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): May 27, 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
<PAGE>
THIS CURRENT REPORT CONTAINS FORWARD-LOOKING STATEMENTS. SUCH
STATEMENTS ARE SUBJECT TO CERTAIN RISKS AND UNCERTAINTITIES WHICH COULD CAUSE
ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE ANTICIPATED OR PROJECTED.
INVESTORS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING
STATEMENTS WHICH SPEAK ONLY AS OF THE DATE HEREOF. THE REGISTRANT UNDERTAKES NO
OBLIGATION TO PUBLISH REVISED FORWARD-LOOKING STATEMENTS TO REFLECT EVENTS OR
CIRCUMSTANCES AFTER THE DATE OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED
EVENTS.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(b) Unaudited Pro Forma Consolidated Financial Statements (set forth beginning
on page F-1).
(c) Exhibits.
1.1 Purchase Agreement dated as of May 27, 1998 by and among
Health and Retirement Properties Trust ("HRP") and the several
Underwriters named therein.
3.1 Third Amendment and Restatement of Declaration of Trust of HRP
dated July 1, 1994, as amended to date.
3.2 By-laws of HRP, as amended to date.
3.3 Articles Supplementary dated November 4, 1994 to Third
Amendment and Restatement of Declaration of Trust dated July
1, 1994 creating the Junior Participating Preferred Shares.
3.4 Articles Supplementary dated May 13, 1997 to Third Amendment
and Restatement of Declaration of Trust dated July 1, 1994
increasing the Junior Participating Preferred Shares.
3.5 Articles Supplementary dated May 22, 1998 to Third Amendment
and Restatement of Declaration of Trust dated July 1, 1994
increasing the Junior Participating Preferred Shares.
8.1 Opinion of Sullivan & Worcester LLP re: tax matters.
23.1 Consent of Sullivan & Worcester LLP (contained in Exhibit
8.1).
<PAGE>
HEALTH AND RETIREMENT PROPERTIES TRUST
Unaudited Pro Forma Consolidated Financial Statements
The following unaudited pro forma consolidated balance sheet at March
31, 1998 is intended to present the consolidated financial position of the
Company as if the transactions described in the notes hereto were consummated at
March 31, 1998. The following unaudited pro forma consolidated statements of
income are intended to present the consolidated results of operations of the
Company as if the transactions were consummated as of the beginning of the
periods presented. These unaudited pro forma consolidated financial statements
should be read in conjunction with, and are qualified in their entirety by
reference to, the separate consolidated financial statements of the Company for
the year ended December 31, 1997, incorporated herein by reference to the
Company's Current Report on Form 8-K dated February 27, 1998 and the Company's
unaudited consolidated financial statements for the quarter ended March 31,
1998, incorporated herein by reference to the Company's Quarterly Report on Form
10-Q for the quarter ended March 31, 1998. These unaudited pro forma
consolidated financial statements are not necessarily indicative of the expected
consolidated financial position or results of operations of the Company for any
future period. Differences would result from, among other considerations, future
changes in the Company's portfolio of investments, changes in interest rates,
changes in the capital structure of the Company, delays in the acquisition of
certain properties and changes in property level operating expenses.
F-1
<PAGE>
<TABLE>
<CAPTION>
HEALTH AND RETIREMENT PROPERTIES TRUST
Pro Forma Consolidated Balance Sheet
March 31, 1998
(dollars in thousands, except per share amounts)
(unaudited)
Recent 1735 Market
Historical Acquisitions (A) Street (B) Offering (C) Pro Forma
----------- ---------------- ------------ ------------ -------------
<S> <C> <C> <C> <C> <C>
ASSETS
Real estate properties, at cost:
Land $ 288,933 $ 5,185 $ 22,600 $ -- $ 316,718
Buildings and improvements 1,958,782 46,665 203,400 -- 2,208,847
----------- ----------- ----------- ----------- -----------
2,247,715 51,850 226,000 -- 2,525,565
Less accumulated depreciation (123,652) -- -- -- (123,652)
----------- ----------- ----------- ----------- -----------
2,124,063 51,850 226,000 -- 2,401,913
Real estate mortgages and notes, net 84,195 -- -- -- 84,195
Investment in Hospitality Properties Trust 111,433 -- -- -- 111,433
Cash and cash equivalents 21,678 (11,850) (6,000) 25,922 29,750
Interest and rents receivable 20,419 -- -- -- 20,419
Deferred interest and finance costs, net,
and other assets 27,463 -- -- -- 27,463
----------- ----------- ----------- ----------- -----------
$ 2,389,251 $ 40,000 $ 220,000 $ 25,922 $ 2,675,173
=========== =========== =========== =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Bank notes payable $ 160,000 $ 40,000 $ 220,000 $ (420,000) $ --
Senior notes payable, net 499,851 -- -- -- 499,851
Mortgage notes payable 26,157 -- -- -- 26,157
Convertible subordinated debentures 209,818 -- -- -- 209,818
Accounts payable and accrued expenses 32,371 -- -- -- 32,371
Deferred rents 33,448 -- -- -- 33,448
Security deposits 17,818 -- -- -- 17,818
Due to affiliates 7,141 -- -- -- 7,141
Dividend payable 40,377 -- -- -- 40,377
Shareholders' equity:
Preferred shares of beneficial interest,
$.01 par value; 50,000,000 authorized;
none issued -- -- -- -- --
Common shares of beneficial interest,
$.01 par value; 125,000,000 and
150,000,000 shares authorized and pro
forma, 106,256,403 and 131,256,403
shares issued and outstanding and pro forma 1,063 -- -- 250 1,313
Additional paid-in capital 1,512,767 -- -- 445,672 1,958,439
Cumulative net income 451,679 -- -- -- 451,679
Dividends (603,239) -- -- -- (603,239)
----------- ----------- ----------- ----------- -----------
Total shareholders' equity 1,362,270 -- -- 445,922 1,808,192
----------- ----------- ----------- ----------- -----------
$ 2,389,251 $ 40,000 $ 220,000 $ 25,922 $ 2,675,173
=========== =========== =========== =========== ===========
-- -- -- -- --
</TABLE>
F-2
<PAGE>
<TABLE>
<CAPTION>
HEALTH AND RETIREMENT PROPERTIES TRUST
Pro Forma Consolidated Statement of Income
For the Three Months Ended March 31, 1998
(amounts in thousands, except per share data)
(unaudited)
1998
First Quarter 1600 Market Recent
Historical Acquisitions (D) Street (E) Acquisitions (D)
-------------- ---------------- ----------- ----------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 66,894 $ 2,455 $ 4,721 $ 1,854
Interest and other income 5,058 -- -- --
-------- -------- -------- --------
Total revenues 71,952 2,455 4,721 1,854
-------- -------- -------- --------
Expenses:
Operating expenses 13,502 338 1,915 556
Interest 13,651 1,028 1,869 650
Depreciation and amortization 12,658 479 650 291
General and administrative 3,619 104 145 66
-------- -------- -------- --------
Total expenses 43,430 1,949 4,579 1,563
-------- -------- -------- --------
Income (loss) before equity in earnings of
Hospitality Properties Trust 28,522 506 142 291
Equity in earnings of Hospitality Properties Trust 1,327 -- -- --
Gain on equity transaction of Hospitality Properties Trust 1,532 -- -- --
