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): March 14, 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
<PAGE>
Item 5. Other Events.
The following unaudited pro forma financial information and other data of
Health and Retirement Properties Trust (the "Company") for the year ended
December 31, 1996 reflects the transactions contemplated by the previously
disclosed Merger Agreement dated February 17, 1997 between the Company and
Government Property Investors, Inc., utilizing a $19 7/8 price per share of
the Company's common shares of beneficial interest ("Common Shares") and the
Company's public offering of 23,500,000 Common Shares at a price to the public
of $18 7/8 per share. Such unaudited pro forma financial information and other
data modifies and supersedes the unaudited pro forma balance sheet, unaudited
pro forma statement of income and the adjusted pro forma data and the notes
related thereto contained in the Company's Current Report on Form 8-K dated
February 17, 1997 in their entirety.
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits.
(b) Pro Forma Financial Information and Other Data (see index
on page F-1)
(c) Exhibits
1.1 Underwriting Agreement, dated March 14, 1997 among the Company
and the Underwriters named in Schedule I thereto.
8.1 Opinion of Sullivan & Worcester LLP re: tax matters.
23.1 Consent of Sullivan & Worcester LLP (contained in Exhibit 8.1)
<PAGE>
Contents
<TABLE>
<S> <C>
Index to Pro Forma Financial and Other Data
Unaudited Pro Forma Balance Sheet and Other Data and Unaudited Pro Forma Statement of
Income and Other Data Background Information ...........................................F-2
Unaudited Pro Forma Balance Sheet and Other Data ..........................................F-3
Unaudited Pro Forma Statement of Income and Other Data ....................................F-4
Notes to Pro Forma Financial Data and Other Data ..........................................F-5
</TABLE>
F-1
<PAGE>
HEALTH AND RETIREMENT PROPERTIES TRUST
Unaudited Pro Forma Balance Sheet and Other Data and
Unaudited Pro Forma Statement of Income
and Other Data Background Information
The following unaudited pro forma balance sheet at December 31, 1996 and
unaudited pro forma statement of income 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
December 31, 1996 and January 1, 1996, respectively. These unaudited pro forma
financial statements should be read in conjunction with the separate financial
statements of the Company and of Government Property Investors, Inc. (the
"Seller"), both for the year ended December 31, 1996, and both included
in the Company's Current Report on Form 8-K dated February 17, 1997. These
unaudited 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.
The following unaudited pro forma balance sheet and unaudited pro forma
statement of income were prepared pursuant to the Securities and Exchange
Commission's rules for the presentation of pro forma data. The pro forma and
adjusted pro forma data give effect to the acquisition by the Company of the
Government Office Properties (the "Transaction") from the Seller and an offering
of 23,500,000 common shares of beneficial interest ("Shares") to fund the
payment of certain debt of the Seller and the Company. Certain properties
expected to be acquired by the Company are currently under construction or
development by the Seller or third parties. Other properties were under
construction or renovation during 1996 when they were owned or under development
by the Seller. The accompanying pro forma operating data does not give further
effect to the completion of construction or the related lease commencement for
any period prior thereto. Construction projects not completed by December 31,
1996 are likewise not reflected in the pro forma balance sheet data. Rather, the
effect of completion of these construction projects is presented separately from
the pro forma data as described in the accompanying notes. The Company believes
that a display of such adjusted pro forma data is meaningful and relevant to the
understanding of the Transaction and, accordingly has presented such data in the
final two columns, labelled "Other Data," on the accompanying pages.
F-2
<PAGE>
Health and Retirement Properties Trust
Unaudited Pro Forma Balance Sheet and Other Data
(dollars in thousands)
(unaudited)
<TABLE>
<CAPTION>
Pro Forma Data Other Data
----------------------------------------------------------------------------- -------------------------
HRPT Government Office
--------------------------- ----------------------------
Historical Adjustments Historical Acquisitions Pro Forma Pro Forma Other Adjusted
December 31, December 31, Adjustments Adjustments Pro Forma
1996 (A) (B) 1996 (C) (D) (M)
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Real estate properties,
at cost:
Land $ 93,522 $ 537 $ 64,850 $ 4,258 $ 8,212 $ 171,379 $ 6,071 $ 177,450
Buildings and
improvements 912,217 4,838 278,085 18,257 36,147 1,249,544 25,101 1,274,645
-------------------------------------------------------------------------------------------------------
1,005,739 5,375 342,935 22,515 44,359 1,420,923 31,172 1,452,095
Less accumulated
depreciation 76,921 0 8,026 (8,026) 76,921 0 76,921
-------------------------------------------------------------------------------------------------------
928,818 5,375 334,909 22,515 52,385 (E) 1,344,002 31,172 1,375,174
Real estate mortgages 150,205 0 0 0 0 150,205 0 150,205
Investment in HPT 103,062 0 0 0 0 103,062 0 103,062
Cash and cash equivalents 21,853 (5,375) 776 0 (5,212)(F) 12,042 0 12,042
Interest and rent
receivables 11,612 0 4,436 0 0 16,048 0 16,048
Deferred interest and
finance costs, net
and other assets 13,972 0 24,822 0 (9,325)(G) 29,469 0 29,469
-------------------------------------------------------------------------------------------------------
$1,229,522 $0 $364,943 $22,515 $37,848 $1,654,828 $31,172 $1,686,000
=======================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Bank notes payable $ 140,000 0 $0 $20,240 ($155,433)(H) $4,807 $29,382 $34,189
Senior notes and bonds
payable, net 124,385 0 0 0 0 124,385 0 124,385
Mortgages payable 0 0 311,081 0 (264,387)(I) 46,694 0 46,694
Convertible subordinated
debentures 227,790 0 0 0 0 227,790 0 227,790
Accounts payable and
accrued expenses 18,319 0 12,018 0 901 (J) 31,238 0 31,238
Security deposits 8,387 0 0 0 0 8,387 0 8,387
Due to affiliates 2,593 0 47,520 0 (47,520)(K) 2,593 0 2,593
Shareholders' equity:
Seller deficit 0 0 (5,676) 0 5,676 (K) 0 0 0
Preferred shares 0 0 0 0 0 0 0 0
Common shares of
beneficial interest,
$.01 par value 669 0 0 1 274 (L) 944 1 945
Additional paid-in
capital 795,263 0 0 2,274 498,337 (L) 1,295,874 1,789 1,297,663
Cumulative net income 306,298 0 0 0 0 306,298 0 306,298
Distributions of cash
available from
operations (394,182) 0 0 0 0 (394,182) 0 (394,182)
-------------------------------------------------------------------------------------------------------
Total shareholders'
equity 708,048 0 (5,676) 2,275 504,287 1,208,934 1,790 1,210,724
-------------------------------------------------------------------------------------------------------
$1,229,522 $0 $364,943 $22,515 $37,848 $1,654,828 $31,172 $1,686,000
=======================================================================================================
</TABLE>
F-3
<PAGE>
Health and Retirement Properties Trust
Pro Forma Statement of Income and Other Data
(amounts in thousands, except share data)
(unaudited)
<TABLE>
<CAPTION>
Pro Forma Data Other Data
------------------------------------------------------------------------------------- -----------------------
HRPT Government Office
-------------------------- ---------------------------
1996 1996 Pro Forma Other Adjusted
Historical(N) Adjustments Historical(S) Acquisitions Adjustments Pro Forma Adjustments Pro Forma
------------- ----------- ---------- ------------ ----------- --------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Rental income $98,039 $20,399 (O) $36,523 $15,055 (T) -- $170,016 $8,391(Z) $178,407
Interest income 22,144 (396)(P) 780 -- -- 22,528 -- 22,528
----------------------------------------------------------------------------------------------------------------
Total revenues 120,183 20,003 37,303 15,055 -- 192,544 8,391 200,935
----------------------------------------------------------------------------------------------------------------
Expenses:
Interest 22,545 11,624 (Q) 28,730 8,313 (U) (42,031)(V) 29,181 1,873(AA) 31,054
Operating expenses 3,776 328 (O) 8,657 5,605 (T) 1,073 (W) 19,439 1,107(Z) 20,546
Depreciation and
amortization 22,106 4,402 (O) 6,357 1,144 (T) 932 (X) 34,941 627(Z) 35,568
General and
administrative 7,055 943 (O) 5,570 -- (3,493)(W) 10,075 155(Z) 10,230
----------------------------------------------------------------------------------------------------------------
Total expenses 55,482 17,297 49,314 15,062 (43,519) 93,636 3,762 97,398
----------------------------------------------------------------------------------------------------------------
Net income before
equity income and
extraordinary item 64,701 2,706 (12,011) (7) 43,519 98,908 4,629 103,537
HPT equity income 8,860 -- -- -- -- 8,860 -- 8,860
Gain on HPT equity
transaction 3,603 -- -- -- -- 3,603 -- 3,603
----------------------------------------------------------------------------------------------------------------
Income before
extraordinary item $77,164 $2,706 $(12,011) $(7) $43,519 $111,371 $4,629 $116,000
----------------------------------------------------------------------------------------------------------------
Average shares
outstanding 66,255 633 (R) -- -- 27,562 (Y) 94,450 90(BB) 94,540
================================================================================================================
Per Share Data:
Income before
extraordinary item $1.16 $1.18 $1.23
===== ===== =====
</TABLE>
F-4
<PAGE>
Health and Retirement Properties Trust
Notes to Pro Forma Financial Data and Other Data
(dollars in thousands except share amounts)
Pro Forma Balance Sheet Adjustments
A. Represents the historical balance sheet of the Company at December 31,
1996.
