (computed in accordance with generally
accepted accounting principles), before gain or loss on sale of properties and
extraordinary items, depreciation and other non-cash items and include the
Company's pro rata share of the funds from operations of unconsolidated
subsidiaries and entities for which the Company accounts by the equity method of
accounting.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits
1.1 Purchase Agreement relating to the Remarketed Reset Notes due July 9,
2007 by and between the Company and Merrill Lynch & Co., dated as of
July 2, 1997.
1.2 Remarketing Agreement (including form of Remarketing Underwriting
Agreement) relating to the Remarketed Reset Notes due July 9, 2007 by
and between the Company and Merrill Lynch & Co., dated as of July 2,
1997.
4.1 Form of First Supplemental Indenture by and between the Company and
State Street Bank & Trust Company as Trustee, relating to the
Remarketed Reset Notes due July 9, 2007.
4.2 Form of Global Note relating to the Remarketed Reset Notes due July 9,
2007.
8.1 Opinion of Sullivan & Worcester LLP dated July 2, 1997 with respect to
certain tax matters.
10 Third Amendment to Advisory Agreement by and between the Company and
the Advisor, dated June 26, 1997.
99 Unaudited Pro Forma Financial Statements.
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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
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Ajay Saini
Treasurer and Chief Financial Officer
Date: July 2, 1997
Ex 1.1
HEALTH AND RETIREMENT PROPERTIES TRUST
(a Maryland real estate investment trust)
PURCHASE AGREEMENT
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July 2, 1997
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
North Tower, 26th Floor
World Financial Center
New York, New York 10281-1209
Ladies and Gentlemen:
Health and Retirement Properties Trust, a Maryland real estate investment
trust (the "Company"), confirms its agreement with you with respect to the sale
by the Company and the purchase by you of the aggregate principal amount of the
Company's Remarketed Reset Notes (the "Securities") set forth in Schedule I
hereto. The Securities are to be issued pursuant to the Indenture and
Supplemental Indenture referred to in Schedule I hereto (together, the
"Indenture"), between the Company and the Trustee identified in such Schedule
(the "Trustee").
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (No. 333-26887) for the
registration of debt securities, preferred shares of beneficial interest,
depositary shares, common shares of beneficial interest and warrants under the
Securities Act of 1933, as amended (the "1933 Act"), and has filed such
amendments thereto, if any, as may have been required to the date hereof. Such
registration statement has been declared effective under the 1933 Act and the
Indenture has been duly qualified under the Trust Indenture Act of 1939, as
amended (the "1939 Act"). Such registration statement (as amended, if
applicable) and the prospectus constituting a part thereof, as supplemented by
the prospectus supplement relating to the Securities (including, in each case,
all documents incorporated or deemed to be incorporated by reference therein),
as from time to time amended or supplemented pursuant to the 1933 Act, the
Securities Exchange Act of 1934, as amended (the "1934 Act"), or
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otherwise, are hereinafter referred to as the "Registration Statement" and the
"Prospectus", respectively. All references in this Agreement to financial
statements and schedules and other information which is "contained", "included"
or "stated" in the Registration Statement or the Prospectus (and all other
references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which is or is deemed
to be incorporated by reference in the Registration Statement or in the
Prospectus, as the case may be.
Section 1. Representations and Warranties.
(a) The Company represents and warrants to you as of the date hereof as
follows:
(i) At the time the Registration Statement became effective, the
Registration Statement complied in all material respects with the
requirements of the 1933 Act and the rules and regulations under the 1933
Act (the "1933 Act Regulations") and did not contain an untrue statement of
a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading. The
Prospectus, at the date hereof (unless the term "Prospectus" refers to a
prospectus which has been provided to you by the Company for use in
connection with the offering of the Securities which differs from the
Prospectus on file at the Commission at the date of effectiveness of the
Registration Statement, in which case at the time it is first provided to
you for such use) and at the Closing Time referred to in Section 2 hereof,
does not and will not include an untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; provided, however, that the representations and warranties in
this subsection (i) shall not apply to (a) that part of the Registration
Statement that constitutes the Statement of Eligibility (Form T-1) of the
Trustee under the 1939 Act or (b) those parts of the Registration Statement
or the Prospectus made in reliance upon and in conformity with information
furnished to the Company in writing by you expressly for use in the
Registration Statement or the Prospectus.
(ii) The documents incorporated or deemed to be incorporated by
reference in the Prospectus, at the time they were or hereafter are filed
with the Commission, complied and will comply in all material respects with
the requirements of the 1934 Act and the rules and regulations of the
Commission under the 1934 Act (the "1934 Act Regulations"), and, when read
together with the other
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information in the Prospectus, at the time the Registration Statement
became effective and at Closing Time, did not and will not include an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading.
(iii) The Company is a Maryland real estate investment trust duly
organized, validly existing and in good standing under the laws of the
State of Maryland. Each of its subsidiaries has been duly organized and is
validly existing as a corporation or trust 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 in the
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, and is 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.
(iv) The financial statements of the Company and its subsidiaries and,
to the Actual Knowledge of the Company (as defined in paragraph (xii) of
this Section 1(a)), of Marriott International, Inc. (the "Operator") and
Government Properties Investors, Inc. ("GPI") and its consolidated
subsidiaries, together with the related schedules and notes thereto,
included or incorporated by reference in the Registration Statement and in
the Prospectus, comply as to form in all material respects with the
requirements of the 1933 Act. Such financial statements of the Company and,
to the Actual Knowledge of the Company, of the Operator and GPI, together
with the related schedules and notes thereto, present fairly the
consolidated financial position, results of operations, shareholders'
equity and changes in financial position of the foregoing entities at the
respective dates or for the respective periods therein specified and have
been prepared in accordance with generally accepted accounting principles
("GAAP") consistently applied throughout the periods involved. The pro
forma financial statements and other pro forma financial information
(including the notes thereto) included or incorporated by reference in the
Registration Statement and in the Prospectus (i) present fairly the
information shown therein, (ii) have been prepared in accordance with the
Commission's
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rules and guidelines with respect to pro forma financial statements and
(iii) have been properly compiled on the basis described therein and the
assumptions used in the preparation of such pro forma financial statements
and other pro forma financial information (including the notes thereto) are
reasonable and the adjustments used therein are appropriate to give effect
to the transactions or circumstances referred to therein. The adjusted pro
forma financial statements and other adjusted pro forma financial
information (including the notes thereto) included or incorporated by
reference in the Registration Statement and in the Prospectus (i) present
fairly the information shown therein and (ii) have been properly compiled
on the basis described therein and the assumptions used in the preparation
of such adjusted pro forma financial statements and other adjusted pro
forma financial information (including the notes thereto) are reasonable
and the adjustments used therein are appropriate to give effect to the
transactions or circumstances referred to therein.
(v) The accountants who have certified the financial statements of the
Company and its subsidiaries and, to the Actual Knowledge of the Company,
of the Operator and its subsidiaries and of GPI and its subsidiaries,
included or incorporated by reference in the Registration Statement and in
the Prospectus are independent certified accountants as required by the
1933 Act. The statements included in or incorporated by reference in the
Registration Statement and in the Prospectus with respect to such
accountants pursuant to Rule 509 of Regulation S-K under the 1933 Act are
true and correct in all material respects.
(vi) The Indenture has been duly qualified under the 1939 Act and has
been duly authorized, executed and delivered by the Company and is a valid
and binding agreement of the Company enforceable in accordance with its
terms, except as limited by (a) the effect of bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or other similar laws
relating to or affecting the rights or remedies of creditors or (b) the
effect of general principles of equity (regardless of whether enforcement
is sought in a proceeding in equity or at law.)
(vii) The Securities have been authorized by all necessary trust
action and, when executed and authenticated in accordance with the
provisions of the Indenture and delivered and paid for pursuant to this
Agreement, will be valid and binding obligations of the Company enforceable
in accordance with their terms, except as limited by (a) the effect of
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or
other similar laws
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relating to or affecting the rights or remedies of creditors or (b) the
effect of general principles of equity (regardless of whether enforcement
is sought in a proceeding in equity or at law.)
(viii) The Securities and the Indenture conform to the descriptions
thereof in the Registration Statement and in the Prospectus.
(ix) Since the respective dates as of which information is given in
the 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 of the
Company or the Advisor (as defined in paragraph (xii) of this Section
1(a)), 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, by 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 Advisor, has incurred any
material liabilities or obligations, direct or contingent, (iv) the Company
and its subsidiaries, on a consolidated basis, have not (A) other than the
declaration by the Board of Trustees on July 2, 1997 of a dividend of $0.36
per share of beneficial interest to shareholders of record on July 25,
1997, payable August 22, 1997, declared, paid or made a dividend or
distribution of any kind on any class of its shares of beneficial interest
(other than dividends or distributions from wholly owned subsidiaries to
the Company), (B) other than the issuance of 9,500 common shares of
beneficial interest pursuant to its 1992 Incentive Share Award Plan
authorized by the Company's Board of Trustees on July 2, 1997, issued any
shares of beneficial interest of the Company or any of its subsidiaries or
any options, warrants, convertible securities or other rights to purchase
the shares of beneficial interest of the Company or any of its subsidiaries
(other than the issuance of common shares of beneficial interest upon
conversion of certain convertible debentures of the Company) or (C)
repurchased or redeemed shares of beneficial interest, 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.
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(x) 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 GAAP 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.
(xi) Except as otherwise disclosed in the Prospectus, neither the
Company nor any of its subsidiaries nor, to the Actual Knowledge of the
Company, 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 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 the Company and its subsidiaries, taken as
a whole, or of the Advisor, as the case may be. Neither the Company nor, to
the Actual Knowledge of the Company, 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 business,
operations, earnings, prospects, properties or condition (financial or
otherwise) of any of the Company and its subsidiaries, taken as a whole, or
the Advisor, as the case may be.
(xii) Except as disclosed in the Registration Statement or in the
Prospectus, there is not now pending or, to the knowledge of the Company,
threatened, any litigation, action, suit or proceeding to which the Company
or, to the actual knowledge of the Company (including without limitation,
for purposes of this Agreement, its managing trustees) without independent
inquiry (the "Actual Knowledge of the Company"), 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
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the Company or, to the Actual Knowledge of the Company, of 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 Advisor, or (C)
concerns the Company or, to the Actual Knowledge of the Company, the
Advisor, and is required to be disclosed in the Prospectus, or (D) could
adversely affect the consummation of this Agreement and the issuance,
purchase and sale of the Securities. No contract or other document is
required to be described in the Registration Statement or in the Prospectus
or to be filed as an exhibit to the Registration Statement that is not
described therein or filed as required.
(xiii) The execution, delivery and performance by the Company of this
Agreement, the issuance, offering and sale by the Company of the Securities
as contemplated by the Registration Statement and by the Prospectus and the
consummation of the transactions contemplated hereby and compliance with
the terms and provisions hereof, 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 (the "Declaration
of Trust") or the By-laws of the Company or the charter or by-laws or other
organizational documents of any subsidiaries of the Company or, to the
Actual Knowledge of the Company, the respective charter or by-laws or other
organizational documents of the Advisor, or (ii) except as disclosed in the
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 Advisor, is a party or by which the Company or any of its
subsidiaries or, to the Actual Knowledge of the Company, the Advisor or
their respective properties or assets is bound, or (iii) any laws,
administrative regulations or rulings or decrees to which the Company or
any of its subsidiaries or, to the Actual Knowledge of the Company, the
Advisor or their respective properties or assets may be subject.
(xiv) 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 and the consummation of the transactions
contemplated hereby, including, without limitation, the issuance, sale and
delivery of the Securities pursuant to this Agreement, except such as have
been obtained and such as may be required under foreign and state
securities or "Blue Sky" laws.
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(xv) Except as otherwise disclosed in the Registration Statement and
in the Prospectus, the Company and each of its subsidiaries 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, materially and adversely affect the current use or
value thereof, to all property and assets described in the Registration
Statement and in the Prospectus as being owned by them. Except as otherwise
set forth in the Registration Statement or in the Prospectus, all leases to
which the Company and each of its subsidiaries is a party relating to real
property, and all other leases which are material to the business of the
Company and its subsidiaries, taken as a whole, 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, that would, individually or in the aggregate,
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) has occurred and is continuing
thereunder, and the Company and each of its subsidiaries 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 and
each of its subsidiaries, the Company or such subsidiary has such
documents, instruments, certificates, opinions and assurances, including
without limitation, fee, leasehold owners or mortgage title insurance
policies (disclosing no encumbrances or title exceptions which are material
to the Company and its subsidiaries considered as a whole, except as
otherwise set forth in the Registration Statement and in the 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 or such
subsidiary to have obtained.
(xvi) The Company and each of its 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
in the 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,
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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.
(xvii) 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.
(xviii) Except for non-compliance which in the aggregate does not have
a material adverse effect on the business, operations, earnings, prospects,
properties or condition (financial or otherwise) of the Company and its
subsidiaries, 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 and each of its subsidiaries in
connection with the operation of their respective businesses, including,
without limitation, any subsurface soils and ground water (the "Realty"),
is free of contamination from any Hazardous Materials. To the Company's
knowledge, after due investigation, the Realty does not contain any
underground storage or treatment tanks, active or abandoned water, gas or
oil wells, or any other underground improvements or structures, other than
the foundations, footings, or other supports for the improvements located
thereon which, based on present knowledge, could presently or at any time
in the future cause a material detriment to or materially impair the
beneficial use thereof by the Company or constitute or cause a significant
health, safety or other environmental hazard to occupants or users thereof
without regard to any special conditions of such occupants or users. The
Company represents that, after due investigation, it has no knowledge of
any material violation, with respect to the Realty, of any Environmental
Law, or of any material liability on the part of the Company with respect
to the Realty, resulting from the presence, use, release, threatened
release, emission, disposal, pumping, discharge, generation or processing
of any Hazardous Materials. As used herein, "Environmental Law" means any
federal, state or local statute, regulation, judgment, order or
authorization
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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, and "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.
(xix) Each of the Company, its subsidiaries and, to the Actual
Knowledge of the Company, the Advisor, has such permits, licenses,
franchises and authorizations of governmental or regulatory authorities
(together, "permits"), including, without limitation, under any applicable
Environmental Law, 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 business,
operations, earnings, prospects, properties or condition (financial or
otherwise) of the Company, or, to the Actual Knowledge of the Company, the
Advisor, and neither the Company nor, to the Actual Knowledge of the
Company, 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 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 in
the 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 Advisor.
(xx) To the 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,
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properties or condition (financial or otherwise) of the Company and its
subsidiaries, taken as a whole.
(xxi) Neither the Company nor any of its subsidiaries nor, to the
knowledge of the Company, any officer, trustee or 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.
(xxii) The authorized, issued and outstanding capital stock of the
Company is as set forth under the caption "Capitalization" in the
Prospectus. All of the issued and outstanding indebtedness of the Company
and common shares of beneficial interest are duly and validly authorized
and issued, and all of the issued and outstanding common shares of
beneficial interest are fully paid and nonassessable.
(xxiii) All of the outstanding shares of beneficial interest of, or
other ownership interests in, each of the Company's subsidiaries have been
duly authorized and validly issued and are fully paid and nonassessable,
and, except as disclosed in the Registration Statement and in the
Prospectus, are or will be owned by the Company free and clear of any
security interest, claim, lien, encumbrance or adverse interest of any
nature.
(xxiv) 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 other than the issued
capital shares of its subsidiaries or as referred to or described in the
Registration Statement and in the 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.
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(xxv) Except as disclosed in the Registration Statement and in 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, trustees or directors of the
Company or any of its subsidiaries or any of the members of the families of
any of them.
(xxvi) 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 by the Prospectus.
(xxvii) Neither the Company nor any of its officers and directors (as
defined in the 1933 Act Regulations) has taken or will take, directly or
indirectly, prior to the termination of the offering contemplated by this
Agreement, 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 Securities.
(xxviii) 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 (the "1940 Act"),
or an "investment adviser" as such term is defined in the Investment
Advisers Act of 1940, as amended.
(xxix) The Company is organized in conformity with the requirements
for qualification, and, as of the date hereof the Company operates, and as
of Closing Time the Company will operate, in a manner that qualifies the
Company as a "real estate investment trust" under the Internal Revenue Code
of 1986, as amended (the "Code"), and the rules and regulations thereunder,
for 1996 and subsequent years. The
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Company qualified as a real estate investment trust under the Code for each
of its taxable years from 1987 through 1996.
(xxx) 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, except such defaults which, singly or in the aggregate,
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, considered as a whole, except as
disclosed in the Registration Statement and in the Prospectus.
(xxxi) The Advisory Agreement, dated as of November 20, 1986, as
amended, between the Company and the Advisor (the "Advisory Agreement"),
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, fraudulent transfer or
other similar laws relating to or affecting the rights or remedies of
creditors or (b) the effect of general principles of equity (regardless of
whether enforcement is sought in a proceeding in equity or at law).
(b) Any certificate signed by any officer of the Company and delivered to
you or to your counsel shall be deemed a representation and warranty by the
Company to you as to the matters covered thereby.
Section 2. Sale and Delivery to You; Closing.
(a) On the basis of the representations and warranties herein contained and
subject to the terms and conditions herein set forth, the Company agrees to sell
to you, and you agree to purchase from the Company, at the purchase price set
forth in Schedule I hereto, the aggregate principal amount of Securities set
forth in Schedule I hereto, plus accrued interest, if any, from the date
specified in Schedule I hereto to the date of payment and delivery.
(b) Payment of the purchase price for and delivery of the Securities shall
be made on the date and at the time and place set forth in Schedule I hereto
(such time and date of payment and
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delivery being herein called "Closing Time"). Payment shall be made by certified
or official bank check or checks in Federal or similar same-day funds payable to
the order of the Company against delivery to you of the Securities to be
purchased by you. The Securities shall be in such authorized denominations and
registered in such names as you may request in writing at least two business
days before Closing Time. The Securities will be made available for examination
and packaging by you not later than 10:00 a.m. on the last business day prior to
Closing Time.
Section 3. Covenants of the Company. The Company covenants with you as
follows:
(a) Immediately following the execution of this Agreement, the Company will
prepare a Prospectus Supplement setting forth the aggregate principal amount of
Securities covered thereby and their terms not otherwise specified in the
Prospectus or the Indenture, your name, the price at which the Securities are to
be purchased by you from the Company, the initial public offering price, if any,
the selling concession and reallowance, if any, and any delayed delivery
arrangements, and such other information as you and the Company deem appropriate
in connection with the offering of the Securities; and the Company will promptly
transmit copies of the Prospectus Supplement to the Commission for filing
pursuant to Rule 424(b) of the 1933 Act Regulations and will furnish to you as
many copies of the Prospectus (including such Prospectus Supplement) as you
shall reasonably request.
