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): February 18, 1998
HEALTH AND RETIREMENT PROPERTIES TRUST
(Exact name of registrant as specified in charter)
Maryland 1-9317 04-6558834
(State or other (Commission file (IRS employer
jurisdiction of number) identification no.)
incorporation)
400 Centre Street, Newton, Massachusetts 02158
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: 617-332-3990
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Item 5. Other Events.
Debt Offerings. On February 18, 1998, the Company agreed to sell an
additional $50 million aggregate principal amount (the "Additional Reset Notes")
of its Remarketed Reset Notes due July 9, 2007 (the "Reset Notes") in an
offering registered pursuant to the Securities Act. The Additional Reset Notes
will be sold to the public at varying prices to be determined by the underwriter
at the time of each sale. The net proceeds to the Company will be 99.85245% of
the principal amount of the Additional Reset Notes, before deducting expenses
payable by the Company. Subject to the terms and conditions of the underwriting
agreement, the Company expects such offering to close on February 23, 1998, and
expects that its net proceeds from such offering, after payment of the Company's
expenses, will be $49.8 million. The Company expects to use the net proceeds
from the offering of the Additional Reset Notes to reduce amounts outstanding
under the Company's bank credit facility and for general business purposes.
There can be no assurance that the offering of the Additional Reset Notes will
be consummated.
Upon consummation of the sale of the Additional Reset Notes, there will
be $250,000,000 in aggregate principal amount of the Reset Notes outstanding.
The Reset Notes currently bear interest at a floating rate equal to three month
LIBOR plus a spread of .45% per annum. In July 1998, the Company will have the
option to prepay the Reset Notes or to have the Reset Notes remarketed and the
interest rate reset on either a floating or fixed rate basis.
On February 18, 1998, the Company agreed to sell an aggregate of $100
million of 6.7% Senior Notes due 2005 (the "6.7% Notes") at a price to the
public of 99.945% of this principal amount in an offering registered pursuant to
the Securities Act. Subject to the terms and conditions of the underwriting
agreement, the Company expects such offering to close on February 23, 1998, and
expects that its net proceeds from such offering, after payment of the Company's
expenses, will be $99.1 million. The Company expects to use the net proceeds of
such offering to reduce amounts outstanding under the Company's bank credit
facility and for general business purposes. There can be no assurance that the
offering described above will be consummated.
Equity Offerings. On February 18, 1998, the Company sold an aggregate
of 2,995,776 common shares of beneficial interest ("Shares") at a price to the
public of $20.125 per Share in two offerings registered pursuant to the
Securities Act to underwriters who indicated to the Company that they intended
to deposit Shares purchased in such offering into registered unit investment
trusts sponsored by them. The net proceeds from such offerings, after payment of
the Company's expenses, were approximately $57.0 million in aggregate. Also on
February 18, 1998, the Company agreed to sell an aggregate of 2,500,000 Shares
at a price to the public of $20 per Share in an offering registered pursuant to
the Securities Act to an underwriter who has indicated to the Company that it
intends to deposit the Shares purchased in such offering into a registered unit
investment trust sponsored by an unrelated entity. Subject to the terms and
conditions of the applicable underwriting agreement, the Company expects such
offering to close on February 23, 1998, and expects that its net proceeds from
such offering, after payment of the Company's expenses, will be $47.4 million.
The Company expects to use the net proceeds of such equity offerings to reduce
amounts outstanding under the Company's bank credit facility and for general
business purposes
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits.
(c) Exhibits.
1.1 Purchase Agreement dated February 18, 1998 between Health and
Retirement Properties Trust and Merril Lynch & Co. pertaining
to the 6.7% Notes.
1.2 Underwriting Agreement dated February 18, 1998 between Health
and Retirement Properties Trust and A.G. Edwards & Sons, Inc.
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4.1 Form of Supplemental Indenture dated as of February 23 , 1998
between Health and Retirement Properties Trust and State
Street Bank and Trust Company pertaining to the 6.7% Notes.
8.1 Opinion of Sullivan & Worcester LLP re: tax matters.
23.1 Consent of Sullivan & Worcester LLP (contained in Exhibit
8.1).
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HEALTH AND RETIREMENT PROPERTIES TRUST
By: /s/Ajay Saini
Ajay Saini
Treasurer and Chief Financial Officer
Date: February 18, 1998
HEALTH AND RETIREMENT PROPERTIES TRUST
(a Maryland real estate investment trust)
$100,000,000 6.70% Senior Notes due February 23, 2005
PURCHASE AGREEMENT
February 18, 1998
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
Ladies and Gentlemen:
Health and Retirement Properties Trust, a Maryland real estate
investment trust (the "Company"), confirms its agreement with you with respect
to the sale by the Company and the purchase by you of $100,000,000 of the
Company's 6.70% Senior Notes due February 23, 2005 (the "Securities") at a
purchase price of 99.945% of the principal amount of the Securities. The
Securities are to be issued pursuant to an indenture dated as of July 9, 1997
and a supplemental indenture dated as of February 23, 1998 (together the
"Indenture"), each between the Company and State Street Bank and Trust Company
(the "Trustee").
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (No. 333-26887) for the
registration of debt securities, preferred shares of beneficial interest,
depositary shares, common shares of beneficial interest and warrants under the
Securities Act of 1933, as amended (the "1933 Act"), and has filed such
amendments thereto, if any, as may have been required to the date hereof. Such
registration statement has been declared effective under the 1933 Act. Such
registration statement (as amended, if applicable) and the prospectus
constituting a part thereof, as supplemented by the prospectus supplement
relating to the Securities (including, in each case, all documents incorporated
or deemed to be incorporated by reference therein), as from time to time amended
or supplemented pursuant to the 1933 Act, the Securities Exchange Act of 1934,
as amended (the "1934 Act"), or otherwise, are hereinafter referred to as the
"Registration Statement" and the "Prospectus",
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respectively. All references in this Agreement to financial statements and
schedules and other information which is "contained", "included" or "stated" in
the Registration Statement or the Prospectus (and all other references of like
import) shall be deemed to mean and include all such financial statements and
schedules and other information which is or is deemed to be incorporated by
reference in the Registration Statement or in the Prospectus, as the case may
be.
Section 1. Representations and Warranties.
(a) The Company represents and warrants to you as of the
date hereof as follows:
(i) At the time the Registration Statement became effective,
the Registration Statement complied in all material respects with the
requirements of the 1933 Act and the rules and regulations under the
1933 Act (the "1933 Act Regulations") and did not contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading. The Prospectus, at the date hereof (unless the term
"Prospectus" refers to a prospectus which has been provided to you by
the Company for use in connection with the offering of the Securities
which differs from the Prospectus on file at the Commission at the date
of effectiveness of the Registration Statement, in which case at the
time it is first provided to you for such use) and at the Closing Time
referred to in Section 2 hereof, does not and will not include an
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
however, that the representations and warranties in this subsection (i)
shall not apply to those parts of the Registration Statement or the
Prospectus made in reliance upon and in conformity with information
furnished to the Company in writing by you expressly for use in the
Registration Statement or the Prospectus.
(ii) The documents incorporated or deemed to be incorporated
by reference in the Prospectus, at the time they were or hereafter are
filed with the Commission, complied and will comply in all material
respects with the requirements of the 1934 Act and the rules and
regulations of the Commission under the 1934 Act (the "1934 Act
Regulations"), and, when read together with the other information in
the Prospectus, at the time the Registration Statement became effective
and at Closing Time, did not and
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will not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(iii) The Company is a Maryland real estate investment trust
duly organized, validly existing and in good standing under the laws of
the State of Maryland. Each of its subsidiaries has been duly organized
and is validly existing as a corporation or trust in good standing
under the laws of its jurisdiction of incorporation or organization.
Each of the Company and its subsidiaries has full power and authority
(corporate and other) to carry on its business as described in the
Registration Statement and in the Prospectus and to own, lease and
operate its properties. Each of the Company and its subsidiaries is
duly qualified and is in good standing as a foreign corporation or
trust, as the case may be, and is authorized to do business in each
jurisdiction in which the nature of its business or its ownership or
leasing of property requires such qualification, except where the
failure to be so qualified would not have a material adverse effect on
the Company and its subsidiaries, taken as a whole.
(iv) The financial statements of the Company and its
subsidiaries and, to the Actual Knowledge of the Company (as defined in
paragraph (xii) of this Section 1(a)), of Marriott International, Inc.
(the "Operator") and Government Properties Investors, Inc. ("GPI") and
its consolidated subsidiaries, together with the related schedules and
notes thereto, included or incorporated by reference in the
Registration Statement and in the Prospectus, comply as to form in all
material respects with the requirements of the 1933 Act. Such financial
statements of the Company and, to the Actual Knowledge of the Company,
of the Operator and GPI, together with the related schedules and notes
thereto, present fairly the consolidated financial position, results of
operations, shareholders' equity and changes in financial position of
the foregoing entities at the respective dates or for the respective
periods therein specified and have been prepared in accordance with
generally accepted accounting principles ("GAAP") consistently applied
throughout the periods involved. The pro forma financial statements and
other pro forma financial information (including the notes thereto)
included or incorporated by reference in the Registration Statement and
in the Prospectus (i) present fairly the information shown therein,
(ii) have been prepared in accordance with the Commission's rules and
guidelines with respect to pro forma financial
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statements and (iii) have been properly compiled on the basis described
therein and the assumptions used in the preparation of such pro forma
financial statements and other pro forma financial information
(including the notes thereto) are reasonable and the adjustments used
therein are appropriate to give effect to the transactions or
circumstances referred to therein. The adjusted pro forma financial
statements and other adjusted pro forma financial information
(including the notes thereto) included or incorporated by reference in
the Registration Statement and in the Prospectus (i) present fairly the
information shown therein and (ii) have been properly compiled on the
basis described therein and the assumptions used in the preparation of
such adjusted pro forma financial statements and other adjusted pro
forma financial information (including the notes thereto) are
reasonable and the adjustments used therein are appropriate to give
effect to the transactions or circumstances referred to therein.
(v) The accountants who have certified the financial
statements of the Company and its subsidiaries and, to the Actual
Knowledge of the Company, of the Operator and its subsidiaries and of
GPI and its subsidiaries, included or incorporated by reference in the
Registration Statement and in the Prospectus are independent certified
accountants as required by the 1933 Act. The statements included in or
incorporated by reference in the Registration Statement and in the
Prospectus with respect to such accountants pursuant to Rule 509 of
Regulation S-K under the 1933 Act are true and correct in all material
respects.
(vi) The Indenture has been duly qualified under the Trust
Indenture Act of 1939 (the "1939 Act") and has been duly authorized,
executed and delivered by the Company and is a valid and binding
agreement of the Company enforceable in accordance with its terms,
except as limited by (a) the effect of bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or other similar laws
relating to or affecting the rights or remedies of creditors or (b) the
effect of general principles of equity
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(regardless of whether enforcement is sought in a proceeding in equity
or at law.)
(vii) All of the issued and outstanding indebtedness of the
Company is duly and validly authorized and issued; the Securities have
been authorized by all necessary trust action and, when executed and
authenticated in accordance with the provisions of the Indenture and
delivered and paid for pursuant to this Agreement, will be valid and
binding obligations of the Company enforceable in accordance with their
terms, except as limited by (a) the effect of bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or other similar laws
relating to or affecting the rights or remedies of creditors or (b) the
effect of general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law).
(viii) The Securities and the Indenture conform to the
descriptions thereof in the Registration Statement and in the
Prospectus.
(ix) Since the respective dates as of which information is
given in the Prospectus, and except as otherwise disclosed therein, (i)
there has been no material adverse change in the business, operations,
earnings, prospects, properties or condition (financial or otherwise)
of the Company and its subsidiaries, taken as a whole, or, to the
Actual Knowledge of the Company, of the Advisor (as defined in
paragraph (xii) of this Section 1(a)), in any case whether or not
arising in the ordinary course of business, (ii) there have been no
material transactions entered into by the Company and its subsidiaries,
on a consolidated basis, other than transactions in the ordinary course
of business, (iii) neither the Company nor its subsidiaries has
incurred any material liabilities or obligations, direct or contingent,
(iv) the Company and its subsidiaries, on a consolidated basis, have
not, (A) other than regular quarterly dividends, declared, paid or made
a dividend or distribution of any kind on any class of its shares of
beneficial interest (other than dividends or distributions from wholly
owned subsidiaries to the Company), (B) issued any shares of beneficial
interest of the Company or any of its subsidiaries or any options,
warrants, convertible securities or other rights to purchase the shares
of beneficial interest of the Company or any of its subsidiaries (other
than the issuance of common shares of beneficial interest ("Common
Shares") upon conversion of
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certain convertible debentures of the Company or Common Shares to Nike
Securities L.P. for deposit in a unit investment trust for which it
acts as sponsor) 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 but excluding
borrowings under existing bank lines of credit) of the Company and its
subsidiaries, on a consolidated basis.
(x) The Company and each of its subsidiaries maintains a
system of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with
management's general or specific authorizations; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with GAAP and to maintain asset accountability; (iii) access
to assets is permitted only in accordance with management's general or
specific authorization; and (iv) the recorded accountability for assets
is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(xi) Except as otherwise disclosed in the Prospectus, neither
the Company nor any of its subsidiaries nor, to the Actual Knowledge of
the Company, the Advisor, is in violation of its respective charter or
by-laws or other organizational documents or in default in the
performance of any obligation, agreement or condition contained in any
bond, debenture, note or any other evidence of indebtedness or in any
other agreement, indenture or instrument to which the Company or any of
its subsidiaries or, to the Actual Knowledge of the Company, the
Advisor, is a party or by which any of their respective properties or
assets may be bound or affected, except for any such violation that
would not have a material adverse effect on the condition, financial or
otherwise or in the respective earnings, business affairs or business
prospects of the Company and its subsidiaries, taken as a whole.
Neither the Company nor, to the Actual Knowledge of the Company, the
Advisor, is in violation of any law, ordinance, governmental rule or
regulation or court decree to which it is subject, except for any such
violations that would not, individually or in the aggregate, have a
material adverse effect on the business, operations, earnings,
prospects, properties or condition (financial or otherwise) of any of
the Company and its subsidiaries, taken as a whole.
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(xii) Except as disclosed in the Registration Statement or in
the Prospectus, there is not now pending or, to the knowledge of the
Company, threatened, any litigation, action, suit or proceeding to
which the Company or, to the actual knowledge of the Company (including
without limitation, for purposes of this Agreement, its managing
trustees) without independent inquiry (the "Actual Knowledge of the
Company"), REIT Management & Research, 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 (B) might materially and adversely
affect the property or assets of the Company or (C) concerns the
Company or, to the Actual Knowledge of the Company, the Advisor, and is
required to be disclosed in the Prospectus, or (D) could adversely
affect the consummation of this Agreement and the issuance, purchase
and sale of the Securities. No contract or other document is required
to be described in the Registration Statement or in the Prospectus or
to be filed as an exhibit to the Registration Statement that is not
described therein or filed as required.
(xiii) The execution, delivery and performance by the Company
of this Agreement, the issuance, offering and sale by the Company of
the Securities as contemplated by the Registration Statement and by the
Prospectus and the consummation of the transactions contemplated hereby
and compliance with the terms and provisions hereof, will not violate
or conflict with or constitute a breach of any of the terms or
provisions of, or a default under, (i) the Amended and Restated
Declaration of Trust (the "Declaration of Trust") or the By-laws of the
Company or the charter or by-laws or other organizational documents of
any subsidiaries of the Company or, to the Actual Knowledge of the
Company, the respective charter or by-laws or other organizational
documents of the Advisor, or (ii) except as disclosed in the
Prospectus, any agreement, indenture or other instrument to which the
Company or any of its subsidiaries or, to the Actual Knowledge of the
Company, the Advisor, is a party or by which the Company or any of its
subsidiaries or, to the Actual Knowledge of the Company, the Advisor or
their respective properties or assets is bound, or (iii) any laws,
administrative regulations or rulings or decrees to which the Company
or any of its subsidiaries or, to the Actual Knowledge of the Company,
the Advisor or their respective properties or assets may be subject.
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(xiv) No consent, approval, authorization, order,
registration, filing, qualification, license or permit of or with any
court or any public, governmental or regulatory agency or body having
jurisdiction over the Company or any of its subsidiaries or any of
their respective properties or assets is required for the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby, including, without limitation, the
issuance, sale and delivery of the Securities pursuant to this
Agreement, except such as have been obtained and such as may be
required under foreign and state securities or "Blue Sky" laws.
(xv) Except as otherwise disclosed in the Registration
Statement and in the Prospectus, the Company and each of its
subsidiaries has good and marketable title or ground leases, free and
clear of all liens, claims, encumbrances and restrictions, except liens
for taxes not yet due and payable and other liens and encumbrances
which do not, either individually or in the aggregate, materially and
adversely affect the current use or value thereof, to all property and
assets described in the Registration Statement and in the Prospectus as
being owned by them. Except as otherwise set forth in the Registration
Statement or in the Prospectus, all leases to which the Company and
each of its subsidiaries is a party relating to real property, and all
other leases which are material to the business of the Company and its
subsidiaries, taken as a whole, are valid and binding, and no default
(to the Company's knowledge, in the case of leases to which the Company
is a party as lessor, that would, individually or in the aggregate,
have a material adverse effect on the business, operations, earnings,
prospects, properties or condition (financial or otherwise) of the
Company and its subsidiaries, taken as a whole) has occurred and is
continuing thereunder, and the Company and each of its subsidiaries
enjoys peaceful and undisturbed possession under all such leases to
which it is a party as lessee. With respect to all properties owned or
leased by the Company and each of its subsidiaries, the Company or such
subsidiary has such documents, instruments, certificates, opinions and
assurances, including without limitation, fee, leasehold owners or
mortgage title insurance policies (disclosing no encumbrances or title
exceptions which are material to the Company and its subsidiaries
considered as a whole, except as otherwise set forth in the
Registration Statement and in the Prospectus), legal opinions and
property insurance policies in each case in form and substance as are
usual and customary in
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transactions involving the purchase of similar real estate and are
appropriate for the Company or such subsidiary to have obtained.