B. Represents the acquisition by the Company of a medical office building in
January 1997, purchased with cash on hand.
C. Represents the historical balance sheet of the Seller at December 31, 1996.
D. In connection with the Transaction, the Company expects to purchase two
properties (the "Contract Properties") from third parties simultaneously
with the consummation of the Transaction for an aggregate purchase price of
approximately $22,515 consisting of approximately $20,240 in cash to such
third parties and the remainder in Shares to the Seller.
E. Represents the adjustment from the Seller's historical basis in existing
assets to the new basis of the Company as a result of the Transaction.
F. Represents the net use of cash on hand in connection with the Transaction.
G. Represents adjustment to eliminate certain other assets (primarily deferred
financing fees) of the Seller and to reflect certain assets acquired in
connection with the Transaction including prepaid expenses ($1,750),
minimum payment due to the Seller with respect to certain potential
acquisitions ($8,000) and the value of one property held for future
disposition ($5,747).
H. Represents repayments under the Bank Credit Facility as a result of the
assumed offering and the Transaction.
I. Represents repayment of secured financing of the Seller with the exception
of $46,694 that is not expected to be repaid as part of the Transaction.
J. Represents adjustment to record accounts payable, accrued expenses and
deferred minimum acquisition fees assumed by the Company as part of the
Transaction.
K. Represents the elimination of the Seller's historical net retained deficit
and removal of Seller affiliate debt not assumed or paid by the Company as
part of the transaction.
L. Represents the following:
Gross Proceeds from the assumed offering
(23,500,000 Shares at $18.875/Share) $443,563
Estimated expenses from the assumed offering (23,410)
-------
420,153
Value of Transaction Shares (3,947,556 shares
at $19.875/Share) 78,458
-------
$498,611
=======
Par value of Shares 274
Additional paid-in capital $498,337
-------
$498,611
=======
F-5
<PAGE>
Health and Retirement Properties Trust
Notes to Pro Forma Financial Data and Other Data
(dollars in thousands except share amounts)
Other Data - Balance Sheet Adjustments
M. In connection with the Transaction, the Company expects to purchase three
properties currently under construction and complete the construction of
one additional property (the "Construction Properties"), all of which are
expected to be substantially complete in 1997, subsequent to the closing
of the Transaction, for an aggregate cost of approximately $31,172,
consisting of approximately $29,382 in cash and $1,790 in Shares.
Income Statement Adjustments
N. Represents the historical income statement of the Company for the year
ended December 31, 1996.
O. Represents adjustments to rent and expenses arising from the Company's
acquisitions completed during 1996 and 1997, assuming the current
contractual rents were in effect since January 1, 1996. Property level
expense adjustments represent the annualized historical operating expenses
for one gross lease property acquired. Depreciation expense adjustements
assume an average building life of 40 years. Also reflects adjustments to
general and administrative expenses which would arise from the Company's
1996 and 1997 completed investment transactions.
P. Represents reduction of interest income arising from the use of cash
balances to fund a portion of the Company's 1996 acquisitions.
Q. Represents pro forma effect on interest expense related to financing placed
during 1996 to fund the Company's acquisitions at an average interest cost
of 6.38%.
R. Represents the impact of convertible debentures converted during 1996 as
if such shares were issued on January 1, 1996.
S. Represents the historical income statement of the Seller for the year ended
December 31, 1996.
T. Represents adjustments to rent and expenses arising from the Seller's
acquisitions of operating properties completed during 1996 and,
additionally, the acquisitions of the Contract Properties, 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 the Seller during 1996.
Depreciation expense adjustments assume an average building life of
40 years.
U. Represents the effect on interest expense of the Seller's acquisition
financing activity assuming such financing occured on January 1, 1996 at a
weighted average interest rate of 7.42%. For purposes of interest expense
related to the Contract Property acquisition, it has been assumed for
purposes of this pro forma presentation that the cost of borrowing is
equal to the cost of borrowing of the Company under its Bank Credit
Facility at a weighted average interest rate of 6.38%. Such costs are
believed to be less than the costs that could have been acheived by the
Seller had the Seller undertaken to acquire such properties on a
stand-alone basis. See Note D and Note H, above.
F-6
<PAGE>
Health and Retirement Properties Trust
Notes to Pro Forma Financial Data and Other Data
(dollars in thousands except share amounts)
V. Represents the reduction of interest expense arising from the Company's
repayment of all of the Seller's mortgage and affiliate debt, except
$46,694 of mortgage debt that is not expected to be repaid as part of the
Transaction, and the reduction of interest expense arising from expected
net reductions in the balance of the Company's Bank Credit Facility with
the use of proceeds from the assumed offering discussed in Note M, above.
W. Represents the net reduction in 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 the Seller (which included the employment by the
Seller of separate property management companies for certain of the
Government Office Properties under separate fee arrangements and costs
related to administrative, financial, acquisition and other activities
performed by the Seller's management).
X. Represents the effect on depreciation arising from the adjustment of the
Seller's historical basis in existing assets to the new basis of the
Company as a result of the Transaction.
Y. Represents the impact on weighted average shares from the assumed offering
and the Transaction as discussed in Note M above.
Other Data--Income Statement Adjustments
Z. Represents the adjustment to reflect current rents from existing leases
for properties under construction during the 1996 period and the
Construction Properties assuming such leases and related contractual rents
were in effect as of January 1, 1996. Property level expense adjustments
are established for the purposes of this adjusted 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 the Seller during 1996. Property level expense
adjustments and general and administrative expense adjustments also
include the full year impact of the Company's cost structure discussed in
Note W, above. Depreciation expense adjustments assume an average building
life of 40 years.
AA. Represents interest expense related to increased borrowings necessary
for the acquisition and completion of the properties under construction
during 1996 (see Note Z) and the Construction Properties.
BB. Represents balance of Transaction Shares to be issued in connection with
the acquisition of the Construction Properties.
F-7
<PAGE>
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/ David J. Hegarty
-----------------------------------
David J. Hegarty, President
Date: March 14, 1997
23,500,000 Shares
Health and Retirement Properties Trust
Common Shares of Beneficial Interest
UNDERWRITING AGREEMENT
March 13, 1997
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
DEAN WITTER REYNOLDS INC.
A.G. EDWARDS & SONS, INC.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
NATWEST SECURITIES LIMITED
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
SALOMON BROTHERS INC
SMITH BARNEY INC.
As representatives of the
several underwriters
named in Schedule I hereto
c/o DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
277 Park Avenue
New York, New York 10172
Dear Sirs:
Health and Retirement Properties Trust, a Maryland real estate
investment trust (the "Company"), proposes to issue and sell 23,500,000 of its
common shares of beneficial interest, par value $.01 per share (the "Firm
Shares"), to the several underwriters named in Schedule I hereto (the
"Underwriters"). The Company also proposes to issue and sell to the several
Underwriters not more than 3,525,000 additional common shares of beneficial
interest, par value $.01 per share (the "Additional Shares"), if requested by
the Underwriters as provided in Section 2 hereof. The Firm Shares and the
Additional Shares are herein collectively called the "Shares." The class of
common shares of beneficial interest of the Company to be outstanding after
<PAGE>
giving effect to the sales contemplated hereby are hereinafter referred to as
the "Common Shares."
1. Registration Statement and Prospectus. The Company has
prepared and filed with the Securities and Exchange Commission (the
"Commission") in accordance with the provisions of the Securities Act of 1933,
as amended, and the rules and regulations of the Commission thereunder
(collectively, the "Act"), a registration statement on Form S-3 (No. 333-02863)
including a prospectus for the registration of debt securities, preferred shares
of beneficial interest, depositary shares, common shares of beneficial interest
and warrants (collectively, the "Shelf Securities"). The registration statement
as amended at the date of this Agreement is hereinafter referred to as the
"Registration Statement"; and the related prospectus covering the Shelf
Securities in the form contained in the Registration Statement at the time it
was declared effective by the Commission is hereinafter referred to as the Basic
Prospectus. The Basic Prospectus as supplemented by the prospectus supplement
specifically relating to the offering of the Shares in the form first used to
confirm sales of the Shares is hereinafter referred to as the "Prospectus" and
the Prospectus as supplemented by the cover for use in Canada in connection with
any sales of Shares in Canada is hereinafter referred to as the "Canadian
Offering Memorandum." Any reference in this Agreement to the Registration
Statement, the Basic Prospectus, any preliminary prospectus (a "preliminary
prospectus") filed with the Commission pursuant to Rule 424 or the Prospectus
shall be deemed to refer to and include the documents incorporated by reference
therein pursuant to Item 12 of Form S-3 under the Act which were filed under the
Securities Exchange Act of 1934, as amended, and the rules and regulations of
the Commission thereunder (collectively, the "Exchange Act") on or before the
date of this Agreement or the date of the Basic Prospectus, any preliminary
prospectus or the Prospectus, as the case may be; and any reference to "amend,"
"amendment" or "supplement" with respect to the Registration Statement, the
Basic Prospectus, any preliminary prospectus or the Prospectus shall be deemed
to refer to and include any documents filed under the Exchange Act after the
date of this Agreement, or the date of the Basic Prospectus, any preliminary
prospectus or the Prospectus, as the case may be, which are deemed to be
incorporated by reference therein.