(b) Until the termination of the initial offering of the Securities, the
Company will notify you immediately, and confirm the notice in writing, (i) of
the effectiveness of any amendment to the Registration Statement, (ii) of the
transmittal to the Commission for filing of any supplement or amendment to the
Prospectus or any document to be filed pursuant to the 1934 Act, (iii) of the
receipt of any comments from the Commission with respect to the Securities, (iv)
of any request by the Commission for any amendment to the Registration Statement
or any amendment or supplement to the Prospectus with respect to the Securities
or for additional information relating thereto, and (v) of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or the initiation of any proceedings for that purpose. The Company
will make every reasonable effort to prevent the issuance of any such stop order
and, if any stop order is issued, to obtain the lifting thereof at the earliest
possible moment.
(c) The Company will give you notice of its intention to file or prepare
any post-effective amendment to the Registration Statement or any amendment or
supplement (including any document to be filed pursuant to the 1934 Act prior to
the termination of
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the initial offering of the Securities) to the Prospectus (including any revised
prospectus which the Company proposes for use by you in connection with the
offering of the Securities which differs from the prospectus on file at the
Commission at the time that the Registration Statement becomes effective,
whether or not such revised prospectus is required to be filed pursuant to Rule
424(b) of the 1933 Act Regulations), will furnish you with copies of any such
amendment or supplement a reasonable amount of time prior to such proposed
filing or use, as the case may be, and will not file any such amendment or
supplement or use any such prospectus to which your counsel shall reasonably
object.
(d) The Company will deliver to you a conformed copy of the Registration
Statement as originally filed and of each amendment thereto filed prior to the
termination of the initial offering of the Securities (including exhibits filed
therewith or incorporated by reference therein and the documents incorporated by
reference into the Prospectus pursuant to Item 12 of Form S-3).
(e) The Company will furnish to you, from time to time during the period
when the Prospectus is required to be delivered under the 1933 Act or the 1934
Act, such number of copies of the Prospectus (as amended or supplemented) as you
may reasonably request for the purposes contemplated by the 1933 Act, the 1933
Act Regulations, the 1934 Act or 1934 Act Regulations.
(f) If any event shall occur as a result of which it is necessary, in the
opinion of your counsel, to amend or supplement the Prospectus in order to make
the Prospectus not misleading in the light of the circumstances existing at the
time it is delivered to a purchaser, the Company will either (i) forthwith
prepare and furnish to you a reasonable number of copies of an amendment of or
supplement to the Prospectus or (ii) make an appropriate filing pursuant to
Section 13, 14 or 15 of the 1934 Act, in form and substance reasonably
satisfactory to your counsel, which will amend or supplement the Prospectus so
that it will not include an untrue statement of a material fact or omit to state
a material fact necessary in order to make the statements therein, in the light
of the circumstances existing at the time it is delivered to a purchaser, not
misleading.
(g) The Company will endeavor in good faith, in cooperation with you, to
qualify the Securities for offering and sale under the applicable securities
laws and real estate syndication laws of such states and other jurisdictions of
the United States as you may designate provided that, in connection therewith,
the Company shall not be required to qualify as a foreign corporation or trust
or to file any general consent to service of process. In each jurisdiction in
which the Securities have been so
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qualified the Company will file such statements and reports as may be required
by the laws of such jurisdiction to continue such qualification in effect for so
long as required for the distribution of the Securities.
(h) The Company will make generally available to its security holders as
soon as reasonably practicable, but not later than 90 days after the close of
the period covered thereby, an earning statement of the Company (in form
complying with the provisions of Rule 158 of the 1933 Act Regulations) covering
a period of at least twelve months beginning not later than the first day of the
Company's fiscal quarter next following the effective date of the Registration
Statement. "Earning statement", "make generally available" and "effective date"
will have the meanings contained in Rule 158 of the 1933 Act Regulations.
(i) The Company will use the net proceeds received by it from the sale of
the Securities in the manner specified in the Prospectus under the caption "Use
of Proceeds" in all material respects.
(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 requirements to qualify as a "real estate investment
trust".
(k) The Company will timely file any document which it is required to file
pursuant to the 1934 Act prior to the termination of the offering of the
Securities.
(l) The Company will not, between the date of this Agreement and the
termination of any trading restrictions or Closing Time, whichever is later,
with respect to the Securities, without your prior written consent, offer or
sell, grant any option for the sale of, or enter into any agreement to sell, any
debt securities of the Company with a maturity of more than one year (other than
the Securities which are to be sold pursuant to this Agreement and additional or
expanded commitments to participate in the Company's revolving line of credit)
except as may otherwise be provided in this Agreement.
Section 4. Payment of Expenses. The Company will pay all expenses incident
to the performance of its obligations under this Agreement, including (i) the
printing and filing of the Registration Statement as originally filed and of
each amendment thereto, (ii) the printing and filing of this Agreement, (iii)
the preparation, issuance and delivery of the Securities to you, (iv) the fees
and disbursements of counsel for the Company, referred to in Section 5(b)
hereof, the Company's accountants, the Trustee and its counsel and any
applicable calculation agent
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or exchange rate agent, (v) the qualification of the Securities under securities
laws and real estate syndication laws in accordance with the provisions of
Section 3(g) hereof, including filing fees and the fee and disbursements of
counsel for the Company in connection therewith and in connection with the
preparation of the Blue Sky Survey, (vi) the printing and delivery to you of
copies of the Registration Statement as originally filed and of each amendment
thereto, and of the Prospectus and any amendments or supplements thereto, (vii)
the printing and delivery to you of copies of the Indenture, (viii) any fees
charged by nationally recognized statistical rating organizations for the rating
of the Securities, (ix) the cost of printing or reproducing and delivering to
you copies of the Blue Sky Survey, (x) the cost of providing any CUSIP or other
identification numbers for the Securities, and (xi) the fees and expenses of any
depositary in connection with the Securities.
If this Agreement is terminated by you in accordance with the provisions of
Section 5 or Section 9(a)(i), the Company shall reimburse you for all of your
out-of-pocket expenses, including the reasonable fees and disbursements of your
counsel.
Section 5. Conditions of Your Obligations. Your obligations hereunder are
subject to the accuracy of the representations and warranties of the Company
herein contained, to the performance by the Company of its obligations
hereunder, and to the following further conditions:
(a) At Closing Time no stop order suspending the effectiveness of the
Registration Statement shall have been issued under the 1933 Act or proceedings
therefor initiated or threatened by the Commission. The price of the Securities
and any other information previously omitted from the effective Registration
Statement pursuant to Rule 415 of the 1933 Act Regulations shall have been
transmitted to the Commission for filing pursuant to Rule 424(b) of the 1933 Act
Regulations within the prescribed time period, and prior to Closing Time the
Company shall have provided evidence satisfactory to you of such timely filing,
or a post-effective amendment providing such information shall have been filed
and declared effective in accordance with the requirements of the 1933 Act
Regulations.
(b) At Closing Time you shall have received:
(1) The favorable opinion, dated as of Closing Time, of Sullivan &
Worcester LLP, counsel for the Company, in form and substance satisfactory
to your counsel, to the effect that:
(i) The company is a Maryland real estate investment trust duly
organized, validly existing and in good standing under the laws of the
State of Maryland; each of its Significant Subsidiaries (as defined in Rule
1-02 of Regulation S-X under the 1933 Act) has been duly organized, is
validly existing as a corporation or trust in good standing
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under the laws of its jurisdiction of incorporation or organization; each
of the Company and its subsidiaries has the trust or corporate (as
applicable) power and authority to carry on its business as described in
the Registration Statement and in the 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 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.
(ii) All of the issued and outstanding shares of beneficial interest
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 are owned by the Company free and clear of any security
interest or other adverse interest (within the meaning of Article 8 of the
Massachusetts Uniform Commercial Code).
(iii) The Registration Statement has become effective under the 1933
Act, and, to the knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement is in effect, and no
proceedings for such purpose are pending before or threatened by the
Commission; and any required filing of the Prospectus pursuant to Rule 424
under the 1933 Act has been made in accordance with said Rule 424.
(iv) The Company has the requisite trust power and authority to enter
into and perform this Agreement and the Indenture and to issue and deliver
the Securities.
(v) To such counsel's knowledge, except as disclosed in the
Registration Statement or in the Prospectus, there is not now pending or
threatened, any litigation, action, suit ox proceeding to which the company
or any of its subsidiaries or 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
business, operations, earnings, prospects, properties or condition
(financial or otherwise) of the Company and its
18
<PAGE>
subsidiaries, taken as a whole, or the Advisor or (B) might materially and
adversely affect the property or assets of the Company and its
subsidiaries, taken as a whole, or the Advisor, or (C) concerns the Company
or any of its subsidiaries or the Advisor and is required to be disclosed
in the Prospectus, or (D) could adversely affect the consummation of this
Agreement and the issuance of the Securities; to such counsel's knowledge,
no contract or other document is required to be described in the
Registration Statement or in the Prospectus or to be filed as an exhibit to
the Registration Statement that is not described therein or filed as
required.
(vi) Except as otherwise disclosed in the Prospectus, to such
counsel's knowledge, neither the Company, any of its subsidiaries nor 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 material agreement,
indenture or instrument to which the Company, any of its subsidiaries 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 business, operations, earnings,
business prospects, properties or condition (financial or otherwise) of the
Company and its subsidiaries taken as a whole, or the Advisor, as the case
may be.
(vii) To such counsel's knowledge, each of the Company, its
subsidiaries and the Advisor has such permits, licenses, franchises and
authorizations of governmental or regulatory authorities (together,
"permits"), including, without limitation, under any applicable
Environmental Law, 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 business,
operations, earnings, business prospects, properties or condition
(financial or otherwise) of the Company and its subsidiaries, taken as a
whole, or the Advisor, as the case may be.
(viii) The execution, delivery and performance of this Agreement and
the Indenture, and the consummation of the transactions herein and therein
contemplated will not conflict with or constitute a breach or violation of
any of the terms or provision of, or constitute a default under, (A) the
Declaration of Trust or the By-laws of the Company or the charter or
by-laws or other organizational documents of the Advisor or any Significant
Subsidiary of the Company, or (B) except as disclosed in the Prospectus,
any material
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agreement, indenture or other instrument to which the Company, any of its
Significant Subsidiaries or the Advisor or their respective material
properties or assets is bound, or (C) any laws, administrative regulations
or rulings or decrees known to such counsel to which the Company, any of
its Significant Subsidiaries or the Advisor or their respective material
properties or assets may be subject.
(ix) No consent, approval, authorization, order, registration, filing,
qualification, license or permit of or with any federal, Massachusetts or
Maryland court or public, governmental or regulatory agency or body having
jurisdiction over the Company or any of its Significant Subsidiaries or the
Advisor or any of their respective material properties or assets is
required for the Company's execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby,
including, without limitation, the issuance, sale and delivery of the
Securities pursuant to this Agreement, except such as have been obtained
and such as may be required under foreign and state securities or "Blue
Sky" laws.
(x) The Advisory Agreement 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 (a) as
limited by the effect of bankruptcy, insolvency, reorganization, fraudulent
transfer, moratorium or other similar laws relating to or affecting the
rights or remedies of creditors, (b) as limited by the effect of general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law) and (c) insofar as the enforceability of
the indemnity and contribution provisions contained in such agreement may
be limited by federal or state securities laws and the public policy
underlying such laws.
(xi) The Advisor (A) is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, and (B) has
the requisite corporate power and authority to conduct its business as
described in the Prospectus and to own and operate its material properties.
(xii) The Company has qualified to be taxed as a real estate
investment trust pursuant to Sections 856-860 of the Code for each of the
fiscal years ended December 31, 1987 through December 31, 1996, and the
Company's current anticipated investments and its current plan of operation
will enable it to continue to meet the requirements for
20
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qualification and taxation as a real estate investment trust under the
Code; actual qualification of the Company as a real estate investment
trust, however, will depend upon the Company's continued ability to meet,
and its meeting, through actual annual operating results and distributions,
the various qualification tests imposed under the Code.
(xiii) The Registration Statement and the Prospectus and any
supplements or amendments thereto (except for the financial statements and
the notes thereto and the schedules and other financial and statistical
data included therein, the Excluded Proceedings (as defined in the last
paragraph of this Section 5(b)) and the part of the Registration Statement
that constitutes the Statement of Eligibility (Form T-1) of the Trustee
under the 1939 Act, as to which such counsel need not express any opinion)
comply as to form in all material respects with the requirements of the
1933 Act.
(xiv) Each document incorporated by reference in the Registration
Statement and in the Prospectus (except for the financial statements and
the notes thereto and the schedules and other financial and statistical
data included therein, the Excluded Proceedings (as defined in the last
paragraph of this Section 5(b)) and the part of the Registration Statement
that constitutes the Statement of Eligibility (Form T-1) of the Trustee
under the 1939 Act, as to which such counsel need not express any opinion)
complied as to form when filed with the Commission in all material respects
with the requirements of the 1934 Act.
(xv) The statements (a) in the Prospectus under the captions
"Description of Shares", "Description of Debt Securities", "Redemption;
Business Combinations and Control Share Acquisitions", "Limitation of
Liability; Shareholder Liability" and "Description of Notes", (b) in Item 1
of the Company's Annual Report on Form 10-K under the caption "Regulation
and Reimbursement", (c) in Part B ("Authorization of Additional Common
Shares of Beneficial Interest") of Item 5 of the Company's Current Report
on Form 8-K dated February 17, 1997 and (d) Item 5 of the Company's Current
Report on Form 8-K dated February 13, 1997 (excluding the statements under
the caption "Legal Proceedings"), in each case insofar as they purport to
summarize matters arising under Massachusetts or Maryland law or the
federal law of the United States, or provisions of documents to which the
Company is a party specifically referred to therein, are accurate summaries
of such legal matters or provisions.
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(xvi) This Agreement and the Indenture have been duly authorized,
executed and delivered by the Company.
(xvii) The Indenture is a valid and binding obligation of the Company
enforceable in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting
creditors' rights generally and equitable principles; and the Indenture has
been duly qualified under the 1939 Act.
(xviii) The authorized, issued and outstanding capital stock of the
Company is correctly set forth in all material respects in the Prospectus
under the caption "Capitalization".
(xix) The Securities have been duly authorized and, when executed and
authenticated in accordance with the provisions of the Indenture and
delivered and paid for in accordance with the terms of this Agreement, will
be valid and binding obligations of the Company enforceable in accordance
with their terms subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors' rights
generally and equitable principles; and the holders of the Securities are
entitled to the benefit of the Indenture.
(xx) The Company is not required to register as an "investment
company" within the meaning of the 1940 Act.
(xxi) To the extent required to be described therein, the Securities
and the Indenture and the rights related thereto conform in all material
respects to the descriptions in the Registration Statement and the
Prospectus.
(xxii) Although counsel has not undertaken, except as otherwise
indicated in their opinion, to determine independently, and does not assume
any responsibility for, the accuracy or completeness of the statements in
the Registration Statement, such counsel has participated in the
preparation of the Registration Statement and the Prospectus, including
review and discussion of the contents thereof (including review and
discussion of the contents of all documents incorporated by reference in
the Registration Statement and the Prospectus), and nothing has come to the
attention of such counsel that has caused them to believe that the
Registration Statement (including the documents incorporated by reference
therein) at the time the Registration Statement became effective, or the
Prospectus, as of its date and as of Closing Time, as the case may be,
contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or
22
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necessary to make the statements therein not misleading or that any
amendment or supplement to the Prospectus, as of its respective date, and
as of Closing Time, as the case may be, contained any untrue statement of a
material fact or omitted to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which
they were made, not misleading (it being understood that such counsel need
express no view with respect to (a) the financial statements and the notes
thereto and the schedules and other financial and statistical data included
or incorporated by reference in the Registration Statement or in the
Prospectus, (b) the matters to be addressed in the opinion of Sherin &
Lodgen LLP, special counsel to the Company, described below, or (c) the
part of the Registration Statement that constitutes the Statement of
Eligibility (Form T-1) of the Trustee under the 1939 Act).
In rendering their opinion as aforesaid, Sullivan & Worcester LLP may
rely upon an opinion, dated as of Closing Time, of Piper & Marbury L.L.P.
as to matters governed by Maryland law, provided that such reliance is
expressly authorized by such opinion and a copy of such opinion is
delivered to you and is, in form and substance, satisfactory to you and
your counsel. In addition, in rendering such opinion, such counsel may
state that their opinion as to laws of the State of Delaware is limited to
the Delaware General Corporation Law and that their opinion with respect to
the qualification of the Company and its subsidiaries to do business in
jurisdictions other than their respective jurisdictions of organization is
based solely upon certificates to such effect issued by an appropriate
official of the applicable jurisdictions.
The opinion of Piper & Marbury L.L.P. described in the paragraph above
shall be rendered to you at the request of the Company and shall so state
therein.
In addition, you shall have received at Closing Time an opinion
(satisfactory to you and your counsel) of Sherin & Lodgen LLP, special
counsel for the Company, dated as of Closing Time, to the effect that the
proceedings (the "Excluded Proceedings") described in Item 5 of the
Company's Current Report on Form 8-K dated February 13, 1997 under the
caption "Legal Proceedings", in each case insofar as they purport to
summarize legal proceedings are, taken together, fair summaries of such
legal proceedings.
(c) You shall have received at Closing Time an opinion, dated as of
Closing Time, of Brown & Wood LLP, your counsel, as to the matters referred
to in clauses (iii),
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(xiii), (xvi), (xvii), (xix) and (xxii) of the foregoing paragraph (b). In
giving such opinion with respect to the matters covered by clause (xxii),
such counsel may state that their opinion and belief are based upon their
participation in the preparation of the Registration Statement and the
Prospectus and any amendments or supplements thereto and review and
discussion of the contents thereof, but are without independent check or
verification except as specified.
In rendering their opinion as aforesaid, Brown & Wood LLP may rely
upon an opinion, dated as of Closing Time, of Piper & Marbury L.L P. as to
matters governed by Maryland law, and the opinion of Sullivan & Worcester
LLP referred to above as to matters governed by Massachusetts law. In
addition, in rendering such opinion, such counsel may state that their
opinion as to laws of the State of Delaware is limited to the Delaware
General Corporation Law.
(d) At Closing Time (i) the Registration Statement and the Prospectus shall
contain all statements which are required to be stated therein in accordance
with the 1933 Act and the 1933 Act Regulations and in all material respects
shall conform to the requirements of the 1933 Act and the 1933 Act Regulations,
and neither the Registration Statement nor the Prospectus shall contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not misleading
and no action, suit or proceeding at law or in equity shall be pending or to the
knowledge of the Company threatened against the Company which would be required
to be set forth in the Prospectus other than as set forth therein, (ii) there
shall not have been, since the respective dates as of which information is given
in the Registration Statement and the Prospectus, any material adverse change in
the condition, financial or otherwise, of the Company or in its earnings,
business affairs or business prospects, whether or not arising in the ordinary
course of business from that set forth in the Registration Statement, and (iii)
no proceedings shall be pending or, to the knowledge of the Company, threatened
against the Company before or by any Federal, state or other commission, board
or administrative agency wherein an unfavorable decision, ruling or finding
would materially and adversely affect the business, property, financial
condition or income of the Company other than as set forth in the Prospectus;
and you shall have received, at Closing Time, a certificate of the President and
Chief Operating Officer and the chief financial officer of the Company, dated as
of Closing Time, evidencing compliance with the provisions of this subsection
(c) and stating that the representations and warranties set forth in Section
1(a) hereof are accurate as though expressly made at and as of Closing Time.