-------- -------- -------- --------
Income (loss) before extraordinary item $ 31,381 $ 506 $ 142 $ 291
======== ======== ======== ========
Weighted average shares outstanding 101,471
========
Basic and diluted earnings per common share:
Income (loss) before extraordinary item $ 0.31
========
<CAPTION>
1735 Market
Street (F) Other (G) Offering (H) Pro Forma
----------- ---------- ------------ ------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 7,483 $ -- $ -- $ 83,407
Interest and other income -- -- -- 5,058
-------- -------- -------- --------
Total revenues 7,483 -- -- 88,465
-------- -------- -------- --------
Expenses:
Operating expenses 2,459 -- -- 18,770
Interest 3,575 (1,291) (6,825) 12,657
Depreciation and amortization 1,271 -- -- 15,349
General and administrative 283 -- -- 4,217
-------- -------- -------- --------
Total expenses 7,588 (1,291) (6,825) 50,993
-------- -------- -------- --------
Income (loss) before equity in earnings of
Hospitality Properties Trust (105) 1,291 6,825 37,472
Equity in earnings of Hospitality Properties Trust -- -- -- 1,327
Gain on equity transaction of Hospitality Properties Trust -- -- -- 1,532
-------- -------- -------- --------
Income (loss) before extraordinary item $ (105) $ 1,291 $ 6,825 $ 40,331
======== ======== ======== ========
Weighted average shares outstanding 130,941
========
Basic and diluted earnings per common share:
Income (loss) before extraordinary item $ 0.31
========
</TABLE>
F-3
<PAGE>
<TABLE>
<CAPTION>
HEALTH AND RETIREMENT PROPERTIES TRUST
Pro Forma Consolidated Statement of Income
For the Year Ended December 31, 1997
(amounts in thousands, except per share data)
(unaudited)
Second Quarter Third Quarter
Historical GPI (I) CSMC (J) Acquisitions (K) Acquisitions (K)
---------- --------- --------- ---------------- ----------------
<S> <C> <C> <C> <C> <C>
Revenues:
Rental income $188,000 $ 11,959 $ 6,831 $ 2,948 $ 3,179
Interest and other income 20,863 (366) -- -- --
-------- -------- -------- -------- --------
Total revenues 208,863 11,593 6,831 2,948 3,179
-------- -------- -------- -------- --------
Expenses:
Operating expenses 26,765 2,053 1,910 -- 954
Interest 36,766 (1,216) 3,232 1,087 1,463
Depreciation and amortization 39,330 4,156 1,119 627 501
General and administrative 11,670 2,105 249 139 111
-------- -------- -------- -------- --------
Total expenses 114,531 7,098 6,510 1,853 3,029
-------- -------- -------- -------- --------
Income (loss) before equity in earnings of Hospitality
Properties Trust, gain on sale of properties and
extraordinary item 94,332 4,495 321 1,095 150
Equity in earnings of Hospitality Properties Trust 8,590 -- -- -- --
Gain on equity transaction of Hospitality Properties Trust 9,282 -- -- -- --
-------- -------- -------- -------- --------
Income (loss) before gain on sale of properties and
extraordinary item 112,204 4,495 321 1,095 150
Gain on sale of properties, net 2,898 -- -- -- --
-------- -------- -------- -------- --------
Income (loss) before extraordinary item $115,102 $ 4,495 $ 321 $ 1,095 $ 150
======== ======== ======== ======== ========
Weighted average shares outstanding 92,168
========
Basic and diluted earnings per common share:
Income (loss) before extraordinary item $ 1.25
========
<CAPTION>
West 34th Franklin Bridgepoint Fourth Quarter 1998
Street (L) Plaza (M) Square (N) Acquisitions(K) Acquisitions (Q)
---------- ----------- ----------- ---------------- ---------------
<S> <C> <C> <C> <C> <C>
Revenues:
Rental income $ 10,771 $ 9,614 $ 5,599 $ 8,461 $ 26,039
Interest and other income -- -- -- -- --
-------- -------- -------- -------- --------
Total revenues 10,771 9,614 5,599 8,461 26,039
-------- -------- -------- -------- --------
Expenses:
Operating expenses 3,641 4,904 2,162 2,634 5,583
Interest 2,876 2,486 3,216 4,338 9,100
Depreciation and amortization 1,869 1,334 1,175 1,269 4,601
General and administrative 415 296 262 283 1,024
-------- -------- -------- -------- --------
Total expenses 8,801 9,020 6,815 8,524 20,308
-------- -------- -------- -------- --------
Income (loss) before equity in earnings of Hospitality
Properties Trust, gain on sale of properties and
extraordinary item 1,970 594 (1,216) (63) 5,731
Equity in earnings of Hospitality Properties Trust -- -- -- -- --
Gain on equity transaction of Hospitality Properties Trust -- -- -- -- --
-------- -------- -------- -------- --------
Income (loss) before gain on sale of properties and
extraordinary item 1,970 594 (1,216) (63) 5,731
Gain on sale of properties, net -- -- -- -- --
-------- -------- -------- -------- --------
Income (loss) before extraordinary item $ 1,970 $ 594 $ (1,216) $ (63) $ 5,731
======== ======== ======== ======== ========
Weighted average shares outstanding
Basic and diluted earnings per common share:
Income (loss) before extraordinary item
<PAGE>
<CAPTION>
1600 Market 1735 Market
Street (O) Street (P) Other (R) Offering (S) Pro Forma
------------ ------------ ---------- ------------ ----------
<S> <C> <C> <C> <C> <C>
Revenues:
Rental income $ 18,883 $ 29,836 $ -- $ -- $ 322,120
Interest and other income -- -- -- -- 20,497
--------- --------- --------- --------- ---------
Total revenues 18,883 29,836 -- -- 342,617
--------- --------- --------- --------- ---------
Expenses:
Operating expenses 7,659 10,276 -- -- 68,541
Interest 7,475 14,300 (6,395) (27,300) 51,428
Depreciation and amortization 2,601 5,085 -- -- 63,667
General and administrative 578 1,130 -- -- 18,262
--------- --------- --------- --------- ---------
Total expenses 18,313 30,791 (6,395) (27,300) 201,898
--------- --------- --------- --------- ---------
Income (loss) before equity in earnings of Hospitality
Properties Trust, gain on sale of properties and
extraordinary item 570 (955) 6,395 27,300 140,719
Equity in earnings of Hospitality Properties Trust -- -- -- -- 8,590
Gain on equity transaction of Hospitality Properties Trust -- -- -- -- 9,282
--------- --------- --------- --------- ---------
Income (loss) before gain on sale of properties and
extraordinary item 570 (955) 6,395 27,300 158,591
Gain on sale of properties, net -- -- -- -- 2,898
--------- --------- --------- --------- ---------
Income (loss) before extraordinary item $ 570 $ (955) $ 6,395 $ 27,300 $ 161,489
========= ========= ========= ========= =========
Weighted average shares outstanding 130,725
=========
Basic and diluted earnings per common share:
Income (loss) before extraordinary item $ 1.24
=========
</TABLE>
F-4
<PAGE>
HEALTH AND RETIREMENT PROPERTIES TRUST
Notes To Unaudited Pro Forma Consolidated Financial Statements
(dollars in thousands, except per share data)
Consolidated Balance Sheet Adjustments
A. Represents the Company's acquisitions in April 1998 and May 1998 of two
commercial office properties located in Massachusetts, a medical office
property located in California and three commercial office properties
located in New Jersey (the "Recent Acquisitions"). These acquisitions were
funded with available cash and by drawings under the Company's revolving
line of credit.