2. Agreements to Sell and Purchase. On the basis of the
representations and warranties contained in this Agreement, and subject to its
terms and conditions, the Company agrees to issue and sell, and each Underwriter
agrees, severally and not jointly, to purchase from the Company at a price per
share of $17.915 (the "Purchase Price") the number of Firm Shares set forth
opposite the name of such Underwriter in Schedule I hereto.
-2-
<PAGE>
On the basis of the representations and warranties contained
in this Agreement, and subject to its terms and conditions, the Company agrees
to issue and sell the Additional Shares and the Underwriters shall have the
right to purchase, severally and not jointly, up to 3,525,000 Additional Shares
from the Company at the Purchase Price. Additional Shares may be purchased
solely for the purpose of covering over-allotments made in connection with the
offering of the Firm Shares. The Underwriters may exercise their right to
purchase Additional Shares in whole or in part from time to time by giving
written notice thereof to the Company within 30 days after the date of this
Agreement. You shall give any such notice on behalf of the Underwriters and such
notice shall specify the aggregate number of Additional Shares to be purchased
pursuant to such exercise and the date for payment and delivery thereof. The
date specified in any such notice shall be a business day (i) no earlier than
the Closing Date (as hereinafter defined), (ii) no later than ten business days
after such notice has been given and (iii) no earlier than two business days
after such notice has been given. If any Additional Shares are to be purchased,
each Underwriter, severally and not jointly, agrees to purchase from the Company
the number of Additional Shares (subject to such adjustments to eliminate
fractional shares as you may determine) which bears the same proportion to the
total number of Additional Shares to be purchased from the Company as the number
of Firm Shares set forth opposite the name of such Underwriter in Schedule I
bears to the total number of Firm Shares.
The Company hereby agrees, and will use its reasonable efforts
to cause each of its Trustees, officers and affiliates to agree, and the Company
shall, concurrently with the execution of this Agreement, deliver an agreement
executed by each of the Trustees and affiliates of the Company listed on Annex I
hereto, pursuant to which each such person agrees, not to register, offer, sell,
contract to sell, grant any option to purchase, or otherwise dispose of any
Common Shares or any securities convertible into or exercisable or exchangeable
for Common Shares, or warrants to purchase Common Shares, or in any other manner
transfer all or a portion of the economic consequences associated with the
ownership of any such Common Shares, except to the Underwriters pursuant to this
Agreement, for a period of 90 days after the date of this Agreement without the
prior written consent of Donaldson, Lufkin & Jenrette Securities Corporation.
Notwithstanding the foregoing, during such period (i) the Company may issue
Common Shares pursuant to the Company's 1992 Incentive Share Award Plan, (ii)
the Company may issue Common Shares pursuant to that certain Agreement of Merger
(the "Merger Agreement"), dated February 17, 1997, between the Company and
Government Property Investors, Inc. and (iii) the Company may issue Common
Shares upon conversion of the Company's 7.5% Convertible
-3-
<PAGE>
Subordinate Debentures Due 2003, Series A, 7.5% Convertible Subordinate
Debentures Due 2003, Series B, and 7.25% Convertible Subordinate Debentures Due
2001 (collectively, the "Convertible Debentures").
3. Terms of Public Offering. The Company is advised by you
that the Underwriters propose (i) to make a public offering of their respective
portions of the Shares as soon after the execution and delivery of this
Agreement as in your judgment is advisable and (ii) initially to offer the
Shares upon the terms set forth in the Prospectus.
4. Delivery and Payment. Delivery to the Underwriters of and
payment for the Firm Shares shall be made at 10:00 A.M., New York City time, on
March 19, 1997 (the "Closing Date") at the offices of Willkie Farr & Gallagher,
One Citicorp Center, 153 East 53rd Street, New York, New York 10022. The Closing
Date and the location of delivery of and the form of payment for the Firm Shares
may be varied by agreement between you and the Company.
Delivery to the Underwriters of and payment for any Additional
Shares to be purchased by the Underwriters shall be made at such place as you
shall designate at 10:00 A.M., New York City time, on the date specified in the
applicable exercise notice given by you pursuant to Section 2 (an "Option
Closing Date"). Any such Option Closing Date and the location of delivery of and
the form of payment for such Additional Shares may be varied by agreement
between you and the Company.
Certificates for the Shares shall be registered in such names
and issued in such denominations as you shall request in writing not later than
two full business days prior to the Closing Date or an Option Closing Date, as
the case may be. Such certificates shall be made available to you for inspection
not later than 9:30 A.M., New York City time, on the business day next preceding
the Closing Date or the applicable Option Closing Date, as the case may be.
Certificates in definitive form evidencing the Shares shall be delivered to you
on the Closing Date or the applicable Option Closing Date, as the case may be,
with any transfer taxes thereon duly paid by the Company, for the respective
accounts of the several Underwriters, against payment of the Purchase Price
therefor by wire transfer of immediately available funds to the account
designated in writing by the Company at least one full business day prior to the
Closing Date or the Option Closing Date, as the case may be. The form of payment
may be varied by agreement between you and the Company.
5. Agreements of the Company. The Company agrees with you:
-4-
<PAGE>
(a) To file the Prospectus in a form approved by you within
the applicable time period prescribed for such filing by Rule 424 under
the Act.
(b) To file promptly all reports and any definitive proxy or
information statements required to be filed by the Company with the
Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act during the period specified in paragraph (f) below.
(c) During the period specified in paragraph (f) below, to
advise you promptly and, if requested by you, to confirm such advice in
writing, (i) when any amendment to the Registration Statement becomes
effective, (ii) of any request by the Commission for amendments to the
Registration Statement or amendments or supplements to the Prospectus
or for additional information, (iii) of the issuance by the Commission
of any stop order suspending the effectiveness of the Registration
Statement or of the suspension of qualification of the Shares for
offering or sale in any jurisdiction, or the initiation of any
proceeding for such purposes, and (iv) of the happening of any event
during the period referred to in paragraph (f) below which makes any
statement of a material fact made in the Registration Statement or the
Prospectus untrue or which requires the making of any additions to or
changes in the Registration Statement or the Prospectus in order to
make the statements therein not misleading. If at any time the
Commission shall issue any stop order suspending the effectiveness of
the Registration Statement, the Company will make every reasonable
effort to obtain the withdrawal or lifting of such order at the
earliest possible time.
(d) To furnish to you, without charge, ten copies of the
signed Registration Statement as first filed with the Commission and of
each amendment to it, including all exhibits, and to furnish to you and
each Underwriter designated by you such number of conformed copies of
the Registration Statement as so filed and of each amendment to it,
without exhibits, as you may reasonably request.
(e) During the period specified in paragraph (f) below, not to
file any amendment or supplement to the Registration Statement, or to
make any amendment or supplement to the Prospectus of which you shall
not previously have been advised or to which you shall reasonably
object; and to prepare and file with the Commission, promptly upon your
reasonable request, any amendment to the Registration Statement or
supplement to the Prospectus which may be necessary or advisable in
connection with the distribution of the Shares by
-5-
<PAGE>
you, and to use its best efforts to cause the same to become effective
promptly.
(f) From time to time for such period as in the opinion of
counsel for the Underwriters a prospectus is required by law to be
delivered in connection with sales of the Shares by an Underwriter or a
dealer, to furnish to each Underwriter and dealer as many copies of the
Prospectus (and of any amendment or supplement to the Prospectus) as
such Underwriter or dealer may reasonably request.
(g) If during the period specified in paragraph (f) any event
shall occur as a result of which, in the opinion of counsel for the
Underwriters, it becomes necessary to amend or supplement the
Prospectus in order to make the statements therein, in the light of the
circumstances when the Prospectus is delivered to a purchaser, not
misleading, or if it is necessary to amend or supplement the Prospectus
to comply with any law, forthwith to prepare and file with the
Commission an appropriate amendment or supplement to the Prospectus so
that the statements in the Prospectus, as so amended or supplemented,
will not in the light of the circumstances when it is so delivered, be
misleading, or so that the Prospectus will comply with law, and to
furnish to each Underwriter and to such dealers as you shall specify,
such number of copies thereof as such Underwriter or dealers may
reasonably request.