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(e) Concurrently with the execution and delivery of this Agreement, and at
Closing Time prior to payment and delivery of the Securities, Ernst & Young LLP
shall have furnished to you a letter, dated the date of its delivery, addressed
to you and in form and substance satisfactory to you, confirming that they are
independent accountants with respect to the Company as required by the 1933 Act
and the 1933 Act Regulations and with respect to the financial and other
statistical and numerical information contained in the Registration Statement
and the Prospectus or incorporated by reference therein. Each such letter shall
contain information of the type customarily included in accountants' comfort
letters to underwriters.
(f) At Closing Time your counsel shall have been furnished with such
documents and opinions as they may reasonably require for the purpose of
enabling them to pass upon the issuance and sale of the Securities as herein
contemplated and related proceedings, or in order to evidence the accuracy of
any of the representations or warranties, or the fulfillment of any of the
conditions, herein contained; and all proceedings taken by the Company in
connection with the issuance and sale of the Securities as herein contemplated
shall be reasonably satisfactory in form and substance to you and your counsel.
If any condition specified in this Section 5 shall not have been fulfilled
when and as required to be fulfilled, this Agreement may be terminated by you by
notice to the Company at any time at or prior to Closing Time, and such
termination shall be without liability of any party to any other party except as
provided in Section 4 hereof.
Section 6. Indemnification. (a) The Company hereby agrees to indemnify and
hold harmless you and each person, if any, who controls you within the meaning
of Section 15 of the 1933 Act as follows:
(1) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(or any amendment thereto), or the omission or alleged omission therefrom
of a material fact required to be stated therein or necessary to make the
statements therein not misleading or arising out of any untrue statement or
alleged untrue statement of a material fact included in any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto), or
the omission, or alleged omission therefrom of a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading:
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(2) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, if such settlement is effected with
the written consent of the Company; and
(3) against any and all expense whatsoever, as incurred (including,
subject to Section 6(c) hereof, the fees and disbursements of your
counsel), reasonably incurred in investigating, preparing or defending
against any litigation, or any investigation or proceedings by any
governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, to the extent that any such expense
is not paid under paragraph (1) or (2) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by you
expressly for use in the Registration Statement (or any amendment thereto) or
any preliminary prospectus or the Prospectus (or any amendment or supplement
thereto); and provided, further, that the foregoing indemnity agreement with
respect to any preliminary prospectus shall not inure to your benefit, or the
benefit of any person controlling you, if a copy of the Prospectus (as then
amended or supplemented if the Company shall have furnished any amendments or
supplements thereto and excluding documents incorporated or deemed to be
incorporated by reference therein) was not sent or given by or on behalf of you
to such person asserting any such losses, claims, damages or liabilities at or
prior to the written confirmation of the sale of such Securities to such person,
if required by law so to have been delivered, and if the Prospectus (as so
amended or supplemented) would have cured the defect giving rise to such loss,
claim, damage or expense.
(b) You agree to indemnify and hold harmless the Company, each of the
Company's trustees, each of the Company's officers who signed the Registration
Statement and each person, if any, who controls the Company within the meaning
of Section 15 of the 1933 Act against any and all loss, liability, claim, damage
and expense described in the indemnity contained in subsection (a) of this
Section 6, as incurred, but only with respect to untrue statements or omissions,
26
<PAGE>
or alleged untrue statements or omissions, made in the Registration Statement
(or any amendment thereto) or such preliminary prospectus or the Prospectus (or
any amendment or supplement thereto) in reliance upon and in conformity with
written information furnished to the Company by you expressly for use in the
Registration Statement (or any amendment thereto) or such preliminary prospectus
or the Prospectus (or any amendment or supplement thereto).
(c) Each indemnified party shall give notice as promptly as reasonably
practicable to each indemnifying party of any action commenced against it in
respect of which indemnity may be sought hereunder, but failure to so notify an
indemnifying party shall not relieve such indemnifying party from any liability
which it may have otherwise than on account of this indemnity agreement. An
indemnifying party may participate at its own expense in the defense of such
action. In no event shall the indemnifying parties be liable for fees and
expenses of more than one counsel (in addition to any local counsel) separate
from their own 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.
Section 7. Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement provided for in
Section 6 hereof is for any reason held to be unenforceable by the indemnified
parties although applicable in accordance with its terms, the Company and you
shall contribute to the aggregate losses, liabilities, claims, damages and
expenses of the nature contemplated by said indemnity agreement incurred by the
Company and you, as incurred; provided, however, that no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933
Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. Notwithstanding the provisions of this
Section 7, you shall not be required to contribute any amount in excess of the
amount by which the total price at which the Securities underwritten by you and
distributed to the public were offered to the public exceeds the amount of any
damages which you have otherwise been required to pay in respect of such losses,
liabilities, claims, damages and expenses. For purposes of this Section 7, each
person, if any, who controls you within the meaning of Section 15 of the 1933
Act shall have the same rights to contribution as you, and each trustee of the
Company, each officer of the Company who signed the Registration Statement, and
each person, if any, who controls the Company within the meaning of Section 15
of the 1933 Act shall have the same rights to contribution as the Company.
Section 8. Representations, Warranties and Agreements to Survive Delivery.
All representations, warranties and agreements
27
<PAGE>
contained in this Agreement, or contained in certificates of officers of the
Company submitted pursuant hereto, shall remain operative and in full force and
effect, regardless of any investigation made by or on behalf of you or any
controlling person, or by or on behalf of the Company, and shall survive
delivery of the Securities to you.
Section 9. Termination of Agreement. (a) You may terminate this Agreement,
by notice to the Company, at any time at or prior to Closing Time (i) if there
has been, since the respective dates as of which information is given in the
Registration Statement, any material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs or business prospects of the
Company, whether or not arising in the ordinary course of business, (ii) if
there has occurred any material adverse change in the financial markets in the
United States or any outbreak of hostilities or escalation of existing
hostilities or other calamity or crisis the effect of which on the financial
markets of the United States is such as to make it, in your reasonable judgment,
impracticable to market the Securities or enforce contracts for the sale of the
Securities, (iii) if trading in the Company's common shares of beneficial
interest of the Company has been suspended by the Commission, or if trading
generally on either the New York Stock Exchange or the American Stock Exchange
has been suspended, or minimum or maximum prices for trading have been fixed, or
maximum ranges for prices for securities have been required, by either of said
exchanges or by order of the Commission or any other governmental authority, or
if a banking moratorium has been declared by Federal or New York authorities, or
(iv) if the rating assigned by any nationally recognized statistical rating
organization to any long-term debt securities of the Company as of the date of
this Agreement shall have been lowered since such date or if any such rating
organization shall have publicly announced that it has placed any long-term debt
securities of the Company on what is commonly termed a "watch list" for possible
downgrading.
(b) If this Agreement is terminated pursuant to this Section 9, such
termination shall be without liability of any party to any other party except as
provided in Section 4, and provided further that Sections 6 and 7 hereof shall
survive such termination.
Section 10. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to you shall be
directed to you at Merrill Lynch World Headquarters, North Tower, 26th Floor,
World Financial Center, New York, New York 10281-1209, attention: Tjarda van S.
Clagett, Director; and notices to the Company shall
28
<PAGE>
be directed to it at 400 Centre Street, Newton, Massachusetts 02158, Attention:
David J. Hegarty, President.
Section 11. Parties. This Agreement shall inure to the benefit of and be
binding upon you and the Company and your respective successors. Nothing
expressed or mentioned in this Agreement is intended or shall be construed to
give any person, firm or corporation, other than those referred to in Sections 6
and 7 and their heirs and legal representatives, any legal or equitable right,
remedy or claim under or in respect of this Agreement or any provision herein
contained. This Agreement and all conditions and provisions hereof are intended
to be for the sole and exclusive benefit of the parties hereto and thereto and
their respective successors and said controlling persons and officers, trustees
and directors and their heirs and legal representatives, and for the benefit of
no other person, firm or corporation. No purchaser of Securities from you shall
be deemed to be a successor by reason merely of such purchase.
Section 12. Governing Law and Time; Miscellaneous. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York
applicable to agreements made and to be performed in said State. Specified times
of day refer to New York City time.
THE DECLARATION OF TRUST ESTABLISHING THE COMPANY, DATED OCTOBER 9, 1986, A
COPY OF WHICH, TOGETHER WITH ALL AMENDMENTS THERETO (THE "DECLARATION"), IS DULY
ON FILE IN THE OFFICE OF THE STATE DEPARTMENT OF ASSESSMENTS AND TAXATION 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.
29
<PAGE>
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us a counterpart hereof, whereupon this instrument
along with all counterparts will become a binding agreement between you and the
Company in accordance with its terms.
Very truly yours,
HEALTH AND RETIREMENT PROPERTIES TRUST
By /s/ Ajay Saini
--------------------------
Name: Ajay Saini
Title: Treasurer
CONFIRMED AND ACCEPTED, as of
the date first above written:
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
By /s/ Elizabeth Anne Casey
-------------------------------
Name: Elizabeth Anne Casey
Title: Vice President
30
<PAGE>
SCHEDULE I
Company: Health and Retirement Properties Trust
Underwriter: Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated
("Merrill Lynch")
Purchase Agreement Dated: July 2, 1997
Registration Statement No.: 333-26887
Indenture: Indenture dated as of July 9, 1997 and
Supplemental Indenture dated as of July 9,
1997, both between the Company and the
Trustee
Trustee: State Street Bank and Trust Company
Title of Securities: Remarketed Reset Notes due July 9, 2007
(the "Securities")
Currency: United States Dollars
Aggregate Principal Amount: $200,000,000
Current Ratings: Moody's Investors Service, Inc.: Baa2;
Standard & Poor's Ratings Services: BBB;
Fitch Investors Service, L.P.: BBB+
Price to Public: 100% of the principal amount of the
Securities
Purchase Price: 99.65% of the principal amount of the
Securities
Gross Spread: 0.35% for the initial Remarketing Period
0.075% per annum for each additional
Remarketing Period
Day Basis: Actual/360 for Floating Rate Mode;
30/360 for Fixed Rate Mode
Form: Global Note
I-1
<PAGE>
Maturity: July 9, 2007
Initial Spread Period: The one-year period commencing July 9,
1997 and ending July 9, 1998 during
which the interest rate on the
Securities will be reset quarterly and
will equal LIBOR (as defined) plus 0.45%
Initial Interest Rate: LIBOR (as defined) plus 0.45% until
July 9, 1998
Initial Interest
Payment Dates: Quarterly on October 9, 1997, January 9,
1998, April 9, 1998, and July 9, 1998;
the interest rate on the Securities will
be reset quarterly and will be payable
in arrears until July 9, 1998
Duration/Mode
Determination Date: After the Initial Spread Period, the
character and duration of the interest
rate on the Securities as well as the
redemption type (either Par Redemption,
Premium Redemption or Make-Whole
Redemption) will be agreed to by the
Company and the Remarketing Underwriter
on each applicable Duration/Mode
Determination Date, which is the 15th
calendar date prior to the first date of
each Subsequent Spread Period
Subsequent Spread Period: Determined by agreement between the
Company and the Remarketing Underwriter
on the applicable Duration/Mode
Determination Date. Each Subsequent
Spread Period will last for either one
year, two years, three years, four
years, five years, six years, seven
years, eight years or nine years (or any
integral multiple of six months) but
cannot exceed the maturity date of the
Securities
I-2
<PAGE>
Interest Rate During
Subsequent Spread Periods: If the Securities are in the Floating
Rate Mode, interest will equal LIBOR
plus the applicable Spread, as agreed to
by the Company and the Remarketing
Underwriter; if the Securities are in
the Fixed Rate Mode, interest will equal
the applicable Spread plus the
comparable Treasury rate
Subsequent Spread: Determined by agreement between the
Remarketing Underwriter and the Company
to result in a rate which will enable
100% of tendered Securities to be
remarketed
Alternate Spread: The percentage equal to LIBOR for the
Quarterly Period beginning on the
Commencement Date of the Subsequent
Spread Period
Redemption: On or after July 9, 1998, the Securities
may be redeemable, in whole or part, at
the option of the Company on those
Interest Payment Dates that are
specified as redemption dates by the
Company on the applicable Duration/Mode
Determination Date; the redemption type
(either Par Redemption, Premium
Redemption or Make-Whole Redemption)
will be agreed to by the Company and the
Remarketing Underwriter on each
applicable Duration/Mode Determination
Date
Sinking Fund Provisions: None
Definitions and Other
Provisions: As per Prospectus Supplement dated
July 2, 1997
Closing Date, Time and
Location: July 9, 1997, 9:00 a.m. at the offices
of Sullivan & Worcester, LLP in Boston,
Massachusetts
I-3
Ex 1.2
REMARKETING AGREEMENT
REMARKETING AGREEMENT, dated as of July 2, 1997 (the "Remarketing
Agreement"), by and between Health and Retirement Properties Trust (the
"Company") and Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("Merrill Lynch").
WHEREAS, the Company will issue $150,000,000 aggregate principal amount of
Remarketed Reset Notes Due July 9, 2007 (the "Notes"), such Notes to be issued
under an Indenture dated as of July 9, 1997 and a Supplemental Indenture dated
as of July 9, 1997 (together, the "Indenture"), both by and between the Company
and State Street Bank and Trust Company, as trustee (the "Trustee"); and
WHEREAS, the Notes are to be initially offered to the public through
Merrill Lynch; and
WHEREAS, the Company has requested Merrill Lynch to act as Rate Agent (as
defined in Section 2(a) hereof) and as Remarketing Underwriter (as defined in
Section 2(a) hereof) in connection with the Notes and as such to perform the
services described herein; and
WHEREAS, Merrill Lynch is willing to act as Rate Agent and as Remarketing
Underwriter in connection with the Notes and as such to perform such duties on
the terms and conditions expressly set forth herein.
NOW, THEREFORE, for and in consideration of the covenants herein made, and
subject to the conditions herein set forth, the parties hereto agree as follows:
<PAGE>
Section 1. Definitions. Capitalized terms used and not defined in this
Agreement shall have the respective meanings assigned to them in the Notes or,
if not therein stated, in the Indenture relating to the offering of the Notes.
Section 2. Appointment and Obligations of Merrill Lynch. (a) The Company
hereby appoints Merrill Lynch, and Merrill Lynch hereby accepts such
appointment, (i) as the rate agent (the "Rate Agent") of the Company to
determine (1) LIBOR and the interest rate on the Notes for any Quarterly Period,
and/or (2) the yield to maturity on the applicable United States Treasury
security that is used in connection with the determination of the applicable
Fixed Rate, and the ensuing applicable Fixed Rate and (ii) as the exclusive
remarketing underwriter (the "Remarketing Underwriter") for the purpose of (x)
recommending to the Company the Spread for each Subsequent Spread Period that,
in the opinion of the Remarketing Underwriter, will enable the Remarketing
Underwriter to remarket, for delivery on the Tender Date, tendered Notes at 100%
of the principal amount thereof, (y) if the Company and the Remarketing
Underwriter agree on the Spread referred to in (x) above, entering into a
remarketing underwriting agreement (each, a "Remarketing Underwriting
Agreement") with the Company, substantially in the form attached hereto as
Exhibit A, pursuant to which the Remarketing Underwriter will agree to purchase
the Notes tendered by the beneficial owners thereof (the "Beneficial Owners")
and remarket such Notes (each such purchase and remarketing being hereinafter
referred to as a "Remarketing"), and (z) performing such other duties as are
assigned to the Remarketing Underwriter in the Notes and/or the Indenture and/or
the applicable Remarketing Underwriting Agreement.
2
<PAGE>
(b) The Rate Agent hereby agrees to determine LIBOR on each LIBOR
Determination Date in accordance with the following provisions and the other
relevant provisions of the Notes:
(i) LIBOR shall be determined on the basis of the offered rates for
three-month deposits in U.S. Dollars of not less than U.S. $1,000,000,
commencing on the second London Business Day immediately following the
applicable LIBOR Determination Date, which appears on Telerate Page 3750 as
of approximately 11:00 a.m., London time, on the applicable LIBOR
Determination Date. If no rate appears on Telerate Page 3750, LIBOR for the
applicable LIBOR Determination Date will be determined in accordance with
the provisions of paragraph (ii) below.
(ii) With respect to a LIBOR Determination Date on which no rate
appears on Telerate Page 3750 as of approximately 11:00 a.m., London time,
on the applicable LIBOR Determination Date, the Rate Agent shall select
four major reference banks in the London interbank market and shall request
the principal London offices of each of such banks to provide it with a
quotation of the rate at which three-month deposits in U.S. Dollars,
commencing on the second London Business Day immediately following the
applicable LIBOR Determination Date, are offered by it to prime banks in
the London interbank market as of approximately 11:00 a.m., London time, on
the applicable LIBOR Determination Date and in a principal amount equal to
an amount of not less than U.S. $1,000,000 that is representative for a
single transaction in such market at such time. If at least two such
quotations are provided, LIBOR for the applicable LIBOR Determination Date
will be the arithmetic mean of such quotations as calculated by the Rate
Agent. If fewer than two quotations are provided, the Rate Agent, after
consultation with the
3
<PAGE>
Company, shall select three major banks in The City of New York and shall
request each of such banks to provide it with the rates quoted by such bank
as of approximately 11:00 a.m., New York City time, on the applicable LIBOR
Determination Date for loans in U.S. Dollars to leading European banks,
having a three-month maturity, commencing on the second London Business Day
immediately following the applicable LIBOR Determination Date and in a
principal amount equal to an amount of not less than U.S. $1,000,000 that
is representative for a single transaction in such market at such time, and
LIBOR for the applicable LIBOR Determination Date shall be the arithmetic
mean of such rates; provided, however, that if the banks selected as
aforesaid by the Rate Agent are not quoting as mentioned in this sentence,
LIBOR for the applicable LIBOR Determination Date will be the LIBOR
determined with respect to the immediately preceding LIBOR Determination
Date, or in the case of the first LIBOR Determination Date, LIBOR for the
Initial Quarterly Period.
(c) The Rate Agent hereby agrees to determine the yield to maturity on the
applicable United States Treasury security that is used in connection with the
determination of the applicable Fixed Rate, and the ensuing applicable Fixed
Rate, in accordance with the following provisions: If the Notes are to be reset
to the Fixed Rate Mode, as agreed to by the Company and the Remarketing
Underwriter on a Duration/Mode Determination Date, then the applicable Fixed
Rate for the corresponding Subsequent Spread Period will be determined as of the
sixth calendar day following the Spread Determination Date (provided that such
date is a Business Day; otherwise, as of the next Business Day thereafter) (the
"Fixed Rate Determination Date") (provided, however, that in the case of where
the Notice Date also falls on the Fixed Rate Determination Date, the
4
<PAGE>
Fixed Rate Determination Date will be the following Business Day thereafter).