B. Represents the Company's acquisition on May 22, 1998 of a mortgage secured
by a commercial office property located in Philadelphia, Pennsylvania
("1735 Market Street"). The Company has also entered into an agreement with
the current owners of 1735 Market Street to acquire a controlling interest
in the property subject to definitive agreements and the resolution of
certain issues. The acquisition is subject to various conditions and no
assurances can be given as to when or if this acquisition will be
consummated. In addition, the realization on the collateral may involve
foreclosure or other judicial proceedings. This acquisition was funded with
available cash and by drawings under the Company's revolving line of
credit.
C. Represents the public offering of 25,000,000 common shares of beneficial
interest of the Company ("Common Shares") at a per share price of $18.875
(the "Offering"). Net proceeds will be used, in part, to repay amounts
outstanding under the Company's revolving line of credit.
Consolidated Statement of Income Adjustments for the Quarter Ended March 31,
1998
D. Represents the increases in rental income, operating expenses, depreciation
and amortization and general and administrative expenses arising from the
Recent Acquisitions and the Company's acquisitions during January 1998,
February 1998 and March 1998 of two medical office properties and three
commercial office properties located in Pennsylvania, four commercial
office properties located in Texas, a medical office property located in
Massachusetts, a commercial office property located in Maryland, one
medical office property and two commercial office properties located in
Minnesota and three medical office properties and a commercial office
property located in Florida (collectively, "1998 First Quarter
Acquisitions"), and the increase in interest expense from the use of the
Company's revolving line of credit to fund these acquisitions.
E. Represents the increase in rental income, operating expenses, depreciation
and amortization and general and administrative expenses arising from the
Company's acquisition on March 30, 1998 of a commercial office property
located at 1600 Market Street in Philadelphia, Pennsylvania ("1600 Market
Street") and the increase in interest expense from the use of the Company's
revolving line of credit to fund this acquisition.
F. Represents the increase in rental income, operating expenses, depreciation
and amortization and general and administrative expenses arising from the
Company's acquisition of 1735 Market Street, as well as the increase in
interest expense from the use of the Company's revolving line of credit to
fund this acquisition.
G. Represents the net decrease in interest expense relating to the issuance of
additional Remarketed Reset Notes and 6.7% Senior Notes due 2005 in
February 1998 (collectively the "1998 Notes') and the issuance of 6,977,575
common shares in February 1998 and March 1998; the proceeds of these
offerings were used to repay amounts then outstanding on the Company's
revolving credit facility.
H. Reflects the decrease in interest expense as a result of the Offering and
the application of the net proceeds to the Company's revolving line of
credit.
F-5
<PAGE>
HEALTH AND RETIREMENT PROPERTIES TRUST
Notes To Unaudited Pro Forma Consolidated Financial Statements
(dollars in thousands, except per share data)
Consolidated Statement of Income Adjustments for the Year Ended December 31,
1997
I. Represents the increase in rental income, operating expenses, depreciation
and amortization and general and administrative expenses arising from the
Company's acquisition of the government office properties ("Government
Office Properties") from Government Property Investors, Inc ("GPI"). Also
reflects the decrease in interest expense arising from the Company's
issuance of common shares in a March 1997 offering, the proceeds of which
were used in part to repay amounts then outstanding under the Company'
revolving line of credit, net of an increase in interest expense related to
the Company's assumption of certain debt in connection with the acquisition
of the Government Office Properties.
J. Represents the increase in rental income, operating expenses, depreciation
and amortization and general and administrative expenses arising from the
Company's acquisition of two medical office properties and two parking
structures located in Los Angeles, California ("CSMC"), as well as the
increase in interest expense due to the use of the Company's revolving line
of credit to fund this acquisition.
K. Represents the increase in rental income, operating expenses, depreciation
and amortization and general and administrative expenses arising from the
Company's acquisition of a) a 200 unit retirement housing property located
in Spokane, Washington and 20 medical office clinics and ancillary
structures located in Massachusetts during the second quarter ("Second
Quarter Acquisitions"), b) three medical and two commercial office
buildings located in Pennsylvania during the third quarter ("Third Quarter
Acquisitions") and c) a medical office property located in Colorado, a
medical office property located in Maryland, a medical office property
located in Rhode Island, three medical office properties located in
California, and a medical office property located in Washington, D.C.
during the fourth quarter ("Fourth Quarter Acquisitions"), as well as the
increase in interest expense due to the use of the Company's revolving line
of credit to fund these acquisitions.
L. Represents the increase in rental income, operating expenses, depreciation
and amortization and general and administrative expenses arising from the
Company's acquisition of West 34th Street in New York City ("West 34th
Street"), as well as the increase in interest expense due to the use of the
Company's revolving line of credit to fund the acquisition.
M. Represents the increase in rental income, operating expenses, depreciation
and amortization and general and administrative expenses arising from the
Company's acquisition of Franklin Plaza in Philadelphia, Pennsylvania
("Franklin Plaza"), as well as the increase in interest expense due to the
use of the Company's revolving line of credit to fund the acquisition.
N. Represents the increase in rental income, operating expenses, depreciation
and amortization and general and administrative expenses arising from the
Company's acquisition of Bridgepoint Square, Austin, Texas ("Bridgepoint
Square"). Bridgepoint Square consists of five properties, of which one
property was under construction at September 30, 1997 and one property was
completed in July 1997. Also represents the increase in interest expense
due to the use of the Company's revolving line of credit to fund the
acquisition.
O. Represents the increase in rental income, operating expenses, depreciation
and amortization and general and administrative expenses arising from the
Company's acquisition of 1600 Market Street, as well as the increase in
interest expense due to the use of the Company's revolving line of credit
to fund the acquisition.
P. Represents the increase in rental income, depreciation and amortization and
general and administrative expenses arising from the Company's acquisition
of 1735 Market Street, as well as the increase in interest expense due to
the use of the Company's revolving line of credit to fund the acquisition.
F-6
<PAGE>
HEALTH AND RETIREMENT PROPERTIES TRUST
Notes To Unaudited Pro Forma Consolidated Financial Statements
(dollars in thousands, except per share data)
Consolidated Statement of Income Adjustments for the Year Ended December 31,
1997 - continued
Q. Represents the increase in rental income, operating expenses, depreciation
and amortization and general and administrative expenses arising from the
Company's Recent Acquisitions and the 1998 First Quarter Acquisitions
(collectively, "1998 Acquisitions"), as well as the increase in interest
expense due to the use of the Company's revolving line of credit to fund
these acquisitions.
R. Represents the net decrease in interest expense relating to the issuance of
Remarketed Reset Notes in July 1997, the issuance of 6.75% Senior Notes in
December 1997, the issuance of the 1998 Notes, the prepayment of Floating
Rate Senior Notes in July 1997, and the issuance of common shares in
February 1998 and March 1998.
S. Reflects the decrease in interest expense as a result of the Company's
Offering and the application of net proceeds to the Company's revolving
line of credit.