(xvi) The Company and each of its subsidiaries owns, or
possesses adequate rights to use, all patents, trademarks, trade names,
service marks, copyrights, licenses and other rights necessary for the
conduct of their respective businesses as described in the Registration
Statement and in the Prospectus, and neither the Company nor any of its
subsidiaries has received any notice of conflict with, or infringement
of, the asserted rights of others with respect to any such patents,
trademarks, trade names, service marks, copyrights, licenses and other
such rights (other than conflicts or infringements that, if proven,
would not have a material adverse effect on the business, operations,
earnings, prospects, properties or condition (financial or otherwise)
of the Company and its subsidiaries, taken as a whole), and neither the
Company nor any of its subsidiaries knows of any basis therefor.
(xvii) All material tax returns required to be filed by the
Company and each of its subsidiaries in any jurisdiction have been
timely filed, other than those filings being contested in good faith,
and all material taxes, including withholding taxes, penalties and
interest, assessments, fees and other charges due pursuant to such
returns or pursuant to any assessment received by the Company or any of
its subsidiaries have been paid, other than those being contested in
good faith and for which adequate reserves have been provided.
(xviii) Except for those matters which in the aggregate do 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 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 operated 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,
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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, in their present condition, reasonably be
expected to presently 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 public 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, which is defined, used or
listed as a "hazardous waste", "hazardous substance", "toxic
substance", "medical waste", "infectious waste" or other similar terms
as defined or used in any Environmental Law, or any petroleum products,
asbestos, lead-based paint, polychlorinated biphenyls, flammable
explosives or radioactive materials.
(xix) Each of the Company, its subsidiaries and, to the Actual
Knowledge of the Company, the Advisor, has such permits, licenses,
franchises and authorizations of governmental or regulatory authorities
(together, "permits"), including, without limitation, under any
applicable Environmental Law, as are necessary to own, lease and
operate its properties and to engage in the business currently
conducted by it, except such licenses and permits as to which the
failure to own or possess will not in the aggregate have a material
adverse effect on the business, operations, earnings, prospects,
properties or condition (financial or otherwise) of the Company, and
neither the Company nor, to the Actual Knowledge of the Company, the
Advisor, has any reason to believe that any governmental
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body or agency is considering limiting, suspending or revoking any such
license, certificate, permit, authorization, approval, franchise or
right; each of the Company, its subsidiaries and, to the Actual
Knowledge of the Company, the Advisor, has fulfilled and performed all
of its obligations with respect to such permits and no event has
occurred which allows, or after notice or lapse of time would allow,
revocation or termination thereof or results in any other material
impairment of the rights of the holder of any such permit; and, except
as described in the Registration Statement and in the Prospectus, such
permits contain no restrictions that are materially burdensome to the
Company or any of its subsidiaries.
(xx) To the knowledge of the Company, no labor problem exists
or is imminent with employees of the Company or any of its subsidiaries
that could have a material adverse effect on the business, operations,
earnings, prospects, properties or condition (financial or otherwise)
of the Company and its subsidiaries, taken as a whole.
(xxi) Neither the Company nor any of its subsidiaries nor, to
the knowledge of the Company, any officer, trustee or director
purporting to act on behalf of the Company or any of its subsidiaries,
has at any time: (i) made any contributions to any candidate for
political office, or failed to disclose fully any such contributions,
in violation of law; (ii) made any payment of funds to, or received or
retained any funds from, any state, federal or foreign governmental
officer or official, or other person charged with similar public or
quasi-public duties, other than payments required or allowed by
applicable law; or (iii) engaged in any transactions, maintained any
bank accounts or used any corporate funds except for transactions, bank
accounts and funds, which have been and are reflected in the normally
maintained books and records of the Company and its subsidiaries.
(xxii) All of the outstanding shares of beneficial interest
of, or other ownership interests in, each of the Company's subsidiaries
have been duly authorized and validly issued and are fully paid and
nonassessable, and, except as disclosed in the Registration Statement
and in the Prospectus, are or will be owned by the Company free and
clear of any security interest, claim, lien, encumbrance or adverse
interest of any nature.
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(xxiii) Except, as referred to or described in the
Registration Statement and in the Prospectus, none of the subsidiaries
of the Company owns any shares of stock or any other securities of any
corporation or has any equity interest in any firm, partnership,
association or other entity other than the issued capital shares of its
subsidiaries, and the Company does not own, directly or indirectly, any
shares of stock or any other securities of any corporation or have any
equity interest in any firm, partnership, association or other entity
other than the issued capital shares of its subsidiaries, except in
each case for non-controlling positions acquired in the ordinary course
of business.
(xxiv) Except as disclosed in the Registration Statement and
in the Prospectus, there are no material outstanding loans or advances
or material guarantees of indebtedness by the Company or any of its
subsidiaries to or for the benefit of any of the officers, trustees or
directors of the Company or any of its subsidiaries or any of the
members of the families of any of them.
(xxv) The Company and each of its subsidiaries maintains
insurance, duly in force, with insurers of recognized financial
responsibility; such insurance insures against such losses and risks as
are adequate in accordance with customary industry practice to protect
the Company and its subsidiaries and their respective businesses; and
neither the Company nor any such subsidiary has any reason to believe
that it will not be able to renew its existing insurance coverage as
and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business at a cost
that would not materially and adversely affect the business,
operations, earnings, prospects, properties or condition (financial or
otherwise) of the Company and its subsidiaries, taken as a whole,
except as disclosed in or contemplated by the Registration Statement
and by the Prospectus.
(xxvi) Neither the Company nor any of its officers and
directors (as defined in the 1933 Act Regulations) has taken or will
take, directly or indirectly, prior to the termination of the offering
contemplated by this Agreement, any action designed to stabilize or
manipulate the price of any security of the Company, or which has
caused or resulted in, or which might in the future reasonably be
expected to cause or result in, stabilization or manipulation of the
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price of any security of the Company to facilitate the sale or resale
of the Securities.
(xxvii) Neither the Company nor any of its subsidiaries is an
"investment company" or an "affiliated person" of, or "promoter" or
"principal underwriter" for, an "investment company" as such terms are
defined in the Investment Company Act of 1940, as amended (the "1940
Act"), or an "investment adviser" as such term is defined in the
Investment Advisers Act of 1940, as amended.
(xxviii) The Company is organized in conformity with the
requirements for qualification, and, as of the date hereof the Company
operates, and as of Closing Time the Company will operate, in a manner
that qualifies the Company as a "real estate investment trust" under
the Internal Revenue Code of 1986, as amended (the "Code"), and the
rules and regulations thereunder, for 1997 and subsequent years. The
Company qualified as a real estate investment trust under the Code for
each of its taxable years from 1987 through 1997.
(xxix) No default exists, and no event has occurred which,
with notice or lapse of time or both, would constitute a default in the
due performance and observance of any term, covenant or condition of
any indenture, mortgage, deed of trust, lease or other agreement or
instrument to which the Company or any of its subsidiaries is a party
or by which the Company or any of its subsidiaries or any of their
respective properties is bound or may be affected, except such defaults
which, singly or in the aggregate, would not have a material adverse
effect on the business, operations, earnings, prospects, properties or
condition (financial or otherwise) of the Company and its subsidiaries,
considered as a whole, except as disclosed in the Registration
Statement and in the Prospectus.
(xxx) The Advisory Agreement, dated as of January 1, 1998,
between the Company and the Advisor (the "Advisory Agreement"), has
been duly authorized, executed and delivered by the parties thereto and
constitutes the valid agreement of the parties thereto, enforceable in
accordance with its terms, except as limited by (a) the effect of
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer
or other similar laws relating to or affecting the rights or remedies
of creditors or (b) the effect of general principles of equity
(regardless of whether enforcement is sought in a proceeding in equity
or at law).
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(b) Any certificate signed by any officer of the Company or any of its
subsidiaries and delivered to you or your counsel shall be deemed a
representation and warranty by the Company to you as to the matters covered
thereby.
Section 2. Sale and Delivery to You; Closing.
(a) On the basis of the representations and warranties herein contained
and subject to the terms and conditions herein set forth, the Company agrees to
sell to you, and you agree to purchase from the Company, the Securities as set
forth on the first page of this Agreement.
(b) Payment of the purchase price for and delivery of the Securities
shall be made, subject to Section 9, on February 23, 1998 at 9:00 a.m. at the
offices of Sullivan & Worcester LLP in Boston, Massachusetts (such time and date
of payment and delivery being herein called "Closing Time"). Payment shall be
made by wire transfer of immediately available funds to the Company against
delivery to you of the Securities to be purchased by you. The Securities shall
be in such authorized denominations and registered in such names as you may
request in writing at least two business days before Closing Time. The
Securities will be made available for examination by you not later than 10:00
a.m. on the last business day prior to Closing Time.
Section 3. Covenants of the Company. The Company covenants with you as
follows:
(a) Immediately following the execution of this Agreement, the Company
will prepare a Prospectus Supplement setting forth the aggregate principal
amount of Securities covered thereby and their terms not otherwise specified in
the Prospectus or the Indenture, your name, the price at which the Securities
are to be purchased by you from the Company, the initial public offering price,
the selling concession and reallowance, if any, and any delayed delivery
arrangements, and such other information as you and the Company deem appropriate
in connection with the offering of the Securities; and the Company will promptly
transmit copies of the Prospectus Supplement to the Commission for filing
pursuant to Rule 424(b) of the 1933 Act Regulations and will furnish to you as
many copies of the Prospectus (including such Prospectus Supplement) as you
shall reasonably request.
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(b) Until the termination of the initial offering of the Securities,
the Company will notify you immediately, and confirm the notice in writing, (i)
of the effectiveness of any amendment to the Registration Statement, (ii) of the
transmittal to the Commission for filing of any supplement or amendment to the
Prospectus or any document to be filed pursuant to the 1934 Act, (iii) of the
receipt of any comments from the Commission with respect to the Securities, (iv)
of any request by the Commission for any amendment to the Registration Statement
or any amendment or supplement to the Prospectus with respect to the Securities
or for additional information relating thereto, and (v) of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or the initiation of any proceedings for that purpose. The Company
will make every reasonable effort to prevent the issuance of any such stop order
and, if any stop order is issued, to obtain the lifting thereof at the earliest
possible moment.
(c) The Company will give you notice of its intention to file or
prepare any post-effective amendment to the Registration Statement or any
amendment or supplement (including any document to be filed pursuant to the 1934
Act prior to the termination of the initial offering of the Securities) to the
Prospectus (including any revised prospectus which the Company proposes for use
by you in connection with the offering of the Securities which differs from the
prospectus on file at the Commission at the time that the Registration Statement
becomes effective, whether or not such revised prospectus is required to be
filed pursuant to Rule 424(b) of the 1933 Act Regulations), will furnish you
with copies of any such amendment or supplement a reasonable amount of time
prior to such proposed filing or use, as the case may be, and will not file any
such amendment or supplement or use any such prospectus to which your counsel
shall reasonably object.
(d) The Company will deliver to you a conformed copy of the
Registration Statement as originally filed and of each amendment thereto filed
prior to the termination of the initial offering of the Securities (including
exhibits filed therewith or incorporated by reference therein and the documents
incorporated by reference into the Prospectus pursuant to Item 12 of Form S-3).
(e) The Company will furnish to you, from time to time during the
period when the Prospectus is required to be delivered under the 1933 Act or the
1934 Act, such number of copies of the Prospectus (as amended or supplemented)
as you may reasonably
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<PAGE>
request for the purposes contemplated by the 1933 Act, the 1933 Act Regulations,
the 1934 Act or 1934 Act Regulations.
(f) If any event shall occur as a result of which it is necessary, in
the opinion of your counsel, to amend or supplement the Prospectus in order to
make the Prospectus not misleading in the light of the circumstances existing at
the time it is delivered to a purchaser, the Company will either (i) forthwith
prepare and furnish to you a reasonable number of copies of an amendment of or
supplement to the Prospectus or (ii) make an appropriate filing pursuant to
Section 13, 14 or 15 of the 1934 Act, in form and substance reasonably
satisfactory to your counsel, which will amend or supplement the Prospectus so
that it will not include an untrue statement of a material fact or omit to state
a material fact necessary in order to make the statements therein, in the light
of the circumstances existing at the time it is delivered to a purchaser, not
misleading.
(g) The Company will endeavor in good faith, in cooperation with you,
to qualify the Securities for offering and sale under the applicable securities
laws and real estate syndication laws of such states and other jurisdictions of
the United States as you may designate provided that, in connection therewith,
the Company shall not be required to qualify as a foreign corporation or trust
or to file any general consent to service of process. In each jurisdiction in
which the Securities have been so qualified the Company will file such
statements and reports as may be required by the laws of such jurisdiction to
continue such qualification in effect for so long as required for the
distribution of the Securities.
(h) The Company will make generally available to its security holders
as soon as reasonably practicable, but not later than 90 days after the close of
the period covered thereby, an earning statement of the Company (in form
complying with the provisions of Rule 158 of the 1933 Act Regulations) covering
a period of at least twelve months beginning not later than the first day of the
Company's fiscal quarter next following the effective date of the Registration
Statement. "Earning statement", "make generally available" and "effective date"
will have the meanings contained in Rule 158 of the 1933 Act Regulations.
(i) The Company will use the net proceeds received by it from the sale
of the Securities in the manner specified in the Prospectus under the caption
"Use of Proceeds" in all material respects.
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(j) The Company currently intends to continue to elect to qualify as a
"real estate investment trust" under the Code, and use its best efforts to
continue to meet the requirements to qualify as a "real estate investment
trust".
(k) The Company will timely file any document which it is required to
file pursuant to the 1934 Act prior to the termination of the offering of the
Securities.
(l) The Company will not, between the date of this Agreement and the
termination of any trading restrictions or Closing Time, whichever is later,
with respect to the Securities, without your prior written consent, offer or
sell, grant any option for the sale of, or enter into any agreement to sell, any
debt securities of the Company with a maturity of more than one year (other than
the Securities which are to be sold pursuant to this Agreement and additional or
expanded commitments to participate in the Company's revolving line of credit)
except as may otherwise be provided in this Agreement.
Section 4. Payment of Expenses. The Company will pay all expenses
incident to the performance of its obligations under this Agreement, including
(i) the preparation and filing of the Registration Statement as originally filed
and of each amendment thereto, (ii) the preparation and filing of this
Agreement, (iii) the preparation, issuance and delivery of the Securities to
you, (iv) the fees and disbursements of counsel for the Company, referred to in
Section 5(b) hereof, and the Company's accountants, (v) the qualification of the
Securities under securities laws and real estate syndication laws in accordance
with the provisions of Section 3(g) hereof, including filing fees and the fee
and disbursements of counsel for the Company in connection therewith and in
connection with the preparation of any Blue Sky Survey, (vi) the printing and
delivery to you of copies of the Registration Statement as originally filed and
of each amendment thereto, and of the Prospectus and any amendments or
supplements thereto, (vii) the printing and delivery to you of copies of the
Indenture, (viii) any fees charged by nationally recognized statistical rating
organizations for the rating of the Securities, (ix) the cost of printing or
reproducing and delivering to you copies of any Blue Sky Survey, (x) the cost of
providing any CUSIP or other identification numbers for the Securities, and (xi)
the fees and expenses of any depositary in connection with the Securities.
If this Agreement is terminated by you in accordance with the
provisions of Section 5 or Section 9(a)(i), the Company shall
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reimburse you for all of your out-of-pocket expenses, including the reasonable
fees and disbursements of your counsel.
Section 5. Conditions of Your Obligations. Your obligations hereunder
are subject to the accuracy of the representations and warranties of the Company
herein contained, to the performance by the Company of its obligations
hereunder, and to the following further conditions:
(a) At Closing Time no stop order suspending the effectiveness of the
Registration Statement shall have been issued under the 1933 Act or proceedings
therefor initiated or threatened by the Commission. The price of the Securities
and any other information previously omitted from the effective Registration
Statement pursuant to Rule 415 of the 1933 Act Regulations shall have been
transmitted to the Commission for filing pursuant to Rule 424(b) of the 1933 Act
Regulations within the prescribed time period, and prior to Closing Time the
Company shall have provided evidence satisfactory to you of such timely filing,
or a post-effective amendment providing such information shall have been filed
and declared effective in accordance with the requirements of the 1933 Act
Regulations.
(b) At Closing Time you shall have received the favorable opinion,
dated as of Closing Time, of Sullivan & Worcester LLP, counsel for the Company,
in form and substance satisfactory to your counsel, to the effect that:
(i) The Company is a Maryland real estate investment trust
duly organized, validly existing and in good standing under the laws of
the State of Maryland; each of its Significant Subsidiaries (as defined
in Rule 1-02 of Regulation S-X under the 1933 Act) has been duly
organized, is validly existing as a corporation or trust in good
standing under the laws of its jurisdiction of incorporation or
organization; each of the Company and its subsidiaries has the trust or
corporate (as applicable) power and authority to carry on its business
as described in the Registration Statement and in the Prospectus and to
own, lease and operate its properties; each of the Company and its
subsidiaries is duly qualified and is in good standing as a foreign
corporation or trust, as the case may be, authorized to do business in
each jurisdiction in which its ownership or leasing of property
requires such qualification, except where the failure to be so
qualified would not have a material adverse effect on the Company and
its subsidiaries, taken as a whole.
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(ii) All of the issued and outstanding shares of beneficial
interest of, or other ownership interests in, each of the Company's
subsidiaries have been duly authorized and validly issued and are fully
paid and non-assessable, and are owned by the Company free and clear of
any security interest or other adverse interest (within the meaning of
Article 8 of the Massachusetts Uniform Commercial Code).
(iii) The Registration Statement has become effective under
the 1933 Act, and, to the knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement is in
effect, and no proceedings for such purpose are pending before or
threatened by the Commission; and any required filing of the Prospectus
pursuant to Rule 424 under the 1933 Act has been made in accordance
with said Rule 424.