(h) Prior to any public offering of the Shares, to cooperate
with you and counsel for the Underwriters in connection with the
registration or qualification of the Shares for offer and sale by the
several Underwriters and by dealers under the state securities or Blue
Sky laws of such jurisdictions as you may request, to continue such
qualification in effect so long as required for distribution of the
Shares and to file such consents to service of process or other
documents as may be necessary in order to effect such registration or
qualification; provided that in no event shall the Company be obligated
to qualify to do business in any jurisdiction where it is not now so
qualified or to take any action which would subject it to service of
process in suits, other than those arising out of the offering or sale
of the Shares, in any jurisdiction where it is not now so subject.
(i) To make generally available to its stockholders within the
meaning of Rule 158 under the Act as soon as reasonably practicable an
earnings statement covering a period of at least twelve months after
the date of the Prospectus (but in no event commencing later than 90
days after such date) which
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shall satisfy the provisions of Section 11(a) of the Act, and to
advise you in writing when such statement has been so made available.
(j) During the period of five years after the date of this
Agreement, (i) to mail as soon as reasonably practicable after the end
of each fiscal year to the record holders of its Common Shares a
financial report of the Company and its subsidiaries on a consolidated
basis (and a similar financial report of all unconsolidated
subsidiaries, if any), all such financial reports to include a
consolidated balance sheet, a consolidated statement of operations, a
consolidated statement of cash flows and a consolidated statement of
shareholders' equity as of the end of and for such fiscal year,
together with comparable information as of the end of and for the
preceding year, certified by independent certified public accountants,
and (ii) to make generally available as soon as practicable after the
end of each quarterly period (except for the last quarterly period of
each fiscal year) to such holders, a consolidated balance sheet, a
consolidated statement of operations and a consolidated statement of
cash flows (and similar financial reports of all unconsolidated
subsidiaries, if any) as of the end of and for such period, and for the
period from the beginning of such year to the close of such quarterly
period, together with comparable information for the corresponding
periods of the preceding year.
(k) During the period referred to in paragraph (j), to furnish
to you as soon as available a copy of each report or other publicly
available information of the Company mailed to the holders of Common
Shares or filed with the Commission and such other publicly available
information concerning the Company and its subsidiaries as you may
reasonably request.
(l) To pay all costs, expenses, fees and taxes incident to (i)
the preparation, printing, filing and distribution under the Act of the
Registration Statement (including financial statements and exhibits),
each preliminary prospectus and all amendments and supplements to any
of them prior to or during the period specified in paragraph (f), (ii)
the printing and delivery of the Prospectus and all amendments or
supplements to it during the period specified in paragraph (f), (iii)
the printing and delivery of this Agreement, the Blue Sky Memorandum
and all other agreements, memoranda, correspondence and other documents
printed and delivered in connection with the offering of the Shares
(including in each case any disbursements of counsel for the
Underwriters relating to such printing and delivery), (iv) the
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registration or qualification of the Shares for offer and sale under
the securities or Blue Sky laws of the several states (including in
each case the fees and disbursements of counsel for the Company, or
counsel for the Underwriters, relating to such registration or
qualification and memoranda relating thereto), (v) required filings and
clearance with the National Association of Securities Dealers, Inc. in
connection with the offering, (vi) supplemental listing of the Shares
on the New York Stock Exchange ("NYSE") and (vii) furnishing such
copies of the Prospectus and all amendments and supplements thereto as
may be requested for use in connection with the offering or sale of the
Shares by the Underwriters or by dealers to whom Shares may be sold.
(m) To use its best efforts to maintain the inclusion of the
Common Shares on the NYSE for a period of five years after the date of
the Prospectus.
(n) To use its best efforts to continue to meet the
requirements to qualify as a "real estate investment trust" under the
Internal Revenue Code of 1986, as amended (the "Code").
(o) To use the net proceeds received by it from the sale of
the Shares in the manner specified in the Prospectus under the caption
"Use of Proceeds".
(p) To exercise the rights of the Company under subsection
5.1(c) of the Investment and Registration Rights Agreement contemplated
by the Merger Agreement (as such subsection is set forth in the form of
such agreement attached as Schedule 2.6 of the Merger Agreement), and
to take such other actions as are necessary or appropriate, to cause a
Block-Out Period thereunder to extend through at least the 90th day
following the date of this Agreement, unless otherwise consented to by
Donaldson, Lufkin & Jenrette Securities Corporation.
(q) To use its best efforts to do and perform all things
required or necessary to be done and performed under this Agreement by
the Company prior to the Closing Date or any Option Closing Date, as
the case may be, and to satisfy all conditions precedent to the
delivery of the Shares.
6. Representations and Warranties of the Company. The Company
represents and warrants to each Underwriter that:
(a) The Registration Statement has become effective under the
Act; no stop order suspending the effectiveness of the Registration
Statement is in
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effect, and no proceedings for such purpose are pending before or
threatened by the Commission.
(b) (i) Each part of the Registration Statement, when such
part became effective, did not contain and each such part, as amended
or supplemented, if applicable, will not contain any 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, (ii) the Registration Statement and the Prospectus comply
and, as amended or supplemented, if applicable, will comply in all
material respects with the Act and (iii) the Prospectus does not
contain and, as amended or supplemented, if applicable, will not
contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading, except
that the representations and warranties set forth in this paragraph (b)
do not apply to statements or omissions in the Registration Statement
or the Prospectus based upon information relating to any Underwriter
furnished to the Company in writing by such Underwriter through you
expressly for use therein.
(c) The documents incorporated by reference in the Prospectus,
when they were filed with the Commission, conformed in all material
respects to the requirements of the Exchange Act, and none of such
documents, when they were filed with the Commission, contained an
untrue statement of a material fact or omitted to state a material fact
necessary to make the statements therein, in the light of the
circumstances under which they are made, not misleading; and any
further documents so filed and incorporated by reference in the
Prospectus, when such documents are filed with the Commission, will
conform in all material respects to the requirements of the Exchange
Act, as applicable, and will not contain an untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading.
(d) Each preliminary prospectus filed as part of the
registration statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the Act, complied when so
filed in all material respects with the Act 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, in the light of the circumstances under which they were made,
not misleading.
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(e) The Company meets the requirements for using Form S-3
under the Act as of the date hereof and pursuant to the standards for
such form prior to October 21, 1992.
(f) 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 in good standing under the
laws of its jurisdiction of incorporation or organization. Each of the
Company and its subsidiaries has full power and authority (corporate
and other) to carry on its business as described in the Registration
Statement and the Prospectus and to own, lease and operate its
properties. Each of the Company and its subsidiaries is duly qualified
and is in good standing as a foreign corporation or trust, as the case
may be, authorized to do business in each jurisdiction in which the
nature of its business or its ownership or leasing of property requires
such qualification, except where the failure to be so qualified would
not have a material adverse effect on the Company and its subsidiaries,
taken as a whole.
(g) The financial statements of the Company and its
subsidiaries and, to the Actual Knowledge of the Company (as defined in
Section 6(1) hereof), 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
the Prospectus, comply as to form in all material respects with the
requirements of the 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 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 the
Prospectus (i) present fairly the information shown therein, (ii) have
been prepared in accordance with the Commission's rules and guidelines
with respect to pro forma financial statements and (iii) have been
properly compiled on the basis described therein and
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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 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.
(h) 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 GPI
and its subsidiaries, included or incorporated by reference into the
Registration Statement and the Prospectus, are independent certified
accountants as required by the Act. The statements included or
incorporated by reference in the Registration Statement and the
Prospectus with respect to such accountants pursuant to Rule 509 of
Regulation S-K under the Act are true and correct in all material
respects.
(i) 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, of the Operator or the Advisor (as
defined in Section 6(l) hereof), in any case whether or not arising in
the ordinary course of business, (ii) there have been no material
transactions entered into by the Company and its subsidiaries, on a
consolidated basis, or, to the Actual Knowledge of the Company, the
Operator or the Advisor, other than transactions in the ordinary course
of business, (iii) neither the Company nor its subsidiaries nor, to the
Actual Knowledge of the Company, the Operator or the Advisor, has
incurred any material liabilities or obligations, direct or contingent,
(iv) the Company and its subsidiaries, on a consolidated basis, have
not (A) declared, paid or made a dividend or distribution of any kind
on any class of its shares of beneficial interest (other than dividends
or distributions from wholly owned subsidiaries to the
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Company), (B) 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 upon conversion of the Convertible
Debentures) 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.
(j) The Company and each of its subsidiaries maintains a
system of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with
management's general or specific authorizations; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to
maintain asset accountability; (iii) access to assets is permitted only
in accordance with management's general or specific authorization; and
(iv) the recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.