The Fixed Rate will be a per annum rate and will be determined as of 12:00 Noon
on such Fixed Rate Determination Date by adding the applicable Spread (as agreed
to by the Company and the Remarketing Underwriter on the preceding Spread
Determination Date) to the yield to maturity (expressed as a bond equivalent, on
the basis of a year of 365 or 366 days, as applicable, and applied on a daily
basis) of the applicable United States Treasury security, selected by the Rate
Agent after consultation with the Remarketing Underwriter, as having a maturity
comparable to the duration selected for the following Subsequent Spread Period,
which would be used in accordance with customary financial practice in pricing
new issues of corporate debt securities of comparable maturity to the duration
selected for the following Subsequent Spread Period.
Section 2. Fees and Expenses. The obligations of the Company to pay to the
Remarketing Underwriter on each Tender Date the fees set forth in the applicable
Remarketing Underwriting Agreement shall survive the termination of this
Agreement and remain in full force and effect until all such payments shall have
been made in full.
Section 3. Removal of the Rate Agent and Remarketing Underwriter. With
respect to any Subsequent Spread Period, the Company may in its absolute
discretion remove the Rate Agent and Remarketing Underwriter by giving notice to
the Rate Agent and Remarketing Underwriter prior to 3:00 p.m., New York City
time, on the Duration/Mode Determination Date applicable thereto, such removal
to be effective upon the Company's appointment of a successor Rate Agent and
Remarketing Underwriter. In such case, the Company will use its best efforts to
appoint a
5
<PAGE>
successor Rate Agent and Remarketing Underwriter and enter into such a
remarketing agreement with such persons as soon as reasonably practicable.
Section 5. Dealing in the Notes. Subject to its compliance with applicable
laws and regulations, Merrill Lynch, when acting as a Rate Agent and Remarketing
Underwriter or in its individual or any other capacity, may buy, sell, hold and
deal in any of the Notes. Merrill Lynch may exercise any vote or join in any
action which any Beneficial Owner of Notes may be entitled to exercise or take
with like effect as if it did not act in any capacity hereunder. Merrill Lynch,
in its individual capacity, either as principal or agent, may also engage in or
have an interest in any financial or other transaction with the Company as
freely as if it did not act in any capacity hereunder.
Section 6. Current Prospectus. In connection with each Remarketing, if and
to the extent required by applicable law or regulations or interpretations of
the Securities and Exchange Commission in effect at the time of such
Remarketing, the Company shall furnish a current prospectus to be used by the
Remarketing Underwriter in such Remarketing.
Section 7. Conditions to the Remarketing Underwriter's Obligations. The
obligations of the Remarketing Underwriter to purchase and remarket the Notes
shall be subject to the terms and conditions of the applicable Remarketing
Underwriting Agreement.
6
<PAGE>
Section 8. Termination of this Remarketing Agreement. This Agreement shall
terminate as to the Rate Agent and the Remarketing Underwriter on the effective
date of the removal of such Rate Agent and Remarketing Underwriter pursuant to
Section 4 hereof.
Section 9. Rate Agent's and Remarketing Underwriter's Performance; Duty of
Care. The duties and obligations of the Rate Agent and Remarketing Underwriter
hereunder shall be determined solely by the express provisions of this Agreement
and the Notes and the Indenture and, in the case of the Remarketing Underwriter,
the applicable Remarketing Underwriting Agreement.
Section 10. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed in such State.
Section 11. Term of Agreement. Unless otherwise terminated in accordance
with the provisions hereof, this Agreement shall remain in full force and effect
from the date hereof until the first day thereafter on which no Notes are
outstanding.
Section 12. Successors and Assigns. The rights and obligations of the
Company hereunder may not be assigned or delegated to any other person without
the prior written consent of Merrill Lynch. The rights and obligations of
Merrill Lynch hereunder may not be assigned or delegated to any other person
without the prior written consent of the Company. This Agreement
7
<PAGE>
shall inure to the benefit of and be binding upon the Company and Merrill Lynch
and their respective successors and assigns. The terms "successors" and
"assigns" shall not include any purchaser of any Notes merely because of such
purchase.
Section 13. Headings. Section headings have been inserted in this Agreement
as a matter of convenience of reference only, and it is agreed that such section
headings are not a part of this Agreement and will not be used in the
interpretation of any provisions of this Agreement.
Section 14. Severability. If any provision of this Agreement shall be held
or deemed to be or shall, in fact, be invalid, inoperative or unenforceable as
applied in any particular case in any or all jurisdictions because it conflicts
with any provision of any constitution, statute, rule or public policy or for
any other reason, such circumstances shall not have the effect of rendering the
provision in question invalid, inoperative or unenforceable in any other case,
circumstances or jurisdiction, or of rendering any other provision or provisions
of this Agreement invalid, inoperative or unenforceable to any extent
whatsoever.
Section 15. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be regarded as an original and all of which
shall constitute one and the same document.
Section 16. Amendments. This Agreement may be amended by any instrument in
writing signed by each of the parties hereto.
8
<PAGE>
Section 17. Notices. Unless otherwise specified, any notices, requests,
consents or other communications given or made hereunder or pursuant hereto
shall be made in writing or transmitted by any standard form of
telecommunication or by telephone and confirmed in writing. All written notices
shall be deemed to be validly given or made, if delivered by hand, when so
delivered, or if mailed, when mailed registered or certified mail, return
receipt requested and postage prepaid. All notices by telecommunication
(including telephone) shall be deemed to be validly given or made when received.
All such notices, requests, consents or other communications shall be addressed
as follows: if to the Company, to Health and Retirement Properties Trust, 400
Centre Street, Newton, Massachusetts 02158, Attention: David J. Hegarty,
President; and if to Merrill Lynch, to Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Merrill Lynch World Headquarters, World Financial Center, North
Tower, New York, New York 10281-1209, Attention: Debt Syndicate, or to such
other address as either of the above shall specify to the other in writing.
Section 18. Benefit. Nothing in this Agreement, express or implied, is
intended or shall be construed to confer upon or give any person other than the
parties hereto any remedy or claim under or by reason of this Agreement or any
term, covenant or condition hereof, all of which shall be for the sole and
exclusive benefit of the parties.
9
<PAGE>
IN WITNESS WHEREOF, each of the Company and Merrill Lynch has caused this
Agreement to be executed in its name and on its behalf by one of its duly
authorized officers as of the date first above written.
HEALTH AND RETIREMENT PROPERTIES TRUST
By: /s/ Ajay Saini
--------------------------
Name: Ajay Saini
Title:Treasurer
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: /s/ Elizabeth Anne Casey
---------------------------
Name: Elizabeth Anne Casey
Title: Vice President
<PAGE>
EXHIBIT A
---------
REMARKETING UNDERWRITING AGREEMENT
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated
(the "Remarketing Underwriter") hereby agrees to purchase the Notes described
below (the "Notes") that have been tendered by the holders thereof for sale on
__________________ (the "Tender Date").
It is acknowledged and agreed that the Notes need not be further registered
under the Securities Act of 1933, as amended (the "Act"), and that, in
connection with the remarketing of the Notes by the Remarketing Underwriter in
accordance with the terms of the Remarketing Agreement dated July 2, 1997, no
prospectus meeting the requirements of Section 10 of the Act need be delivered,
or filed pursuant to Rule 424 under the Act.
It is understood that the Remarketing Underwriter will deliver to
purchasers and prospective purchasers, in connection with the remarketing, one
or more forms of written communication describing the terms of the Notes (each,
a "Remarketing Memorandum"), the form of each of which shall be delivered to
Health and Retirement Properties Trust (the "Company") (not less than two
Business Days prior to its use) and subject to the approval of the Company prior
to its use by the Remarketing Underwriter, which approval shall not be
unreasonably withheld.
The Remarketing Underwriter shall offer to purchase Notes and purchase
validly tendered Notes on the Tender Date in accordance with all applicable laws
and regulations and interpretations of the Securities and Exchange Commission.
The provisions of Sections 1, 3, 4, 5, 6, 7, 8 and 9 of the attached
Purchase Agreement are incorporated in their entirety into this Agreement and
made applicable to the obligations of the Remarketing Underwriter to the extent
applicable to any remarketing of the Notes, except as explicitly amended hereby.
All references therein to "you" or to the "Underwriter" shall be deemed to refer
to the Remarketing Underwriter, all references to the "Securities" shall be
deemed to refer to the Notes, and all references to "Closing Time" shall be
deemed to refer to the Tender Date. To the extent such provisions refer to the
"Prospectus" or the "Registration Statement," such references shall be deemed to
refer to any Remarketing Memorandum or registration statement, if any, that the
Company is required to prepare or file pursuant to applicable law, regulations
or interpretations of the Securities and Exchange Commission in effect at the
time of such remarketing of the Notes. For the purposes of Section 7 of the
attached Purchase Agreement, amounts paid by the Remarketing Underwriter shall
be deemed the "aggregate public offering price".
All capitalized terms not otherwise defined in this Agreement have the
respective meanings assigned thereto in the Notes, the form of which is attached
hereto.
<PAGE>
Company Health and Retirement Properties Trust
Remarketing Underwriter and Address: Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Merrill Lynch World Headquarters
World Financial Center
North Tower, 26th Floor
New York, New York 10281-1209
Title of Notes: Remarketed Reset Notes Due July 9, 2007
Principal Amount of Notes
to be Purchased: The aggregate principal amount of
all Notes tendered for resale on
the Tender Date
Title of Indenture: Indenture dated as of July 9, 1997 and
Supplemental Indenture dated as of
July 9, 1997, both by and between the
Company and the Trustee
Trustee: State Street Bank and Trust Company
Current Ratings: Moody's Investors Service, Inc.: Baa2;
Standard & Poor's Ratings Services: BBB;
Fitch Investors Service, L.P.: BBB+
Certain Terms of the Notes:
Maturity: July 9, 2007
Spread Determination Date:
Duration/Mode Determination Date:
Tender Notice Date:
Interest Reset Dates:
Tender Date:
New Interest Rate: As determined by application of the
provisions set forth in the attached
form of the Notes on the LIBOR
Determination Date or the Fixed Rate
Determination Date, as applicable
Spread: [Plus/Minus] ______ basis points
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Interest Payment Dates: [October 9], [January 9], [April 9]
and/or [July 9]
Subsequent Spread Period:
Redemption Provisions: Redeemable as set forth in the attached
Prospectus Supplement dated July 2, 1997
Beneficial Owner Tender Provisions: As set forth in the attached
Prospectus Supplement dated July 2,
1997. In the event that the
Remarketing Underwriter fails to
purchase all Notes validly tendered
for purchase on the Tender Date,
then the Remarketing Underwriter
shall promptly notify the Company
and the Trustee of such failure.
Shorter Subsequent Spread Period: In the event that (A) the
Remarketing Underwriter fails to
purchase all Notes validly tendered
for purchase on the Tender Date for
any reason, and (B) the Company has
not given notice of redemption of
all of the Notes then outstanding
in accordance with the provisions
described in the attached form of
the Notes, then the Subsequent
Spread Period shall be a period of
one year, which Subsequent Spread
Period shall be deemed to have
commenced upon the Commencement
Date that coincides with the Tender
Date.
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Legal Opinion: The opinion required to be
delivered pursuant to Section
5(b)(1)(xix) of the attached
Purchase Agreement shall be
modified to read as follows "(xix)
the Notes have been duly
authorized; a single global Note
registered in the name of CEDE &
Co., a nominee of The Depository
Trust Company ("DTC"), has been
duly authenticated in accordance
with the provisions of the
Indenture, paid for and delivered
to DTC, and constitutes a valid and
binding obligation of the Company;
and the Underwriter will acquire
the rights of a bona fide purchaser
(as such terms are defined in the
Uniform Commercial Code as in
effect in the State of New York
(the "UCC")) in any portion of the
Notes transferred to the
Underwriter by a prior owner
thereof as recorded on the books of
DTC, provided that (i) the portion
of the Notes transferred is an
authorized denomination of the
Notes, (ii) the transfer is
recorded on the books of DTC by a
debit to the transferor's account
with DTC and a credit to the
Underwriter's account with DTC,
(iii) the Underwriter makes payment
to such transferor of value for
such transfer and (iv) the
Underwriter purchases such interest
in good faith and without notice of
any adverse claim, within the
meaning of the UCC.
The opinion required to be
delivered pursuant to Section
5(b)(1)(xix) of the attached
Purchase Agreement may be delivered
by any counsel designated by the
Remarketing Underwriter and
reasonably acceptable to the
Company.
Form of Notes: Global certificate registered in
the name of the nominee, which
currently is CEDE & Co., of the
depository of the Notes, which is
DTC. The beneficial owners of the
Notes ("Beneficial Owners") are not
entitled to receive definitive
certificates representing their
Notes, except under limited
circumstances. A Beneficial Owner's
ownership of a Note currently is
recorded on or through the records
of the brokerage firm or other
entity that is a participant in DTC
and that maintains such Beneficial
Owner's account.
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Purchase Price: 100% of the principal amount of the
Notes. Payable to DTC for the
Beneficial Owners of Tendered Notes.
Remarketing Fee: 0.075% of the principal amount of
the Notes outstanding on each
Tender Date multiplied by the
number of years remaining in the
Stated Maturity.
Closing: Brown & Wood LLP, One World Trade
Center, New York, N.Y. 10048, at
9:00 a.m., New York City time, on
the Tender Date.
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The foregoing terms are hereby confirmed and agreed to as of this ____ day
of ____________.
HEALTH AND RETIREMENT PROPERTIES TRUST
By: _________________________________
Name:
Title:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: ________________________________
Name:
Title:
EX 4.1
SUPPLEMENTAL INDENTURE
by and between
HEALTH AND RETIREMENT PROPERTIES TRUST
and
STATE STREET BANK AND TRUST COMPANY
July 9, 1997
HEALTH AND RETIREMENT PROPERTIES TRUST
$200,000,000 Remarketed Reset Notes due July 9, 2007
<PAGE>
This SUPPLEMENTAL INDENTURE (this "Supplemental Indenture") made and
entered into as of July 9, 1997 between Health and Retirement Properties Trust,
a Maryland real estate investment trust (the "Company"), and State Street Bank
and Trust Company, a national banking association (the "Trustee").
WITNESSETH THAT:
WHEREAS, the Company and the Trustee have executed and delivered an
Indenture, dated as of July 9, 1997 (the "Indenture"), relating to the Company's
issuance, from time to time, of various series of debt securities; and
WHEREAS, the Company has determined to issue debt securities known as its
$200,000,000 Remarketed Reset Notes due July 9, 2007 (the "Notes"); and
WHEREAS, the Indenture provides that certain terms and conditions for each
series of debt securities issued by the Company thereunder may be set forth in
an indenture supplemental to the Indenture;
NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE WITNESSETH:
ARTICLE ONE
DEFINED TERMS
Section 101. The following definitions supplement, and, to the extent
inconsistent with, replace the definitions in Section 101 of the Indenture:
"Acquired Debt" means Debt of a Person (i) existing at the time such Person
becomes a Subsidiary or (ii) assumed in connection with the acquisition of
assets from such Person, in each case, other than Debt incurred in connection
with, or in contemplation of, such Person's becoming a Subsidiary or such
acquisition. Acquired Debt shall be deemed to be incurred on the date of the
related acquisition of assets from any Person or the date the acquired Person
becomes a Subsidiary.
"Alternate Spread" means the percentage equal to LIBOR for the Quarterly
Period beginning on the Commencement Date of the relevant Subsequent Spread
Period.
"Annual Service Charge" as of any date means the maximum amount which is
expensed in any 12-month period for interest on Debt of the Company and its
Subsidiaries.
"Business Day" means any day other than a Saturday or Sunday or a day on
which banking institutions in The City of New York are required or authorized to
close and, in the case of Notes in the Floating Rate Mode, that is also a London
Business Day.
<PAGE>
"Capital Stock" means, with respect to any Person, any capital stock
(including preferred stock), shares, interests, participation or other ownership
interests (however designated) of such Person and any rights (other than debt
securities convertible into or exchangeable for capital stock), warrants or
options to purchase any thereof.
"Commencement Date" means the first date of a Subsequent Spread Period.
"Consolidated Income Available for Debt Service" for any period means
Earnings from Operations of the Company and its Subsidiaries plus amounts which
have been deducted, and minus amounts which have been added, for the following
(without duplication): (i) interest on Debt of the Company and its Subsidiaries,
(ii) provision for taxes of the Company and its Subsidiaries based on income,
(iii) amortization of debt discount and deferred financing costs, (iv)
provisions for gains and losses on properties and property depreciation and
amortization, (v) the effect of any noncash charge resulting from a change in
accounting principles in determining Earnings from Operations for such period
and (vi) amortization of deferred charges.
"Debt" of the Company or any Subsidiary means, without duplication, any
indebtedness of the Company or any Subsidiary, whether or not contingent, in
respect of (i) borrowed money or evidenced by bonds, notes, debentures or
similar instruments, (ii) indebtedness for borrowed money secured by any
Encumbrance existing on property owned by the Company or any Subsidiary, (iii)
the reimbursement obligations, contingent or otherwise, in connection with any
letters of credit actually issued (other than letters of credit issued to
provide credit enhancement or support with respect to other indebtedness of the
Company or any Subsidiary otherwise reflected as Debt hereunder) or amounts
representing the balance deferred and unpaid of the purchase price of any
property or services, except any such balance that constitutes an accrued
expense or trade payable, or all conditional sale obligations or obligations
under any title retention agreement, (iv) the principal amount of all
obligations of the Company or any Subsidiary with respect to redemption,
repayment or other repurchase of any Disqualified Stock, or (v) any lease of
property by the Company or any Subsidiary as lessee which is reflected on the
Company's consolidated balance sheet as a capitalized lease in accordance with
GAAP, to the extent, in the case of items of indebtedness under (i) through
(iii) above, that any such items (other than letters of credit) would appear as
a liability on the Company's consolidated balance sheet in accordance with GAAP,
and also includes, to the extent not otherwise included, any obligation by the
Company or any Subsidiary to be liable for, or to pay, as obligor, guarantor or
otherwise (other than for purposes of collection in the ordinary course of
business), Debt of another Person (other than the Company or any Subsidiary) (it
being understood that Debt shall be deemed to be incurred by the Company or any
Subsidiary whenever the Company or such Subsidiary shall create, assume,
guarantee or otherwise become liable in respect thereof).
"Disqualified Stock" means, with respect to any Person, any Capital Stock
of such Person which by the terms of such Capital Stock (or by the terms of any
security into which it is convertible or for which it is exchangeable or
exercisable), upon the happening of any event or otherwise (i) matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise
(other than Capital Stock which is redeemable solely in exchange for common
stock or
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shares), (ii) is convertible into or exchangeable or exercisable for Debt or
Disqualified Stock, or (iii) is redeemable at the option of the holder thereof,
in whole or in part (other than Capital Stock which is redeemable solely in
exchange for common stock or shares), in each case on or prior to the stated
maturity of the Notes.
"Duration/Mode Determination Date" means the fifteenth calendar date prior
to the Commencement Date of each Subsequent Spread Period on which the character
and duration of the interest rate on the Notes as well as the redemption type
(and any other relevant terms) for the Subsequent Spread Period will be agreed
to by the Company and the Remarketing Underwriter.