T. The Company has proposed acquisitions, which include a medical office
property and a commercial office property located in Texas, three
commercial office properties located in Ohio, a commercial office property
located in Pennsylvania, a commercial office property located in
Connecticut, a commercial office property located in Delaware, a commercial
office property located in Massachusetts and a commercial office property
located in New York (the "Proposed Acquisitions"). Upon the consummation of
the Proposed Acquisitions, adjusted pro forma total assets, total real
estate investments, total borrowings and shareholders' equity at March 31,
1998 would be $2,806,423, $2,681,690, $867,076 and $1,808,192,
respectively, for the three months ended March 31, 1998, adjusted pro forma
total revenues, total expenses and net income would be $93,730, $55,516 and
$41,073, respectively, and for the year ended December 31, 1997, adjusted
pro forma total revenues, total expenses and net income would be $369,978,
$ 222,382 and $167,264, respectively. The Proposed Acquisitions are subject
to various closing conditions customary in real estate transactions,
including, but not limited to, due diligence, Board of Trustees approval
and final documentation. No assurances can be given as to when or if these
Proposed Acquisitions will be consummated.
F-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HEALTH AND RETIREMENT PROPERTIES TRUST
By: /s/ Ajay Saini
Ajay Saini
Treasurer and Chief Financial Officer
Date: May 28, 1998
EXHIBIT 1.1
25,000,000 Shares
HEALTH AND RETIREMENT PROPERTIES TRUST
(a Maryland real estate investment trust)
Common Shares of Beneficial Interest
PURCHASE AGREEMENT
May 27, 1998
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
A.G. EDWARDS & SONS, INC.
LEGG MASON WOOD WALKER INCORPORATED
MORGAN STANLEY & CO. INCORPORATED
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
SMITH BARNEY INC.
as Representatives of the
several Underwriters named
in Schedule A hereto
c/o MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
World Financial Center - North Tower
250 Vesey Street
New York, NY 10281-1326
Ladies and Gentlemen:
Health and Retirement Properties Trust, a Maryland real estate
investment trust (the "Company"), confirms its agreement with Merrill Lynch &
Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch"),
Donaldson Lufkin & Jenrette Securities Corporation ("Donaldson Lufkin"), A.G.
Edwards & Sons, Inc. ("A.G. Edwards"), Legg Mason Wood Walker Incorporated
("Legg Mason"), Morgan Stanley & Co. Incorporated ("Morgan Stanley"),
PaineWebber Incorporated ("PaineWebber"), Prudential Securities Incorporated
("Prudential") and Smith Barney Inc. ("Smith Barney"), together with each of the
other Underwriters named in
<PAGE>
Schedule A hereto (collectively, the "Underwriters" which term shall also
include any underwriter substituted as hereinafter provided in Section 10), for
whom Merrill Lynch, Donaldson Lufkin, A.G. Edwards, Legg Mason, Morgan Stanley,
PaineWebber, Prudential and Smith Barney are acting as representatives (in such
capacity, Merrill Lynch, Donaldson Lufkin, A.G. Edwards, Legg Mason, Morgan
Stanley, PaineWebber, Prudential and Smith Barney are hereinafter collectively
referred to as the "Representatives"), with respect to the sale by the Company
and the purchase by the Underwriters, acting severally and not jointly, of the
number of common shares of beneficial interest, par value $.01 per share, of the
Company (the "Common Shares") set forth in said Schedule A and with respect to
the grant by the Company to the Underwriters of the option described in Section
2 hereof to purchase all or any part of an additional 3,750,000 Common Shares to
cover over-allotments. The aforesaid 25,000,000 Common Shares (the "Initial
Shares"), together with all or any part of the 3,750,000 Common Shares subject
to the option described in Section 2 hereof (the "Option Shares"), are
collectively hereinafter called the "Shares".
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 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 Shares (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",
respectively. The Company has also filed with the Commission a registration
statement on Form S-3 (No. 333-52353) pursuant to Rule 462(b) of the rules and
regulations of the Commission under the 1933 Act (the "1933 Act Regulations"),
which is referred to herein as the "Rule 462(b) Registration Statement." The
term "Registration Statement" includes the Rule 462(b) Registration Statement.
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 each Underwriter 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 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"
2
<PAGE>
refers to a prospectus which has been provided to the Underwriters by
the Company for use in connection with the offering of the Shares 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 the Underwriters 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 statements or omissions in the
Registration Statement or the Prospectus made in reliance upon and in
conformity with information furnished to the Company in writing by any
Underwriter through Merrill Lynch 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 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, together with the related schedules and notes thereto,
and, 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"), of
Marriott International Inc. (f/k/a New Marriott MI, Inc.) ("MII"),
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,
together with the related schedules and notes thereto, and, to the
Actual Knowledge of the Company, of MII, present fairly the
consolidated financial position, results of operations, shareholders'
equity and changes in financial position of the Company and its
subsidiaries and MII, respectively, at the respective dates or for the
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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 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 MII, included or incorporated by reference
in the Registration Statement and in the Prospectus are independent
certified public accountants as required by the 1933 Act.
(vi) All of the outstanding shares of beneficial interest of
the Company have been duly authorized and are validly issued, fully
paid, non-assessable (except as otherwise described in the Registration
Statement) and free of preemptive or similar rights or other rights to
subscribe for or to purchase securities provided for by law or by its
Declaration of Trust or bylaws; the Shares to be issued and sold
pursuant to this Agreement have been duly authorized and, when issued
and delivered to the Underwriters against payment therefor as provided
hereunder, will have been validly issued and will be fully paid,
non-assessable (except as otherwise described in the Registration
Statement) and free of preemptive or similar rights; the Company has no
outstanding preferred shares of beneficial interest; there are no
outstanding subscriptions, rights, warrants, options, calls,
convertible securities, commitments of sale or liens related to or
entitling any person to purchase or otherwise to acquire any Common
Shares of, or other ownership interest in, the Company, except as
otherwise disclosed in the Registration Statement or the Prospectus and
except for (i) awards under the Company's Incentive Share Award Plan
made in the ordinary course of business and (ii) a grant of Common
Shares to the children of the late Ralph J. Watts, a former Trustee of
the Company, which have been authorized but are not yet issued; all
outstanding Common Shares, except for shares issued pursuant to the
Company's Incentive Share Award Plan, are listed on the New York Stock
Exchange (the "NYSE") and the Company knows of no reason or set of
facts which is likely to result in the delisting of such Common Shares
or the inability to list the Shares; and there are no rights of holders
of securities of the Company to the registration of Common Shares or
other securities that would require inclusion of such Common Shares or
other securities in the offering of the Shares.
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(vii) 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,
except as to subsidiaries that are partnerships, nonassessable, and,
except as disclosed in the Registration Statement or 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.
(viii) The authorized capital of the Company, including the
Common Shares, conforms as to legal matters to the description thereof
contained in the Prospectus (or the documents incorporated therein by
reference).
(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, 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 upon conversion of certain
convertible debentures of the Company) or (C) repurchased or redeemed
shares of beneficial interest, and (v) there has not been (A) any
material decrease in the Company's net worth or (B) any material
increase in the short-term or long-term debt (including capitalized
lease obligations 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) Neither the Company nor any of its subsidiaries 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 is a party
or by which any of their respective properties or assets may be bound
or affected, except for any such
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violation that would not have a material adverse effect on the
condition, financial or otherwise or in the earnings, business affairs
or business prospects of the Company and its subsidiaries, taken as a
whole. The Company is not 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.