(k) Except as otherwise disclosed in the Prospectus, neither
the Company nor any of its subsidiaries nor, to the Actual Knowledge of
the Company, of the Operator or the Advisor, is in violation of its
respective charter or by-laws or other organizational documents or in
default in the performance of any obligation, agreement or condition
contained in any bond, debenture, note or any other evidence of
indebtedness or in any other agreement, indenture or instrument to
which the Company or any of its subsidiaries or, to the Actual
Knowledge of the Company, the Operator or the Advisor, is a party or by
which any of their respective properties or assets may be bound or
affected, except for any such violation that would not have a material
adverse effect on the condition, financial or otherwise, or in the
respective earnings, business affairs or business prospects of the
Company and its subsidiaries, taken as a whole, or of the Operator or
the Advisor, as the case may be. Neither the Company nor, to the Actual
Knowledge of the Company, the Operator or the Advisor, is in violation
of any law, ordinance, governmental rule or regulation or court decree
to which it is subject, except for any such violations that would not,
individually or in the aggregate, have a material adverse effect on the
business, operations, earnings, prospects, properties
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or condition (financial or otherwise) of any of the Company and its
subsidiaries, taken as a whole, or of the Operator or the Advisor, as
the case may be.
(l) Except as disclosed in the Registration Statement or 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"), the Operator or HRPT Advisors, Inc. (the "Advisor"), is or
will be a party before or by any court or governmental agency or body,
which (A) might result in any material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs or
business prospects of the Company or, to the Actual Knowledge of the
Company, of the Operator or the Advisor, or (B) might materially and
adversely affect the property or assets of the Company or, to the
Actual Knowledge of the Company, of the Operator or the Advisor, or (C)
concerns the Company or, to the Actual Knowledge of the Company, of the
Operator or the Advisor, and is required to be disclosed in the
Prospectus, or (D) could adversely affect the consummation of this
Agreement and the issuance of the Shares. No contract or other document
is required to be described in the Registration Statement or the
Prospectus or to be filed as an exhibit to the Registration Statement
that is not described therein or filed as required.
(m) The Company has the requisite power and authority to
execute, deliver and perform its obligations under this Agreement and
to issue, sell and deliver the Shares in accordance with and upon the
terms and conditions set forth in this Agreement. All necessary
proceedings of the Company have been duly taken to authorize the
execution, delivery and performance by the Company of this Agreement
and the issuance, sale and delivery by the Company of the Shares.
(n) This Agreement has been duly and validly authorized,
executed and delivered by or on behalf of the Company and is a legal,
valid and binding agreement of the Company, enforceable in accordance
with its terms (i) subject to applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws
affecting creditors' rights, generally, (ii) subject to general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law), and (iii) except insofar as the
enforceability of the indemnity and
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<PAGE>
contribution provisions contained in this Agreement may be limited by
federal or state securities laws and the public policy underlying such
laws.
(o) The execution, delivery and performance by the Company of
this Agreement, the issuance, offering and sale by the Company of the
Shares as contemplated by the Registration Statement and 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 Bylaws of the Company or the
charter or bylaws or other organizational documents of any subsidiaries
of the Company or, to the Actual Knowledge of the Company, the
respective charter or bylaws or other organizational documents of the
Operator or the Advisor, or (ii) except as disclosed in the Prospectus,
any agreement, indenture or other instrument to which the Company or
any of its subsidiaries or, to the Actual Knowledge of the Company, the
Operator or the Advisor, is a party or by which the Company or any of
its subsidiaries or, to the Actual Knowledge of the Company, the
Operator or the Advisor or their respective 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 Operator or the Advisor or their
respective properties or assets may be subject.
(p) 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 Shares 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.
(q) Except as otherwise disclosed in the Registration
Statement and 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, adversely affect the current
use or value thereof, to all property and assets described in
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the Registration Statement and the Prospectus as being owned by them.
Except as otherwise set forth in the Registration Statement or 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 material encumbrances or title exceptions except as
otherwise set forth in the Registration Statement and 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.
(r) 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 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, 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.
(s) 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
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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.
(t) 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 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",
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"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.
(u) Each of the Company, its subsidiaries and, to the Actual
Knowledge of the Company, the Operator and the Advisor, has such
permits, licenses, franchises and authorizations of governmental or
regulatory authorities ("permits"), including, without limitation,
under any applicable Environmental Laws, as are necessary to own, lease
and operate its properties and to engage in the business currently
conducted by it, except such licenses and permits as to which the
failure to own or possess will not in the aggregate have a material
adverse effect on the business, operations, earnings, prospects,
properties or condition (financial or otherwise) of the Company, or, to
the Actual Knowledge of the Company, the Operator or the Advisor, and
neither the Company nor, to the Actual Knowledge of the Company, the
Operator or the Advisor, has any reason to believe that any
governmental body or agency is considering limiting, suspending or
revoking any such license, certificate, permit, authorization,
approval, franchise or right; each of the Company, its subsidiaries
and, to the Actual Knowledge of the Company, the Operator and the
Advisor, has fulfilled and performed all of its obligations with
respect to such permits and no event has occurred which allows, or
after notice or lapse of time would allow, revocation or termination
thereof or results in any other material impairment of the rights of
the holder of any such permit; and, except as described in the
Registration Statement and the Prospectus, such permits contain no
restrictions that are materially burdensome to the Company, any of its
subsidiaries or, to the Actual Knowledge of the Company, the Operator
or the Advisor.
(v) 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, properties or condition (financial or otherwise)
of the Company and its subsidiaries, taken as a whole.
(w) 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
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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.
(x) 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 are duly and validly authorized and issued,
and all of the issued and outstanding Common Shares are fully paid and
nonassessable. There are no preemptive rights or other rights to
subscribe for or to purchase, or any restriction upon the voting or
transfer of, any Common Shares pursuant to the Declaration of Trust,
bylaws or any oral or written agreement or other instrument to which
the Company or any of its subsidiaries is a party or by which either
the Company or any of its subsidiaries is bound that is not described
in the Registration Statement and the Prospectus. The offering and sale
of the Shares, as contemplated by this Agreement, will not give rise to
any rights, other than those which have been, or which will, prior to
the Closing Date, be, waived in writing or satisfied, for or relating
to the registration or offering of any shares of beneficial interest or
other securities of the Company. The Common Shares conform in all
material respects to the statements relating thereto in the
Registration Statement and the Prospectus.
(y) 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
non-assessable, and, except as disclosed in the Registration Statement
and 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.
(z) None of the subsidiaries of the Company owns any shares of
stock or any other securities of any corporation or has any equity
interest in any firm, partnership, association or other entity except
as referred to or described in the Registration Statement and the
Prospectus and the Company does not own, directly or indirectly, any
shares of stock or any
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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.
(aa) Except as disclosed in the Registration Statement and the
Prospectus, there are no material outstanding loans or advances or
material guarantees of indebtedness by the Company or any of its
subsidiaries to or for the benefit of any of the officers, trustees or
directors of the Company or any of its subsidiaries or any of the
members of the families of any of them.
(ab) The Company and each of its subsidiaries maintains
insurance, duly in force, with insurers of recognized financial
responsibility; such insurance insures against such losses and risks as
are adequate in accordance with customary industry practice to protect
the Company and its subsidiaries and their respective businesses; and
neither the Company nor any such subsidiary has any reason to believe
that it will not be able to renew its existing insurance coverage as
and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business at a cost
that would not materially and adversely affect the business,
operations, earnings, prospects, properties or condition (financial or
otherwise) of the Company and its subsidiaries, taken as a whole,
except as disclosed in or contemplated by the Registration Statement
and the Prospectus.
(ac) Neither the Company nor any of its officers and directors
(as defined in the Rules and Regulations under the Act) 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 Shares.
(ad) In connection with the offering contemplated by this
Agreement, the Company has not offered and will not offer Common Shares
or any other securities convertible into or exchangeable or exercisable
for Common Shares in a manner in violation of the Act. The Company has
not distributed and will not distribute any offering material in
connection with the offering contemplated by this Agreement, other than
the Registration Statement, the Prospectus and any preliminary
Prospectus. Except as disclosed in the
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Registration Statement and the Prospectus, no securities of the same
class as the Shares have been issued and sold by the Company within
the six-month period immediately prior to the date hereof.
(ae) Neither the Company nor any of its subsidiaries is an
"investment company" or an "affiliated person" of, or "promoter" or
"principal underwriter" for, an "investment company" as such terms are
defined in the Investment Company Act of 1940, as amended, or an
"investment advisor" as such term is defined in the Investment Advisors
Act of 1940, as amended.
(af) Any certificate signed by an officer of the Company and
delivered to the Underwriters or to counsel for the Underwriters
pursuant to this Agreement shall be deemed a representation and
warranty by the Company to each Underwriter as to the matters covered
thereby.
(ag) The Company has dealt with no broker, finder, commission
agent or other person in connection with the sale of the Shares and the
transactions contemplated by this Agreement, the Registration Statement
and the Prospectus (excluding the transactions contemplated by the
Merger Agreement), other than the Underwriters, and the Company is
under no obligation to pay any broker's fee or commission in connection
with such transactions, other than the commission to the Underwriters
contemplated hereby.