(iv) The Company has the requisite trust power and authority
to enter into and perform this Agreement and to issue and deliver the
Securities.
(v) To such counsel's knowledge, except as disclosed in the
Registration Statement or in the Prospectus, there is not now pending
or threatened, any litigation, action, suit 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 or
properties of the Company and its subsidiaries, taken as a whole, or
(B) might materially and adversely affect the property or assets of the
Company and its subsidiaries, taken as a whole, or (C) concerns the
Company or any of its subsidiaries or the Advisor and is required to be
disclosed in the Prospectus, or (D) could adversely affect the
consummation of this Agreement and the issuance of the Securities; to
such counsel's knowledge, no contract or other document is required to
be described in the Registration Statement or in the Prospectus or to
be filed as an exhibit to the Registration Statement that is not
described therein or filed as required.
(vi) Except as otherwise disclosed in the Prospectus, to such
counsel's knowledge, neither the Company, any of its subsidiaries nor
the Advisor is in violation of its respective charter or by-laws or
other organizational documents or in default in the performance of any
obligation, agreement or condition contained in any bond,
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debenture, note or any other evidence of indebtedness or in any other
material agreement, indenture or instrument to which the Company, any
of its subsidiaries or the Advisor is a party or by which any of their
respective properties or assets may be bound or affected, except for
any such violation that would not have a material adverse effect on the
business, operations, earnings, business prospects, properties or
condition (financial or otherwise) of the Company and its subsidiaries
taken as a whole.
(vii) To such counsel's knowledge, each of the Company, its
subsidiaries and the Advisor has such permits, licenses, franchises and
authorizations of governmental or regulatory authorities (together,
"permits"), including, without limitation, under any applicable
Environmental Law, as are necessary to own, lease and operate its
properties and to engage in the business currently conducted by it,
except such licenses and permits as to which the failure to own or
possess will not in the aggregate have a material adverse effect on the
business, operations, earnings, business prospects, properties or
condition (financial or otherwise) of the Company and its subsidiaries,
taken as a whole.
(viii) 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 provisions of, or constitute a default under, (A) the
Declaration of Trust or the By-laws of the Company or the charter or
by-laws or other organizational documents of the Advisor or any
Significant Subsidiary of the Company, or (B) except as disclosed in
the Prospectus, any material agreement, indenture or other instrument
to which the Company, any of its Significant Subsidiaries or the
Advisor or their respective material properties or assets is bound, or
(C) any laws, administrative regulations or rulings or decrees known to
such counsel to which the Company, any of its Significant Subsidiaries
or the Advisor or their respective material properties or assets may be
subject.
(ix) No consent, approval, authorization, order, registration,
filing, qualification, license or permit of or with any federal,
Massachusetts or Maryland court or public, governmental or regulatory
agency or body having jurisdiction over the Company or any of its
Significant Subsidiaries or the Advisor or any of their respective
material properties or assets is required for the Company's
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execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby, including,
without limitation, the issuance, sale and delivery of the Securities
pursuant to this Agreement, except such as have been obtained and such
as may be required under foreign and state securities or "Blue Sky"
laws.
(x) The Advisory Agreement has been duly authorized, executed
and delivered by the parties thereto and constitutes the valid
agreement of the parties thereto, enforceable in accordance with its
terms, except (a) as limited by the effect of bankruptcy, insolvency,
reorganization, fraudulent transfer, moratorium or other similar laws
relating to or affecting the rights or remedies of creditors, (b) as
limited by the effect of general principles of equity (regardless of
whether enforcement is sought in a proceeding in equity or at law) and
(c) insofar as the enforceability of the indemnity and contribution
provisions contained in such agreement may be limited by federal or
state securities laws and the public policy underlying such laws.
(xi) The Advisor (A) is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware,
and (B) has the requisite corporate power and authority to conduct its
business as described in the Prospectus and to own and operate its
material properties.
(xii) The Company has qualified to be taxed as a real estate
investment trust pursuant to Sections 856-860 of the Code for each of
the fiscal years ended December 31, 1987 through December 31, 1997, 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.
(xiii) The Registration Statement and the Prospectus and any
supplements or amendments thereto (except for the financial statements
and the notes thereto and the schedules and other financial and
statistical data included therein and the Excluded Proceedings (as
defined in the last paragraph of this Section 5(b)), as to which such
counsel
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need not express any opinion) comply as to form in all material
respects with the requirements of the 1933 Act.
(xiv) Each document incorporated by reference in the
Registration Statement and in the Prospectus (except for the financial
statements and the notes thereto and the schedules and other financial
and statistical data included therein and the Excluded Proceedings (as
defined in the last paragraph of this Section 5(b)), as to which such
counsel need not express any opinion) complied as to form when filed
with the Commission in all material respects with the requirements of
the 1934 Act.
(xv) The statements (a) in the Prospectus under the captions
"Description of Shares", "Description of Debt Securities", "Redemption;
Business Combinations and Control Share Acquisitions", "Limitation of
Liability; Shareholder Liability" and "Description of the Notes", (b)
in Item 1 of the Company's Annual Report on Form 10-K under the caption
"Regulation and Reimbursement", (c) in Part B ("Authorization of
Additional Common Shares of Beneficial Interest") of Item 5 of the
Company's Current Report on Form 8-K dated February 17, 1997 and (d)
Item 5 of the Company's Current Report on Form 8-K dated February 13,
1997 (excluding the statements under the caption "Legal Proceedings"),
in each case insofar as they purport to summarize matters arising under
Massachusetts or Maryland law or the federal law of the United States,
or provisions of documents to which the Company is a party specifically
referred to therein, are accurate summaries of such legal matters or
provisions.
(xvi) This Agreement and the Indenture have been duly
authorized, executed and delivered by the Company.
(xvii) The Indenture is a valid and binding obligation of the
Company enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting creditors' rights generally and equitable principles; and the
Indenture has been duly qualified under the 1939 Act.
(xviii) The Securities have been duly authorized and, when
executed and authenticated in accordance with the provisions of the
Indenture and delivered and paid for in accordance with the terms of
this Agreement, will be valid and binding obligations of the Company
enforceable in accordance with their terms subject to applicable
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bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting creditors' rights generally and equitable principles; and the
holders of the Securities are entitled to the benefit of the Indenture.
(xix) The Company is not required to register as an
"investment company" within the meaning of the 1940 Act.
(xx) To the extent required to be described therein, the
Securities and the Indenture conform in all material respects to the
descriptions in the Registration Statement and the Prospectus.
(xxi) Although counsel has not undertaken, except as otherwise
indicated in their opinion, to determine independently, and does not
assume any responsibility for, the accuracy or completeness of the
statements in the Registration Statement, such counsel has participated
in the preparation of the Registration Statement and the Prospectus,
including review and discussion of the contents thereof (including
review and discussion of the contents of all documents incorporated by
reference in the Registration Statement and the Prospectus), and
nothing has come to the attention of such counsel that has caused them
to believe that the Registration Statement (including the documents
incorporated by reference therein) at the time the Registration
Statement became effective, or the Prospectus, as of its date and as of
Closing Time, as the case may be, contained an untrue statement of a
material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading or
that any amendment or supplement to the Prospectus, as of its
respective date, and as of Closing Time, as the case may be, contained
any untrue statement of a material fact or omitted to state a material
fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading (it being
understood that such counsel need express no view with respect to (a)
the financial statements and the notes thereto and the schedules and
other financial and statistical data included or incorporated by
reference in the Registration Statement or in the Prospectus, (b) the
matters to be addressed in the opinion of Sherin & Lodgen LLP, special
counsel to the Company, described below, or (c) the part of the
Registration Statement that constitutes the Statement of Eligibility
(Form T-1) of the Trustee under the 1939 Act).
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In rendering their opinion as aforesaid, Sullivan & Worcester
LLP may rely upon an opinion, dated as of Closing Time, of Piper &
Marbury L.L.P. as to matters governed by Maryland law, provided that
such reliance is expressly authorized by such opinion and a copy of
such opinion is delivered to you and is, in form and substance,
satisfactory to you and your counsel. In addition, in rendering such
opinion, such counsel may state that their opinion as to laws of the
State of Delaware is limited to the Delaware General Corporation Law
and that their opinion with respect to the qualification of the Company
and its subsidiaries to do business in jurisdictions other than their
respective jurisdictions of organization is based solely upon
certificates to such effect issued by an appropriate official of the
applicable jurisdictions.
The opinion of Piper & Marbury L.L.P. described in the
paragraph above shall be rendered to you at the request of the Company
and shall so state therein.
In addition, you shall have received at Closing Time an
opinion (satisfactory to you and your counsel) of Sherin & Lodgen LLP,
special counsel for the Company, dated as of Closing Time, to the
effect that the statements describing the proceedings described in Item
5 of the Company's Current Report on Form 8-K dated February 13, 1997
under the caption "Legal Proceedings", insofar as they purport to
summarize legal proceedings constitute a fair summary of such legal
proceedings. Such proceedings described above in this paragraph and in
the letter dated July 1, 1997 from Stanley R. Wolfe of Berger &
Montague, P.C. to the Board of Trustees of the Company are together
referred to herein as the "Excluded Proceedings".
(c) You shall have received at Closing Time an opinion, dated
as of Closing Time, of Brown & Wood LLP, your counsel, as to the
matters referred to in clauses (iii), (xiii), (xvi), (xvii), (xviii),
(xx) and (xxi) of the foregoing paragraph (b). In giving such opinion
with respect to the matters covered by clause (xxi), such counsel may
state that their opinion and belief are based upon their participation
in the preparation of the Registration Statement and the Prospectus and
any amendments or supplements thereto and review and discussion of the
contents thereof, but are without independent check or verification
except as specified.
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In rendering their opinion as aforesaid, Brown & Wood LLP may
rely upon an opinion, dated as of Closing Time, of Piper & Marbury L.L
P. as to matters governed by Maryland law, and the opinion of Sullivan
& Worcester LLP referred to above as to matters governed by
Massachusetts law. In addition, in rendering such opinion, such counsel
may state that their opinion as to laws of the State of Delaware is
limited to the Delaware General Corporation Law.
(d) At Closing Time (i) the Registration Statement and the Prospectus
shall contain all statements which are required to be stated therein in
accordance with the 1933 Act and the 1933 Act Regulations and in all material
respects shall conform to the requirements of the 1933 Act and the 1933 Act
Regulations, and neither the Registration Statement nor the Prospectus shall
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading and no action, suit or proceeding at law or in equity shall be
pending or to the knowledge of the Company threatened against the Company which
would be required to be set forth in the Prospectus other than as set forth
therein, (ii) there shall not have been, since the respective dates as of which
information is given in the Registration Statement and the Prospectus, any
material adverse change in the condition, financial or otherwise, of the Company
or in its earnings, business affairs or business prospects, whether or not
arising in the ordinary course of business from that set forth in the
Registration Statement, and (iii) no proceedings shall be pending or, to the
knowledge of the Company, threatened against the Company before or by any
Federal, state or other commission, board or administrative agency wherein an
unfavorable decision, ruling or finding would materially and adversely affect
the business, property, financial condition or income of the Company other than
as set forth in the Prospectus; and you shall have received, at Closing Time, a
certificate of the President and Chief Operating Officer and the chief financial
officer of the Company, dated as of Closing Time, evidencing compliance with the
provisions of this subsection (c) and stating that the representations and
warranties set forth in Section 1(a) hereof are accurate as though expressly
made at and as of Closing Time.
(e) Concurrently with the execution and delivery of this Agreement, and
at Closing Time prior to payment and delivery of the Securities, Ernst & Young
LLP shall have furnished to you a letter, dated the date of its delivery,
addressed to you and in form and substance satisfactory to you, confirming that
they are independent accountants with respect to the Company as required
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by the 1933 Act and the 1933 Act Regulations and with respect to the financial
and other statistical and numerical information contained in the Registration
Statement and the Prospectus or incorporated by reference therein. Each such
letter shall contain information of the type customarily included in
accountants' comfort letters to underwriters.
(f) At Closing Time your counsel shall have been furnished with such
documents and opinions as they may reasonably require for the purpose of
enabling them to pass upon the issuance and sale of the Securities as herein
contemplated and related proceedings, or in order to evidence the accuracy of
any of the representations or warranties, or the fulfillment of any of the
conditions, herein contained; and all proceedings taken by the Company in
connection with the issuance and sale of the Securities as herein contemplated
shall be reasonably satisfactory in form and substance to you and your counsel.
If any condition specified in this Section 5 shall not have been
fulfilled when and as required to be fulfilled, this Agreement may be terminated
by you by notice to the Company at any time at or prior to Closing Time, and
such termination shall be without liability of any party to any other party
except as provided in Section 4 hereof.
Section 6. Indemnification. (a) The Company hereby agrees to indemnify
and hold harmless you and each person, if any, who controls you within the
meaning of Section 15 of the 1933 Act as follows:
(1) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto), or the omission or
alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein not misleading or
arising out of any untrue statement or alleged untrue statement of a
material fact included in any preliminary prospectus or the Prospectus
(or any amendment or supplement thereto), or the omission, or alleged
omission therefrom of a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading:
(2) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or
26
<PAGE>
any investigation or proceeding by any governmental agency or body,
commenced or threatened, or of any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or
omission, if such settlement is effected with the written consent of
the Company; and
(3) against any and all expense whatsoever, as incurred
(including, subject to Section 6(c) hereof, the fees and disbursements
of your counsel), reasonably incurred in investigating, preparing or
defending against any litigation, or any investigation or proceedings
by any governmental agency or body, commenced or threatened, or any
claim whatsoever based upon any such untrue statement or omission, or
any such alleged untrue statement or omission, to the extent that any
such expense is not paid under paragraph (1) or (2) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by you
expressly for use in the Registration Statement (or any amendment thereto) or
the Prospectus (or any amendment or supplement thereto); and provided, further,
that the foregoing indemnity agreement with respect to any preliminary
prospectus shall not inure to your benefit, or the benefit of any person
controlling you, if a copy of the Prospectus (as then amended or supplemented if
the Company shall have furnished any amendments or supplements thereto and
excluding documents incorporated or deemed to be incorporated by reference
therein) was not sent or given by or on behalf of you to such person asserting
any such losses, claims, damages or liabilities at or prior to the written
confirmation of the sale of such Securities to such person, if required by law
so to have been delivered, and if the Prospectus (as so amended or supplemented)
would have cured the defect giving rise to such loss, claim, damage or expense.
(b) You agree to indemnify and hold harmless the Company, each of the
Company's trustees, each of the Company's officers who signed the Registration
Statement and each person, if any, who controls the Company within the meaning
of Section 15 of the 1933 Act against any and all loss, liability, claim, damage
and expense described in the indemnity contained in subsection (a) of this
Section 6, as incurred, but only with respect to untrue statements or omissions,
or alleged untrue statements or omissions, made in the Registration Statement
(or any amendment
27
<PAGE>
thereto) or the Prospectus (or any amendment or supplement thereto) in reliance
upon and in conformity with written information furnished to the Company by you
expressly for use in the Registration Statement (or any amendment thereto) or
the Prospectus (or any amendment or supplement thereto).
(c) Each indemnified party shall give notice as promptly as reasonably
practicable to each indemnifying party of any action commenced against it in
respect of which indemnity may be sought hereunder, but failure to so notify an
indemnifying party shall not relieve such indemnifying party from any liability
which it may have otherwise than on account of this indemnity agreement. An
indemnifying party may participate at its own expense in the defense of such
action. In no event shall the indemnifying parties be liable for fees and
expenses of more than one counsel (in addition to any local counsel) separate
from their own counsel for all indemnified parties in connection with any one
action or separate but similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances.
Section 7. Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement provided for in
Section 6 hereof is for any reason held to be unenforceable by the indemnified
parties although applicable in accordance with its terms, the Company and you
shall contribute to the aggregate losses, liabilities, claims, damages and
expenses of the nature contemplated by said indemnity agreement incurred by the
Company and you, as incurred, (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company on the one hand and you on
the other hand from the offering of the Securities pursuant to this Agreement or
(ii) if the allocation provided by clause (i) is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of the
Company on the one hand and of you on the other hand in connection with the
statements or omissions which resulted in such losses, liabilities, claims,
damages or expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company on the one hand and you
on the other hand in connection with the offering of the Securities pursuant to
this Agreement shall be deemed to be in the same respective proportions as the
total net proceeds from the offering of the Securities pursuant to this
Agreement (before deducting expenses) received by the Company and the total
28
<PAGE>
discount received by you, bear to the aggregate initial offering price of the
Securities.
The relative fault of the Company on the one hand and you on the other
hand shall be determined by reference to, among other things, whether any such
untrue or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact relates to information supplied by the Company
or by you and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The Company and you agree that it would not be just and equitable if
contribution pursuant to this Section 7 were determined by pro rata allocation
or by any other method of allocation which does not take into account the
equitable considerations referred to above in this Section 7. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 7 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any 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 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. Notwithstanding the
provisions of this Section 7, you shall not be required to contribute any amount
in excess of the amount by which the total price at which the Securities
underwritten by you and distributed to the public were offered to the public
exceeds the amount of any damages which you have otherwise been required to pay
in respect of such losses, liabilities, claims, damages and expenses. For
purposes of this Section 7, each person, if any, who controls you within the
meaning of Section 15 of the 1933 Act shall have the same rights to contribution
as you, and each trustee of the Company, each officer of the Company who signed
the Registration Statement, and each person, if any, who controls the Company
within the meaning of Section 15 of the 1933 Act shall have the same rights to
contribution as the Company.
Section 8. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Company submitted pursuant
hereto, shall remain operative and in
29
<PAGE>
full force and effect, regardless of any investigation made by or on behalf of
you or any controlling person, or by or on behalf of the Company, and shall
survive delivery of the Securities to you.