(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 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 and is required to be disclosed in
the Registration Statement or the Prospectus, or (D) could adversely
affect the consummation of this Agreement and the issuance, purchase
and sale of the Shares. 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 Shares 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, (ii) any agreement, indenture or other
instrument to which the Company or any of its subsidiaries is a party
or by which the Company or any of its subsidiaries 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 their respective properties or assets may be subject.
(xiv) No consent, approval, authorization or order of, or
registration, filing or qualification with, any governmental body or
regulatory agency having jurisdiction over the Company or any of its
subsidiaries or any of their respective properties or assets is
required for the execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby,
including, without limitation, the issuance, sale and delivery of the
Shares pursuant to this Agreement, except such as have been obtained
and such as may be required under foreign and state securities or "Blue
Sky" or real estate syndication laws.
(xv) Except as otherwise disclosed in the Registration
Statement or 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,
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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 or in the Prospectus as being
owned by them. Except as otherwise set forth in the Registration
Statement or in the Prospectus, all leases to which the Company and
each of its subsidiaries is a party relating to real property, and all
other leases which are material to the business of the Company and its
subsidiaries, taken as a whole, are valid and binding, and no default
(to the Company's knowledge, in the case of leases to which the Company
is a party as lessor, that would, individually or in the aggregate,
have a material adverse effect on the business, operations, earnings,
prospects, properties or condition (financial or otherwise) of the
Company and its subsidiaries, taken as a whole) has occurred and is
continuing thereunder, and the Company and each of its subsidiaries
enjoys peaceful and undisturbed possession under all such leases to
which it is a party as lessee. With respect to all properties owned or
leased by the Company and each of its subsidiaries, the Company or such
subsidiary has such documents, instruments, certificates, opinions and
assurances, including without limitation, fee, leasehold owners or
mortgage title insurance policies (disclosing no encumbrances or title
exceptions which are material to the Company and its subsidiaries
considered as a whole, except as otherwise set forth in the
Registration Statement and in the Prospectus), legal opinions and
property insurance policies in each case in form and substance as are
usual and customary in transactions involving the purchase of similar
real estate and are appropriate for the Company or such subsidiary to
have obtained.
(xvi) The Company and each of its subsidiaries owns, or
possesses adequate rights to use, all patents, trademarks, trade names,
service marks, copyrights, licenses and other rights necessary for the
conduct of their respective businesses as described in the Registration
Statement and in the Prospectus, and neither the Company nor any of its
subsidiaries has received any notice of conflict with, or infringement
of, the asserted rights of others with respect to any such patents,
trademarks, trade names, service marks, copyrights, licenses and other
such rights (other than conflicts or infringements that, if proven,
would not have a material adverse effect on the business, 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
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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, 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,
defined, or listed as a "hazardous waste", "hazardous substance",
"toxic substance", "medical waste", "infectious waste" or other similar
terms in any Environmental Law or by any federal, state or local
government or quasi-government authority, or any petroleum products,
asbestos, lead-based paint, polychlorinated biphenyls, flammable
explosives or radioactive materials.
(xix) Each of the Company and its subsidiaries 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
the Company does not have any reason to believe that any governmental
body or agency is considering limiting, suspending or revoking any such
license, certificate, permit, authorization, approval, franchise or
right; each of the Company and its subsidiaries 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
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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) 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.
(xxiii) 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
(xxiv) 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.
(xxv) 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,
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stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Shares.
(xxvi) 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.
(xxvii) 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 1998 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.
(xxviii) 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.
(xxix) Except as otherwise disclosed in the Prospectus, since
the respective dates as of which information is given in the
Prospectus, there has been no material adverse change in the business,
operations, earnings, prospects, properties or condition (financial or
otherwise) of REIT Management & Research, Inc. (the "Advisor"), whether
or not arising in the ordinary course of business, that would have a
material adverse effect on the Company and its subsidiaries, taken as a
whole. The Advisory Agreement, dated as of January 1, 1998 (the
"Advisory Agreement"), between the Company and the Advisor, has been
duly authorized, executed and delivered by the parties thereto and
constitutes the valid agreement of the parties thereto, enforceable in
accordance with its terms, except as limited by (a) the effect of
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer
or other similar laws relating to or affecting the rights or remedies
of creditors or (b) the effect of general principles of equity
(regardless of whether enforcement is sought in a proceeding in equity
or at law).
(b) Any certificate signed by any officer of the Company or any of its
subsidiaries and delivered to the Representatives or to counsel for the
Underwriters shall be deemed a representation and warranty by the Company to
each Underwriter as to the matters covered thereby.
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Section 2. Sale and Delivery to the Underwriters; 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 each Underwriter, severally and not jointly, and each Underwriter,
severally and not jointly, agrees to purchase from the Company, at a price per
share of $17.93, the number of Initial Shares set forth in Schedule A opposite
the name of such Underwriter, plus any additional number of Initial Shares which
such Underwriter may become obligated to purchase pursuant to the provisions of
Section 10 hereof.
(b) In addition, on the basis of the representations and warranties
herein included and subject to the terms and conditions herein set forth, the
Company hereby grants an option to the Underwriters, severally and not jointly,
to purchase up to an additional 3,750,000 Shares at the price per share set
forth in (a) above. The option hereby granted will expire 30 days after the date
of this Agreement and may be exercised in whole or in part from time to time
only for the purpose of covering over-allotments which may be made in connection
with the offering and distribution of the Initial Shares upon notice by the
Representatives to the Company setting forth the number of Option Shares as to
which the several Underwriters are then exercising the option and the time, date
and place of payment and delivery for such Option Shares. Any such time and date
of delivery (a "Date of Delivery") shall be determined by the Representatives
but shall not be later than seven full business days, nor earlier than two full
business days, after the exercise of said option, nor in any event prior to
Closing Time, unless otherwise agreed upon by the Representatives and the
Company. If the option is exercised as to all or any portion of the Option
Shares, such Option Shares shall be purchased by the Underwriters, severally and
not jointly, in proportion to their respective Initial Share underwriting
obligations as set forth in Schedule A.
(c) Payment of the purchase price for and delivery of certificates for
the Initial Shares shall be made at the offices of Sullivan & Worcester LLP, One
Post Office Square, Boston, Massachusetts 02109, or at such other place as shall
be agreed upon by the Representatives and the Company, at 9:00 A.M. on the third
(fourth, if the pricing occurs after 4:30 P.M. (Eastern time) on any given
day)business day (unless postponed in accordance with the provisions of Section
10 hereof) following the date of this Agreement, or such other time not later
than ten business days after such date as shall be agreed upon by the
Representatives and the Company (such time and date of payment and delivery
being herein called "Closing Time"). In addition, in the event that the
over-allotment option described in (b) above is exercised by the Underwriters,
payment of the purchase price for and delivery of certificates for the related
Option Shares shall be made at the above-mentioned office of Sullivan &
Worcester LLP, or at such other place as shall be mutually agreed upon by the
Representatives and the Company, on each Date of Delivery as specified in the
notice from the Representatives to the Company. Payment shall be made by wire
transfer of immediately available funds payable to the order of the Company
against delivery to the Representatives for the respective accounts of the
Underwriters of certificates for the Shares to be purchased by them. The
certificates for the Initial Shares and the Option Shares shall be in such
authorized denominations and registered in such names as the Representatives may
request in writing at least one full business day before Closing Time or the
Date of Delivery, as the case may be. It is understood that each Underwriter has
authorized the Representatives, for its account, to accept delivery of and
receipt for, and to make payment of,
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the purchase price for, the Initial Shares and the Option Shares which it has
agreed to purchase. The Representatives, individually and not as representatives
of the several Underwriters may (but shall not be obligated to) make payment of
the purchase price for the Initial Shares or the Option Shares to be purchased
by any Underwriter whose check has not been received by Closing Time, but any
such payment shall not relieve such Underwriter from its obligations hereunder.