(ah) Neither the Company nor any of its subsidiaries or
affiliates does business with the government of Cuba or with any person
or affiliate located in Cuba and the Company, its subsidiaries and each
affiliate thereof has complied, to the extent necessary, with all
provisions of Section 517.075, Florida Statutes, and applicable rules
and regulations thereunder.
(ai) There are no outstanding subscriptions, rights, warrants,
options, calls, convertible securities, commitments of sale or liens
related to or entitling any person to purchase or otherwise to acquire
any shares of the capital stock of, or other ownership interest in, the
Company or any subsidiary thereof, except as otherwise disclosed in the
Registration Statement and the Prospectus.
(aj) The Company is organized in conformity with the
requirements for qualification, and, as of the date hereof the Company
operates, and as of the Closing Date and any Option Closing Date the
Company will operate, in a manner that qualifies the Company as a "real
estate investment trust" under the Code, and the rules
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and regulations thereunder, for 1996 and subsequent years. The Company
qualified as a real estate investment trust under the Code for each of
its taxable years from 1987 through 1996.
(ak) 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 the Prospectus.
(al) The Shares have been approved for listing on the NYSE,
subject only to notice of issuance.
(am) The Advisory Agreement, dated as of November 20, 1986, as
amended, between the Company and the Advisor 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). The Merger
Agreement has been duly authorized, executed and delivered by the
Company and, to the Actual Knowledge of the Company, by GPI, and
constitutes the valid agreement of the Company and, to the Actual
Knowledge of the Company, of GPI, 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).
(an) Upon consummation of the transactions contemplated by the
Merger Agreement and the satisfaction of all conditions and covenants
therein (including, without limitation, the formation of GPH and Merger
Sub, as each such term is defined in the
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Merger Agreement), the subsidiaries of GPI to be acquired by the
Company pursuant to the Merger Agreement (the "Acquired Subsidiaries")
will become wholly owned subsidiaries of the Company. To the Actual
Knowledge of the Company, had the transactions contemplated by the
Merger Agreement and the Prospectus (including the application of the
use of proceeds from the sale of the Shares as described in the
Prospectus and including satisfaction of all conditions and covenants
set forth in the Merger Agreement) been consummated as of the date of
this Agreement in accordance with the terms of the Merger Agreement
and the Prospectus, the representations and warranties contained in
this Section 6 would be true and correct in all material respects with
respect to the Company and its subsidiaries (including the Acquired
Subsidiaries). For purposes of the foregoing sentence, a
representation or warranty will be deemed to be true and correct if
the sole reason such representation or warranty would be false is due
to an action, inaction or other event or occurrence that is expressly
permitted or contemplated by the Merger Agreement without further
agreement or waiver by any of the parties thereto.
7. Indemnification. (a) The Company agrees to indemnify and
hold harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, from and against any and all losses, claims, damages, liabilities
and judgments caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or the Prospectus (as
amended or supplemented if the Company shall have furnished any amendments or
supplements thereto) or any preliminary prospectus or the Canadian Offering
Memorandum, or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses, claims, damages,
liabilities or judgments are caused by any such untrue statement or omission or
alleged untrue statement or omission based upon information relating to any
Underwriter furnished in writing to the Company by or on behalf of any
Underwriter through you expressly for use therein; provided, however, that the
foregoing indemnity agreement with respect to any preliminary prospectus shall
not inure to the benefit of any Underwriter from whom the person asserting any
such losses, claims, damages and liabilities and judgments purchased Shares, or
any person controlling such Underwriter, if a copy of the Prospectus (as then
amended or supplemented if the Company shall have furnished any amendments or
supplements thereto) was not sent or given by or on behalf of such Underwriter
to such person, if required by law so to have been delivered, at or prior to the
written confirmation
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of the sale of the Shares to such person, and if the Prospectus (as so amended
and supplemented) would have cured the defect giving rise to such loss, claim,
damage, liability or judgment.
(b) In case any action shall be brought against any
Underwriter or any person controlling such Underwriter, based upon any
preliminary prospectus, the Registration Statement, the Prospectus or the
Canadian Offering Memorandum or any amendment or supplement thereto and with
respect to which indemnity may be sought against the Company, such Underwriter
shall promptly notify the Company in writing and the Company shall assume the
defense thereof, including the employment of counsel reasonably satisfactory to
such indemnified party and payment of all fees and expenses. Any Underwriter or
any such controlling person shall have the right to employ separate counsel in
any such action and participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such Underwriter or such
controlling person unless (i) the employment of such counsel shall have been
specifically authorized in writing by the Company, (ii) the Company shall have
failed to assume the defense and employ counsel or (iii) the named parties to
any such action (including any impleaded parties) include both such Underwriter
or such controlling person and the Company and such Underwriter or such
controlling person shall have been advised by such counsel that there may be one
or more legal defenses available to it which are different from or additional to
those available to the Company (in which case the Company shall not have the
right to assume the defense of such action on behalf of such Underwriter or such
controlling person, it being understood, however, that the Company shall not, in
connection with any one such action or separate but substantially similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the fees and expenses of more than
one separate firm of attorneys (in addition to any local counsel) for all such
Underwriters and controlling persons, which firm shall be designated in writing
by Donaldson, Lufkin & Jenrette Securities Corporation and that all such fees
and expenses shall be reimbursed as they are incurred). The Company shall not be
liable for any settlement of any such action effected without its written
consent but if settled with the written consent of the Company, the Company
agrees to indemnify and hold harmless any Underwriter and any such controlling
person from and against any loss or liability by reason of such settlement.
Notwithstanding the immediately preceding sentence, if in any case where the
fees and expenses of counsel are at the expense of the indemnifying party and an
indemnified party shall have requested the indemnifying party to reimburse the
indemnified party for such fees and expenses of counsel as incurred, such
indemnifying party agrees that it shall be liable for any settlement of any
action effected without its
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written consent if (i) such settlement is entered into more than ten business
days after the receipt by such indemnifying party of the aforesaid request and
(ii) such indemnifying party shall have failed to reimburse the indemnified
party in accordance with such request for reimbursement prior to the date of
such settlement. No indemnifying party shall, without the prior written consent
of the indemnified party, effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could have been a
party and indemnity could have been sought hereunder by such indemnified party,
unless such settlement includes an unconditional release of such indemnified
party from all liability for claims that are the subject matter of such
proceeding.
(c) Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, its trustees, its officers who sign the
Registration Statement and any person controlling the Company within the meaning
of Section 15 of the Act or Section 20 of the Exchange Act, to the same extent
as the foregoing indemnity from the Company to each Underwriter, but only with
reference to information relating to such Underwriter furnished in writing by or
on behalf of such Underwriter through you expressly for use in the Registration
Statement, the Prospectus, any preliminary prospectus or the Canadian Offering
Memorandum. In case any action shall be brought against the Company, any of its
trustees, any such officer or any person controlling the Company based on the
Registration Statement, the Prospectus, any preliminary prospectus or the
Canadian Offering Memorandum and in respect of which indemnity may be sought
against any Underwriter, the Underwriter shall have the rights and duties given
to the Company (except that if the Company shall have assumed the defense
thereof, such Underwriter shall not be required to do so, but may employ
separate counsel therein and participate in the defense thereof but the fees and
expenses of such counsel shall be at the expense of such Underwriter), and the
Company, its trustees, any such officers and any person controlling the Company
shall have the rights and duties given to the Underwriter by Section 7(b)
hereof.
(d) If the indemnification provided for in this Section 7 is
unavailable to an indemnified party in respect of any losses, claims, damages,
liabilities or judgments referred to therein, then each indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount paid
or payable by such indemnified party as a result of such losses, claims,
damages, liabilities and judgments (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company on the one hand and the
Underwriters on the other hand from the offering of the Shares or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such
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proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company and the
Underwriters in connection with the statements or omissions which resulted in
such losses, claims, damages, liabilities or judgments, as well as any other
relevant equitable considerations. The relative benefits received by the Company
and the Underwriters shall be deemed to be in the same proportion as the total
net proceeds from the offering (before deducting expenses) received by the
Company, and the total underwriting discounts and commissions received by the
Underwriters, bear to the total price to the public of the Shares, in each case
as set forth in the table on the cover page of the Prospectus. The relative
fault of the Company and the Underwriters shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission to state a material fact relates to information supplied by
the Company or the Underwriters and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.
The Company and the Underwriters agree that it would not be
just and equitable if contribution pursuant to this Section 7(d) were determined
by pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages, liabilities or judgments referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Shares underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which such Underwriter
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute pursuant to this
Section 7(d) are several in proportion to the respective number of Shares
purchased by each of the Underwriters hereunder and not joint.
8. Conditions of Underwriters' Obligations. The several
obligations of the Underwriters to purchase the Firm Shares under this Agreement
are subject to the satisfaction of each of the following conditions:
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(a) All the representations and warranties of the Company
contained in this Agreement shall be true and correct on the Closing
Date with the same force and effect as if made on and as of the Closing
Date.