Section 9. Termination of Agreement. (a) You may terminate this
Agreement, by notice to the Company, at any time at or prior to Closing Time (i)
if there has been, since the respective dates as of which information is given
in the Registration Statement, any material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs or business
prospects of the Company, whether or not arising in the ordinary course of
business, which would make it, in your reasonable judgment, impracticable or
inadvisable to market the Securities or enforce contracts for the sale of the
Securities, (ii) if there has occurred any material adverse change in the
financial markets in the United States or any outbreak of hostilities or
escalation of existing hostilities or other calamity or crisis the effect of
which on the financial markets of the United States is such as to make it, in
your reasonable judgment, impracticable or inadvisable to market the Securities
or enforce contracts for the sale of the Securities, (iii) if trading in the
Company's Common Shares has been suspended by the Commission, or if trading
generally on either the New York Stock Exchange or the American Stock Exchange
has been suspended, or minimum or maximum prices for trading have been fixed, or
maximum ranges for prices for securities have been required, by either of said
exchanges or by order of the Commission or any other governmental authority, or
if a banking moratorium has been declared by Federal or New York authorities.
(b) If this Agreement is terminated pursuant to this Section 9, such
termination shall be without liability of any party to any other party except as
provided in Section 4, and provided further that Sections 6 and 7 hereof shall
survive such termination.
Section 10. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to you shall be
directed to you at Merrill Lynch & Co., North Tower, World Financial Center, New
York, New York 10281-1209, Attention: Tjarda van S. Clagett, Director; and
notices to the Company shall be directed to it at 400 Centre Street, Newton,
Massachusetts 02158, Attention: David J. Hegarty, President.
Section 11. Parties. This Agreement shall inure to the benefit of and
be binding upon you and the Company and your
30
<PAGE>
respective successors. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any person, firm or corporation, other
than those referred to in Sections 6 and 7 and their heirs and legal
representatives, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision herein contained. This Agreement and
all conditions and provisions hereof are intended to be for the sole and
exclusive benefit of the parties hereto and thereto and their respective
successors and said controlling persons and officers, trustees and directors and
their heirs and legal representatives, and for the benefit of no other person,
firm or corporation. No purchaser of Securities from you shall be deemed to be a
successor by reason merely of such purchase.
Section 12. Governing Law and Time; Miscellaneous. This Agreement shall
be governed by and construed in accordance with the laws of the State of New
York applicable to agreements made and to be performed in said State. Specified
times of day refer to New York City time.
THE DECLARATION OF TRUST ESTABLISHING THE COMPANY, DATED OCTOBER 9,
1986, A COPY OF WHICH, TOGETHER WITH ALL AMENDMENTS THERETO (THE "DECLARATION"),
IS DULY ON FILE IN THE OFFICE OF THE STATE DEPARTMENT OF ASSESSMENTS AND
TAXATION OF MARYLAND, PROVIDES THAT THE NAME "HEALTH AND RETIREMENT PROPERTIES
TRUST" REFERS TO THE TRUSTEES UNDER THE DECLARATION COLLECTIVELY AS TRUSTEES,
BUT NOT INDIVIDUALLY OR PERSONALLY, AND THAT NO TRUSTEE, OFFICER, SHAREHOLDER,
EMPLOYEE OR AGENT OF THE COMPANY SHALL BE HELD TO ANY PERSONAL LIABILITY,
JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, THE COMPANY. ALL
PERSONS DEALING WITH THE COMPANY, IN ANY WAY, SHALL LOOK ONLY TO THE ASSETS OF
THE COMPANY FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION.
31
<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us a counterpart hereof, whereupon this
instrument along with all counterparts will become a binding agreement between
you and the Company in accordance with its terms.
Very truly yours,
HEALTH AND RETIREMENT PROPERTIES TRUST
By /s/ Ajay Saini
Name Ajay Saini
Title: Chief Financial Officer
CONFIRMED AND ACCEPTED, as of the date first above written:
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
By /s/
Name:
Title:
32
EXHIBIT 1.2
2,500,000 Common Shares
($.01 Par Value)
UNDERWRITING AGREEMENT
February 18, 1998
A.G. EDWARDS & SONS, INC.
One North Jefferson Avenue
St. Louis, Missouri 63103
The undersigned, Health and Retirement Properties Trust, a Maryland
real estate investment trust (the "Company"), hereby confirms its agreement with
you (the "Underwriter") as follows:
1. Description of Shares. The Company proposes to issue and sell to you
2,500,000 common shares of beneficial interest, par value $.01 per share (the
"Shares"). The Shares are more fully described in the Prospectus hereinafter
defined.
2. Purchase, Sale and Delivery of Shares. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Company agrees to sell to you, and
you agree to purchase from the Company at a purchase price of $19.00 per share,
2,500,000 Shares.
The Company will deliver definitive certificates for the Shares at the
office of A.G. Edwards & Sons, Inc., 77 Water Street, New York, New York
("Edwards' Office"), or such other place as you and the Company may mutually
agree upon (the "Place of Closing"), for your account against payment to the
Company of the purchase price for the Shares sold to you by wire transfer of
immediately available funds, at 10:00 a.m., St. Louis time, on February 23,
1998, or at such other time and date not later than three full business days
thereafter as you and the Company may agree, such time and date of payment and
delivery being herein called the "Closing Date."
The certificates for the Shares so to be delivered will be made
available to you for inspection at Edwards' Office (or such other place as you
and the Company may mutually agree upon) at least one full business day prior to
the Closing Date and will be in such names and denominations as you may request
at least two full business days prior to the Closing Date.
3. Representations, Warranties and Agreements of the Company.
(a) The Company represents and warrants to and agrees with you that:
(i) The Company meets the requirements for use of Form S-3
under the Securities Act of 1933, as amended (the "Act"); a
registration statement (Registration No. 333-26887) on Form S-3,
including a prospectus relating to the registration of the
<PAGE>
Shares and such other securities which may be offered from time to time
in accordance with Rule 415 under the Act, and such amendments to such
registration statement as may have been required to the date of this
Agreement, has been prepared by the Company pursuant to and in
conformity in all material respects with the requirements of the Act,
and the Rules and Regulations (the "Rules and Regulations") of the
Securities and Exchange Commission (the "Commission") thereunder, was
filed with the Commission under the Act, and was declared effective on
May 30, 1997. Copies of such registration statement, including any
amendments thereto, each related preliminary prospectus contained
therein, the exhibits, financial statements and schedules have
heretofore been delivered by the Company to you. A prospectus
supplement (the "Prospectus Supplement") setting forth the terms of the
offering, sale and plan of distribution of the Shares and additional
information concerning the Company and its business has been or will be
prepared and will be filed pursuant to Rule 424(b) of the Rules and
Regulations on or before the second business day after the date hereof
(or such earlier time as may be required by the Rules and Regulations).
The term "Registration Statement" as used herein means the registration
statement, and the basic prospectus included therein, as amended at the
time it or any amendment thereto became effective under the Act (the
"Effective Date"), including financial statements and all exhibits and
all documents incorporated by reference therein pursuant to Item 12 of
Form S-3 under the Act. Any document filed by the Company under the
Securities Exchange Act of 1934, as amended (the "Exchange Act") after
the effective date of the Registration Statement or the date of the
Prospectus Supplement and incorporated by reference in the Prospectus
as defined below shall be deemed to be included in the Registration
Statement and the Prospectus as of the date of such filing. The term
"Prospectus" as used herein means (i) the basic prospectus included in
the Registration Statement at the Effective Date, as supplemented by
the Prospectus Supplement as first filed with the Commission pursuant
to Rule 424(b) of the Rules and Regulations, except that, if such basic
prospectus is amended or supplemented subsequent to the Effective Date,
the term "Prospectus" shall refer to the basic prospectus as so amended
or supplemented and as further supplemented by the Prospectus
Supplement, or (ii) if no such filing is required, the form of final
prospectus included in the Registration Statement at the Effective Date
and the last Preliminary Prospectus filed with the Commission prior to
the time the Registration Statement became effective, taken together
(including, in each case, the documents incorporated by reference
therein pursuant to Item 12 of Form S-3 under the Act). The term
"Preliminary Prospectus" as used herein shall mean a preliminary
prospectus included at any time in the Registration Statement.
(ii) The Commission has not issued, and is not, to the
knowledge of the Company, threatening to issue, an order preventing or
suspending the use of any Preliminary Prospectus or the Prospectus nor
instituted proceedings for that purpose. Each Preliminary Prospectus at
its date of issue, the Registration Statement at the Effective Date,
and the Prospectus at its date of issue and any amendments or
supplements thereto contains or will contain, as the case may be, all
statements which are required to be stated therein by, and in all
material respects conform or will conform, as the case may be, to the
requirements of, the Act and the Rules and Regulations. Neither the
Registration Statement nor any amendment
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<PAGE>
thereto, as of the applicable effective date, and neither the
Prospectus nor any supplement thereto, as of its applicable issue date
or the Closing Date, contains or will contain, as the case may be, any
untrue statement of a material fact or omits or will omit to state any
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; provided, however, that the Company makes no
representation or warranty as to information contained in or omitted
from the Registration Statement or the Prospectus, or any such
amendment or supplement, in reliance upon, and conforming with, written
information furnished to the Company by you specifically for use in the
preparation thereof.
(iii) The documents incorporated by reference in the
Prospectus pursuant to Item 12 of Form S-3 under the Act, at the time
they were filed with the Commission, complied in all material respects
with the requirements of the Exchange Act, and the rules and
regulations adopted by the Commission thereunder (the "1934 Act Rules
and Regulations"), and, when read together and with the other
information in the Prospectus, at the time the Registration Statement
became effective and at the Closing Date, did not or will not, as the
case may be, 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 light of the circumstances in which they
were made not misleading.
(iv) The filing of the Registration Statement and the
execution and delivery of this Agreement have been duly authorized by
the Board of Trustees of the Company; this Agreement constitutes a
valid and legally binding obligation of the Company enforceable in
accordance with its terms (except to the extent the enforceability of
the indemnification and contribution provisions of Section 6 hereof may
be limited by public policy considerations as expressed in the Act as
construed by courts of competent jurisdiction, and except as
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other laws affecting creditors' rights
generally and by general principles of equity); the issue and sale of
the Shares by the Company and the performance of this Agreement and the
consummation of the transactions herein contemplated will not result in
a violation of the Company's Amended and Restated Declaration of Trust
or bylaws or result in a breach or violation of any of the terms and
provisions of, or constitute a default under, or result in the creation
or imposition of any lien, charge or encumbrance upon any properties or
assets of the Company or its subsidiaries under, any statute, or under
any indenture, mortgage, deed of trust, note, loan agreement, sale and
leaseback arrangement or other agreement or instrument to which the
Company or any of its subsidiaries is a party or by which they are
bound or to which any of the properties or assets of the Company or its
subsidiaries is subject, or any order, rule or regulation of any court
or governmental agency or body having jurisdiction over the Company or
its subsidiaries or their properties, except to such extent as does not
materially adversely affect the business of the Company and its
subsidiaries taken as a whole; no consent, approval, authorization,
order, registration or qualification of or with any court or
governmental agency or body is required for the consummation of the
transactions herein contemplated, except such as may be required by
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<PAGE>
the National Association of Securities Dealers, Inc. (the "NASD"), the
New York Stock Exchange or under the Act or Rules and Regulations or
any state securities laws.
(v) Neither the Company nor any of its subsidiaries has
sustained since the date of the latest audited financial statements
included or incorporated by reference in the Prospectus any material
loss or interference with its business from fire, explosion, flood or
other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree. Except as
contemplated in the Prospectus, subsequent to the respective dates as
of which information is given in the Registration Statement and the
Prospectus, the Company and its subsidiaries taken as a whole have not
incurred any material liabilities or material obligations, direct or
contingent, other than in the ordinary course of business, or entered
into any material transactions not in the ordinary course of business,
and there has not been any material change in the capital stock or
long-term debt of the Company and its subsidiaries taken as a whole or
any material adverse change in the condition (financial or other), net
worth, business, affairs, management, prospects or results of
operations of the Company and its subsidiaries taken as a whole. The
Company and its subsidiaries have filed all material federal, state and
foreign income and franchise tax returns and paid all material taxes
shown as due thereon; all tax liabilities are adequately provided for
on the books of the Company and its subsidiaries except to such extent
as would not materially adversely affect the business, operations,
affairs, properties, prospects, profits or condition (financial or
other) or income of the Company and its subsidiaries taken as a whole,
the Company and its subsidiaries have made all necessary payroll tax
payments and are current and up-to-date as of the date of this
Agreement; and the Company and its subsidiaries have no knowledge of
any tax proceeding or action pending or threatened against the Company
or its subsidiaries which might materially adversely affect their
business or property.
(vi) Except as described in the Prospectus, there is not now
pending or, to the knowledge of the Company, threatened, any action,
suit or proceeding to which the Company or its subsidiaries is a party
before or by any court or public, regulatory or governmental agency or
body which might be expected to result (individually or in the
aggregate) in any material adverse change in the business, operations,
affairs, properties, prospects, profits or condition (financial or
other) or income of the Company and its subsidiaries taken as a whole,
or might be expected to materially and adversely affect (individually
or in the aggregate) the properties or assets thereof, and there are no
contracts or documents of the Company or its subsidiaries which would
be required to be filed as exhibits to the Registration Statement by
the Act or by the Rules and Regulations which have not been filed as
exhibits to the Registration Statement or incorporated by reference
therein.
(vii) The Company has duly and validly authorized Shares as
described in the Prospectus; all outstanding Shares of the Company and
the Shares conform, or when issued will conform, to the description
thereof in the Prospectus and have been, or, when issued and paid for
will be, duly authorized, validly issued, fully paid and nonassessable;
and the
-4-
<PAGE>
issuance of the Shares to be purchased from the Company hereunder is
not subject to preemptive rights.
(viii) Each of the Company and its subsidiaries have been
duly incorporated or formed, as the case may be, and is a validly
existing corporation, general or limited partnership, or other legal
entity, as the case may be, in good standing under the laws of the
state or other jurisdiction in which it is incorporated or formed, as
the case may be. The Company and its subsidiaries have full power and
authority (corporate and other) to own, lease and operate their
properties and conduct their businesses as described in the Prospectus;
each of the Company and its subsidiaries is duly qualified or
registered to do business and is in good standing in each state or
other jurisdiction in which its ownership or leasing of property or
conduct of business legally requires such qualification, except where
the failure to be so qualified would not have a material adverse effect
on the ability of the Company and its subsidiaries to conduct its or
their business as described in the Prospectus; and the outstanding
shares of capital stock or ownership interests of the Company's
subsidiaries have been duly authorized and validly issued, are fully
paid and nonassessable and are owned by the Company free and clear of
any mortgage, pledge, lien, encumbrance, charge or adverse claim and
are not except as disclosed in the Prospectus the subject of any
agreement or understanding with any person.
(ix) The accounting firms which have certified the
financial statements filed with or incorporated by reference in and as
a part of the Registration Statement are independent public accounting
firms within the meaning of the Act and the Rules and Regulations.
(x) The consolidated financial statements of the Company
together with the related schedules and notes thereto, set forth or
included or incorporated by reference in the Registration Statement and
Prospectus fairly present the financial condition of the Company and
its consolidated subsidiaries as of the dates indicated and the results
of operations, changes in financial position, shareholders' equity and
cash flows for the periods therein specified, in conformity with
generally accepted accounting principles consistently applied
throughout the periods involved (except as otherwise stated therein).
The summary and selected financial and statistical data included or
incorporated by reference in the Registration Statement and the
Prospectus present fairly the information shown therein and, to the
extent based upon or derived from the financial statements, have been
compiled on a basis consistent with the financial statements presented
therein. In addition, the pro forma financial statements of the
Company, and the related notes thereto, included or incorporated by
reference in the Registration Statement and the Prospectus present
fairly the information shown therein, have been prepared in accordance
with the Commission's rules and guidelines with respect to pro forma
financial statements and have been properly compiled on the basis
described therein, and the assumptions used in the preparation thereof
are reasonable and the adjustments used therein are appropriate to give
effect to the transactions and circumstances referred to therein.
Furthermore, all financial statements required by Rule 3-14 of
Regulation S-X ("Rule 3-14") have been included or incorporated by
reference in
-5-
<PAGE>
the Registration Statement and the Prospectus and any such financial
statements are in conformity with the requirements of Rule 3-14. No
other financial statements are required to be set forth or to be
incorporated by reference in the Registration Statement or the
Prospectus under the Act or the Rules and Regulations thereunder.
(xi) Neither the Company nor any subsidiary is in default
with respect to any contract or agreement to which it is a party;
provided that this representation shall not apply to defaults which
individually or in the aggregate are not materially adverse to the
business, operations, affairs, properties, prospects, profits or
condition (financial or other), or income of the Company and its
subsidiaries taken as a whole.
(xii) Neither the Company nor any subsidiary is in
violation of any other laws, ordinances or governmental rules or
regulations to which it is subject, including, without limitation,
Section 13 of the Exchange Act, except for any such violations that
would not, individually or in the aggregate, have a material adverse
effect on the business, operations, affairs, properties, prospects,
profits or condition (financial or other) or income of the Company and
its subsidiaries taken as a whole, and neither the Company nor any
subsidiary has failed to obtain any license, permit, franchise,
easement, consent, or other governmental authorization necessary to the
ownership, leasing and operation of its properties or to the conduct of
its business, which violation or failure would materially adversely
affect the business, operations, affairs, properties, prospects,
profits or condition (financial or other) or income of the Company and
its subsidiaries taken as a whole. Neither the Company nor any
subsidiary has, at any time during the past five years, (A) made any
unlawful contributions to any candidate for any political office, or
failed fully to disclose any contribution in violation of law, or (B)
made any payment to any state, federal or foreign government official,
or other person charged with similar public or quasi-public duty (other
than payment required or permitted by applicable law).
(xiii) Except as disclosed in the Prospectus, there are no
holders of securities of the Company having rights to registration
thereof or preemptive rights to purchase Shares of the Company. Holders
of registration rights have waived such rights with respect to the
offering being made by the Prospectus.