The certificates for the Initial Shares and the Option Shares will be made
available for examination and packaging by the Representatives not later than
10:00 A.M. (Eastern time) on the business day prior to Closing Time or the Date
of Delivery, as the case may be.
Section 3. Covenants of the Company. The Company covenants with each
Underwriter as follows:
(a) Immediately following the execution of this Agreement, the Company
will prepare a Prospectus Supplement setting forth the number of Shares covered
thereby and their terms not otherwise specified in the Prospectus, the
Underwriters' names, the price at which the Shares are to be purchased by the
Underwriters from the Company, and such other information as the Representatives
and the Company deem appropriate in connection with the offering of the Shares;
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 the Representatives as many copies of the Prospectus
(including such Prospectus Supplement) as they shall reasonably request.
(b) Until the termination of the initial offering of the Shares, the
Company will notify the Representatives 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 Shares, (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 Shares 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 the Representatives 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 Shares) to the
Prospectus (including any revised prospectus which the Company proposes for use
by the Underwriters in connection with the offering of the Shares 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
the Representatives 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 counsel for the Underwriters shall reasonably object.
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(d) The Company will deliver to each of the Representatives 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 Shares
(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 the Representatives, 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 the Representatives may reasonably request for the purposes
contemplated by the 1933 Act, the 1933 Act Regulations, the 1934 Act or 1934 Act
Regulations.
(f) If any event shall occur as a result of which it is necessary, in
the opinion of counsel for the Underwriters, 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, the Company will either (i)
forthwith prepare and furnish to the Representatives 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 counsel for the Underwriters, 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, not
misleading.
(g) The Company will endeavor in good faith, in cooperation with the
Representatives, to qualify the Shares 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 the Representatives 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 Shares 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 Shares.
(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 Shares in the manner specified in the Prospectus under the caption "Use
of Proceeds" in all material respects.
(j) The Company will use its best efforts to effect the listing of the
Shares on the NYSE.
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(k) 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".
(l) 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
Shares.
(m) The Company will not, during a period of 90 days from the date of
this Agreement, without the prior written consent of Merrill Lynch, register,
offer, sell, contract to sell, grant any option to purchase or otherwise dispose
of any Common Shares or any securities convertible into or exercisable or
exchangeable for Common Shares, or warrants to purchase Common Shares, other
than (i) the Shares which are to be sold pursuant to this Agreement, (ii) Common
Shares issued or to be issued pursuant to the Company's Incentive Share Award
Plan, (iii) Common Shares to be issued upon conversion of the Company's
outstanding convertible debentures, (iv) Common Shares to be issued as partial
or full payment for properties directly or indirectly acquired or to be acquired
by the Company or its subsidiaries; provided that, the Company shall have
conditioned the issuance of such Common Shares upon the agreement of the
recipients to the restrictions of this paragraph (m); provided, however, that
any Common Shares issued as a post-closing adjustment in connection with the
acquisition previously agreed to of the government office properties from
Government Properties Investors, Inc. and related parties shall not be subject
to such condition, (v) the issuance of Common Shares to any sponsor or
underwriter of a unit investment trust; provided that, the unit investment trust
shall have a limitation upon the sale of such Common Shares until the expiration
of the 90-day period in this paragraph (m), (vi) Common Shares to be issued to
the children of the late Ralph J. Watts and (vii) the registration of Common
Shares on an omnibus shelf registration statement.
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 Shares to the
Underwriters, (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 Shares 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 the Underwriters 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 fees and
expenses incurred in connection with the listing of the Shares on the NYSE,
(viii) the cost of printing or reproducing and delivering to the Underwriters
copies of any Blue Sky Survey, (ix) the cost of providing any CUSIP or other
identification numbers for the Shares, and (x) any transfer taxes imposed on the
sale of the Shares to the Underwriters.
If this Agreement is terminated by the Representatives in accordance
with the provisions of Section 5 or Section 9(a)(i), the Company shall reimburse
the Underwriters for all of their out-of-pocket expenses, including the
reasonable fees and disbursements of counsel for the Underwriters.
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Section 5. Conditions of the Underwriters' Obligations. The obligations
of the Underwriters 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 Shares 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 the Representatives 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 the Representatives 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 counsel for the
Underwriters, 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.
(ii) (A) All of the outstanding shares of beneficial interest
of the Company have been duly authorized and are validly issued, fully
paid and non-assessable (except as otherwise described in the
Registration Statement) and (B) the Shares have been duly authorized
and, when issued and delivered to the Underwriters against payment
therefor in accordance with the terms of this Agreement, will be
validly issued, fully paid and nonassessable, and will be free of any
preemptive or, to such counsel's knowledge, similar rights that entitle
any person (other than the Underwriters, their successors and assigns)
to acquire any Shares upon the issuance thereof by the Company.
(iii) 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, except as to subsidiaries that are partnerships,
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).
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<PAGE>
(iv) The Company has the requisite trust power and authority
to enter into and perform this Agreement and to issue and deliver the
Shares.
(v) This Agreement has been duly authorized, executed and
delivered by the Company.
(vi) 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 any Significant Subsidiary
of the Company, (B) except as disclosed in the Prospectus, any material
agreement, indenture or other instrument to which the Company, or any
of its Significant Subsidiaries 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 their respective material properties or
assets may be subject.
(vii) 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 any of their respective material
properties or assets is required for the Company's execution, delivery
and performance of this Agreement and the consummation of the
transactions contemplated hereby, including, without limitation, the
issuance, sale and delivery of the Shares pursuant to this Agreement,
except such as have been obtained and such as may be required under
foreign and state securities or "Blue Sky" laws.
(viii) 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.
(ix) 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 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 and is required to be disclosed in the Prospectus, or
(D) could adversely affect the consummation of this Agreement and the
issuance of the Shares; to such counsel's knowledge, no contract or
other document is required to be described in the Registration
Statement or in the Prospectus or to be filed as an exhibit to the
Registration Statement that is not described therein or filed as
required.
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<PAGE>
(x) Except as otherwise disclosed in the Prospectus, to such
counsel's knowledge, neither the Company nor any of its subsidiaries is
in violation of its respective charter or by-laws or other
organizational documents or in default in the performance of any
obligation, agreement or condition contained in any bond, debenture,
note or any other evidence of indebtedness or in any other material
agreement, indenture or instrument to which the Company or any of its
subsidiaries 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.
(xi) To such counsel's knowledge, each of the Company and its
subsidiaries 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.