"Earnings from Operations" for any period means net earnings excluding
gains and losses on sales of investments, as reflected in the financial
statements of the Company and its Subsidiaries for such period, determined on a
consolidated basis in accordance with GAAP.
"Encumbrance" means any mortgage, lien, charge, pledge or security interest
of any kind.
"Initial Quarterly Period" is defined in the third paragraph of Section
201(c) hereof.
"Initial Spread" means the Spread applicable during the Initial Spread
Period.
"Initial Spread Period" means the one-year period from and including July
9, 1997 to but excluding July 9, 1998 during which the interest rate on the
Notes will be reset quarterly and will equal LIBOR plus the Initial Spread.
"Interest Payment Date" means any date interest is paid on the Notes.
"Interest Reset Date" means the first day of a Quarterly Period.
"LIBOR Determination Date" means the second London Business Day preceding
each Interest Reset Date, on which the Rate Agent will determine LIBOR
applicable for a Quarterly Period.
"LIBOR" means, with respect to determining the interest rate on Notes in
the Floating Rate Mode, the offered rate for three-month deposits in U.S.
Dollars of not less than U.S. $1,000,000, commencing on the second London
Business Day immediately following such LIBOR Determination Date, which appears
on Telerate Page 3750 as of approximately 11:00 a.m., London time, on such LIBOR
Determination Date. With respect to a LIBOR Determination Date on which no rate
appears on Telerate Page 3750 as of approximately 11:00 a.m., London time, on
such LIBOR Determination Date, the Rate Agent shall request the principal London
offices of each of four major reference banks in the London interbank market
selected by the Rate Agent to provide the Rate Agent with a quotation of the
rate at which three-month deposits in U.S. Dollars, commencing on the second
London Business Day immediately following such LIBOR Determination Date, are
offered by it to prime banks in the London interbank market as of approximately
11:00 a.m., London time, on such LIBOR Determination Date and in a principal
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<PAGE>
amount equal to an amount of not less than U.S. $1,000,000 that is
representative for a single transaction in such market at such time. If at least
two such quotations are provided, LIBOR for such LIBOR Determination Date will
be the arithmetic mean of such quotations as calculated by the Rate Agent. If
fewer than two quotations are provided, LIBOR for such LIBOR Determination Date
will be the arithmetic mean of the rates quoted as of approximately 11:00 a.m.,
New York City time, on such LIBOR Determination Date by three major banks in The
City of New York selected by the Rate Agent (after consultation with the
Company) for loans in U.S. Dollars to leading European banks, having a
three-month maturity commencing on the second London Business Day immediately
following such LIBOR Determination Date and in a principal amount equal to an
amount of not less than U.S. $1,000,000 that is representative for a single
transaction in such market at such time; provided, however, that if the banks
selected as aforesaid by the Rate Agent are not quoting as mentioned in this
sentence, LIBOR for such LIBOR Determination Date will be LIBOR determined with
respect to the immediately preceding LIBOR Determination Date, or in the case of
the first LIBOR Determination Date, LIBOR for the Initial Quarterly Period.
"London Business Day" means any day on which dealings in deposits in U.S.
Dollars are transacted in the London interbank market.
"Make-Whole Amount" means, in connection with any optional redemption or
accelerated payment of any Note, the excess, if any, of (i) the aggregate
present value as of the date of such redemption or accelerated payment of each
dollar of principal being redeemed or paid and the amount of interest (exclusive
of interest accrued to the date of redemption or accelerated payment) that would
have been payable in respect of such dollar if such redemption or accelerated
payment had not been made, determined by discounting, on a semiannual basis,
such principal and interest at the Reinvestment Rate (determined on the third
Business Day preceding the date such notice of redemption is given or
declaration of acceleration is made) from the respective dates on which such
principal and interest would have been payable if such redemption or accelerated
payment had not been made, over (ii) the aggregate principal amount of the Notes
being redeemed or paid. For purposes of this Supplemental Indenture and the
Notes, references in the Indenture to the payment of the principal (and premium,
if any) and interest on the Notes shall be deemed to include the payment of the
Make-Whole Amount, if any, due upon redemption with respect to the Notes.
"Make-Whole Redemption" means redemption at a redemption price equal to the
sum of (i) the principal amount of the Notes being redeemed plus accrued
interest thereon, if any, to the redemption date and (ii) the Make-Whole Amount,
if any, with respect to such Notes.
"Par Redemption" means redemption at a redemption price equal to 100% of
the principal amount thereof, plus accrued interest thereon, if any, to the
redemption date.
"Premium Redemption" means redemption at a redemption price or prices
greater than 100% of the principal amount thereof, plus accrued interest
thereon, if any, to the redemption date, as determined on the Duration/Mode
Determination Date.
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"Quarterly Period" means the period from and including the most recent
Interest Payment Date to which interest has been paid to but excluding the next
Interest Payment Date.
"Rate Agent" means the nationally recognized broker-dealer selected by the
Company as its agent to determine (i) LIBOR and the interest rate on the Notes
for any Quarterly Period and/or (ii) the yield to maturity on the applicable
United States Treasury security that is used in connection with the
determination of the applicable Fixed Rate, and the ensuing applicable Fixed
Rate.
"Record Date" means the fifteenth calendar day, whether or not a Business
Day, next preceding the applicable Interest Payment Date.
"Reinvestment Rate" means 0.25% (twenty-five one hundredths of one percent)
plus the yield on treasury securities at constant maturity under the heading
"Week Ending" published in the Statistical Release under the caption "Treasury
Constant Maturities" for the maturity (rounded to the nearest month)
corresponding to the remaining life to maturity, as of the payment date of the
principal being redeemed or paid. If no maturity exactly corresponds to such
maturity, yields for the two published maturities most closely corresponding to
such maturity shall be calculated pursuant to the immediately preceding sentence
and the Reinvestment Rate shall be interpolated or extrapolated from such yields
on a straight-line basis, rounding in each of such relevant periods to the
nearest month. For purposes of calculating the Reinvestment Rate, the most
recent Statistical Release published prior to the date of determination of the
Make-Whole Amount shall be used.
"Remarketing Underwriter" means the nationally recognized broker-dealer
selected by the Company to act as Remarketing Underwriter.
"Remarketing Underwriting Agreement" means the agreement entered into by
the Company and the Remarketing Underwriter in the event the Company and the
Remarketing Underwriter agree on the Spread on the Spread Determination Date
with respect to any Subsequent Spread Period.
"Secured Debt" means Debt secured by any mortgage, lien, charge, pledge or
security interest of any kind.
"Spread" refers to the percentage that, added to LIBOR (when in the
Floating Rate Mode) or the comparable Treasury rate (when in the Fixed Rate
Mode), equals the interest rate payable on the Notes.
"Spread Determination Date" is the tenth calendar day prior to the
Commencement Date of such Subsequent Spread Period on which the Spread for each
Subsequent Spread Period will be established by 3:00 p.m., New York City time.
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"Statistical Release" means the statistical release designated "H. 15(519)"
or any successor publication which is published weekly by the Federal Reserve
System and which establishes yields on actively traded United States government
securities adjusted to constant maturities or, if such statistical release is
not published at the time of any determination under this Supplemental
Indenture, then such other reasonably comparable index which shall be designated
by the Rate Agent, after consultation with the Company.
"Subsequent Spread" means the Spread determined by agreement between the
Remarketing Underwriter and the Company to result in a rate which will enable
100% of tendered Notes to be remarketed.
"Subsequent Spread Period" means one or more periods of at least six months
and not more than nine years (or any integral multiple of six months therein),
designated by the Company, commencing on a January 9 or July 9 (or as otherwise
specified by the Company and the Remarketing Underwriter on the applicable
Duration/Mode Determination Date in connection with the establishment of each
Subsequent Spread Period) through and including July 9, 2007.
"Subsidiary" means any corporation or other entity of which a majority of
(i) the voting power of the voting equity securities or (ii) the outstanding
equity interests of which are owned, directly or indirectly, by the Company or
one or more other Subsidiaries of the Company. For the purposes of this
definition, "voting equity securities" means equity securities having voting
power for the election of directors, whether at all times or only so long as no
senior class of security has such voting power by reason of any contingency.
"Telerate Page 3750" means the display designated on page "3750" on the
Telerate Service (or such other page as may replace the 3750 page on that
service or such other service or services as may be nominated by the British
Bankers' Association for the purpose of displaying London interbank offered
rates for U.S. Dollar deposits).
"Tender Date" is defined in Section 201(e) hereof.
"Tender Notice" is defined in Section 201(e) hereof.
"Total Assets" as of any date means the sum of (i) the Undepreciated Real
Estate Assets and (ii) all other assets of the Company and its Subsidiaries
determined in accordance with GAAP (but excluding accounts receivable and
intangibles).
"Total Unencumbered Assets" means the sum of (i) those Undepreciated Real
Estate Assets not subject to an Encumbrance for borrowed money and (ii) all
other assets of the Company and its Subsidiaries not subject to an Encumbrance
for borrowed money determined in accordance with GAAP (but excluding accounts
receivable and intangibles).
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"Undepreciated Real Estate Assets" as of any date means the cost (original
cost plus capital improvements) of real estate assets of the Company and its
Subsidiaries on such date, before depreciation and amortization determined on a
consolidated basis in accordance with GAAP.
"Unsecured Debt" means Debt which is not secured by any of the properties
of the Company or any Subsidiary.
ARTICLE TWO
TERMS OF THE NOTES
Section 201. Pursuant to Section 301 of the Indenture, the Notes shall have
the following terms and conditions:
(a) Title; Limitation on Aggregate Principal Amount. The Notes shall be
known as the Company's $200,000,000 Remarketed Reset Notes due July 9, 2007. The
Notes will be limited to an aggregate principal amount of $200,000,000.
(b) Principal Repayment; Currency. The stated maturity of the Notes is July
9, 2007, provided, however, the Notes may be earlier redeemed at the option of
the Company as provided in paragraph (d) below. The principal of each Note
payable on the maturity date shall be paid against presentation and surrender
thereof at the corporate trust office of the Trustee, located initially at Two
International Place, Boston, Massachusetts 02110, in such coin or currency of
the United States of America as at the time of payment is legal tender for the
payment of public or private debts. The Company will not pay Additional Amounts
(as defined in the Indenture) on the Notes.
(c) Interest Payments. During the Initial Spread Period, the interest rate
on the Notes will be reset on each Interest Reset Date, and will equal LIBOR
plus the Initial Spread. The Initial Spread is .45%. After the Initial Spread
Period, unless notice of redemption of the Notes as a whole has been given, the
duration, redemption dates, redemption type, redemption prices (if applicable),
Commencement Date, Interest Payment Date and interest rate mode will be agreed
to by the Company and the Remarketing Underwriter by 3:00 p.m., New York City
time, on each applicable Duration/Mode Determination Date and the Spread will be
agreed to by the Company and the Remarketing Underwriter by 3:00 p.m., New York
City time, on the corresponding Spread Determination Date. Interest on the Notes
during each Subsequent Spread Period shall be payable, as applicable, either (i)
at a floating interest rate (such Notes being in the "Floating Rate Mode", and
such interest rate being a "Floating Rate") or (ii) at a fixed interest rate
(such Notes being in the "Fixed Rate Mode" and such interest rate being a "Fixed
Rate"), in each case as determined by the Remarketing Underwriter and the
Company in accordance with a Remarketing Agreement between the Remarketing
Underwriter and the Company (the "Remarketing Agreement").
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After the Initial Spread Period, the Spread applicable to each Subsequent
Spread Period will be determined on each subsequent Spread Determination Date
which precedes the beginning of the corresponding Subsequent Spread Period,
pursuant to agreement between the Company and the Remarketing Underwriter
(except as otherwise provided below), and the interest rate mode used for each
Subsequent Spread Period may be a Floating Rate Mode or a Fixed Rate Mode, at
the discretion of the Company and the Remarketing Underwriter. If the Company
and the Remarketing Underwriter are unable to agree on the Spread for any
Subsequent Spread Period, (1) the Subsequent Spread Period will be one year, (2)
the Notes will be reset to the Floating Rate Mode, (3) the Spread for such
Subsequent Spread Period will be the Alternate Spread and (4) the Notes will be
redeemable at the option of the Company, in whole or in part, upon at least five
Business Days' notice given by no later than the fifth Business Day after the
relevant Spread Determination Date, at a redemption price equal to 100% of the
principal amount thereof, together with accrued interest to the redemption date,
except that the Notes may not be redeemed prior to the Tender Date or later than
the last day of such one-year Subsequent Spread Period. During the Initial
Spread Period, interest on the Notes will be payable in Dollars quarterly in
arrears on October 9, 1997, January 9, 1998, April 9, 1998 and July 9, 1998 (or,
if not a Business Day, on the next succeeding Business Day except as described
herein). After the Initial Spread Period, (i) if the Notes are in the Floating
Rate Mode, interest on the Notes will be payable, unless otherwise specified on
the applicable Duration/Mode Determination Date, quarterly in arrears on each
January 9, April 9, July 9 and October 9, during the applicable Subsequent
Spread Period, or (ii) if the Notes are in the Fixed Rate Mode, interest on the
Notes will be payable, unless otherwise specified on the applicable
Duration/Mode Determination Date, semiannually in arrears on each January 9 and
July 9 beginning on the Commencement Date and for the duration of the applicable
Subsequent Spread Period. Interest on the Notes is payable to the persons in
whose names the Notes are registered at the close of business on the applicable
Record Date next preceding the applicable Interest Payment Date.
Interest on the Notes will accrue from and including each Interest Payment
Date (or in the case of the Initial Quarterly Period, July 9, 1997) to but
excluding the next succeeding Interest Payment Date or maturity date, as the
case may be. The Initial Quarterly Period will be the period from and including
July 9, 1997 to but excluding the first Interest Payment Date (October 9, 1997)
(the "Initial Quarterly Period"). Thereafter, each Quarterly Period during the
Initial Spread Period or any Subsequent Spread Period will be from and including
the most recent Interest Payment Date to which interest has been paid to but
excluding the next Interest Payment Date.
Payment of interest on the Notes shall be made by the Trustee to or at the
direction of The Depository Trust Company or its nominee, Cede & Co., who will
in turn immediately credit the account of the Remarketing Underwriter.
If any Interest Payment Date (other than at maturity), redemption date,
Interest Reset Date, Duration/Mode Determination Date, Spread Determination
Date, Commencement Date or Tender Date would otherwise be a day that is not a
Business Day, such Interest Payment Date, redemption date, Interest Reset Date,
Duration/Mode Determination Date, Spread Determination Date, Commencement Date
or Tender Date will be postponed to the next succeeding day that is a
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Business Day, except that if such Business Day is in the next succeeding
calendar month, such Interest Payment Date, redemption date, Interest Reset
Date, Commencement Date or Tender Date shall be the next preceding Business Day.
If the maturity date for the Notes falls on a day that is not a Business Day,
the related payment of principal and interest will be made on the next
succeeding Business Day as if it were made on the date such payment was due, and
no interest will accrue on the amounts so payable for the period for the period
from and after such dates.
If the Notes are in the Floating Rate Mode, such Notes will bear interest
at a rate per annum (computed on the basis of the actual number of days elapsed
over a 360-day year) equal to LIBOR for the applicable Quarterly Period plus the
applicable Spread, as agreed to by the Company and the Remarketing Underwriter,
and such interest rate will be reset quarterly. If the Notes are in the Fixed
Rate Mode, interest will equal the applicable Spread, as agreed to by the
Company and the Remarketing Underwriter, plus the applicable Treasury rate,
computed on the basis of a 360-day year of twelve 30-day months. Interest in the
Fixed Rate Mode will accrue from and including each Interest Payment Date to but
excluding the next succeeding Interest Payment Date or maturity date, as the
case may be.
If any Interest Payment Date or any redemption date in the Fixed Rate Mode
falls on a day that is not a Business Day (in either case, other than any
Interest Payment Date or redemption date that falls on a Commencement Date, in
which case such Commencement Date will be postponed to the next day that is a
Business Day), the related payment of principal and interest will be made on the
next succeeding Business Day as if it were made on the date such payment was
due, and no interest will accrue on the amounts so payable for the period from
and after such date.
Unless the Company shall have otherwise provided pursuant to Section 4 of
the Remarketing Agreement, dated as of July 2, 1997 between the Company and
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated
("Merrill Lynch"), the Rate Agent will be Merrill Lynch.
All percentages resulting from any calculation in respect of a Note will be
rounded, if necessary, to the nearest one hundred-thousandth of a percentage
point, with five one-millionths of a percentage point rounded upward, and all
dollar amounts used in or resulting from such calculation in respect of a Note
will be rounded to the nearest cent (with one-half cent rounded upward).
Unless notice of redemption of the Notes as a whole has been given, the
Company will cause a notice to be given to holders of Notes on the New York
Business Day (as defined below) following the Spread Determination Date for each
Subsequent Spread Period in the manner described below, specifying (1) the
duration of such Subsequent Spread Period, (2) the mode (i.e., Fixed Rate Mode
or Floating Rate Mode), (3) the Commencement Date, (4) any redemption dates, (5)
any redemption type (i.e., par, premium or make-whole), (6) any redemption
prices, (7) the Spread for such Subsequent Spread Period, (8) the identity of
the Remarketing Underwriter, if applicable, and (9) any other relevant
provisions. The term "New York Business Day" means any
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day other than a Saturday or Sunday or a day on which banking institutions in
The City of New York are required or authorized to close.
(d) Prepayment at the Option of the Company; Redemption. The Notes are not
redeemable prior to July 9, 1998. On that date and thereafter, the Notes may be
redeemable, at the option of the Company, on those Interest Payment Dates that
are specified as redemption dates by the Company on the applicable Duration/Mode
Determination Date, in whole or in part, upon notice thereof given at any time
during the 45 calendar day period ending on the tenth calendar day prior to the
redemption date (provided that notice of any partial redemption must be given to
the Noteholders at least 15 calendar days prior to the redemption date), in
accordance with the redemption type selected on the Duration/Mode Determination
Date. The redemption type to be chosen by the Company and the Remarketing
Underwriter on the Duration/Mode Determination Date may be one of the following:
(i) Par Redemption; (ii) Premium Redemption; or (iii) Make-Whole Redemption.