(b) The Prospectus shall have been filed with the Commission
pursuant to Rule 424 within the applicable time period prescribed for
such filing under the Act, and at the Closing Date no stop order
suspending the effectiveness of the Registration Statement shall have
been issued and no proceedings for that purpose shall have been
commenced or shall be pending before or contemplated by the Commission.
(c)(i) Since the date of the latest balance sheet included or
incorporated by reference in the Registration Statement and the
Prospectus, there shall not have been any material adverse change, or
any development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, affairs or
business prospects, whether or not arising in the ordinary course of
business, of the Company, (ii) since the date of the latest balance
sheet included or incorporated by reference in the Registration
Statement and the Prospectus there shall not have been any change, or
any development involving a prospective material adverse change, in the
capital stock or in the long-term debt of the Company from that set
forth in the Registration Statement and Prospectus, (iii) the Company
and its subsidiaries shall have no liability or obligation, direct or
contingent, which is material to the Company and its subsidiaries,
taken as a whole, other than those reflected in the Registration
Statement and the Prospectus and (iv) on the Closing Date you shall
have received a certificate, dated the Closing Date, signed by David J.
Hegarty and Ajay Saini, in their capacities as the President and Chief
Operating Officer and Chief Financial Officer of the Company,
confirming the matters set forth in paragraphs (a), (b), and (c) of
this Section 8.
(d) You shall have received on the Closing Date an opinion
(satisfactory to you and counsel for the Underwriters), dated the
Closing Date, of Sullivan and Worcester LLP, counsel for the Company,
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 Act) has been duly organized, is
validly existing as a corporation in good standing under
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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 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) The authorized, issued and outstanding shares of
beneficial interest of the Company are as set forth under the
caption "Capitalization" in the Prospectus; and the authorized
shares of beneficial interest of the Company conform in all
material respects as to legal matters to the description
thereof contained in the Prospectus under the captions
"Description of Shares" and "Description of Preferred Shares";
(iii) All of the issued and outstanding Common Shares
are duly authorized and validly issued and are fully paid and
nonassessable;
(iv) 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);
(v) The Shares have been duly authorized and, when
issued and delivered to the Underwriters against payment
therefor in accordance with the terms hereof, will be validly
issued, fully paid and nonassessable and free of any
preemptive, or, to the best knowledge of such counsel, similar
rights that entitle any person to acquire any Shares upon the
issuance thereof by the Company;
(vi) The form of certificates for the Shares
conforms to applicable requirements of Maryland law;
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(vii) The Company is not required to register as an
"investment company" within the meaning of the Investment
Company Act of 1940, as amended;
(viii) The Registration Statement has become
effective under the Act, and, to the best 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 has been made in accordance with Rule 424;
(ix) The Company has the requisite trust power and
authority to execute, deliver and perform its obligations
under this Agreement and to issue, sell and deliver the Shares
in accordance with and upon the terms and conditions set forth
in this Agreement; the execution and delivery of this
Agreement by the Company and the performance by the Company of
its obligations thereunder have been duly authorized by all
necessary trust action on the part of the Company;
(x) This Agreement has been duly executed and
delivered by or on behalf of the Company and is a valid and
binding agreement of the Company, enforceable in accordance
with its terms (A) subject to applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer
and similar laws affecting creditors' rights, generally, (B)
subject to general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law),
and (C) except insofar as the enforceability of the indemnity
and contribution provisions contained in this Agreement may be
limited by federal or state securities laws and the public
policy underlying such laws;
(xi) To such counsel's knowledge, except as disclosed
in the Registration Statement or the Prospectus, there is not
now pending or threatened, any litigation, action, suit or
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 subsidiaries, taken as a whole, or the
Advisor or (B) might materially and adversely affect the
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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 Shares;
to such counsel's knowledge, no contract or other document is
required to be described in the Registration Statement or the
Prospectus or to be filed as an exhibit to the Registration
Statement that is not described therein or filed as required;
(xii) 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 or the Advisor, as the case may be;
(xiii) 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 ("permits"), including, without
limitation, under any applicable Environmental Laws, as are
necessary to own, lease and operate its properties and to
engage in the business currently conducted by it, except such
licenses and permits as to which the failure to own or possess
will not in the aggregate have a material adverse effect on
the 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;
(xiv) The execution, delivery and performance of this
Agreement and the consummation of the transactions herein
contemplated will not conflict with or constitute a breach or
violation of any of the terms or provision of, or constitute a
default under, (A) the Declaration of Trust or Bylaws of
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the Company or the charter or bylaws or other organizational
documents of the Advisor or any Significant Subsidiary of the
Company, or (B) except as disclosed in the Prospectus, any
material 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.
(xv) 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 Shares
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;
(xvi) The Advisory Agreement, dated as of November
20, 1986, as amended, between the Company and the Advisor, 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; the Merger Agreement has been duly
authorized, executed and delivered by the Company and
constitutes the valid agreement of the Company 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
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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;
(xvii) The Advisor (A) is a corporation duly
organized, validly existing and in good standing under the
laws of the State of Delaware, and (B) has the requisite
corporate power and authority to conduct its business as
described in the Prospectus and to own and operate its
material properties;
(xviii) 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
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;
(xix) The Registration Statement and the Prospectus
and any supplements or amendments thereto (except for the
financial statements and the notes thereto and the schedules
and other financial and statistical data included therein, as
to which such counsel need not express any opinion) comply as
to form in all material respects with the requirements of the
Act;
(xx) Each document incorporated by reference in the
Registration Statement and the Prospectus (except for the
financial statements and the notes thereto and the schedules
and other financial and statistical data included therein, as
to which such counsel need not express any opinion) complied
as to form when filed with the Commission in all material
respects with the Exchange Act;
(xxi) The statements (a) in the Basic Prospectus
under the captions "Description of Shares," "Redemption;
Business Combinations and
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Control Share Acquisitions" and "Limitation of Liability;
Shareholder Liability", (b) in the Prospectus under the
captions "Recent Developments" and "Federal Income Tax and
ERISA Considerations", (c) in Item 1 of the Company's Annual
Report on Form 10-K for its fiscal year ended December 31,
1995 under the captions "Regulation and Reimbursement,"
"Federal Income Tax Considerations" and "ERISA Plans, Keogh
Plans and Individual Retirement Accounts", (d) in Part A (GPI
Acquisition) and 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 (e)
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.
(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 the
Closing Date or any applicable Option Closing Date, as the
case may be, contained an untrue statement of a material fact
or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not
misleading or that any amendment or supplement to the
Prospectus, as of its respective date, and as of the Closing
Date or such Option Closing Date, as the case may be,
contained any untrue statement of a material fact or omitted
to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under
which they were made, not misleading (it being understood that
such counsel
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<PAGE>
need express no view with respect to 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 the Prospectus or as to the
matters to be addressed in the opinion of Sherin & Lodgen
LLP, special counsel to the Company, described below).
In rendering their opinion as aforesaid, Sullivan & Worcester
LLP may rely upon an opinion, dated as of the Closing Date, of Piper &
Marbury L.L.P. as to matters governed by Maryland law, provided that
such reliance is expressly authorized by such opinion and a copy of
such opinion is delivered to the Underwriters and is, in form and
substance, satisfactory to them and their counsel. 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 paragraph
(d) above shall be rendered to you at the request of the Company and
shall so state therein.
In addition, you shall have received on the Closing Date an
opinion (satisfactory to you and counsel for the Underwriters) of
Sherin & Lodgen LLP, special counsel for the Company, dated the Closing
Date, to the effect that the statements (a) in Item 3 (Legal
Proceedings) of the Company's Annual Report on Form 10-K for its fiscal
year ended December 31, 1995, (b) in Item 1 (Legal Proceedings) of Part
2 of the Company's Quarterly Report on Form 10-Q for its fiscal quarter
ended September 30, 1996, and (c) 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.
(e) You shall have received on the Closing Date an opinion,
dated the Closing Date, of Willkie Farr & Gallagher, counsel for the
Underwriters, as to the matters referred to in clauses (v), (viii),
(x), (xxi) (but only with respect to the statements in the Prospectus
under the caption "Underwriting") and (xxii) of the foregoing paragraph
(d). In giving such opinion with respect to the matters covered by
clause (xxii) such counsel may state that their opinion and belief
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<PAGE>
are based upon their participation in the preparation of the
Registration Statement and 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, Willkie Farr & Gallagher may
rely upon an opinion, dated as of the Closing Date, 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 referred to
in clauses (v) and (x) of the foregoing paragraph (d) or matters
otherwise 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.
(f) You shall have received a letter on and as of the Closing
Date, in form and substance satisfactory to you, from Ernst & Young
LLP, independent public accountants, with respect to the financial
statements and certain financial information contained or incorporated
by reference in the Registration Statement and the Prospectus and
substantially in the form and substance of the letter delivered to you
by Ernst & Young LLP on the date of this Agreement.
(g) The Company shall have delivered to you the agreements
specified in Section 2 hereof.
(h) The Company shall not have failed at or prior to the
Closing Date to perform or comply with any of the agreements herein
contained and required to be performed or complied with by the Company
at or prior to the Closing Date.