(xii) 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 paragraph (xx) below), as to which such counsel need not
express any opinion) comply as to form in all material respects with
the requirements of the 1933 Act.
(xiii) 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
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.
(xiv) To the extent required to be described therein, the
Shares conform in all material respects to the descriptions in the
Registration Statement and the Prospectus.
(xv) The statements (a) in the Prospectus under the captions
"Description of Shares", "Redemption; Business Combinations and Control
Share Acquisitions," "Limitation of Liability; Shareholder Liability"
and "Federal Income Tax and ERISA Considerations" and (b) in Item 1 of
the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997 under the captions "Regulation and Reimbursement,"
"Federal Income Tax Considerations" and "ERISA Plans, Keogh Plans and
Individual Retirement Accounts" in each case insofar as they purport to
summarize matters arising under Massachusetts or Maryland law or the
federal law of the United States, or provisions of documents to which
the Company is a party specifically referred to therein, are accurate
summaries of such legal matters or provisions.
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<PAGE>
(xvi) 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.
(xvii) The Company is not required to register as an
"investment company" within the meaning of the 1940 Act.
(xviii) 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.
(xix) 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. (xx)
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
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or (b) the proceedings referred to in Item 3 of the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1997 under
the caption "Legal Proceedings" and any claims related thereto
(collectively, the "Excluded Proceedings").
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 the Representatives and is, in form and
substance, satisfactory to the Representatives and counsel for the
Underwriters. 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 the Representatives at the request
of the Company and shall so state therein.
In addition, the Representatives shall have received at
Closing Time an opinion (satisfactory to the Representatives and
counsel for the Underwriters) of Sherin & Lodgen LLP, special counsel
for the Company, dated as of Closing Time, to the effect that the
statements describing the proceedings in Item 3 of the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1997 under
the caption "Legal Proceedings", insofar as they purport to summarize
legal proceedings, constitute a fair summary of such legal proceedings.
(c) The Representatives shall have received at Closing Time an opinion,
dated as of Closing Time, of Brown & Wood LLP, counsel for the Underwriters, as
to the matters referred to in clauses (ii)(B), (v), (viii), (xii), (xiv) and
(xx) of the foregoing paragraph (b). In giving such opinion with respect to the
matters covered by clause (xx), such counsel may state that their opinion and
belief are based upon their participation in the preparation of the Registration
Statement and the Prospectus and any amendments or supplements thereto and
review and discussion of the contents thereof, but are without independent check
or verification except as specified.
In rendering their opinion as aforesaid, Brown & Wood LLP may rely upon
an opinion, dated as of Closing Time, of Piper & Marbury L.L P. as to matters
governed by Maryland law, and the opinion of Sullivan & Worcester LLP referred
to above as to matters governed by Massachusetts law. In addition, in rendering
such opinion, such counsel may state that their opinion as to laws of the State
of Delaware is limited to the Delaware General Corporation Law.
(d) At Closing Time (i) the Registration Statement and the Prospectus
shall contain all statements which are required to be stated therein in
accordance with the 1933 Act and the 1933 Act Regulations and in all material
respects shall conform to the requirements of the 1933 Act and the 1933 Act
Regulations, and neither the Registration Statement nor the Prospectus shall
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading and no action, suit
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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 the Representatives 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 (d) 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) At Closing Time, 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 business, operations, earnings,
prospects, properties or condition (financial or otherwise) of the Advisor,
whether or not arising in the ordinary course of business; and the
Representatives shall have received, at Closing Time, a certificate of the
President of the Advisor evidencing compliance with this subsection (e).
(f) Concurrently with the execution and delivery of this Agreement, and
at Closing Time prior to payment and delivery of the Shares, Ernst & Young LLP
shall have furnished to the Representatives a letter, dated the date of its
delivery, addressed to the Representatives and in form and substance
satisfactory to the Representatives, confirming that they are independent
accountants with respect to the Company as required by the 1933 Act and the 1933
Act Regulations and with respect to the financial and other statistical and
numerical information contained in the Registration Statement and the Prospectus
or incorporated by reference therein. Each such letter shall contain information
of the type customarily included in accountants' comfort letters to
underwriters.
(g) At Closing Time counsel for the Underwriters 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 Shares 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 Shares as herein contemplated shall
be reasonably satisfactory in form and substance to the Representatives and
counsel for the Underwriters.
(h) In the event the Representatives exercise the option described in
Section 2 hereof to purchase all or any portion of the Option Shares, the
representations and warranties of the Company included herein and the statements
in any certificates furnished by the Company hereunder shall be true and correct
as of the Date of Delivery, and the Representatives shall have received:
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(i) A certificate of the President and Chief Executive Officer
and the chief financial officer of the Company, dated such date of
Delivery, confirming that their certificate delivered at Closing Time
pursuant to Section 5(d) hereof remain true as of such Date of
Delivery.
(ii) The favorable opinion of Sullivan & Worcester LLP,
counsel for the Company, in form and substance satisfactory to counsel
for the Underwriters, dated such Date of Delivery, relating to the
Option Shares and otherwise to the same effect as the opinion required
by Section 5(b) hereof.
(iii) Certificate of the President of the Advisor confirming
that his certificate delivered at Closing Time pursuant to Section 5(e)
hereof remains true as of such Date of Delivery.
(iv) The favorable opinion of Brown & Wood LLP, counsel for
the Underwriters, dated such Date of Delivery, relating to the Option
Shares and otherwise to the same effect as the opinion required by
Section 5(c) hereof.
(v) A letter from Ernst & Young, in form and substance
satisfactory to the Representatives, dated such Date of Delivery,
substantially the same in scope and substance as the letter furnished
to the Representatives pursuant to Section 5(f) hereof.
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 the Representatives 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 each Underwriter and each person, if any, who controls each
Underwriter 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 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
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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 counsel chosen by Merrill Lynch), 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 any
Underwriter through Merrill Lynch 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 the
benefit of any Underwriter, or the benefit of any person controlling any
Underwriter, 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 such Underwriter to such person asserting
any such losses, claims, damages or liabilities at or prior to the written
confirmation of the sale of such Shares 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) Each Underwriter agrees 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 thereto) or the Prospectus (or any amendment or
supplement thereto) in reliance upon and in conformity with written information
furnished to the Company by any Underwriter through Merrill Lynch 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
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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 the
Underwriters shall contribute to the aggregate losses, liabilities, claims,
damages and expenses of the nature contemplated by said indemnity agreement
incurred by the Company and the Underwriters, as incurred, (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and the Underwriters on the other hand from the offering
of the Shares 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 the
Underwriters 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 the
Underwriters on the other hand in connection with the offering of the Shares
pursuant to this Agreement shall be deemed to be in the same respective
proportions as the total net proceeds from the offering of the Shares pursuant
to this Agreement (before deducting expenses) received by the Company and the
total discount received by the Underwriters, bear to the aggregate initial
offering price of the Shares.
The relative fault of the Company on the one hand and the Underwriters
on the other hand shall be determined by reference to, among other things,
whether 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 the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7 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, the Underwriters shall not be required to
contribute any amount in excess of the amount by which the total price at which
the Shares purchased from the Company by the Underwriters and distributed to the
public were offered to the public exceeds the amount of any damages which the
Underwriters have
23
<PAGE>
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 any Underwriter within the meaning of Section 15 of the 1933 Act shall
have the same rights to contribution as such Underwriter, 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 full force and effect, regardless of any
investigation made by or on behalf of the Underwriters or any controlling
person, or by or on behalf of the Company, and shall survive delivery of the
Shares to the Underwriters.