(xiv) Except as described in the Prospectus, the Company
and its subsidiaries own or possess, or can acquire on reasonable
terms, adequate patents, patent licenses, trademarks, service marks and
trade names necessary to conduct the business now operated by them, and
neither the Company nor any subsidiary has received any notice of
infringement of or conflict with asserted rights of others with respect
to any patents, patent licenses, trademarks, service marks or trade
names which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would have a material adverse
effect on the conduct of the business, operations, affairs, properties,
prospects, profits or condition (financial or other) or income of the
Company and its subsidiaries taken as a whole.
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<PAGE>
(xv) The Company and each of its subsidiaries has good
and marketable title to all properties and assets described in the
Prospectus as owned by it, free and clear of all liens, charges,
encumbrances or restrictions, except such as (i) are described in the
Prospectus or (ii) are not material to the business of the Company or
its subsidiaries, taken as a whole. The Company and each of its
subsidiaries has valid, subsisting and enforceable leases for the
properties described in the Prospectus as leased by it, with such
exceptions as are not material and do not materially interfere with the
use made and proposed to be made of such properties by the Company and
such subsidiaries; the use and occupancy of each of the properties of
the Company complies in all respects with all applicable codes and
zoning laws and regulations, except such noncompliance as would not
have a material adverse effect on the conduct of the business,
operations, affairs, properties, prospects, profits or condition
(financial or other) or income of the Company and its subsidiaries
taken as a whole; the Company has no knowledge of any pending or
threatened condemnation or zoning change that will in any material
respect affect the size of, use of, improvements of, construction on,
or access to any of the properties of the Company; and the Company has
no knowledge of any pending or threatened proceeding or action that
will in any manner affect the size of, use of, improvements on,
construction on, or access to any of the properties of the Company.
(xvi) Title insurance in favor of the Company (or the
subsidiary which holds title to such property) is maintained with
respect to each of the properties owned by the Company in an amount at
least equal to the greater of (i) the cost of acquisition of such
property or (ii) the cost of construction by the Company of the
improvements located on such property (measured at the time of such
construction), except, in each case, where the failure to maintain such
title insurance would not materially adversely affect the business,
operations, affairs, properties, prospects, profits or condition
(financial or other) or income of the Company and its subsidiaries
taken as a whole. Title insurance in favor of the mortgagee is
maintained in an amount equal to the maximum commitment of the related
loan.
(xvii) (a) Except as disclosed in the Prospectus, the
Company has no knowledge of (a) the presence of any hazardous
substances, hazardous materials, toxic substances, pollutants or waste
materials (collectively, "Hazardous Materials") on any of its
properties, except that which is in compliance with all Environmental
Laws, or (b) any spills, releases, discharges or disposals of Hazardous
Materials that have occurred or are presently occurring on or from its
properties, which presence or occurrence would individually or in the
aggregate have a material adverse effect on the conduct of the
business, operations, affairs, properties, profits or condition
(financial or other) or income of the Company and its subsidiaries
taken as a whole.
(b) Except as disclosed in the Prospectus, the Company,
its subsidiaries and its properties (i) are in compliance with any and
all Environmental Laws, (ii) have received all permits, licenses or
other approvals required under applicable Environmental Laws to conduct
their businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval, except where such
noncompliance with Environmental Laws,
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failure to receive required permits, licenses or other approvals or
failure to comply with the terms and conditions of such permits,
licenses or approvals would not individually or in the aggregate have a
material adverse effect on the conduct of the business, operations,
affairs, properties, profits or condition (financial or other) or
income of the Company and its subsidiaries taken as a whole.
(c) The Company engages environmental consultants to
perform phase I environmental site assessments in substantial
accordance with the applicable ASTM Standard to identify any
environmental conditions prior to the purchase of its properties. On
the basis of such phase I environmental site assessments, or such
additional investigations as may have been performed based on the
findings of a phase I assessment, and, except as described in the
Prospectus, the Company and its subsidiaries have reasonably concluded
that no such environmental conditions have been identified which would,
individually or in the aggregate, have a material adverse effect on the
conduct of the business, operations, affairs, properties, profits or
condition (financial or other) or income of the Company and its
subsidiaries taken as a whole.
(d) As used herein, "Hazardous Material" shall include,
without limitation any flammable explosives, radioactive materials,
hazardous materials, hazardous wastes, hazardous or toxic substances,
or related materials, asbestos, polychlorinated biphenyls ("PCBs"),
petroleum products and by-products and substances defined or listed as
"hazardous substances," "toxic substances," "hazardous waste," or
"hazardous materials" in any Federal, state or local Environmental Law.
(e) As used herein, "Environmental Law" shall mean all
laws, regulations or ordinances of any Federal, state or local
governmental authority having or claiming jurisdiction over any of the
Company's properties (a "Governmental Authority") that are designed to
protect public health and the environment or regulate the handling of
Hazardous Materials, including, without limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as
amended (42 U.S.C. Section 9601 et seq.) ("CERCLA"), the Hazardous
Material Transportation Act, as amended (49 U.S.C. Section 1801 et
seq.), the Resource Conservation and Recovery Act, as amended (42
U.S.C. Section 6901 et seq.), the Federal Water Pollution Control Act,
as amended (33 U.S.C. Section 1251 et seq.), and the Clean Air Act, as
amended (42 U.S.C. Section 7401 et seq.), and any and all analogous
future federal or present or future state or local laws.
(xviii) To the knowledge of the Company, no labor disturbance
exists with the employees of the Company or its subsidiaries or is
imminent which would have a material adverse effect on the business,
operations, affairs, properties, profits or condition (financial or
other) or income of the Company and its subsidiaries taken as a whole.
(xix) The Company has not taken and will not take, directly or
indirectly, any action designed to or which might reasonably be
expected to cause or result in stabilization
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or manipulation of the price of the Shares, and the Company is not
aware of any such action taken or to be taken by affiliates of the
Company.
(xx) The Company is not an "investment company" or a company
"controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
(xxi) The mortgages and deeds of trust encumbering the
properties and assets described in the Prospectus are not convertible
nor does the Company hold a participating interest therein.
(xxii) Property and casualty insurance in favor of the Company
is maintained with respect to each of the properties owned by it in an
amount and on such terms as is reasonable and customary for businesses
of this type.
(xxiii) The Company has continuously been organized and
operated in conformity with the requirements for qualification as a
real estate investment trust under the Internal Revenue Code of 1986,
as amended (the "Code") for all taxable years commencing with its
taxable year ended December 31, 1987. The Company has filed an election
to be taxed as a real estate investment trust for all subsequent
taxable years, and no such election has been terminated. The Company's
method of operation will permit it to continue to meet the requirements
for taxation as a real estate investment trust under the Code. The
Company intends to continue to operate in a manner which would permit
it to qualify as a real estate investment trust under the Code.
(xxiv) Except as disclosed in the Prospectus, each entity
identified in the Prospectus as a tenant of any property, or a
subtenant thereof, has entered into a lease or a sublease, if
applicable, for the possession of such property; except as disclosed in
the Prospectus, each such lease is in full force and effect and neither
the Company nor any of its subsidiaries has notice of any defense to
the obligations of the tenant thereunder or any claim asserted or
threatened by any person or entity, which claim, if sustained, would
have a material adverse effect on the conduct of the business,
operations, affairs, properties, profits or condition (financial or
other) or income of the Company and its subsidiaries taken as a whole;
and except as disclosed in the Prospectus, the lessor under each such
lease has complied with its obligations under such lease in all
material respects and neither the Company nor any of its subsidiaries
has received notice of any default by the tenant under such lease
which, individually or in the aggregate with other such defaults, would
have a material adverse effect on the conduct of the business,
operations, affairs, properties, profits or condition (financial or
other) or income of the Company and its subsidiaries taken as a whole.
(xxv) Any certificate signed by any officer of the Company and
delivered to you or to your counsel shall be deemed a representation
and warranty by the Company to you as to the matters covered thereby.
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(xxvi) A registration statement relating to the Shares of the
Company has been declared effective by the Commission pursuant to the
Exchange Act and the Shares of the Company is duly registered
thereunder. The Shares have been listed on the New York Stock Exchange,
subject to notice of issuance or sale of the Shares, as the case may
be.
4. Additional Covenants. The Company covenants and agrees with
you that:
(a) The Company will (i) prepare a Prospectus Supplement
setting forth the number of Shares covered thereby and their terms not
otherwise specified in the Prospectus pursuant to which the Shares are
being issued, the name of the Underwriter and the number of Shares
which the Underwriter has agreed to purchase, the price at which the
Shares are to be purchased by the Underwriter from the Company and such
other information as the Underwriter and the Company deem appropriate
in connection with the offering of the Shares, and file the Prospectus
in a form approved by you pursuant to Rule 424(b) under the Act no
later than the Commission's close of business on the second business
day following the date of the determination of the offering price of
the Shares; (ii) not file any amendment to the Registration Statement
or supplement to the Prospectus of which you shall not previously have
been advised and furnished with a copy or to which you shall have
reasonably objected in writing or which is not in compliance with the
Rules and Regulations; and (iii) promptly notify you after it shall
have received notice thereof of the time when any amendment to the
Registration Statement becomes effective or when any supplement to the
Prospectus has been filed.
(b) The Company will advise you promptly, after it shall
receive notice or obtain knowledge thereof, of any request of the
Commission for amendment of the Registration Statement or for
supplement to the Prospectus or for any additional information, or of
the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the use of the
Prospectus or of the institution or threatening of any proceedings for
that purpose, and the Company will use its best efforts to prevent the
issuance of any such stop order preventing or suspending the use of the
Prospectus and to obtain as soon as possible the lifting thereof, if
issued.
(c) The Company will cooperate with you and your counsel
in endeavoring to qualify the Shares for sale under the securities laws
of such jurisdictions as they may have designated and will make such
applications, file such documents, and furnish such information as may
be necessary for that purpose, provided the Company shall not be
required to qualify as a foreign corporation or to file a general
consent to service of process in any jurisdiction where it is not now
so qualified or required to file such a consent or to subject itself to
taxation as doing business in any jurisdiction where it is not now so
taxed. The Company will, from time to time, file such statements,
reports, and other documents, as are or may be required to continue
such qualifications in effect for so long a period as you may
reasonably request.
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(d) The Company will deliver to you, without charge as
many copies of the Prospectus (including all documents incorporated by
reference therein), or as it thereafter may be amended or supplemented,
as you may from time to time reasonably request. The Company consents
to the use of such Prospectus by you, both in connection with the
offering or sale of the Shares and for such other purposes and for such
period of time thereafter as the Prospectus is required by law to be
delivered in connection with the offering or sale of the Shares. The
Company will deliver to you at or before the Closing Date two conformed
copies of the Registration Statement and all amendments thereto
including all exhibits filed therewith or incorporated by reference
therein and all documents incorporated by reference in the Prospectus
and will deliver to you such number of copies of the Registration
Statement, without exhibits, and of all amendments thereto, as you may
reasonably request.
(e) If, during the period in which a prospectus is
required by law to be delivered by an underwriter or dealer, any event
shall occur as a result of which, in the judgment of the Company or in
your judgment or in the opinion of your counsel, it becomes necessary
to amend or supplement the Prospectus in order to make the statements
therein, in light of the circumstances existing at the time the
Prospectus is delivered to a purchaser, not misleading, or, if it is
necessary at any time to amend or supplement the Prospectus to comply
with any law, the Company promptly will prepare and file with the
Commission an appropriate amendment to the Registration Statement or
supplement to the Prospectus so that 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.
(f) The Company will make generally available to its
shareholders as soon as it is practicable to do so, but in any event
not later than 15 months after the effective date of the Registration
Statement, an earnings statement in reasonable detail, covering a
period of at least 12 consecutive months beginning not later than the
first day of the Company's fiscal quarter next following the effective
date of the Registration Statement, which earnings statement shall
satisfy the requirements of Section 11(a) of the Act and Rule 158
of the Rules and Regulations and will advise you in writing when such
statement has been so made available.
(g) The Company will, for a period of five years from
the Closing Date, deliver to you at your principal executive offices a
reasonable number of copies of annual reports, quarterly reports,
current reports and copies of all other documents, reports and
information furnished by the Company to its shareholders or filed with
any securities exchange pursuant to the requirements of such exchange
or with the Commission pursuant to the Act or the Exchange Act. The
Company will deliver to you similar reports with respect to any
significant subsidiaries, as that term is defined in the Rules and
Regulations, which are not consolidated in the Company financial
statements. Any report, document or other information required to be
furnished under this paragraph (g) shall be furnished as soon as
practicable after such report, document or information becomes
available.
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<PAGE>
(h) The Company will apply the proceeds from the sale of
the Shares as set forth in the description under "Use of Proceeds" in
the Prospectus, which description complies in all respects with the
requirements of Item 504 of Regulation S-K.
(i) The Company will supply you with copies of all
correspondence to and from, and all documents issued to and by, the
Commission in connection with the registration of the Shares under the
Act.
(j) Prior to the Closing Date, the Company will furnish
to you, as soon as they have been prepared, copies of any unaudited
interim consolidated financial statements of the Company and its
subsidiaries for any periods subsequent to the periods covered by the
financial statements appearing in the Registration Statement and the
Prospectus.
(k) Prior to the Closing Date, the Company will not
issue any press releases or other communications directly or indirectly
and will hold no press conference, with respect to the Company or any
of its subsidiaries, the financial condition, results of operations,
business, properties, assets or liabilities of the Company or any of
its subsidiaries, or the offering of the Shares, without your prior
consent.
(l) The Company will use its best efforts to obtain
approval for, and maintain the listing of the Shares on, the New York
Stock Exchange.
(m) The Company and its subsidiaries will maintain and
keep accurate books and records reflecting their assets and maintain
internal accounting controls which provide reasonable assurance that
(1) transactions are executed in accordance with management's
authorization, (2) transactions are recorded as necessary to permit the
preparation of the Company's consolidated financial statements and to
maintain accountability for the assets of the Company and its
subsidiaries, (3) access to the assets of the Company and its
subsidiaries is permitted only in accordance with management's
authorization, and (4) the recorded accounts of the assets of the
Company and its subsidiaries are compared with existing assets at
reasonable intervals.
(n) During any period in which a prospectus is required
by law to be delivered by an Underwriter or dealer, the Company will
promptly file all documents required to be filed with the Commission
pursuant to Sections 13, 14 or 15(d) of the Exchange Act.
(o) The Company will continue to elect to qualify as a
"real estate investment trust" under the Code, and will use its best
efforts to continue to meet the requirements to qualify as a "real
estate investment trust."
5. Conditions of Underwriter's Obligation. Your obligations, as
Underwriter to purchase and pay for the Shares, as provided herein, shall be
subject to the accuracy in all material respects, as of the date hereof and as
of the Closing Date, of the representations and warranties of
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the Company contained herein, to the performance in all material respects by the
Company of its covenants and obligations hereunder, and to the following
additional conditions:
(a) All filings required by Rule 424 of the Rules and
Regulations shall have been made. No stop order suspending the
effectiveness of the Registration Statement, as amended from time to
time, shall have been issued and no proceeding for that purpose shall
have been initiated or, to your knowledge or the knowledge of the
Company, threatened or contemplated by the Commission, and any request
of the Commission for additional information (to be included in the
Registration Statement or the Prospectus or otherwise) shall have been
complied with to your reasonable satisfaction.
(b) You shall not have disclosed in writing to the Company on
or prior to the Closing Date, that the Registration Statement or
Prospectus or any amendment or supplement thereto contains an untrue
statement of fact which, in the opinion of your counsel, is material,
or omits to state a fact which, in the opinion of such counsel, is
material and is required to be stated therein or is necessary to make
the statements therein, in light of the circumstances under which they
were made, not misleading.
(c) On the Closing Date, you shall have received (i) the
opinion of Sullivan & Worcester LLP, counsel for the Company, addressed
to you and dated the Closing Date, as to the matters set forth in
Schedule I attached hereto, (ii) the opinion of Piper & Marbury LLP (as
to Maryland law) and (iii) Sherin & Lodgen (as to certain matters not
otherwise addressed).
(d) You shall have received on the Closing Date, from Chapman
and Cutler, your counsel, such opinion or opinions, dated the Closing
Date with respect to the incorporation of the Company, the validity of
the Shares, the Registration Statement, the Prospectus and other
related matters as you may reasonably require; the Company shall have
furnished to such counsel such documents as they reasonably request for
the purpose of enabling them to pass on such matters.
(e) You shall have received at or prior to the Closing Date
from Chapman and Cutler a memorandum or memoranda, in form and
substance satisfactory to you, with respect to the qualification for
offering and sale by you of the Shares under state securities or Blue
Sky laws of such jurisdictions as you may have designated to the
Company.
(f) On the date of this Agreement and on the Closing Date, you
shall have received from Ernst & Young LLP, a letter or letters, dated
the date of this Agreement and the Closing Date, respectively, in form
and substance satisfactory to you, confirming that they are independent
public accountants with respect to the Company within the meaning of
the Act and the published Rules and Regulations, and stating to the
effect set forth in Schedule II hereto.
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<PAGE>
(g) Except as contemplated in the Prospectus, (i) neither the
Company nor any of its subsidiaries shall have sustained since the date
of the latest audited financial statements included or incorporated by
reference in the Prospectus any loss or interference with its business
from fire, explosion, flood or other calamity, whether or not covered
by insurance, or from any labor dispute or court or governmental
action, order or decree; and (ii) subsequent to the respective dates as
of which information is given in the Registration Statement and the
Prospectus, neither the Company nor any of its subsidiaries shall have
incurred any liability or obligation, direct or contingent, or entered
into transactions, and there shall not have been any change in the
capital stock or long-term debt of the Company and its subsidiaries or
any change in the business, operations, affairs, prospects, profits or
condition (financial or other) or income of the Company or its
subsidiaries, the effect of which, in any such case described in clause
(i) or (ii), is in your judgment so material or adverse as to make it
impracticable or inadvisable to proceed with the public offering or the
delivery of the Shares being delivered on the Closing Date on the terms
and in the manner contemplated in the Prospectus.