(e) Tender at Option of Beneficial Owners. The Company will request, not
later than seven nor more than 15 calendar days prior to any Spread
Determination Date, that The Depository Trust Company ("DTC") notify its
Participants of such Spread Determination Date and of the procedures that must
be followed if any beneficial owner of a Note wishes to tender such Note as
described herein. If the Company and the Remarketing Underwriter agree on the
Spread on the Spread Determination Date with respect to any Subsequent Spread
Period, each Note may be tendered to the Remarketing Underwriter for purchase
from the tendering Noteholder at 100% of its principal amount and for
remarketing by the Remarketing Underwriter on the calendar day (or if such day
is not a Business Day, on the next succeeding Business Day except as otherwise
provided herein) immediately following the end of each Subsequent Spread Period
(the "Tender Date"). In the case of the Initial Spread Period, the Notes may be
tendered on July 9, 1998. Notice of a beneficial owner's election to tender to
the Remarketing Underwriter, which notice is irrevocable (the "Tender Notice"),
must be received by the Remarketing Underwriter during the period commencing on
the calendar day following the Spread Determination Date (or, if not a Business
Day, on the next succeeding Business Day) and ending at 5:00 p.m., New York City
time, on the fifth calendar day following the
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relevant Spread Determination Date. The obligation of the Remarketing
Underwriter to purchase tendered Notes from the tendering Noteholders will be
subject to certain conditions and termination events as provided in the
Remarketing Underwriting Agreement. If, pursuant to those certain conditions or
termination events set forth in the Remarketing Underwriting Agreement, the
Remarketing Underwriter does not purchase all Notes on the relevant Tender Date,
for which a Tender Notice shall have been given, (1) all Tender Notices relating
thereto will be null and void, (2) none of the Notes for which such Tender
Notices shall have been given will be purchased by the Remarketing Underwriter
on such Tender Date, (3) the Subsequent Spread Period will be one year, which
Subsequent Spread Period shall be deemed to have commenced on the applicable
Commencement Date, (4) the Notes will be reset to the Floating Rate Mode, (5)
the Spread for such Subsequent Spread Period will be the Alternate Spread and
(6) the Notes will be redeemable at the option of the Company, in whole or in
part, upon at least ten Business Days' notice given by no later than the fifth
Business Day following the relevant Tender Date on the date set forth in such
notice, which shall be no later than the last day of such one-year Subsequent
Spread Period, at a redemption price equal to 100% of the principal amount
thereof, together with accrued interest to the redemption date. No beneficial
owner of any Note shall have any rights or claims against the Company or the
Remarketing Underwriter as a result of the Remarketing Underwriter not
purchasing such Notes, except as provided in clause (5) of the preceding
sentence.
If the Remarketing Underwriter does not purchase all Notes tendered for
purchase on any Tender Date, it will promptly notify the Company and the
Trustee. As soon as practicable after receipt of such notice, the Company will
cause a notice to be given to holders of the Notes specifying (1) the one-year
duration of the Subsequent Spread Period, (2) that the Notes will be reset to
the Floating Rate Mode, (3) the Spread for such Subsequent Spread Period (which
shall be the Alternate Spread) and (4) LIBOR for the initial Quarterly Period of
such Subsequent Spread Period.
(f) Form of Notes. The Notes shall be issued by the Company in registered
form as set forth in Exhibit A attached hereto and all of the terms and
provisions thereof are incorporated herein by reference. The Notes will be
issued in the form of single fully registered global security without coupons
(the "Global Note") which will be deposited with, or on behalf of, DTC, and
registered in the name of DTC's nominee, Cede & Co. Except under the
circumstance described below, the Notes will not be issuable in a definitive
form. Unless and until it is exchanged in whole or in part for the individual
notes represented thereby, a Global Note may not be transferred except as a
whole by DTC to a nominee of DTC or by a nominee of DTC to DTC or another
nominee of DTC or by DTC or any nominee of DTC to a successor depository or any
nominee of such successor.
So long as DTC or its nominee is the registered owner of such Global Note,
DTC or such nominee, as the case may be, will be considered the sole owner or
holder of the Notes represented by such Global Note for all purposes under this
Supplemental Indenture. Except as described below, owners of beneficial interest
in Notes evidenced by a Global Note will not be entitled to have any of the
individual Notes represented by such Global Note registered in their names, will
not receive or be entitled to receive physical delivery of any such Notes in
definitive form and will not be considered the owners or holders thereof under
the Indenture or this Supplemental Indenture.
If DTC is at any time unwilling, unable or ineligible to continue as
depository and a successor depository is not appointed by the Company within 90
days, the Company will issue individual Notes in exchange for the Global Note
representing such Notes. In addition, the Company may at any time and in its
sole discretion, subject to certain limitations set forth in the Indenture,
determine not to have any of such Notes represented by one or more Global Notes
and in such event will issue individual Notes in exchange for the Global Note or
Notes representing such debt Securities. Individual Notes so issued will be
issued in denominations of $1,000 and integral multiples thereof and will be
issued in registered form only, without coupons.
11
<PAGE>
(g) Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if mailed or transmitted by
any standard form of telecommunication. Notices to the Company shall be directed
to it at 400 Centre Street, Newton, Massachusetts 02158, Attention: David J.
Hegarty, President; notices to the Trustee shall be directed to it at Two
International Place, Boston, Massachusetts 02110, Attention: Corporate Trust
Division.
ARTICLE THREE
ADDITIONAL COVENANTS
Section 301. In addition to the covenants of the Company set forth in
Article Ten of the Indenture, for the benefit of the holders of the Notes:
(a) Limitations on Incurrence of Debt. (i) The Company will not, and will
not permit any Subsidiary to, incur any Debt if, immediately after giving effect
to the incurrence of such additional Debt and the application of the proceeds
thereof, the aggregate principal amount of all outstanding Debt of the Company
and its Subsidiaries on a consolidated basis determined in accordance with GAAP
is greater than 60% of the sum ("Adjusted Total Assets") of (without
duplication) (i) the Total Assets of the Company and its Subsidiaries as of the
end of the calendar quarter covered in the Company's Annual Report on Form 10-K,
or the Quarterly Report on Form 10-Q, as the case may be, most recently filed
with the Securities and Exchange Commission (or, if such filing is not permitted
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), with
the Trustee) prior to the incurrence of such additional Debt and (ii) the
purchase price of any real estate assets or mortgages receivable acquired, and
the amount of any securities offering proceeds received (to the extent that such
proceeds were not used to acquire real estate assets or mortgages receivable or
used to reduce Debt), by the Company or any Subsidiary since the end of such
calendar quarter, including those proceeds obtained in connection with the
incurrence of such additional Debt.
(ii) In addition to the foregoing limitations on the incurrence of Debt,
the Company will not, and will not permit any Subsidiary to, incur any Secured
Debt if, immediately after giving effect to the incurrence of such additional
Secured Debt and the application of the proceeds thereof, the aggregate
principal amount of all outstanding Secured Debt of the Company and its
Subsidiaries on a consolidated basis is greater than 40% of Adjusted Total
Assets.
(iii) In addition to the foregoing limitations on the Incurrence of Debt,
the Company will not, and will not permit any Subsidiary to, incur any Debt if
the ratio of Consolidated Income Available for Debt Service to the Annual
Service Charge for the four consecutive fiscal quarters most recently ended
prior to the date on which such additional Debt is to be incurred shall have
been less than 1.5x, on a pro forma basis after giving effect thereto and to the
application of the proceeds therefrom, and calculated on the assumption that (i)
such Debt and any other Debt incurred by the Company and its Subsidiaries since
the first day of such four-quarter period and the application of the proceeds
therefrom, including to refinance other Debt, had occurred at the
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<PAGE>
beginning of such period; (ii) the repayment or retirement of any other Debt by
the Company and its Subsidiaries since the first date of such four-quarter
period had been repaid or retired at the beginning of such period (except that,
in making such computation, the amount of Debt under any revolving credit
facility shall be computed based upon the average daily balance of such Debt
during such period); (iii) in the case of Acquired Debt or Debt incurred in
connection with any acquisition since the first day of such four-quarter period,
the related acquisition had occurred as of the first day of such period with
appropriate adjustments with respect to such acquisition being included in such
pro forma calculation; and (iv) in the case of any acquisition or disposition by
the Company or its Subsidiaries of any asset or group of assets since the first
day of such four-quarter period, whether by merger, stock purchase or sale, or
asset purchase or sale, such acquisition or disposition or any related repayment
of Debt had occurred as of the first day of such period with the appropriate
adjustments with respect to such acquisition or disposition being included in
such pro forma calculation.
(b) Maintenance of Total Unencumbered Assets. The Company and its
Subsidiaries will maintain Total Unencumbered Assets of not less than 200% of
the aggregate outstanding principal amount of the Unsecured Debt of the Company
and its Subsidiaries on a consolidated basis.
(c) Applicability of Discharge, Defeasance and Covenant Defeasance
Provisions. The Discharge, Defeasance and Covenant Defeasance provisions in
Article Fourteen of the Indenture will apply to the Notes.
ARTICLE FOUR
ADDITIONAL EVENTS OF DEFAULT
For purposes of this Supplemental Indenture and the Notes, in addition to
the Events of Default set forth in Section 501 of the Indenture, it shall also
constitute an "Event of Default" if an event of default under any bond,
debenture, note or other evidence of indebtedness of the Company (including an
event of default with respect to any other series of securities), or under any
mortgage, indenture or other instrument of the Company under which there may be
issued or by which there may be secured or evidenced any indebtedness of the
Company (or by any Subsidiary, the repayment of which the Company has guaranteed
or for which the Company is directly responsible or liable as obligor or
guarantor), whether such indebtedness now exists or shall hereafter be created,
shall happen and shall result in an aggregate principal amount exceeding
$20,000,000 becoming or being declared due and payable prior to the date on
which it would otherwise have become due and payable, without such indebtedness
having been discharged, or such acceleration having been rescinded or annulled,
within a period of ten days after there shall have been given, by registered or
certified mail, to the Company by the Trustee or to the Company and the Trustee
by the holders of at least 25% in principal amount of the outstanding Notes, a
written notice specifying such default and requiring the Company to cause such
indebtedness to be discharged or cause such acceleration to be rescinded or
annulled and stating that such notice is a "Notice of Default" hereunder.
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<PAGE>
ARTICLE FIVE
EFFECTIVENESS
This Supplemental Indenture shall be effective for all purposes as of the
date and time this Supplemental Indenture has been executed and delivered by the
Company and the Trustee in accordance with Article Nine of the Indenture. As
supplemented hereby, the Indenture is hereby confirmed as being in full force
and effect.
ARTICLE SIX
MISCELLANEOUS
Section 601. In the event any provision of this Supplemental Indenture
shall be held invalid or unenforceable by any court of competent jurisdiction,
such holding shall not invalidate or render unenforceable any other provision
hereof or any provision of the Indenture.
Section 602. To the extent that any terms of the Notes are inconsistent
with the terms of the Indenture, the terms of the Notes shall govern and
supersede such inconsistent terms.
Section 603. This Supplemental Indenture shall be governed by and construed
in accordance with the laws of The Commonwealth of Massachusetts.
Section 604. This Supplemental Indenture may be executed in several
counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
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<PAGE>
IN WITNESS WHEREOF, the Company and the Trustee have caused this
Supplemental Indenture to be executed as an instrument under seal in their
respective corporate names and attested by their duly authorized officers, all
as of the date first above written.
(SEAL) HEALTH AND RETIREMENT PROPERTIES TRUST
Attest:
By:
------------------------------
Name:
Title:
Name:
Title:
(SEAL) STATE STREET BANK AND TRUST COMPANY
Attest:
By:
------------------------------
Name:
Title:
Name:
Title:
Ex 4.2
GLOBAL NOTE
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
ISSUER OR ITS AGENT FOR REGISTRATION OR TRANSFER, EXCHANGE OR PAYMENT,
AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND
ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
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.
No. 1 $200,000,000
HEALTH AND RETIREMENT PROPERTIES TRUST
Remarketed Reset Note due July 9, 2007
CUSIP 422169AE2
Health and Retirement Properties Trust, a Maryland real estate investment
trust (the "Company"), for value received, hereby promises to pay to CEDE & CO.
or registered assigns, in the Borough of Manhattan, The City of New York, the
principal sum of TWO HUNDRED MILLION DOLLARS ($200,000,000), on July 9, 2007, in
such coin or currency of the United States of America as at the time of payment
shall be legal tender for the payment of public and private debts, and to pay
interest in arrears on each January 9, April 9, July 9 and October 9, as the
case may be, or any other date (including July 9, 1998) as shall be established
by the Company as an interest payment date (each, an "Interest Payment Date"),
commencing on October 9, 1997, and at maturity, on the principal amount of this
Global Note, in like coin or currency, at the times and at the rate per annum
from time to time in effect as set forth below, from the most recent date to
which interest has been paid or, if no interest has been paid, from July 9,
1997. The interest so payable on each Interest
<PAGE>
Payment Date will, subject to certain exceptions provided in the Indenture
referred to below, be paid to the person in whose name this Global Note is
registered on the 15th calendar day, whether or not a Business Day, next
preceding the applicable Interest Payment Date.
This Global Note is issued in respect of a duly authorized issue of
Securities of the Company, designated as the Remarketed Reset Notes due July 9,
2007 of the Company (the "Notes"), limited (except as otherwise provided in the
Indenture referred to below) in aggregate principal amount to $200,000,000. The
Notes represent one of a duly authorized series of Securities of the Company,
issued and to be issued in one or more series under an Indenture and a
Supplemental Indenture, each dated as of July 9, 1997 (collectively, the
"Indenture"), between the Company and State Street Bank and Trust Company, as
trustee (herein called the "Trustee"). The terms of the Notes include those
stated in the Indenture and those made part of the Indenture by the Trust
Indenture Act of 1939, as amended (the "Act"). The Notes are subject to all such
terms, and beneficial owners of interests in this Global Note are referred to
the Indenture and the Act for a statement of such terms. All terms used in this
Global Note which are defined in the Indenture shall have the meanings assigned
to them in the Indenture. The Notes of this series are general and unsecured
obligations of the Company.
Except as provided below, owners of beneficial interests in the Notes
evidenced by this Global Note will not be entitled to receive definitive Notes
evidencing such ownership. Beneficial interests in the Notes will be held
through a depositary selected by the Company, which initially is The Depository
Trust Company ("DTC"). This Global Note will be deposited with and held by DTC
and is registered in the name of DTC's nominee. So long as DTC's nominee is the
registered owner of this Global Note, such nominee for all purposes will be
considered the sole owner of the Notes under the Indenture. If DTC is at any
time unwilling, unable or ineligible to continue as depositary and a successor
depositary is not appointed by the Company within 90 calendar days of its
receipt of notice from DTC to such effect, the Company will issue individual
Notes in definitive form in exchange for this Global Note. In addition, the
Company may at any time and in its sole discretion determine not to have the
Notes represented by a Global Note. In either instance, an owner of a beneficial
interest in this Global Note will be entitled to have Notes equal in principal
amount to such beneficial interest registered in its name and will be entitled
to physical delivery of such Notes in definitive form. Notes so issued in
definitive form will be issued in denominations of $1,000 and any integral
multiple thereof and will be issued in registered form only, without coupons.
2
<PAGE>
During the one-year period from and including July 9, 1997 to but excluding
July 9, 1998 (the "Initial Spread Period"), the interest rate on the Notes will
be reset quarterly, and will equal LIBOR (as defined herein) plus the applicable
Spread. The Spread during the Initial Spread Period is 0.45%. Unless notice of
redemption as a whole has been given, after the Initial Spread Period, the
duration, redemption dates, redemption type, redemption prices (if applicable),
Commencement Date (as defined herein), Interest Payment Dates (as defined
herein) and interest rate mode will be agreed to by the Company and the
Remarketing Underwriter (as defined herein) by 3:00 p.m., New York City time, on
each applicable Duration/Mode Determination Date (as defined herein) and the
Spread will be agreed to by the Company and the Remarketing Underwriter by 3:00
p.m., New York City time, on the corresponding Spread Determination Date (as
defined herein). Interest on the Notes during each Subsequent Spread Period (a
"Subsequent Spread Period") shall be payable, as applicable, either (i) at a
floating interest rate (such Notes being in the "Floating Rate Mode," and such
interest rate being a "Floating Rate") or (ii) at a fixed interest rate (such
Notes being in the "Fixed Rate Mode" and such interest rate being a "Fixed
Rate"), in each case as determined by the Remarketing Underwriter and the
Company in accordance with a Remarketing Agreement between the Remarketing
Underwriter and the Company (the "Remarketing Agreement").
During the Initial Spread Period, interest on the Notes will be payable
quarterly in arrears, on October 9, 1997, January 9, 1998, April 9, 1998 and
July 9, 1998 (or, if not a Business Day (as defined herein), on the next
succeeding Business Day (except as described below)), to the persons in whose
names the Notes are registered at the close of business on the applicable record
date (i.e., the 15th calendar day, whether or not a Business Day, next preceding
the applicable Interest Payment Date) next preceding such Interest Payment Date.
During the Initial Spread Period and any Subsequent Spread Period for which the
Notes are in the Floating Rate Mode, the interest rate on the Notes will be
reset quarterly and the Notes will bear interest at a per annum rate (computed
on the basis of the actual number of days elapsed over a 360-day year) equal to
LIBOR for the applicable Quarterly Period (as defined herein), plus the
applicable Spread. Interest on the Notes will accrue from and include each
Interest Payment Date (or, in the case of the Initial Quarterly Period (as
defined herein), July 9, 1997) but exclude the next succeeding Interest Payment
Date or maturity date, as the case may be. The Initial Quarterly Period will be
the period from and including July 9, 1997 to but excluding the first Interest
Payment Date (October 9, 1997) (the "Initial Quarterly Period"). Thereafter,
each Quarterly Period during the Initial Spread Period or any Subsequent Spread
Period for which the Notes are in the Floating Rate Mode (each, a "Quarterly
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<PAGE>
Period") will be from and including the most recent Interest Payment Date to
which interest has been paid to but excluding the next Interest Payment Date;
the first day of a Quarterly Period is referred to herein as an "Interest Reset
Date."
After the Initial Spread Period, the Spread applicable to each Subsequent
Spread Period will be determined on each subsequent Spread Determination Date
which precedes the beginning of the corresponding Subsequent Spread Period,
pursuant to agreement between the Company and the Remarketing Underwriter
(except as otherwise provided below). If the Company and the Remarketing
Underwriter are unable to agree on the Spread for any Subsequent Spread Period,
(1) the Subsequent Spread Period will be one year, (2) the Notes will be reset
to the Floating Rate Mode, (3) the Spread for such Subsequent Spread Period will
be the Alternate Spread (as defined herein) and (4) the Notes will be redeemable
at the option of the Company,
9
<PAGE>
in whole or in part, upon at least five Business Days' notice given by no later
than the fifth Business Day after the relevant Spread Determination Date, at a
redemption price equal to 100% of the principal amount thereof, together with
accrued interest to the redemption date, except that the Notes may not be
redeemed prior to the Tender Date (as defined herein) or later than the last day
of such one-year Subsequent Spread Period. The Alternate Spread will be the
percentage equal to LIBOR (as described herein) for the Quarterly Period
beginning on the first date of such Subsequent Spread Period (the "Commencement
Date").
If any Interest Payment Date (other than at maturity), redemption date,
Interest Reset Date, Duration/Mode Determination Date, Spread Determination
Date, Commencement Date or Tender Date in the Floating Rate Mode would otherwise
be a day that is not a Business Day, such Interest Payment Date, redemption
date, Interest Reset Date, Duration/Mode Determination Date, Spread
Determination Date, Commencement Date or Tender Date will be postponed to the
next succeeding day that is a Business Day, except that if such Business Day is
in the next succeeding calendar month, such Interest Payment Date, redemption
date, Interest Reset Date, Commencement Date or Tender Date shall be the next
preceding Business Day. If the maturity date for the Notes falls on a day that
is not a Business Day, the related payment of principal and interest will be
made on the next succeeding Business Day as if it were made on the date such
payment was due, and no interest will accrue on the amounts so payable for the
period from and after such date.