The several obligations of the Underwriters to purchase any Additional Shares
hereunder are subject to the delivery to you on the applicable Option Closing
Date of such documents as you may reasonably request with respect to the good
standing of the Company, the due authorization and issuance of such Additional
Shares and other matters related to the issuance of such Additional Shares.
9. Effective Date of Agreement and Termination. This
Agreement shall become effective upon the execution of this Agreement.
This Agreement may be terminated at any time prior to the
Closing Date by you by written notice to the Company if any of the following has
occurred: (i) since the respective dates as of which information is given in the
Registration Statement and the Prospectus, any material adverse change or
development involving a prospective material adverse change in the condition,
financial or
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otherwise, of the Company and its subsidiaries, taken as a whole, or the
earnings, affairs, or business prospects of the Company or any of its
subsidiaries, taken as a whole, whether or not arising in the ordinary course of
business, which would, in your judgment, make it impracticable to market the
Shares on the terms and in the manner contemplated in the Prospectus, (ii) any
outbreak or escalation of hostilities or other national or international
calamity or crisis or change in economic conditions or in the financial markets
of the United States or elsewhere that, in your judgment, is material and
adverse and would, in your judgment, make it impracticable to market the Shares
on the terms and in the manner contemplated in the Prospectus, (iii) the
suspension or material limitation of trading in securities on the New York Stock
Exchange, the American Stock Exchange or the NASDAQ National Market System or
limitation on prices for securities on any such exchange or National Market
System, (iv) the enactment, publication, decree or other promulgation of any
federal or state statute, regulation, rule or order of any court or other
governmental authority which in your opinion materially and adversely affects,
or will materially and adversely affect, the business or operations of the
Company or any Subsidiary, (v) the declaration of a banking moratorium by either
federal or New York State authorities or (vi) the taking of any action by any
federal, state or local government or agency in respect of its monetary or
fiscal affairs which in your opinion has a material adverse effect on the
financial markets in the United States.
If on the Closing Date or on any applicable Option Closing
Date, as the case may be, any one or more of the Underwriters shall fail or
refuse to purchase the Firm Shares or Additional Shares, as the case may be,
which it or they have agreed to purchase hereunder on such date and the
aggregate number of Firm Shares or Additional Shares, as the case may be, which
such defaulting Underwriter or Underwriters, as the case may be, agreed but
failed or refused to purchase is not more than one-tenth of the total number of
Shares to be purchased on such date by all Underwriters, each non-defaulting
Underwriter shall be obligated severally, in the proportion which the number of
Firm Shares set forth opposite its name in Schedule I bears to the total number
of Firm Shares which all the non-defaulting Underwriters have agreed to
purchase, or in such other proportion as you may specify, to purchase the Firm
Shares or Additional Shares, as the case may be, which such defaulting
Underwriter or Underwriters, as the case may be, agreed but failed or refused to
purchase on such date; provided that in no event shall the number of Firm Shares
or Additional Shares, as the case may be, which any Underwriter has agreed to
purchase pursuant to Section 2 hereof be increased pursuant to this Section 9 by
an amount in excess of one-ninth of such number of Firm Shares or Additional
Shares, as the case may be, without the written consent of
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<PAGE>
such Underwriter. If on the Closing Date or on any applicable Option Closing
Date, as the case may be, any Underwriter or Underwriters shall fail or refuse
to purchase Firm Shares or Additional Shares, as the case may be, and the
aggregate number of Firm Shares or Additional Shares, as the case may be, with
respect to which such default occurs is more than one-tenth of the aggregate
number of Shares to be purchased on such date by all Underwriters and
arrangements satisfactory to you and the Company for purchase of such Shares are
not made within 48 hours after such default, this Agreement will terminate
without liability on the part of any non-defaulting Underwriter and the Company.
In any such case which does not result in termination of this Agreement, either
you or the Company shall have the right to postpone the Closing Date or the
applicable Option Closing Date, as the case may be, but in no event for longer
than seven days, in order that the required changes, if any, in the Registration
Statement and the Prospectus or any other documents or arrangements may be
effected. Any action taken under this paragraph shall not relieve any defaulting
Underwriter from liability in respect of any default of any such Underwriter
under this Agreement.
10. Miscellaneous. Notices given pursuant to any provision of
this Agreement shall be addressed as follows: (a) if to the Company, to at the
office of the Company at 400 Centre Street, Newton, Massachusetts 02158,
Attention: David J. Hegarty, President, and (b) if to any Underwriter or to you,
to you c/o Donaldson, Lufkin & Jenrette Securities Corporation, 140 Broadway,
New York, New York 10005, Attention: Syndicate Department, or in any case to
such other address as the person to be notified may have requested in writing.
The respective indemnities, contribution agreements,
representations, warranties and other statements of the Company, its officers
and trustees and of the several Underwriters set forth in or made pursuant to
this Agreement shall remain operative and in full force and effect, and will
survive delivery of and payment for the Shares, regardless of (i) any
investigation, or statement as to the results thereof, made by or on behalf of
any Underwriter or by or on behalf of the Company, the officers or trustees of
the Company or any controlling person of the Company, (ii) acceptance of the
Shares and payment for them hereunder and (iii) termination of this Agreement.
If this Agreement shall be terminated by the Underwriters
because of any failure or refusal on the part of the Company to comply with the
terms or to fulfill any of the conditions of this Agreement, the Company agrees
to reimburse the several Underwriters for all out-of-pocket expenses (including
the fees and disbursements of counsel) reasonably incurred by them.
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<PAGE>
Except as otherwise provided, this Agreement has been and is
made solely for the benefit of and shall be binding upon the Company, the
Underwriters, any controlling persons referred to herein and their respective
successors and assigns, all as and to the extent provided in this Agreement, and
no other person shall acquire or have any right under or by virtue of this
Agreement. The term "successors and assigns" shall not include a purchaser of
any of the Shares from any of the several Underwriters merely because of such
purchase.
This Agreement shall be governed and construed in accordance
with the laws of the State of New York.
This Agreement may be signed in various counterparts which
together shall constitute one and the same instrument.
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<PAGE>
Please confirm that the foregoing correctly sets forth the
agreement between the Company and the several Underwriters.
Very truly yours,
HEALTH AND RETIREMENT PROPERTIES TRUST
By /s/ David J. Hegarty
-------------------------
Title: President
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
DEAN WITTER REYNOLDS INC.
A.G. EDWARDS & SONS, INC.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
NATWEST SECURITIES LIMITED
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
SALOMON BROTHERS INC
SMITH BARNEY INC.
Acting severally on behalf of
themselves and the several
Underwriters named in
Schedule I hereto
By DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By /s/ Steven Kantor
------------------------------
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SCHEDULE I
----------
Number of Firm
Underwriters Shares to be Purchased
------------ ----------------------
Donaldson, Lufkin & Jenrette 2,021,000
Securities Corporation
Dean Witter Reynolds Inc. 2,021,000
A.G. Edwards & Sons, Inc. 2,021,000
Merrill Lynch, Pierce, Fenner
& Smith Incorporated 2,021,000
NatWest Securities Limited 2,021,000
PaineWebber Incorporated 2,021,000
Prudential Securities Incorporated 2,021,000
Salomon Brothers Inc 2,021,000
Smith Barney Inc. 2,021,000
Lehman Brothers 663,875
Arnhold and S. Bleichroeder, Inc. 663,875
Cruttenden Roth Incorporated 663,875
D.A. Davidson & Co. 663,875
Legg Mason Wood Walker Incorporated 663,875
McDonald & Company Securities, Inc. 663,875
Nesbitt Burns Securities Inc. 663,875
Sands Brothers & Co., Ltd. 663,875
---------------
Total 23,500,000
<PAGE>
ANNEX I
HRPT Advisors, Inc.
Barry M. Portnoy
Gerard M. Martin
Exhibit 8.1
SULLIVAN & WORCESTER LLP
One Post Office Square
Boston, Massachusetts 02109
March 10, 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 common
shares of beneficial interest (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, to be filed
within one week of the date hereof, 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. 333-02863 (the "Registration
Statement") filed under the Securities Act of 1933, as amended (the "Act"), and
we have examined originals or copies, certified or otherwise identified to our
satisfaction, of the Registration Statement, corporate records, certificates and
statements of officers and accountants of the Company and of public officials,
and such other documents as we have considered relevant and necessary in order
to furnish the opinion hereinafter set forth. Specifically, and without limiting
the generality of the foregoing, we have reviewed: (i) the declaration of trust,
as amended and restated, and the by-laws of the Company; (ii) the Registration
Statement; (iii) the final Prospectus dated June 25, 1996 (the "Base
Prospectus") relating to the Registration Statement; and (iv) the preliminary
Prospectus Supplement to the Base Prospectus dated February 28, 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, 1995, filed under the Exchange Act
(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 "Federal Income Tax
and ERISA 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
<PAGE>
Health and Retirement Properties Trust
March 10, 1997
Page 2
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 "Federal Income Tax and ERISA 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 "Federal Income Tax and ERISA
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