(h) There shall not have occurred any of the following: (i) a
suspension or material limitation in trading in securities generally on
the New York Stock Exchange or the American Stock Exchange or the
establishing on such exchanges by the Commission or by such exchanges
of minimum or maximum prices which are not in force and effect on the
date hereof; (ii) a general moratorium on commercial banking activities
declared by either federal or New York state authorities; (iii) the
outbreak or escalation of hostilities involving the United States or
the declaration by the United States of a national emergency or war, if
the effect of any such event specified in this clause (iii) in your
reasonable judgment makes it impracticable or inadvisable to proceed
with the public offering or the delivery of the Shares in the manner
contemplated in the Prospectus; (iv) any calamity or crisis, change in
national, international or world affairs, act of God, change in the
international or domestic markets, or change in the existing financial,
political or economic conditions in the United States or elsewhere, if
the effect of any such event specified in this clause (iv) makes it
impracticable or inadvisable to proceed with the public offering or the
delivery of the Shares in the manner contemplated in the Prospectus; or
(v) the enactment, publication, decree, or other promulgation of any
federal or state statute, regulation, rule, or order of any court or
other governmental authority, or the taking of any action by any
federal, state or local government or agency in respect of fiscal or
monetary affairs, if the effect of any such event specified in this
clause (v) in your reasonable judgment makes it impracticable or
inadvisable to proceed with the public offering or the delivery of the
Shares in the manner contemplated in the Prospectus.
(i) You shall have received certificates, dated the Closing
Date and signed by the President and the Chief Financial Officer of the
Company stating that (i) they have examined the Registration Statement
and the Prospectus as amended or supplemented and all documents
incorporated by reference therein and nothing has come to their
attention that would lead them to believe that either the Registration
Statement or the Prospectus, or any amendment or supplement thereto or
any documents incorporated by reference therein as of
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their respective effective, issue or filing dates, contained, and the
Prospectus as amended or supplemented and all documents incorporated by
reference therein and when read together with the documents
incorporated by reference therein, at the Closing Date, contains any
untrue statement of a material fact, or omits to state a material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were
made, not misleading, and, that (ii) all representations and
warranties made herein by the Company are true and correct in all
material respects at the Closing Date, with the same effect as if made
on and as of the Closing Date, and all agreements herein to be
performed by the Company on or prior to the Closing Date have been duly
performed in all material respects.
(j) The Company shall not have failed, refused, or been
unable, at or prior to the Closing Date to have performed in all
material respects any agreement on their part to be performed or any of
the conditions herein contained and required to be performed or
satisfied by them at or prior to the Closing Date.
(k) The Company shall have furnished to you at the Closing
Date such other certificates as you may have reasonably requested as to
the accuracy, on and as of the Closing Date, of the representations and
warranties of the Company herein and as to the performance by the
Company of their obligations hereunder.
(l) The Shares shall have been approved for trading upon
official notice of issuance on the New York Stock Exchange.
All such opinions, certificates, letters and documents will be in
compliance with the provisions hereof only if they are reasonably satisfactory
to you and to Chapman and Cutler, your counsel. The Company will furnish you
with such conformed copies of such opinions, certificates, letters and documents
as you may request.
If any of the conditions specified above in this Section 5 shall not
have been satisfied at or prior to the Closing Date or waived by you in writing,
this Agreement may be terminated by you on notice to the Company.
6. Indemnification. (a) The Company will indemnify and hold you
harmless and each person, if any, who controls you within the meaning of the
Act, against any losses, claims, damages or liabilities, joint or several, to
which you or such controlling person may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement, any
Preliminary Prospectus, the Prospectus, or any amendment or supplement thereto,
or in any blue sky application or other document executed by the Company or
based on any information furnished in writing by the Company, filed in any
jurisdiction in order to qualify any or all of the Shares under the securities
laws thereof ("Blue Sky Application"), or arise out of or are based upon the
omission or alleged omission to state therein a
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<PAGE>
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading; and will reimburse you and each such controlling person for any
legal or other expenses reasonably incurred by you or such controlling person in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company shall not be liable in
any such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in the Registration Statement, such
Preliminary Prospectus or the Prospectus, or such amendment or supplement, or
any Blue Sky Application in reliance upon and in conformity with written
information furnished to the Company by you, specifically for use in the
preparation thereof; and provided, further, that if any Preliminary Prospectus
or the Prospectus contained any alleged untrue statement or allegedly omitted to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading and such statement or omission shall have
been corrected in a revised Preliminary Prospectus or in the Prospectus or in an
amended or supplemented Prospectus, the Company shall not be liable to you or
controlling persons under this subsection (a) with respect to such alleged
untrue statement or alleged omission to the extent that any such loss, claim,
damage or liability of such person results from the fact that you sold Shares to
a person to whom there was not sent or given, at or prior to the written
confirmation of such sale, such revised Preliminary Prospectus or Prospectus or
amended or supplemented Prospectus. In addition to its other obligations under
this Section 6(a), the Company agrees that, as an interim measure during the
pendency of any claim, action, investigation, inquiry or other proceeding
arising out of or based upon any statement or omission, or any alleged statement
or omission, described in this Section 6(a), it will reimburse you on a monthly
basis for all reasonable legal and other expenses incurred in connection with
investigating or defending any such claim, action, investigation, inquiry or
other proceeding, notwithstanding the absence of a judicial determination as to
the propriety and enforceability of the Company's obligation to reimburse you
for such expenses and the possibility that such payments might later be held to
have been improper by a court of competent jurisdiction. This indemnity
agreement shall be in addition to any liabilities which the Company may
otherwise have.
(b) You will indemnify and hold harmless the Company, each of its
trustees, each of its officers who have signed the Registration Statement and
each person, if any, who controls the Company within the meaning of the Act,
against any losses, claims, damages or liabilities, joint or several, to which
the Company or any such trustee, officer or controlling person may become
subject, under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the Registration Statement, any Preliminary Prospectus, the Prospectus, any
amendment or supplement thereto, or any Blue Sky Application or arise out of or
are based upon the omission or the alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading, in
each case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in the
Registration Statement, such Preliminary Prospectus or the Prospectus, such
amendment or supplement, or any Blue Sky Application in reliance upon and in
conformity with written information furnished to the Company by you specifically
for use in the preparation thereof; and will reimburse any legal or other
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expenses reasonably incurred by the Company or any such director, officer or
controlling person in connection with investigating or defending any such loss,
claim, damage, liability or action. In addition to your other obligations under
this Section 6(b), you agree that, as an interim measure during the pendency of
any claim, action, investigation, inquiry or other proceeding arising out of or
based upon any statement or omission, or any alleged statement or omission,
described in this Section 6(b), you will reimburse the Company on a monthly
basis for all reasonable legal and other expenses incurred in connection with
investigating or defending any such claim, action, investigation, inquiry or
other proceeding, notwithstanding the absence of a judicial determination as to
the propriety and enforceability of your obligation to reimburse the Company for
such expenses and the possibility that such payments might later be held to have
been improper by a court of competent jurisdiction. This indemnity agreement
shall be in addition to any liabilities which you may otherwise have.
(c) Any party which proposes to assert the right to be
indemnified under this Section 6 shall, within ten days after receipt of notice
of commencement of any action, suit or proceeding against such party in respect
of which a claim is to be made against an indemnifying party under this Section
6, notify each such indemnifying party of the commencement of such action, suit
or proceeding, enclosing a copy of all papers served, but the omission so to
notify such indemnifying party of any such action, suit or proceeding shall not
relieve such indemnifying party from any liability which it may have to any
indemnified party otherwise than under this Section 6. In case any such action,
suit or proceeding shall be brought against any indemnified party and it shall
notify the indemnifying party of the commencement thereof, the indemnifying
party shall be entitled to participate in, and, to the extent that it shall
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel reasonably satisfactory to such indemnified
party, and after notice from the indemnifying party to such indemnified party of
its election so to assume the defense thereof, the indemnifying party shall not
be liable to such indemnified party for any legal or other expenses, other than
reasonable costs of investigation, subsequently incurred by such indemnified
party in connection with the defense thereof. The indemnified party shall have
the right to employ its own counsel in any such action, but the fees and
expenses of such counsel shall be at the expense of such indemnified party
unless (i) the employment of counsel by such indemnified party at the expense of
the indemnifying party has been authorized by the indemnifying party, (ii) the
indemnified party shall have been advised by such counsel in a written opinion
that there may be a conflict of interest between the indemnifying party and the
indemnified party in the conduct of the defense, or certain aspects of the
defense, of such action (in which case the indemnifying party shall not have the
right to direct the defense of such action with respect to those matters or
aspects of the defense on which a conflict exists or may exist on behalf of the
indemnified party) or (iii) the indemnifying party shall not in fact have
employed counsel to assume the defense of such action, in any of which events
such fees and expenses to the extent applicable shall be borne by the
indemnifying party. An indemnifying party shall not be liable for any settlement
of any action or claim effected without its consent. Each indemnified party, as
a condition of such indemnity, shall cooperate in good faith with the
indemnifying party in the defense of any such action or claim.
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(d) If the indemnification provided for in this Section 6 is for
any reason, other than pursuant to the terms thereof, judicially determined (by
the entry of a final judgment or decree by a court of competent jurisdiction and
the expiration of time to appeal or the denial of the last right to appeal) to
be unavailable to an indemnified party under subsections (a) or (b) above in
respect of any losses, claims, damages or liabilities (or actions in respect
thereof) referred to therein, then each indemnifying party shall, in lieu of
indemnifying such indemnified party, contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is appropriate
to reflect the relative benefits received by the Company and you from the
offering of the Shares. If, however, the allocation provided by the immediately
preceding sentence is not permitted by applicable law, then each indemnifying
party shall contribute to such amount paid or payable by such indemnified party
in such proportion as is appropriate to reflect not only such relative benefits
but also the relative fault, as applicable, of the Company and you in connection
with the statements or omissions which resulted in such losses, claims, damages
or liabilities (or actions in respect thereof), as well as other relevant
equitable considerations. The relative benefits received by, as applicable, the
Company and you shall be deemed to be in the same proportion as the total net
proceeds from the offering (before deducting expenses) received by the Company
bear to the total underwriting discounts and commissions received by you, in
each case as set forth in the table on the cover page of the Prospectus. The
relative fault shall be determined by reference to, among other things, whether
the untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the Company or you and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission. The Company and you agree that
it would not be just and equitable if contributions pursuant to this subsection
(d) were determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to above in
this subsection (d). The amount paid or payable by an indemnified party as a
result of the losses, claims, damages or liabilities (or actions in respect
thereof) referred to above in this subsection (d) shall be deemed to include 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 subsection (d), you shall not be required
to contribute any amount in excess of the amount by which the total price at
which the Shares underwritten by you and distributed to the public exceeds the
amount of any damages which the 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.
7. Representations and Agreements to Survive Delivery. All
representations, warranties, and agreements of the Company contained herein or
in certificates delivered pursuant hereto, and your agreements contained in
Section 6 hereof, shall remain operative and in full force and effect regardless
of any termination or cancellation of this Agreement or any investigation made
by or on behalf of you or any controlling person, the Company or any of its
officers, directors or any controlling persons, and shall survive delivery of
the Shares to you hereunder.
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<PAGE>
8. Effective Date and Termination. (a) This Agreement shall become
effective upon execution.
(b) This Agreement may be terminated by you at any time at or prior to
the Closing Date by notice to the Company if any condition specified in Section
5 hereof shall not have been satisfied on or prior to the Closing Date. Any such
termination shall be without liability of any party to any other party except as
provided in Sections 6 and 9 hereof.
If you terminate this Agreement as provided in Section 8(b), you shall
notify the Company by telephone or telegram, confirmed by letter.
9. Cost and Expenses. The Company will bear and pay the costs and
expenses incident to the registration of the Shares and public offering thereof,
including, without limitation, (a) the fees and expenses of the Company's
accountants and the fees and expenses of counsel for the Company, (b) the
preparation, printing, filing, delivery and shipping of the Registration
Statement, each Preliminary Prospectus, the Prospectus, and any amendments or
supplements thereto, (c) the furnishing of copies of such documents to you, (d)
the registration or qualification of the Shares for offering and sale under the
securities laws of the various states, including the reasonable fees and
disbursements of your counsel relating to such registration or qualification,
(e) the fees payable to the NASD (if any) and the Commission in connection with
their review of the proposed offering of the Shares, (f) all printing and
engraving costs related to preparation of the certificates for the Shares,
including transfer agent and registrar fees, (g) all initial transfer taxes, if
any, (h) all fees and expenses relating to the authorization of the Shares for
trading on the New York Stock Exchange, (i) all travel expenses, including air
fare and accommodation expenses, of representatives of the Company in connection
with the offering of the Shares and (j) all of the other costs and expenses
incident to the performance by the Company of the registration and offering of
the Shares; provided, however, that you will bear and pay the fees and expenses
of your counsel (other than fees and disbursements relating to the registration
or qualification of the Shares for offering and sale under the securities laws
of the various states), your out-of-pocket expenses, and any advertising costs
and expenses incurred by you incident to the public offering of the Shares.
If this Agreement is terminated by you in accordance with the
provisions of Section 8(b), the Company shall reimburse you for all of your
out-of-pocket expenses, including the reasonable fees and disbursements of your
counsel.
10. Notices. All notices or communications hereunder, except as herein
otherwise specifically provided, shall be in writing and if sent to you shall be
mailed, delivered, sent by facsimile transmission, or telegraphed and confirmed
c/o A.G. Edwards & Sons, Inc. at One North Jefferson Avenue, St. Louis, Missouri
63103, Attention: Syndicate, facsimile number (314) 289-7387, or if sent to the
Company shall be mailed, delivered, sent by facsimile transmission, or
telegraphed and confirmed to the Company at 400 Centre Street, Newton, MA 02158,
facsimile number (617) 332-2261.
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<PAGE>
11. Parties. This Agreement shall inure to the benefit of and be
binding upon you and the Company and their respective successors and assigns.
Nothing expressed or mentioned in this Agreement is intended or shall be
construed to give any person, corporation or other entity, other than the
parties hereto and their respective successors and assigns and the controlling
persons, officers and directors referred to in Section 6, any legal or equitable
right, remedy or claim under or in respect of this Agreement or any provision
herein contained; this Agreement and all conditions and provisions hereof being
intended to be and being for the sole and exclusive benefit of the parties
hereto and their respective successors and assigns and said controlling persons
and said officers and directors, and for the benefit of no other person,
corporation or other entity. No purchaser of any of the Shares from you shall be
construed a successor or assign by reason merely of such purchase.
12. Counterparts. This Agreement may be executed by any one or
more of the parties hereto in any number of counterparts, each of which shall be
deemed to be an original, but all such counterparts shall together constitute
one and the same instrument.
13. Pronouns. Whenever a pronoun of any gender or number is used
herein, it shall, where appropriate, be deemed to include any other gender and
number.
14. Applicable Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Missouri.
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<PAGE>
If the foregoing is in accordance with your understanding, please so
indicate in the space provided below for that purpose, whereupon this letter
shall constitute a binding agreement between the Company and you.
HEALTH AND RETIREMENT
PROPERTIES TRUST
By /s/ Ajay Saini
Name: Ajay Saini
Title: Chief Financial Officer
Accepted in St. Louis, Missouri
as of the date first above written.
A.G. EDWARDS & SONS, INC.
By /s/ Richard H. Giles
Name: Richard H. Giles
Title: Managing Director
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<PAGE>
SCHEDULE I
Pursuant to Section 5(c) of the Underwriting Agreement, you shall be
furnished opinions substantially in the form of the attached.
<PAGE>
SCHEDULE II
Pursuant to Section 5(f) of the Underwriting Agreement, Ernst & Young
LLP and Arthur Anderson LLP shall furnish letters to you to the effect that:
(i) They are independent certified public accountants with
respect to the Company and its subsidiaries within the meaning of the
Act and the applicable Rules and Regulations thereunder
(ii) In their opinion, the financial statements and any
supplementary financial information and schedules audited (and, if
applicable, prospective financial statements and/or pro forma financial
information examined) by them and included or incorporated by reference
in the Prospectus or the Registration Statement comply as to form in
all material respects with the applicable accounting requirements of
the Act and the applicable Rules and Regulations with respect to
registration statements on Form S-3; and, if applicable, they have made
a review in accordance with standards established by the American
Institute of Certified Public Accountants of the unaudited consolidated
interim financial statements, selected financial data, pro forma
financial information, prospective financial statements and/or
condensed financial statements derived from audited financial
statements of the Company for the periods specified in such letter, as
indicated in their reports thereon, copies of which have been furnished
to you.
(iii) On the basis of limited procedures, not constituting an
audit in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and other
information referred to below, performing the procedures specified by
the AICPA for a review of interim financial information as discussed in
SAS No. 71, Interim Financial Information, on the latest available
interim financial statements of the Company and its subsidiaries,
inspection of the minute books of the Company and its subsidiaries
since the date of the latest audited financial statements included in
the Prospectus, inquiries of officials of the Company and its
subsidiaries responsible for financial and accounting matters and such
other inquiries and procedures as may be specified in such letter,
nothing came to their attention that caused them to believe that:
(A) any material modifications should be made to the
unaudited statements of consolidated income, statements of
consolidated financial position and statements of consolidated
cash flows included in the Prospectus for them to be in
conformity with generally accepted accounting principles, or
the unaudited statements of consolidated income, statements of
consolidated financial position and statements of consolidated
cash flows included in the Prospectus do not comply as to
<PAGE>
form in all material respects with the applicable accounting
requirements of the Act and the related published Rules and
Regulations thereunder.
(B) any other unaudited income statement data and
balance sheet items included in the Prospectus do not agree
with the corresponding items in the unaudited consolidated
financial statements from which such data and items were
derived, and any such unaudited data and items were not
determined on a basis substantially consistent with the basis
for the corresponding amounts in the audited consolidated
financial statements included in the Prospectus.
(C) the unaudited financial statements which were not
included in the Prospectus but from which were derived any
unaudited condensed financial statements referred to in Clause
(A) and any unaudited income statement data and balance sheet
items included in the Prospectus and referred to in Clause (B)
were not determined on a basis substantially consistent with
the basis for the audited consolidated financial statements
included in the Prospectus.