LIBOR applicable for a Quarterly Period will be determined by the Rate
Agent (as defined herein) as of the second London Business Day (as defined
herein) preceding each Interest Reset Date (the "LIBOR Determination Date") in
accordance with the following provisions:
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<PAGE>
(i) LIBOR will be determined on the basis of the offered rates for
three-month deposits in U.S. Dollars of not less than U.S.$1,000,000, commencing
on the second London Business Day immediately following such LIBOR Determination
Date, which appears on Telerate Page 3750 (as defined herein) as of
approximately 11:00 a.m., London time, on such LIBOR Determination Date.
"Telerate Page 3750" means the display designated on page "3750" on the Telerate
Service (or such other page as may replace the 3750 page on that service or such
other service or services as may be nominated by the British Bankers'
Association for the purpose of displaying London interbank offered rates for
U.S. Dollar deposits). If no rate appears on Telerate Page 3750, LIBOR for such
LIBOR Determination Date will be determined in accordance with the provisions of
paragraph (ii) below.
(ii) With respect to a LIBOR Determination Date on which no rate appears on
Telerate Page 3750 as of approximately 11:00 a.m., London time, on such LIBOR
Determination Date, the Rate Agent shall request the principal London offices of
each of four major reference banks in the London interbank market selected by
the Rate Agent to provide the Rate Agent with a quotation of the rate at which
three-month deposits in U.S. Dollars, commencing on the second London Business
Day immediately following such LIBOR Determination Date, are offered by it to
prime banks in the London interbank market as of approximately 11:00 a.m.,
London time, on such LIBOR Determination Date and in a principal amount equal to
an amount of not less than U.S.$1,000,000 that is representative for a single
transaction in such market at such time. If at least two such quotations are
provided, LIBOR for such LIBOR Determination Date will be the arithmetic mean of
such quotations as calculated by the Rate Agent. If fewer than two quotations
are provided, LIBOR for such LIBOR Determination Date will be the arithmetic
mean of the rates quoted as of approximately 11:00 a.m., New York City time, on
such LIBOR Determination Date by three major banks in The City of New York
selected by the Rate Agent (after consultation with the Company) for loans in
U.S. Dollars to leading European banks, having a three-month maturity commencing
on the second London Business Day immediately following such LIBOR Determination
Date and in a principal amount equal to an amount of not less than
U.S.$1,000,000 that is representative for a single transaction in such market at
such time; provided, however, that if the banks selected as aforesaid by the
Rate Agent are not quoting as mentioned in this sentence, LIBOR for such LIBOR
Determination Date will be LIBOR determined with respect to the immediately
preceding LIBOR Determination Date, or in the case of the first LIBOR
Determination Date, LIBOR for the Initial Quarterly Period.
If the Notes are to be reset to the Fixed Rate Mode, as agreed to by the
Company and the Remarketing Underwriter on a
5
<PAGE>
Duration/Mode Determination Date, then the applicable Fixed Rate for the
corresponding Subsequent Spread Period will be determined as of the sixth
calendar day following the Spread Determination Date (provided that such date is
a Business Day; otherwise, as of the next Business Day thereafter) (the "Fixed
Rate Determination Date") (provided, however, that in the case where the Notice
Date (as defined herein) also falls on the Fixed Rate Determination Date, the
Fixed Rate Determination Date will be the following Business Day thereafter), in
accordance with the following provisions: the Fixed Rate will be a per annum
rate and will be determined as of 12:00 noon on such Fixed Rate Determination
Date by adding the applicable Spread (as agreed to by the Company and the
Remarketing Underwriter on the preceding Spread Determination Date) to the yield
to maturity (expressed as a bond equivalent, on the basis of a year of 365 or
366 days, as applicable, and applied on a daily basis) of the applicable United
States Treasury security, selected by the Rate Agent after consultation with the
Remarketing Underwriter, as having a maturity comparable to the duration
selected for the following Subsequent Spread Period, which would be used in
accordance with customary financial practice in pricing new issues of corporate
debt securities of comparable maturity to the duration selected for the
following Subsequent Spread Period.
Interest in the Fixed Rate Mode will be computed on the basis of a 360-day
year of twelve 30-day months. Such interest will be payable semiannually in
arrears on the Interest Payment Dates (January 9 and July 9, unless otherwise
specified by the Company and the Remarketing Underwriter on the applicable
Duration/Mode Determination Date) at the applicable Fixed Rate, as determined by
the Company and the Remarketing Underwriter on the Fixed Rate Determination
Date, beginning on the Commencement Date and for the duration of the relevant
Subsequent Spread Period. Interest on the Notes will accrue from and including
each Interest Payment Date to but excluding the next succeeding Interest Payment
Date or maturity date, as the case may be.
If any Interest Payment Date or any redemption date in the Fixed Rate Mode
falls on a day that is not a Business Day (in either case, other than any
Interest Payment Date or redemption date that falls on a Commencement Date, in
which case such date will be postponed to the next day that is a Business Day),
the related payment of principal and interest will be made on the next
succeeding Business Day as if it were made on the date such payment was due, and
no interest will accrue on the amounts so payable for the period from and after
such dates.
The Spread that will be applicable during each Subsequent Spread Period
will be the percentage (a) recommended by the Remarketing Underwriter so as to
result in a rate that, in the opinion of the Remarketing Underwriter, will
enable tendered
6
<PAGE>
Notes to be remarketed by the Remarketing Underwriter at 100% of the principal
amount thereof, as described below, and (b) agreed to by the Company.
Unless notice of redemption of the Notes as a whole has been given, the
duration, redemption dates, redemption types (i.e., par, premium or make-whole),
redemption prices (if applicable), Commencement Date, Interest Payment Dates and
interest rate mode (i.e., Fixed Rate Mode or Floating Rate Mode) (and any other
relevant terms) for each Subsequent Spread Period will be established by 3:00
p.m., New York City time, on the 15th calendar day prior to the Commencement
Date of each Subsequent Spread Period (the "Duration/Mode Determination Date").
In addition, the Spread for each Subsequent Spread Period will be established by
3:00 p.m., New York City time, on the 10th calendar day prior to the
Commencement Date of such Subsequent Spread Period (the "Spread Determination
Date"). The Company will request, not later than seven nor more than 15 calendar
days prior to any Spread Determination Date, that DTC notify its Participants of
such Spread Determination Date and of the procedures that must be followed if
any beneficial owner of a Note wishes to tender such Note as described below.
The term "Business Day" means any day other than a Saturday or Sunday or a day
on which banking institutions in The City of New York are required or authorized
to close and, in the case of Notes in the Floating Rate Mode, that is also a
London Business Day. The term "London Business Day" means any day on which
dealings in deposits in U.S. Dollars are transacted in the London interbank
market.
Unless notice of redemption of the Notes as a whole has been given, the
Company will cause a notice to be given to Noteholders on the New York Business
Day (as defined herein) next following the Spread Determination Date for each
Subsequent Spread Period, specifying (1) the duration of such Subsequent Spread
Period, (2) the mode (i.e., Fixed Rate Mode or Floating Rate Mode), (3) the
Commencement Date, (4) any redemption dates, (5) any redemption type (i.e., par,
premium or make-whole), (6) any redemption prices, (7) the Spread for such
Subsequent Spread Period, (8) the identity of the Remarketing Underwriter, if
applicable, and (9) any other relevant provisions. The term "New York Business
Day" means any day other than a Saturday or Sunday or a day on which banking
institutions in The City of New York are required or authorized to close.
All percentages resulting from any calculation of any interest rate for the
Notes will be rounded, if necessary, to the nearest one hundred thousandth of a
percentage point, with five one millionths of a percentage point rounded upward
and all dollar amounts will be rounded to the nearest cent, with one half cent
being rounded upward.
7
<PAGE>
In the event the Company and the Remarketing Underwriter agree on the
Spread on the Spread Determination Date with respect to any Subsequent Spread
Period, the Company and the Remarketing Underwriter will enter into a
Remarketing Underwriting Agreement (the "Remarketing Underwriting Agreement") on
such Spread Determination Date, under which the Remarketing Underwriter will
agree, subject to the terms and conditions set forth therein, to purchase from
tendering Noteholders on the date immediately following the end of a Subsequent
Spread Period (the "Tender Date") all Notes with respect to which the
Remarketing Underwriter receives a Tender Notice as described below at 100% of
the principal amount thereof (the "Purchase Price"). In such event (except as
otherwise provided below), each beneficial owner of a Note may, at such owner's
option, upon giving notice as provided below (the "Tender Notice"), tender such
Note for purchase by the Remarketing Underwriter on the Tender Date at the
Purchase Price. The Purchase Price will be paid by the Remarketing Underwriter
in accordance with the standard procedures of DTC. Interest accrued on the Notes
with respect to the preceding Quarterly Period will be paid by the Company in
the manner described above.
The Tender Notice must be received by the Remarketing Underwriter during
the period commencing on the calendar day following the Spread Determination
Date (or, if not a Business Day, on the next succeeding Business Day) and ending
at 5:00 p.m., New York City time, on the fifth calendar day following the Spread
Determination Date (or, if not a Business Day, on the next succeeding Business
Day) (the "Notice Date"). Except as otherwise provided below, a Tender Notice
shall be irrevocable. If a Tender Notice is not received for any reason by the
Remarketing Underwriter with respect to any Note by 5:00 p.m., New York City
time, on the Notice Date, the beneficial owner of such Note shall be deemed to
have elected not to tender such Note for purchase by the Remarketing
Underwriter.
The obligation of the Remarketing Underwriter to purchase Notes from
tendering Noteholders will be subject to several conditions precedent set forth
in the Remarketing Underwriting Agreement. In addition, the Remarketing
Underwriting Agreement will provide for the termination thereof by the
Remarketing Underwriter upon the occurrence of certain events. In the event
that, with respect to any Subsequent Spread Period, the Remarketing Underwriter
does not purchase on the relevant Tender Date all of the Notes for which a
Tender Notice shall have been given, then (1) all such Tender Notices will be
null and void, (2) none of the Notes for which such Tender Notices shall have
been given will be purchased by the Remarketing Underwriter on such Tender Date,
(3) the Subsequent Spread Period will be one year, which Subsequent Spread
Period shall be deemed to have commenced upon the applicable Commencement Date,
(4) the Notes
8
<PAGE>
will be reset to the Floating Rate Mode, (5) the Spread for such Subsequent
Spread Period shall be the Alternate Spread and (6) the Notes will be redeemable
at the option of the Company, in whole or in part, upon at least 10 Business
Days' notice given by no later than the fifth Business Day following the
relevant Tender Date, or the date set forth in such notice, which shall be no
later than the last day of such one-year Subsequent Spread Period, in the manner
described below, at a redemption price equal to 100% of the principal amount
thereof, together with accrued interest to the redemption date.
No beneficial owner of any Note shall have any rights or claims under the
Remarketing Underwriting Agreement or against the Company or the Remarketing
Underwriter as a result of the Remarketing Underwriter not purchasing such
Notes, except as provided in clause (5) of the last sentence of the preceding
paragraph. The Company will have no obligation under any circumstance to
repurchase any Notes, except in the case of Notes called for redemption as
described herein.
If the Remarketing Underwriter does not purchase all Notes tendered for
purchase on any Tender Date, it will promptly notify the Company and the
Trustee. As soon as practicable after receipt of such notice, the Company will
cause a notice to be given to Noteholders specifying (1) the one-year duration
of the Subsequent Spread Period, (2) that the Notes will reset to the Floating
Rate Mode, (3) the Spread for such Subsequent Spread Period (which shall be the
Alternate Spread) and (4) LIBOR for the Initial Quarterly Period of such
Subsequent Spread Period.
The term "Remarketing Underwriter" means the nationally recognized
broker-dealer selected by the Company to act as Remarketing Underwriter. The
term "Rate Agent" means the nationally recognized broker-dealer selected by the
Company as its agent to determine (i) LIBOR and the interest rate on the Notes
for any Quarterly Period and/or (ii) the yield to maturity on the applicable
United States Treasury security that is used in connection with the
determination of the applicable Fixed Rate, and the ensuing applicable Fixed
Rate. Pursuant to a Remarketing Agreement, Merrill Lynch, Pierce, Fenner & Smith
Incorporated has agreed to act as Remarketing Underwriter and Rate Agent. The
Company, in its sole discretion, may change the Remarketing Underwriter and the
Rate Agent for any Subsequent Spread Period at any time at or prior to 3:00
p.m., New York City time, on the Duration/Mode Determination Date relating
thereto.
The Notes may not be redeemed by the Company prior to July 9, 1998. On that
date and on those Interest Payment Dates specified as redemption dates by the
Company on the Duration/Mode Determination Date in connection with any
Subsequent Spread Period, the Notes may be redeemed, at the option of the
Company,
10
<PAGE>
in whole or in part, upon notice thereof given at any time during the 45
calendar day period ending on the tenth calendar day prior to the redemption
date (provided that notice of any partial redemption must be given at least 15
calendar days prior to the redemption date), in accordance with the redemption
type selected on the Duration/Mode Determination Date. In the event of any
redemption of less than all of the outstanding Notes, the particular Notes to be
redeemed will be selected by such method as the Company shall deem fair and
appropriate. So long as the Global Note is held by DTC, the Company will give
notice to DTC, and DTC will determine the principal amount to be redeemed from
the account of each Participant.
The redemption type to be chosen by the Company and the Remarketing
Underwriter on the Duration/Mode Determination Date may be one of the following
as defined herein: (i) Par Redemption; (ii) Premium Redemption; or (iii)
Make-Whole Redemption. "Par Redemption" means redemption at a redemption price
equal to 100% of the principal amount thereof, plus accrued interest thereon, if
any, to the redemption date. "Premium Redemption" means redemption at a
redemption price or prices greater than 100% of the principal amount thereof,
plus accrued interest thereon, if any, to the redemption date, as determined on
the Duration/Mode Determination Date. "Make-Whole Redemption" means redemption
at a redemption price equal to the sum of (i) the principal amount of the Notes
being redeemed plus accrued interest thereon, if any, to the redemption date and
(ii) the Make-Whole Amount (as defined herein), if any, with respect to such
Notes.
"Make-Whole Amount" means, in connection with any optional or accelerated
payment of any Note, the excess, if any, of (i) the aggregate present value as
of the date of such redemption or accelerated payment of each dollar or
principal being redeemed or paid and the amount of interest (exclusive of
interest accrued to the date of redemption or accelerated payment) that would
have been payable in respect of such dollar if such redemption or accelerated
payment had not been made, determined by discounting, on a semiannual basis,
such principal and interest at the Reinvestment Rate (as defined herein)
(determined on the third Business Day preceding the date such notice of
redemption is given or declaration of acceleration is made) from the respective
dates on which such principal and interest would have been payable if such
redemption or accelerated payment had not been made, over (ii) the aggregate
principal amount of the Notes being redeemed or paid.
"Reinvestment Rate" means 0.25% (twenty-five one hundredths of one percent)
plus the yield on treasury securities at constant maturity under the heading
"Week Ending" published in the Statistical Release (as defined herein) under the
caption
10
<PAGE>
"Treasury Constant Maturities" for the maturity (rounded to the nearest month)
corresponding to the remaining life to maturity, as of the payment date of the
principal being redeemed or paid. If no maturity exactly corresponds to such
maturity, yields for the two published maturities most closely corresponding to
such maturity shall be calculated pursuant to the immediately preceding sentence
and the Reinvestment Rate shall be interpolated or extrapolated from such yields
on a straight-line basis, rounding in each of such relevant periods to the
nearest month. For purposes of calculating the Reinvestment Rate, the most
recent Statistical Release published prior to the date of determination of the
Make-Whole Amount shall be used.
"Statistical Release" means the statistical release designated "H. 15(519)"
or any successor publication which is published weekly by the Federal Reserve
System and which establishes yields on actively traded United States government
securities adjusted to constant maturities or, if such statistical release is
not published at the time of any determination under the Supplemental Indenture,
then such other reasonably comparable index which shall be designated by the
Rate Agent, after consultation with the Company.
In case an Event of Default (as defined in the Indenture) with respect to
the Notes shall have occurred and be continuing, the principal hereof may be
declared, and upon such declaration shall become, due and payable, in the
manner, with the effect and subject to the provisions provided in the Indenture.
The Indenture contains provisions permitting the holders of not less than a
majority of the aggregate principal amount of the outstanding Notes, on behalf
of the holders of all such Notes at a meeting duly called and held as provided
in the Indenture, to make, give or take any request, demand, authorization,
direction, notice, consent, waiver or other action provided in the Indenture to
be made, given or taken by the holders of the Notes, including without
limitation, waiving (a) compliance by the Company with certain provisions of the
Indenture, and (b) certain past defaults under the Indenture and their
consequences. Any resolution passed or decision taken at any meeting of the
holders of the Notes in accordance with the provisions of the Indenture shall be
conclusive and binding upon such holders and upon all future holders of this
Note and other Notes issued upon the registration of transfer hereof or in
exchange heretofore or in lieu hereof.
The Company, the Trustee, and any agent of the Company or the Trustee may
treat the registered holder hereof as the absolute owner of this Global Note for
all purposes.
11
<PAGE>
When a successor corporation assumes all of the obligations of its
predecessor under the Notes and the Indenture, the predecessor corporation will
be released from those obligations.
12
<PAGE>
This Global Note shall not be valid or become obligatory for any purpose
until the Certificate of Authentication hereon shall have been signed by the
Trustee.
IN WITNESS WHEREOF, Health and Retirement Properties Trust has caused this
Global Note to be executed.
Dated: July 9, 1997
HEALTH AND RETIREMENT PROPERTIES TRUST
By:_____________________________________
Name:___________________________________
Title:__________________________________
13
<PAGE>
CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series designated herein referred to
in the within-mentioned Indenture.
STATE STREET BANK AND TRUST COMPANY
as Trustee
By_________________________________
Authorized Signatory
Dated: July 9, 1997
Ex 8.1
SULLIVAN & WORCESTER LLP
One Post Office Square
Boston, Massachusetts 02109
July 2, 1997
Health and Retirement Properties Trust
400 Centre Street
Newton, Massachusetts 02158
Ladies and Gentlemen:
In connection with the registration by Health and Retirement Properties
Trust, a Maryland real estate investment trust (the "Company"), of its
Remarketed Reset Notes due July 2007 (the "Securities"), the following opinion
is furnished to you to be filed with the Securities and Exchange Commission (the
"SEC") as Exhibit 8.1 to the Company's Current Report on Form 8-K dated July 2,
1997 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. 333-26887 (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 May 30, 1997 (the "Base Prospectus")
relating to the Registration Statement; and (iv) the preliminary Prospectus
Supplement to the Base Prospectus dated June 26, 1997 (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, 1996, filed under the Exchange Act (the "Form 10-K")
captioned "Federal Income Tax Considerations" and "ERISA Plans, Keogh Plans and
Individual
<PAGE>
Retirement Accounts," as supplemented by the statements in the Prospectus
Supplement under the caption "Certain 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 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" and "ERISA Plans, Keogh Plans and Individual
Retirement Accounts," as supplemented by the statements in the Prospectus
Supplement under the caption "Certain 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" and "ERISA Plans, Keogh
Plans and Individual Retirement Accounts," as supplemented by the statements in
the Prospectus Supplement under the caption "Certain 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
THIRD AMENDMENT TO ADVISORY AGREEMENT
THIS THIRD AMENDMENT is entered into as of June 26, 1997 by and between
Health and Retirement Properties Trust, a Maryland real estate investment trust
(the "Company") and HRPT Advisors, Inc., a Delaware corporation (the "Advisor").