(D) any unaudited pro forma consolidated condensed
financial statements included in the Prospectus do not comply
as to form in all material respects with the applicable
accounting requirements of the Act and the published rules and
regulations thereunder or the pro forma adjustments have not
been properly applied to the historical amounts in the
compilation of those statements.
(E) as of a specified date not more than five days
prior to the date of such letter, there have been any changes
in the consolidated capital stock or any increase in the
consolidated long-term debt of the Company and its
subsidiaries, or any decreases in consolidated working
capital, net current assets or net assets, or any changes in
any other items specified by you, in each case as compared
with amounts shown in the latest balance sheet included in the
Prospectus, except in each case for changes, increases or
decreases which the Prospectus discloses have occurred or may
occur or which are described in such letter.
(F) for the period from the date of the latest
financial statements included in the Prospectus to the
specified date referred to in
<PAGE>
Clause (E) there were any decreases in consolidated net
revenues or operating profit or the total or per share amounts
of consolidated net income or any changes in any other items
specified by you, in each case as compared with the comparable
period of the preceding year and with any other period of
corresponding length specified by you, except in each case for
changes, decreases or increases which the Prospectus discloses
have occurred or may occur or which are described in such
letter.
(iv) In addition to the audit referred to in their report(s)
included or incorporated by reference in the Prospectus and the limited
procedures, inspection of minute books, inquiries and other procedures
referred to in paragraph (iii) above, they have carried out certain
specified procedures, not constituting an audit in accordance with
generally accepted auditing standards, with respect to certain amounts,
percentages and financial information specified by you, which are
derived from the general accounting records of the Company and its
subsidiaries for the periods covered by their reports and any interim
or other periods since the latest period covered by their reports,
which appear in the Prospectus, or in Part II of, or in exhibits and
schedules to, the Registration Statement specified by you, and have
compared certain of such amounts, percentages and financial information
with the accounting records of the Company and its subsidiaries and
have found them to be in agreement.
EXHIBIT 4.1
SUPPLEMENTAL INDENTURE
by and between
HEALTH AND RETIREMENT PROPERTIES TRUST
and
STATE STREET BANK AND TRUST COMPANY
as of February 23, 1998
SUPPLEMENTAL TO THE INDENTURE DATED AS OF JULY 9, 1997
------------------------------------
HEALTH AND RETIREMENT PROPERTIES TRUST
$100,000,000 6.7% Senior Notes due February 23, 2005
<PAGE>
This SUPPLEMENTAL INDENTURE (this "Supplemental Indenture") made and
entered into as of February 23, 1998 between HEALTH AND RETIREMENT PROPERTIES
TRUST, a Maryland real estate investment trust (the "Company"), and STATE STREET
BANK AND TRUST COMPANY, a Massachusetts trust company, as Trustee (the
"Trustee").
WITNESSETH THAT:
WHEREAS, the Company and the Trustee have executed and delivered an
Indenture dated as of July 9, 1997 (the "Indenture"), relating to the Company's
issuance, from time to time, of various series of debt securities; and
WHEREAS, the Company has determined to issue debt securities known as
its $100,000,000 6.7% Senior Notes due February 23, 2005; and
WHEREAS, the Indenture provides that certain terms and conditions for
each series of debt securities issued by the Company thereunder may be set forth
in an indenture supplemental to the Indenture;
NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE WITNESSETH:
ARTICLE 1
DEFINED TERMS
Section 1.1 The following definitions supplement, and, to the extent
inconsistent with, replace the definitions in Section 1.1 of the Indenture:
"Acquired Debt" means Debt of a Person (i) existing at the time such
Person becomes a Subsidiary or (ii) assumed in connection with the acquisition
of assets from such Person, in each case, other than Debt incurred in connection
with, or in contemplation of, such Person's becoming a Subsidiary or such
acquisition. Acquired Debt shall be deemed to be incurred on the date of the
related acquisition of assets from any Person or the date the acquired Person
becomes a Subsidiary.
"Annual Debt Service" as of any date means the maximum amount which is
expensed in any 12-month period for interest on Debt of the Company and its
Subsidiaries.
"Business Day" means any day other than a Saturday or Sunday or a day
on which banking institutions in The City of New York or in the city in which
the Corporate Trust Office of the Trustee is located, are required or authorized
to close.
"Capital Stock" means, with respect to any Person, any capital stock
(including preferred stock), shares, interests, participation or other ownership
interests (however designated) of such Person and any rights (other than debt
securities convertible into or exchangeable for capital stock), warrants or
options to purchase any thereof.
"Consolidated Income Available for Debt Service" for any period means
Earnings from Operations of the Company and its Subsidiaries plus amounts which
have been deducted, and minus amounts which have been added, for the following
(without duplication): (i) interest on Debt of the Company and its Subsidiaries,
(ii) provision for taxes of the Company and its Subsidiaries based on income,
(iii) amortization of debt discount and deferred financing costs, (iv)
provisions for gains and losses on properties and property depreciation and
amortization, (v) the effect of any noncash charge resulting from a change in
accounting principles in determining Earnings from Operations for such period
and (vi) amortization of deferred charges.
<PAGE>
"Debt" of the Company or any Subsidiary means, without duplication, any
indebtedness of the Company or any Subsidiary, whether or not contingent, in
respect of (i) borrowed money or evidenced by bonds, notes, debentures or
similar instruments, (ii) indebtedness for borrowed money secured by any
Encumbrance existing on property owned by the Company or any Subsidiary, (iii)
the reimbursement obligations, contingent or otherwise, in connection with any
letters of credit actually issued (other than letters of credit issued to
provide credit enhancement or support with respect to other indebtedness of the
Company or any Subsidiary otherwise reflected as Debt hereunder) or amounts
representing the balance deferred and unpaid of the purchase price of any
property or services, except any such balance that constitutes an accrued
expense or trade payable, or all conditional sale obligations or obligations
under any title retention agreement, (iv) the principal amount of all
obligations of the Company or any Subsidiary with respect to redemption,
repayment or other repurchase of any Disqualified Stock, or (v) any lease of
property by the Company or any Subsidiary as lessee which is reflected on the
Company's consolidated balance sheet as a capitalized lease in accordance with
GAAP, to the extent, in the case of items of indebtedness under (i) through
(iii) above, that any such items (other than letters of credit) would appear as
a liability on the Company's consolidated balance sheet in accordance with GAAP,
and also includes, to the extent not otherwise included, any obligation by the
Company or any Subsidiary to be liable for, or to pay, as obligor, guarantor or
otherwise (other than for purposes of collection in the ordinary course of
business), Debt of another Person (other than the Company or any Subsidiary) (it
being understood that Debt shall be deemed to be incurred by the Company or any
Subsidiary whenever the Company or such Subsidiary shall create, assume,
guarantee or otherwise become liable in respect thereof).
"Disqualified Stock" means, with respect to any Person, any Capital
Stock of such Person which by the terms of such Capital Stock (or by the terms
of any security into which it is convertible or for which it is exchangeable or
exercisable), upon the happening of any event or otherwise (i) matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise
(other than Capital Stock which is redeemable solely in exchange for common
stock or shares), (ii) is convertible into or exchangeable or exercisable for
Debt or Disqualified Stock, or (iii) is redeemable at the option of the holder
thereof, in whole or in part (other than Capital Stock which is redeemable
solely in exchange for common stock or shares), in each case on or prior to the
Stated Maturity of the Notes.
"Earnings from Operations" for any period means net earnings excluding
gains and losses on sales of investments, extraordinary items and property
valuation losses, as reflected in the financial statements of the Company and
its Subsidiaries for such period, determined on a consolidated basis in
accordance with GAAP.
"Encumbrance" means any mortgage, lien, charge, pledge or security
interest of any kind.
"Interest Payment Date" means any date on which interest is due and
payable paid on the Notes in accordance with the terms thereof.
"Issuance Date" means the closing date for the sale and original
issuance of the Notes.
"Make-Whole Amount" means, in connection with any optional redemption
or accelerated payment of any Note, the excess, if any, of (i) the aggregate
present value as of the date of such redemption or accelerated payment of each
dollar of principal being redeemed or paid and the amount of interest (exclusive
of interest accrued to the date of redemption or accelerated payment) that would
have been payable in respect of such dollar if such redemption or accelerated
payment had not been made, determined by discounting, on a semiannual basis,
such principal and interest at the Reinvestment Rate (determined on the third
Business Day preceding the date such notice of redemption is given or
declaration of acceleration is made) from the respective dates on which such
principal and interest would have been payable if such redemption or accelerated
payment had not been made, over (ii) the aggregate principal amount of the Notes
being redeemed
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<PAGE>
or paid. For purposes of this Supplemental Indenture and the Notes, references
in the Indenture to the payment of the principal (and premium, if any) and
interest on the Notes shall be deemed to include the payment of the Make-Whole
Amount, if any, due upon redemption with respect to the Notes.
"Notes" means the Company's $100,000,000 aggregate principal amount of
6.7% Senior Notes, due February 23, 2005, issued under this Indenture, as
amended or supplemented from time to time.
"Record Date" means the fifteenth calendar day, whether or not a
Business Day, next preceding the applicable Interest Payment Date.
"Reinvestment Rate" means a rate per annum equal to the sum of 0.25%
(twenty-five one hundredths of one percent) plus the yield on treasury
securities at constant maturity under the heading "Week Ending" published in the
Statistical Release under the caption "Treasury Constant Maturities" for the
maturity (rounded to the nearest month) corresponding to the remaining life to
maturity, as of the payment date of the principal being redeemed or paid. If no
maturity exactly corresponds to such maturity, yields for the two published
maturities most closely corresponding to such maturity shall be calculated
pursuant to the immediately preceding sentence and the Reinvestment Rate shall
be interpolated or extrapolated from such yields on a straight-line basis,
rounding in each of such relevant periods to the nearest month. For purposes of
calculating the Reinvestment Rate, the most recent Statistical Release published
prior to the date of determination of the Make-Whole Amount shall be used.
"SEC" means the Securities and Exchange Commission.
"Secured Debt" means Debt secured by any mortgage, lien, charge, pledge
or security interest of any kind.
"Securities Act" means the Securities Act of 1933, as amended.
"Statistical Release" means the statistical release designated "H.
15(519)" or any successor publication which is published weekly by the Federal
Reserve System and which establishes yields on actively traded United States
government securities adjusted to constant maturities or, if such statistical
release is not published at the time of any determination under this
Supplemental Indenture, then any publicly available source of similar market
data which shall be designated by the Company.
"Subsidiary" means any corporation or other entity of which a majority
of (i) the voting power of the voting equity securities or (ii) the outstanding
equity interests of which are owned, directly or indirectly, by the Company or
one or more other Subsidiaries of the Company. For the purposes of this
definition, "voting equity securities" means equity securities having voting
power for the election of directors, whether at all times or only so long as no
senior class of security has such voting power by reason of any contingency.
"Total Assets" as of any date means the sum of (i) the Undepreciated
Real Estate Assets and (ii) all other assets of the Company and its Subsidiaries
determined in accordance with GAAP (but excluding accounts receivable and
intangibles).
"Total Unencumbered Assets" means the sum of (i) those Undepreciated
Real Estate Assets not subject to an Encumbrance for borrowed money and (ii) all
other assets of the Company and its Subsidiaries not subject to an Encumbrance
for borrowed money determined in accordance with GAAP (but excluding accounts
receivable and intangibles).
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<PAGE>
"Undepreciated Real Estate Assets" as of any date means the cost
(original cost plus capital improvements) of real estate assets of the Company
and its Subsidiaries on such date, before depreciation and amortization
determined on a consolidated basis in accordance with GAAP.
"Unsecured Debt" means Debt which is not secured by any of the
properties of the Company or any Subsidiary.
ARTICLE 2
TERMS OF THE NOTES
Section 2.1 Pursuant to Section 3.1 of the Indenture, the Notes shall
have the following terms and conditions:
(a) Title; Limitation on Aggregate Principal Amount; Form of Notes. The
Notes shall be known as the Company's $100,000,000 6.7% Senior Notes due
February 23, 2005. The Notes will be limited to an aggregate principal amount of
$100,000,000. The Notes (together with the Trustee's certificate of
authentication) shall be substantially in the form of Exhibit A hereto, which is
hereby incorporated in and made a part of this Supplemental Indenture.
The Notes will be issued in the form of single fully registered global
security without coupons (the "Global Note") which will be deposited with, or on
behalf of, The Depository Trust Company ("DTC"), and registered in the name of
DTC's nominee, Cede & Co. Except under the circumstance described below, the
Notes will not be issuable in a definitive form. Unless and until it is
exchanged in whole or in part for the individual notes represented thereby, a
Global Note may not be transferred except as a whole by DTC to a nominee of DTC
or by a nominee of DTC to DTC or another nominee of DTC or by DTC or any nominee
of DTC to a successor depository or any nominee of such successor.
So long as DTC or its nominee is the registered owner of such Global
Note, DTC or such nominee, as the case may be, will be considered the sole owner
or holder of the Notes represented by such Global Note for all purposes under
this Supplemental Indenture. Except as described below, owners of beneficial
interest in Notes evidenced by a Global Note will not be entitled to have any of
the individual Notes represented by such Global Note registered in their names,
will not receive or be entitled to receive physical delivery of any such Notes
in definitive form and will not be considered the owners or holders thereof
under the Indenture or this Supplemental Indenture.
If DTC is at any time unwilling, unable or ineligible to continue as
depository and a successor depository is not appointed by the Company within 90
days, the Company will issue individual Notes in exchange for the Global Note
representing such Notes. In addition, the Company may at any time and in its
sole discretion, subject to certain limitations set forth in the Indenture,
determine not to have any of such Notes represented by one or more Global Notes
and in such event will issue individual Notes in exchange for the Global Note or
Notes representing such debt Securities. Individual Notes so issued will be
issued in denominations of $1,000 and integral multiples thereof and will be
issued in registered form only, without coupons.
(b) Principal Repayment; Currency. The Stated Maturity of the Notes is
February 23, 2005, provided, however, the Notes may be earlier redeemed at the
option of the Company as provided in paragraph (c) below. The principal of each
Note payable on its maturity date shall be paid against presentation and
surrender thereof at the Corporate Trust Office of the Trustee, located
initially at Two International Place, Boston, Massachusetts 02110, in such coin
or currency of the United States of America as at the time of
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<PAGE>
payment is legal tender for the payment of public or private debts. The Company
will not pay Additional Amounts (as defined in the Indenture) on the Notes.
(c) Redemption at the Option of the Company; Acceleration. The Notes
will be subject to redemption at any time at the option of the Company, in whole
or in part, upon not less than 30 nor more than 60 day's notice to each Holder
of Notes to be redeemed at its address appearing in the Security Register, at a
price equal to the sum of (i) the principal amount of the Notes being redeemed,
plus accrued and unpaid interest to but excluding the applicable redemption date
and (ii) the Make-Whole Amount. Upon the acceleration of the Notes in accordance
with Section 5.02 of the Indenture, the principal amount of the Notes, plus
accrued and unpaid interest thereon and the Make-Whole Amount shall become due
and payable immediately.
(d) The Notes will be subject to redemption at any time at the option
of the Company, in whole or in part, upon not less than 30 nor more than 60
day's notice to each Holder of Notes to be redeemed at its address appearing in
the Security Register, at a price equal to the sum of (i) the principal amount
of the Notes being redeemed, plus accrued and unpaid interest to but excluding
the applicable redemption date and (ii) the Make-Whole Amount.
(e) Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if mailed or transmitted by
any standard form of telecommunication. Notices to the Company shall be directed
to it at 400 Centre Street, Newton, Massachusetts 02158, Attention: David J.
Hegarty, President; notices to the Trustee shall be directed to it at Two
International Place, Boston, Massachusetts 02110, Attention: Corporate Trust
Department, Re: Health and Retirement Properties Trust 6.7% Senior Notes due
February 23, 2005.
ARTICLE 3
ADDITIONAL COVENANTS
Section 3.1 In addition to the covenants of the Company set forth in
Article Ten of the Indenture, for the benefit of the holders of the Notes:
(a) Limitations on Incurrence of Debt.
(i) The Company will not, and will not permit any Subsidiary
to, incur any Debt if, immediately after giving effect to the
incurrence of such additional Debt and the application of the proceeds
thereof, the aggregate principal amount of all outstanding Debt of the
Company and its Subsidiaries on a consolidated basis determined in
accordance with GAAP is greater than 60% of the sum ("Adjusted Total
Assets") of (without duplication) (i) the Total Assets of the Company
and its Subsidiaries as of the end of the calendar quarter covered in
the Company's Annual Report on Form 10-K, or the Quarterly Report on
Form 10-Q, as the case may be, most recently filed with the Securities
and Exchange Commission (or, if such filing is not permitted under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), with
the Trustee) prior to the incurrence of such additional Debt and (ii)
the purchase price of any real estate assets or mortgages receivable
acquired, and the amount of any securities offering proceeds received
(to the extent that such proceeds were not used to acquire real estate
assets or mortgages receivable or used to reduce Debt), by the Company
or any Subsidiary since the end of such calendar quarter, including
those proceeds obtained in connection with the incurrence of such
additional Debt.
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(ii) In addition to the foregoing limitations on the
incurrence of Debt, the Company will not, and will not permit any
Subsidiary to, incur any Secured Debt if, immediately after giving
effect to the incurrence of such additional Secured Debt and the
application of the proceeds thereof, the aggregate principal amount of
all outstanding Secured Debt of the Company and its Subsidiaries on a
consolidated basis is greater than 40% of Adjusted Total Assets.
(iii) In addition to the foregoing limitations on the
Incurrence of Debt, the Company will not, and will not permit any
Subsidiary to, incur any Debt if the ratio of Consolidated Income
Available for Debt Service to the Annual Debt Service for the four
consecutive fiscal quarters most recently ended prior to the date on
which such additional Debt is to be incurred shall have been less than
1.5x, on a pro forma basis after giving effect thereto and to the
application of the proceeds therefrom, and calculated on the assumption
that (i) such Debt and any other Debt incurred by the Company and its
Subsidiaries since the first day of such four-quarter period and the
application of the proceeds therefrom, including to refinance other
Debt, had occurred at the beginning of such period; (ii) the repayment
or retirement of any other Debt by the Company and its Subsidiaries
since the first date of such four-quarter period had been repaid or
retired at the beginning of such period (except that, in making such
computation, the amount of Debt under any revolving credit facility
shall be computed based upon the average daily balance of such Debt
during such period); (iii) in the case of Acquired Debt or Debt
incurred in connection with any acquisition since the first day of such
four-quarter period, the related acquisition had occurred as of the
first day of such period with appropriate adjustments with respect to
such acquisition being included in such pro forma calculation; and (iv)
in the case of any acquisition or disposition by the Company or its
Subsidiaries of any asset or group of assets since the first day of
such four-quarter period, whether by merger, stock purchase or sale, or
asset purchase or sale, such acquisition or disposition or any related
repayment of Debt had occurred as of the first day of such period with
the appropriate adjustments with respect to such acquisition or
disposition being included in such pro forma calculation.
(b) Maintenance of Total Unencumbered Assets. The Company and its
Subsidiaries will maintain Total Unencumbered Assets of not less than 200% of
the aggregate outstanding principal amount of the Unsecured Debt of the Company
and its Subsidiaries on a consolidated basis.
(c) Applicability of Discharge, Defeasance and Covenant Defeasance
Provisions. The Discharge, Defeasance and Covenant Defeasance provisions in
Article Fourteen of the Indenture will apply to the Notes.
ARTICLE 4
ADDITIONAL EVENTS OF DEFAULT
For purposes of this Supplemental Indenture and the Notes, in addition
to the Events of Default set forth in Section 5.1 of the Indenture, it shall
also constitute an "Event of Default" if an event of default under any bond,
debenture, note or other evidence of indebtedness of the Company (including an
event of default with respect to any other series of securities), or under any
mortgage, indenture or other instrument of the Company under which there may be
issued or by which there may be secured or evidenced any indebtedness of the
Company (or by any Subsidiary, the repayment of which the Company has guaranteed
or for which the Company is directly responsible or liable as obligor or
guarantor), whether such indebtedness now exists or shall hereafter be created,
shall happen and shall result in an aggregate principal amount exceeding
$20,000,000 becoming or being declared due and payable prior to the date on
which it would otherwise have become due and payable, without such indebtedness
having been discharged, or such acceleration having been rescinded or annulled,
within a period of ten days after there shall have been given, by registered or
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certified mail, to the Company by the Trustee or to the Company and the Trustee
by the holders of at least 25% in principal amount of the outstanding Notes, a
written notice specifying such default and requiring the Company to cause such
indebtedness to be discharged or cause such acceleration to be rescinded or
annulled and stating that such notice is a "Notice of Default" hereunder.
ARTICLE 5
EFFECTIVENESS
This Supplemental Indenture shall be effective for all purposes as of
the date and time this Supplemental Indenture has been executed and delivered by
the Company and the Trustee in accordance with Article Nine of the Indenture. As
supplemented hereby, the Indenture is hereby confirmed as being in full force
and effect.
ARTICLE 6
MISCELLANEOUS
Section 6.1 In the event any provision of this Supplemental Indenture
shall be held invalid or unenforceable by any court of competent jurisdiction,
such holding shall not invalidate or render unenforceable any other provision
hereof or any provision of the Indenture.
Section 6.2 To the extent that any terms of the Notes are inconsistent
with the terms of the Indenture, the terms of the Notes shall govern and
supersede such inconsistent terms.
Section 6.3 This Supplemental Indenture shall be governed by and
construed in accordance with the laws of The Commonwealth of Massachusetts.
Section 6.4 This Supplemental Indenture may be executed in several
counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
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<PAGE>
IN WITNESS WHEREOF, the Company and the Trustee have caused this
Supplemental Indenture to be executed as an instrument under seal in their
respective corporate names as of the date first above written.
HEALTH AND RETIREMENT PROPERTIES TRUST
By:______________________________
Name: David J. Hegarty
Title: President
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By:
Name:
Title:
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<PAGE>
EXHIBIT A
(Face of Note)
6.7% Senior Notes due February 23, 2005
No. $__________
HEALTH AND RETIREMENT PROPERTIES TRUST
promises to pay to _______________________________________ or registered
assigns, the principal sum of _____________________________________ Dollars on
February 23, 2005.
Interest Payment Dates: February 23 and August 23.
Record Dates: February 8 and August 8.
CUSIP No.:
HEALTH AND RETIREMENT PROPERTIES TRUST
By:____________________________________
Name:
Title:
[SEAL]
Dated:
This is one of the Notes referred to in the within-mentioned Indenture:
STATE STREET BANK AND TRUST COMPANY, as Trustee
By:
Authorized Signatory
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<PAGE>
(Back of Note)
HEALTH AND RETIREMENT PROPERTIES TRUST
6.7% Senior Notes due February 23, 2005
Capitalized terms used herein have the meanings assigned to them in the
Indenture (as defined below) unless otherwise indicated.
1. Interest. Health and Retirement Properties Trust, a Maryland real
estate investment trust (the "Company"), promises to pay interest on the
principal amount of this Note at the rate and in the manner specified below.
The Company shall pay in cash interest on the principal amount of this
Note at the rate per annum of 6.7%. The Company will pay interest semi-annually
in arrears on February 23 and August 23 of each year, commencing on August 23,
1998 or if any such day is not a Business Day (as defined in the Indenture), on
the next succeeding Business Day (each an "Interest Payment Date"), to Holders
of record on the immediately preceding February 8 and August 8.
Interest will be computed on the basis of a 360-day year consisting of
twelve 30-day months. Interest shall accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from the date of the
original issuance of the Notes.
2. Method of Payment. The Company will pay interest on the Notes
(except defaulted interest) to the Persons who are registered Holders of Notes
at the close of business on the record date next preceding the Interest Payment
Date, even if such Notes are canceled after such record date and on or before
such Interest Payment Date. The Company will pay principal and interest in money
of the United States that at the time of payment is legal tender for payment of
public and private debts. The Company, however, may pay principal, premium, if
any, and interest by check payable in such money. It may mail an interest check
to a Holder's registered address.
3. Indenture. The Company issued the Notes under an Indenture dated as
of July 9, 1997, as supplemented by a Supplemental Indenture dated as of
February 23, 1998 (the "Indenture") between the Company and the Trustee. The
terms of the Notes include those stated in the Indenture and those made part of
the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S. Code
ss.ss. 77aaa-77bbbb) as in effect on the date of the Indenture. The Notes are
subject to all such terms, and Holders of the Notes are referred to the
Indenture and such act for a statement of such terms. The terms of the Indenture
shall govern any inconsistencies between the Indenture and the Notes. The Notes
are unsecured general obligations of the Company limited to $100,000,000 in
aggregate principal amount.
4. Optional Redemption. The Notes will be subject to redemption at any
time at the option of the Company, in whole or in part, upon not less than 30
nor more than 60 days' notice, at a redemption price equal to the sum of (i) the
principal amount of the Notes being redeemed, plus accrued and unpaid interest
to but excluding the applicable redemption date and (ii) the Make-Whole Amount.
As used herein the term "Make-Whole Amount" means, in connection with
any optional redemption or accelerated payment of any Note, the excess, if any,
of (i) the aggregate present value as of the date of such redemption or
accelerated payment of each dollar of principal being redeemed or paid and the
amount of interest (exclusive of interest accrued to the date of redemption or
accelerated payment) that would have been payable in respect of such dollar if
such redemption or accelerated payment had not been made,
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<PAGE>
determined by discounting, on a semiannual basis, such principal and interest at
the Reinvestment Rate (as defined herein) (determined on the third Business Day
preceding the date such notice of redemption is given or declaration of
acceleration is made) from the respective dates on which such principal and
interest would have been payable if such redemption or accelerated payment had
not been made, over (ii) the aggregate principal amount of the Notes being
redeemed or paid.
As used herein the term "Reinvestment Rate" means a rate per annum
equal to the sum of 0.25% (twenty-five one hundredths of one percent) plus the
yield on treasury securities at constant maturity under the heading "Week
Ending" published in the Statistical Release (as defined herein) under the
caption "Treasury Constant Maturities" for the maturity (rounded to the nearest
month) corresponding to the remaining life to maturity, as of the payment date
of the principal being redeemed or paid. If no maturity exactly corresponds to
such maturity, yields for the two published maturities most closely
corresponding to such maturity shall be calculated pursuant to the immediately
preceding sentence and the Reinvestment Rate shall be interpolated or
extrapolated from such yields on a straight-line basis, rounding in each of such
relevant periods to the nearest month. For purposes of calculating the
Reinvestment Rate, the most recent Statistical Release published prior to the
date of determination of the Make-Whole Amount shall be used.
As used herein the term "Statistical Release" means the statistical
release designated "H. 15(519)" or any successor publication which is published
weekly by the Federal Reserve System and which establishes yields on actively
traded United States government securities adjusted to constant maturities or,
if such statistical release is not published at the time of any determination
under the Supplemental Indenture, then such other reasonably comparable index
which shall be designated by the Company.
5. Mandatory Redemption. The Company shall not be required to make
sinking fund or redemption payments with respect to the Notes.
6. Notice of Redemption. Notice of redemption shall be mailed at least
30 days but not more than 60 days before the redemption date to each Holder of
Notes to be redeemed at its registered address. Notes may be redeemed in part
but only in whole multiples of $1,000, unless all of the Notes held by a Holder
are to be redeemed. On and after the redemption date, interest ceases to accrue
on Notes or portions of them called for redemption.
7. Denominations, Transfer, Exchange. The Notes are in registered form
without coupons in denominations of $100,000 and integral multiples of $1,000 in
excess thereof. The transfer of Notes may be registered and Notes may be
exchanged as provided in the Indenture. The Registrar and the Trustee may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and to pay any taxes and fees required by law or permitted by
the Indenture. The Registrar need not exchange or register the transfer of any
Note or portion of a Note selected for redemption. Also, it need not exchange or
register the transfer of any Notes for a period of 15 days before the mailing of
a notice of redemption of Notes, or during the period between a record date and
the corresponding Interest Payment Date.
8. Defaults and Remedies. In case an Event of Default (as defined in
the Indenture) with respect to the Notes shall have occurred and be continuing,
the principal hereof may be declared, and upon such declaration shall become,
due and payable, in the manner, with the effect and subject to the provisions
provided in the Indenture.
9. Actions of Holders. The Indenture contains provisions permitting the
holders of not less than a majority of the aggregate principal amount of the
outstanding Notes, on behalf of the holders of all such Notes at a meeting duly
called and held as provided in the Indenture, to make, give or take any request,
demand, authorization, direction, notice, consent, waiver or other action
provided in the Indenture to be
A - 3
<PAGE>
made, given or taken by the holders of the Notes, including without limitation,
waiving (a) compliance by the Company with certain provisions of the Indenture,
and (b) certain past defaults under the Indenture and their consequences. Any
resolution passed or decision taken at any meeting of the holders of the Notes
in accordance with the provisions of the Indenture shall be conclusive and
binding upon such holders and upon all future holders of this Note and other
Notes issued upon the registration of transfer hereof or in exchange heretofore
or in lieu hereof
10. Persons Deemed Owners. The Company, the Trustee, and any agent of
the Company or the Trustee may deem and treat the Person in whose name this Note
is registered on the Security Register as its absolute owner for all purposes.
11. Authentication. This Note shall not be valid until authenticated by
the manual signature of the Trustee or an authenticating agent.
12. Governing Law. THE INTERNAL LAW OF THE COMMONWEALTH OF
MASSACHUSETTS SHALL GOVERN AND BE USED TO CONSTRUE THE INDENTURE AND THE NOTES.
13. No Personal Liability. THE AMENDED AND RESTATED DECLARATION OF
TRUST OF THE COMPANY, DATED JULY 1, 1994, A COPY OF WHICH, TOGETHER WITH ALL
AMENDMENTS THERETO (THE "DECLARATION"), IS DULY FILED IN THE OFFICE OF THE
DEPARTMENT OF ASSESSMENTS AND TAXATION OF THE STATE OF MARYLAND, PROVIDES THAT
THE NAME "HEALTH AND RETIREMENT PROPERTIES TRUST" REFERS TO THE TRUSTEES UNDER
THE DECLARATION COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY,
AND THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF THE COMPANY
SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY
OBLIGATION OF, OR CLAIM AGAINST, THE COMPANY. ALL PERSONS DEALING WITH THE
COMPANY, IN ANY WAY, SHALL LOOK ONLY TO THE ASSETS OF THE COMPANY FOR THE
PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION.
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture. Request may be made to:
Health and Retirement Properties Trust
400 Centre Street
Newton, MA 02158
Telecopier No.: (617) 332-2261
Attention: President
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<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and
transfer this Note to
(Insert assignee's soc. sec. or tax I.D. no.)
(Print or type assignee's name, address and zip code)
and irrevocably appoint
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
Date:
Your Signature:
(Sign exactly as your name appears on the
face of this Note)
Signature Guarantee:
Exhibit 8.1
SULLIVAN & WORCESTER LLP
One Post Office Square
Boston, Massachusetts 02109
February 18, 1998
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 $50,000,000
in principal amount of its Remarketed Reset Notes Due July 9, 2007 (the
"Securities"), the following opinion is furnished to you to be filed with the
Securities and Exchange Commission (the "SEC") as Exhibit 8.1 to the Company's
Current Report on Form 8-K, 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. 333-26887 (the "Registration
Statement") filed under the Securities Act of 1933, as amended (the "Act"), and
we have examined originals or copies, certified or otherwise identified to our
satisfaction, of the Registration Statement, corporate records, certificates and
statements of officers and accountants of the Company and of public officials,
and such other documents as we have considered relevant and necessary in order
to furnish the opinion hereinafter set forth. Specifically, and without limiting
the generality of the foregoing, we have reviewed: (i) the declaration of trust,
as amended and restated, and the by-laws of the Company; (ii) the Registration
Statement; (iii) the final Prospectus dated May 30, 1997 (the "Base Prospectus")
relating to the Registration Statement; (iv) the Prospectus Supplement dated
July 2, 1997 (the "Prospectus Supplement") to the Base Prospectus; and (v) the
Supplement dated February 18, 1998 to the Prospectus Supplement (the "Sticker,"
and the Base Prospectus, as so supplemented by the Prospectus Supplement and the
Sticker, the "Prospectus"). We have reviewed the sections in the Company's
Annual Report on Form 10-K for the year ended December 31, 1996, filed under the
Exchange Act (the "Form 10-K") captioned "Federal Income Tax Considerations" and
"ERISA Plans, Keogh Plans and Individual Retirement Accounts," as supplemented
by the statements in the Prospectus Supplement under the caption "Certain
Federal Income Tax Considerations" and by
<PAGE>
Health and Retirement Properties Trust
February 18, 1998
Page 2
the Sticker. With respect to all questions of fact on which such opinions are
based, we have assumed the accuracy and completeness of and have relied on the
information set forth in the Prospectus and in the documents incorporated
therein by reference, and on representations made to us by the officers of the
Company. We have not independently verified such information; nothing has come
to our attention, however, which would lead us to believe that we are not
entitled to rely on such information.
In particular, we note that the Taxpayer Relief Act of 1997 liberalized
certain of the requirements for qualifying and operating as a real estate
investment trust (a "REIT") under Sections 856 through 860 of the Internal
Revenue Code of 1986, as amended (the "Code"), and that these amendments apply
to the Company for its taxable year commencing January 1, 1998. In comparison to
the rules and requirements in effect for the Company's 1997 taxable year (as
discussed in the Form 10-K in the section captioned "Federal Income Tax
Considerations"), the amendments, inter alia: (i) eliminate REIT
disqualification as the sanction for failing to solicit certain shareholder
ownership statements and instead impose a penalty of $25,000 ($50,000 for
intentional violations), and permit a REIT that solicits necessary shareholder
ownership statements and otherwise exercises reasonable due diligence to rely on
its actual knowledge for purposes of satisfying the requirement that at no time
during the last half of its taxable year was more than 50% in value of its
outstanding shares owned directly or indirectly by five or fewer individuals;
(ii) repeal the requirement that less than 30% of a REIT's gross income be
derived from sales or dispositions of certain short-term property; (iii) treat
income from a larger class of hedging instruments as qualifying income for
purposes of the 95% gross income requirement; (iv) permit a REIT to receive de
minimis amounts of otherwise impermissible service income from tenants, and
nevertheless have the rental income from such tenants qualify as rents from real
property for purposes of the 75% and 95% gross income requirements; and (v)
permit a REIT to retain and pay income tax on net long term capital gain, and
without an actual distribution thereof, pass through to its shareholders such
gain and a refundable credit for such taxes paid. We understand from you that
the availability of these new, liberalized rules are not expected to alter
significantly the Company's operations or affect its continued qualification and
taxation as a REIT.
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 the
matters in the sections of the Form 10-K captioned "Federal Income Tax
Considerations" and "ERISA Plans, Keogh Plans and Individual Retirement
Accounts," as supplemented by the statements in the Prospectus Supplement under
the caption "Certain Federal Income Tax Considerations" and by the Sticker, we
have made certain assumptions and expressed certain conditions and
qualifications therein, all of which assumptions, conditions and qualifications
are incorporated herein by reference.
<PAGE>
Health and Retirement Properties Trust
February 18, 1998
Page 3
Based upon and subject to the foregoing, we are of the opinion that the
discussions in the sections of the Form 10-K captioned "Federal Income Tax
Considerations" and "ERISA Plans, Keogh Plans and Individual Retirement
Accounts," as supplemented by the statements in the Prospectus Supplement under
the caption "Certain Federal Income Tax Considerations" and by the Sticker, in
all material respects are accurate and fairly summarize the Tax Laws 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 LP
SULLIVAN & WORCESTER LP