WHEREAS, the Company and the Advisor entered into an advisory agreement
dated as of November 20, 1986 and amendments thereto dated August 26, 1987 and
December 6, 1993 and have from time to time extended such agreement (such
agreeement, as so amended and extended, the "Advisory Agreement"); and
WHEREAS, the Company and the Advisor wish to modify the provisions of the
Advisory Agreement provideing for an incentive fee payable to the Advisor.
NOW, THEREFORE, in consideration of these premises, the Company and the
Advisor agree as follows:
1. The second sentence of Section 9 of the Advisory Agreement is hereby
deleted and the following is substituted:
"In addition, the Advisor shall be paid an annual incentive fee (the
"Incentive Fee") consisting of a number of shares of the Company's common
shares of beneficial interest ("Common Shares") with a value (determined as
provided below) equal to fifteen percent (15%) of the product of (i) the
weighted average Common Shares of the Company outstanding on a fully
diluted basis during such year and (ii) the excess if any of "FFO Per
Share" (as defined below) for such year over the FFO Per Share for the
preceeding year. However, in no event shall the Incentive Fee payable in
respect of any year exceed $.01 multiplied by the weighted average number
of Common Shares oustanding on a fully diluted basis during such year."
2. The eighth paragraph of Section 9 of the Advisory Agreement is hereby
deleted and the following is substituted:
"For purposes of this agreement: "FFO Per Share" shall mean (i) the
Company's consolidated net income, computed in accordance with generally
accepted accounting principles, before gain or loss on sale of properties
and extraordinary items, depreciation and other non-cash items, including
the Company's pro rata share of the funds from operations (determined in
accordance with this clause) for such year of (A) any unconsolidated
subsidiary and (B) any entity for which the Company accounts by the equity
method of accounting, divided by (ii) the weighted average number of Common
Shares oustanding on a fully diluted basis during such year."
<PAGE>
3. Except as amended hereby, the Advisory Agreement remains in full force
and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Third Amendment to
be executed by their duly authorized officers, under seal, as of the day and
year first above written.
HEALTH AND RETIREMENT
PROPERTIES TRUST
By: /s/ David J. Hegarty
----------------------------
HRPT ADVISORS, INC.
By: /s/ Gerard M. Martin
----------------------------
- 2 -
HEALTH AND RETIREMENT PROPERTIES TRUST
Unaudited Pro Forma Financial Statements
The following unaudited pro forma balance sheet at March 31, 1997 and
unaudited pro forma statements of income for the quarter ended March 31, 1997
and for the year ended December 31, 1996 are intended to present the financial
position and results of operations of the Company as if the transactions
described in the Notes were consummated on March 31, 1997, January 1, 1997 and
January 1, 1996, respectively. These unaudited pro forma financial statements
should be read in connection with, and are qualified in their entirety by
reference to, the separate financial statements of the Company and of the Seller
of the Government Office Properties, each for the year ended December 31, 1996,
incorporated herein by reference to the Company's Current Report on Form 8-K
dated February 17, 1997 and of the Company for the quarter ended March 31, 1997
incorporated by reference from its Quarterly Report on Form 10-Q. These
unaudited adjusted pro forma financial statements are not necessarily indicative
of the expected financial position or results of operations of the Company for
any future period. Differences would result from, among other considerations,
future changes in the Company's portfolio of investments, changes in interest
rates, changes in the capital structure of the Company, delays in the
acquisition of certain properties and changes in property level operating
expenses.
<PAGE>
Health and Retirement Properties Trust
Balance Sheets
March 31,1997
(amounts in thousands)
(unaudited)
<TABLE>
<CAPTION>
Pro Forma Data
--------------------------------------------------------
Second Quarter Pro Forma(B) Pro Forma
Historical Acquisitions(A) Adjustments
---------- -------------- ------------ ---------
<S> <C> <C> <C> <C>
ASSETS
Real estate properties, at cost:
Land $ 168,064 $ 19,400 $ 187,464
Buildings and improvements 1,235,293 174,607 1,409,900
----------- ------------ -------- -----------
1,403,357 194,007 - 1,597,364
Less accumulated depreciation 83,439 - - 83,439
----------- ------------ -------- -----------
1,319,918 194,007 - 1,513,925
Real estate mortgages 146,508 - - 146,508
Investment in HPT 102,958 - - 102,958
Cash and cash equivalents 81,296 (46,622) $ (1,000) 33,674
Interest and rent receivables 16,933 - - 16,933
Deferred interest and finance costs,
net and other assets 11,764 - 293 12,057
----------- ------------ -------- -----------
$ 1,679,377 $ 147,385 $ (707) $ 1,826,055
=========== ============ ======== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Bank notes payable $ - $ 145,000 $(75,000) $ 70,000
Senior notes payable, net 124,446 - 75,554 200,000
Mortgages Payable 27,588 - - 27,588
Convertible subordinated debentures 211,723 - - 211,723
Accounts payable and accrued expenses 32,212 - - 32,212
Security deposits 6,111 - - 6,111
Due to affiliates 916 - - 916
Dividends payable 35,532 - - 35,532
Shareholders' equity:
Preferred shares - - - -
Common shares of beneficial interest,
$.01 par value 987 1 - 988
Additional paid-in capital 1,368,275 2,384 1,370,659
Cumulative net income 325,697 (1,261) 324,436
Distributions of cash available from
operations (454,110) - - (454,110)
----------- ------------ -------- -----------
Total shareholders' equity 1,240,849 2,385 (1,261) 1,241,973
----------- ------------ -------- -----------
$ 1,679,377 $ 147,385 $ (707) $ 1,826,055
=========== ============ ======== ===========
</TABLE>
<PAGE>
Health and Retirement Properties Trust
Proforma Statement of Income
Three months ended March 31, 1997
(amounts in thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
Pro Forma Data
----------------------------------------------------------------------
Adjusted Second Quarter
Historical GPI(C) Acquisitions(D) Adjustments(E) Pro Forma
---------- --------- -------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Revenues:
Rental income $ 30,679 $ 12,028 $ 5,369 - $ 48,076
Interest income 5,205 - - - 5,205
-------- --------- -------- ------- ---------
Total revenues 35,884 12,028 5,369 - 53,281
-------- --------- -------- ------- ---------
Expenses:
Interest 7,848 (1,894) 2,356 $ (97) 8,213
Operating expenses 2,067 3,593 1,042 - 6,702
Depreciation and amortization 6,955 1,967 960 (76) 9,806
General, administrative and
advisory 1,871 487 214 - 2,572
-------- --------- -------- ------- ---------
Total expenses 18,741 4,153 4,572 (173) 27,293
-------- --------- -------- ------- ---------
Income before equity income and 17,143 7,875 797 173 25,988
extraordinary item
HPT equity income 2,256 - - - 2,256
-------- --------- -------- ------- ---------
Income before extraordinary item $ 19,399 $ 7,875 $ 797 $ 173 $ 28,244
-------- --------- -------- ------- ---------
Average shares outstanding 71,905 98,737
Per share data:
Income before extraordinary item $0.27 $0.29
</TABLE>
<PAGE>
Health and Retirement Properties Trust
Proforma Statement of Income
Year ended December 31, 1996
(amounts in thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
Pro Forma Data
----------------------------------------------------------------------------------------
HRPT GPI
--------------------------- ---------------------------- Pro Forma
Historical Acquisitions(F) Historical Acquisitions(G) Adjustments Pro Forma
---------- --------------- ---------- --------------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Rental income $ 98,039 $ 41,878 $ 36,523 $ 15,055 - $ 191,495
Interest income 22,144 (396) 780 - - 22,528
--------- -------- ---------- -------- ---------- ----------
Total revenues 120,183 41,482 37,303 15,055 - 214,023
--------- -------- ---------- -------- ---------- ----------
Expenses:
Interest 22,545 21,050 28,730 8,313 $ (45,395)(H) 35,243
Operating expenses 3,776 4,495 8,657 5,605 1,073 (I) 23,606
Depreciation and amortization 22,106 8,240 6,357 1,174 621 (J) 38,498
General, administrative and
advisory 7,055 1,797 5,570 - (3,486)(I) 10,936
--------- -------- ---------- -------- ---------- ----------
Total expenses 55,482 35,582 49,314 15,092 (47,187) 108,283
--------- -------- ---------- -------- ---------- ----------
Income before equity income and 64,701 5,900 (12,011) (37) 47,187 105,740
extraordinary item
HPT equity income 8,860 - - - - 8,860
Gain on HPT equity transaction 3,603 - - - - 3,603
--------- -------- ---------- -------- ---------- ----------
Income before gain on sale and
extraordinary item $ 77,164 $ 5,900 $ (12,011) $ (37) $ 47,187 $ 118,203
--------- -------- ---------- -------- ---------- ----------
Average shares outstanding 66,255 31,557 97,812
Per share data:
Income before extraordinary item $1.16 $1.21
</TABLE>
<PAGE>
Pro-Forma Balance Sheet Adjustments at March 31, 1997
A. Represents the acquisition of 24 medical office buildings and ancillary
structures, a 200 unit retirement housing property (collectively, "Second
Quarter Acquisitions"), and a government office property during the second
quarter of 1997 with cash on hand, draws on the Company's revolving credit
facility and the issuance of shares of the Company.
B. Represents proceeds from the issuance of Remarketed Reset Notes due 2007 in
the amount of $200,000, net of repayments under the bank credit facility of
$75,000, repayment in full of the senior notes payable of $125,000 and the
write-off of associated deferred financing fees as a result of the assumed
transaction.
Pro-Forma Income Statement for the Quarter Ended March 31, 1997
C. Represents the increase in rental income, operating expenses, depreciation
and amortization and general, administrative and advisory expense arising from
the Company's acquisition of the government office properties. Also reflects the
decrease in interest expense arising from the Company's issuance of its shares
pursuant to a common stock offering in March 1997, proceeds of which were used
in part to repay amounts then outstanding on the Company's revolving credit
facility, net of an increase in interest expense related to the Company's
assumption of certain debt in connection with the acquisition of the government
office properties.
D. Represents the increase in rental income, operating expenses, depreciation
and amortization and general, administrative and advisory expense arising from
the Company's acquisition of 24 medical office buildings and ancillary
structures, a 200 unit retirement housing property and an office property leased
to the U.S. government as well as the increase in interest expense due to the
use of the Company's revolving credit facility to fund, in part, these
acquisitions.
E. Represents the net decrease in interest expense which would have resulted
from utilization of the proceeds from the assumed issuance of the Remarketed
Reset Notes to refund previous borrowings which had been used to fund the
acquisitions discussed in A above and the net decrease in amortization resulting
from the write-off of deferred financing costs associated with the senior notes
payable, net of additional amortization of costs associated with the Remarketed
Reset Notes.
<PAGE>
Pro-Forma Income Statement for the Year Ended December 31, 1996
F. Represents the increase in rental income, interest expense, operating
expenses, depreciation and amortization and general, administrative and advisory
expense arising from the Second Quarter Acquisitions and other acquisitions
completed during 1996 and 1997, assuming the contractual rents were in effect
since January 1, 1996. Property level expense adjustments represent the
annualized historical operating expenses for gross leased properties acquired.
Depreciation expense adjustments assume an average building life of 40 years.
Also assumes a reduction in interest income from the use of cash on hand to
fund, in part, these acquisitions.
G. Represents the increase in rental income, interest expense, operating
expenses and depreciation and amortization arising from GPI acquisitions during
1996 assuming the current contractual rents were in effect since January 1,
1996. Property level expense adjustments are established for the purposes of
this pro-forma presentation as equal to the percentage of rents which is the
same percentage of rents as was represented by property level operating expenses
for the properties which were owned by GPI during 1996. Depreciation expense
adjustments assume an average building life of 40 years.
H. Represents the reduction of interest expense arising from the Company's
repayment of GPI mortgage and affiliate debt, excluding $27,588 of mortgage debt
that was not repaid in connection with the merger, and the reduction of interest
expense arising from the expected net reductions in the balance of the Company's
revolving credit facility and the repayment of the senior notes payable with the
use of proceeds from the issuance of the Remarketed Reset Notes.
I. Represents the net reduction in operating and administrative expenses arising
from the differences in the Company's cost structure (which include the full
year effect of general and administrative and property management services) and
the cost structure of GPI (which included the employment of separate property
management companies for certain of the government office properties under
separate fee arrangements and cost related to administrative financial,
acquisition and other activities performed by GPI's management) and the cost
structure of the other properties acquired in 1997.
J. Represents the effect on depreciation arising from the adjustment of GPI's
historical basis in existing assets to the Company's basis at acquisition and
the net decrease in amortization resulting from the write-off of deferred
financing costs associated with the senior notes payable, net of additional
amortization of costs associated with the Remarketed Reset Notes.
<PAGE>
K. Other Data
The following presentation reflects the Company's expected acquisition of three
properties currently under construction (the "Construction Properties"), all of
which are expected to be substantially complete in 1997, subsequent to the
closing of the GPI merger, for an aggregate cost of approximately $31,657,
consisting of approximately $28,508 in cash and $3,149 in shares.
<TABLE>
<CAPTION>
March 31, 1997
(amounts in thousands)
Other Data
---------------------------
Other
Pro Forma Adjustments Adjusted
---------- ----------- --------
<S> <C> <C> <C>
ASSETS
Real estate properties, at cost:
Land $ 187,464 $ 3,166 (1) $ 190,630
Buildings and improvements 1,409,900 28,491 (1) 1,438,391
----------- -------- -----------
1,597,364 31,657 1,629,021
Less accumulated depreciation 83,439 - 83,439
----------- -------- -----------
1,513,925 31,657 1,545,582
Real estate mortgages 146,508 - 146,508
Investment in HPT 102,958 - 102,958
Cash and cash equivalents 33,674 (28,508)(1) 5,166
Interest and rent receivables 16,933 - 16,933
Deferred interest and finance costs,
net and other assets 12,057 - 12,057
----------- -------- -----------
$ 1,826,055 $ 3,149 $1,829,204
=========== ======== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Bank notes payable $ 70,000 - $ 70,000
Senior notes payable, net 200,000 - 200,000
Mortgages Payable 27,588 - 27,588
Convertible Subordinated Debentures 211,723 - 211,723
Accounts payable and accrued expenses 32,212 - 32,212
Security deposits 6,111 - 6,111
Due to affiliates 916 - 916
Dividends payable 35,532 - 35,532
Shareholders' equity:
Preferred shares - - -
Common shares of beneficial interest,
$.01 par value 988 $ 2 (1) 990
Additional paid-in capital 1,370,659 3,147 (1) 1,373,806
Cumulative net income 324,436 - 324,436
Distributions of cash available from
operations (454,110) - (454,110)
----------- -------- -----------
Total shareholders' equity 1,241,973 3,149 1,245,122
----------- -------- -----------
$ 1,826,055 $ 3,149 $1,829,204
=========== ======== ===========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Quarter Ended March 31, 1997
(amounts in thousands, except per share data)
Other Data
--------- --------------------------
Other
Pro Forma Adjustments Adjusted
--------- ----------- --------
<S> <C> <C> <C>
Revenues:
Rental income $ 48,076 $ 2,099 (2) $ 50,175
Interest income 5,205 - 5,205
--------- ------- --------
Total revenues 53,281 2,099 55,380
--------- ------- --------
Expenses:
Interest 8,213 469 (2) 8,682
Operating expenses 6,702 277 (2) 6,979
Depreciation and amortization 9,806 157 (2) 9,963
General, administrative and
advisory 2,572 38 (2) 2,610
--------- ------- --------
Total expenses 27,293 941 28,234
--------- ------- --------
Net income before equity income and 25,988 1,158 27,146
extraordinary item
HPT equity income 2,256 - 2,256
--------- ------- --------
Income before extraordinary item $ 28,244 $ 1,158 $ 29,402
--------- ------- --------
Average shares outstanding 98,737 98,990
Per share data:
Income before extraordinary item $0.29 $0.30
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Year Ended December 31, 1996
(amounts in thousands, except per share data)
Other Data
--------- -----------------------------
Other
Pro Forma Adjustments Adjusted
--------- ----------- ---------
<S> <C> <C> <C>
Revenues:
Rental income $ 191,495 $ 8,390 (3) $ 199,885
Interest income 22,528 - 22,528
--------- --------- ----------
Total revenues 214,023 8,390 222,413
--------- --------- ----------
Expenses:
Interest 35,243 1,872 (3) 37,115
Operating expenses 23,606 1,107 (3) 24,713
Depreciation and amortization 38,498 598 (3) 39,096
General, administrative and
advisory 10,936 147 (3) 11,083
--------- --------- ----------
Total expenses 108,283 3,724 112,007
--------- --------- ----------
Net income before equity income and 105,740 4,666 110,406
extraordinary item
HPT equity income 8,860 - 8,860
Gain on HPT equity transaction 3,603 - 3,603
--------- --------- ----------
Income before gain on sale &
extraordinary $ 118,203 $ 4,666 $ 122,869
--------- --------- ----------
Average shares outstanding 97,812 98,065
Per share data:
Income before extraordinary item $1.21 $1.25
</TABLE>
<PAGE>
1. Reflects the acquisition of the Construction Properties discussed above.
2. Represents the adjustment to reflect current rents from existing leases at
the Contract Properties, assuming such leases and related contractual rents were
in effect since January 1, 1996. Property level expense adjustments are
established for the purposes of this pro-forma presentation as equal to the
percentage of rents which is the same percentage of rents as was represented by
property level operating expenses for the properties which were owned by GPI
during 1996. Property level expense adjustments also include the impact of the
Company's cost structure discussed in I above for the entire quarter ended March
31, 1997. Depreciation expense adjustments assume an average building life of 40
years.
3. Represents the adjustment to reflect current rents from existing leases at
the Contract Properties, assuming such leases and related contractual rents were
in effect since January 1, 1996. Property level expense adjustments are
established for the purposes of this pro-forma presentation as equal to the
percentage of rents which is the same percentage of rents as was represented by
property level operating expenses for the properties which were owned by GPI
during 1996. Property level expense adjustments also include the impact of the
Company's cost structure discussed in I above for the entire year ended
December 31, 1996. Depreciation expense adjustments assume an average building
life of 40 years.