Section 9. Termination of Agreement. (a) The Representatives 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 or the Advisor, whether or not arising in
the ordinary course of business, which would make it, in the Representatives'
reasonable judgment, impracticable or inadvisable to market the Shares or
enforce contracts for the sale of the Shares, (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 the Representatives' reasonable judgment, impracticable
or inadvisable to market the Shares or enforce contracts for the sale of the
Shares, or (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. Default. If one or more of the Underwriters shall fail at
Closing Time to purchase the Initial Shares which it or they are obligated to
purchase under this Agreement (the "Defaulted Shares"), the Representatives
shall have the right, within 24 hours thereafter, to make arrangements for one
or more of the non-defaulting Underwriters, or any other underwriters, to
purchase all, but not less than all, of the Defaulted Shares in such amounts as
may be agreed upon and upon the terms herein set forth; if, however, the
Representatives shall not have completed such arrangements within such 24-hour
period, then:
(i) if the number of Defaulted Shares does not exceed 10% of
the Initial Shares, the non-defaulting Underwriters shall be obligated
to purchase the full amount
24
<PAGE>
thereof in the proportions that their respective underwriting
obligations hereunder bear to the underwriting obligations of all
non-defaulting Underwriters, or
(ii) if the number of Defaulted Shares exceeds 10% of the
Initial Shares, this Agreement shall terminate without liability on the
part of any non-defaulting Underwriter and the Company.
No action taken pursuant to this Section 10 shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination
of this Agreement, either the Representatives or the Company shall have the
right to postpone Closing Time for a period not exceeding seven days in order to
effect any required changes in the Prospectus or in any other documents or
arrangements.
Section 11. 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
Underwriters shall be directed to the Representatives c/o Merrill Lynch, Pierce,
Fenner & Smith Incorporated at World Financial Center, North Tower, 250 Vesey
Street, New York, NY 10281-1326, 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 12. Parties. This Agreement shall inure to the benefit of and
be binding upon the Underwriters and the Company and their 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 Shares from any Underwriter shall be deemed to be a successor by
reason merely of such purchase.
Section 13. 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 AMENDED AND RESTATED DECLARATION OF TRUST ESTABLISHING 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 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,
25
<PAGE>
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.
26
<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
the Underwriters and the Company in accordance with its terms.
Very truly yours,
HEALTH AND RETIREMENT PROPERTIES TRUST
By /s/ Ajay Saini
Name: Ajay Saini
Title: Treasurer
CONFIRMED AND ACCEPTED, as of
the date first above written:
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
A.G. EDWARDS & SONS, INC.
LEGG MASON WOOD WALKER INCORPORATED
MORGAN STANLEY & CO. INCORPORATED
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
SMITH BARNEY INC.
By: MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
By /s/ Tjarda van S. Clagett
Name: Tjarda van S. Clagett
Title: Director
For themselves and as Representatives
of the other Underwriters named in
Schedule A hereto
27
<PAGE>
SCHEDULE A
Number of
Name of Underwriter Initial Shares
------------------- --------------
Merrill Lynch, Pierce, Fenner & Smith
Incorporated 2,675,000
Donaldson, Lufkin & Jenrette
Securities Corporation 2,675,000
A.G. Edwards & Sons, Inc. 2,675,000
Legg Mason Wood Walker
Incorporated 2,675,000
Morgan Stanley & Co. Incorporated 2,675,000
PaineWebber Incorporated 2,675,000
Prudential Securities Incorporated 2,675,000
Smith Barney Inc. 2,675,000
Lehman Brothers Inc. 300,000
Arnhold and S. Bleichroeder, Inc. 300,000
Credit Lyonnais Securities (USA) Inc. 300,000
Dresdner Kleinwort Benson North America LLC 300,000
Nesbitt Burns Securities Inc. 300,000
Societe Generale 300,000
Cowen & Company 300,000
Cruttenden Roth Incorporated 300,000
D.A. Davidson & Co. 300,000
Sands Brothers & Co., Ltd. 300,000
Sutro & Co. Incorporated 300,000
Wheat First Securities, Inc. 300,000
----------
Total 25,000,000
==========
EXHIBIT 3.1
HEALTH AND REHABILITATION
PROPERTIES TRUST
Changing its Name to
Health and Retirement Properties Trust
Third Amendment and Restatement of Declaration of Trust
Conformed Composite Copy
October 9, 1986
As Amended and Restated on July 1, 1994
and Amended July 9, 1996
and Amended March 3, 1997
and Amended May 26, 1998
<PAGE>
INDEX
Page
ARTICLE I
THE TRUST; DEFINITIONS
1.1 Name............................................................. 2
1.2 Places of Business............................................... 2
1.3 Nature of Trust.................................................. 3
1.4 Definitions...................................................... 3
ARTICLE II
TRUSTEES
2.1 Number, Term of Office and Qualifications
of Trustees.................................................... 8
2.2 Compensation and Other Remuneration.............................. 10
2.3 Resignation, Removal and Death of Trustees....................... 10
2.4 Vacancies........................................................ 10
2.5 Successor and Additional Trustees................................ 11
2.6 Actions by Trustees.............................................. 11
2.7 Certification of Changes in Trustees............................. 12
2.8 Committees....................................................... 12
ARTICLE III
TRUSTEES' POWERS
3.1 Power and Authority of Trustees.................................. 13
3.2 Specific Powers and Authority.................................... 13
3.3 Bylaws........................................................... 19
ARTICLE IV
ADVISOR
4.1 Employment of Advisor............................................ 20
4.2 Term............................................................. 21
4.3 Other Activities of Advisor...................................... 21
4.4 Advisor Compensation............................................. 22
4.5 Annual Total Operating Expenses.................................. 23
<PAGE>
-ii-
ARTICLE V
INVESTMENT POLICY AND POLICIES
WITH RESPECT TO CERTAIN
DISTRIBUTIONS TO SHAREHOLDERS
5.1 Statement of Policy............................................... 24
5.2 Prohibited Investments and Activities............................. 26
5.3 Appraisals........................................................ 27
5.4 Change in Investment Policies..................................... 27
ARTICLE VI
THE SHARES AND SHAREHOLDERS
6.1 Description of Shares............................................. 28
6.2 Certificates...................................................... 29
6.3 Fractional Shares................................................. 30
6.4 Legal Ownership of Trust Estate................................... 30
6.5 Shares Deemed Personal Property................................... 31
6.6 Share Record; Issuance and Transferability
of Shares....................................................... 31
6.7 Dividends or Distributions to Shareholders........................ 32
6.8 Transfer Agent, Dividend Disbursing
Agent and Registrar............................................. 32
6.9 Shareholders' Meetings............................................ 33
6.10 Proxies........................................................... 34
6.11 Reports to Shareholders........................................... 34
6.12 Fixing Record Date................................................ 35
6.13 Notice to Shareholders............................................ 35
6.14 Shareholders' Disclosures; Trustees' Right
to Refuse to Transfer Shares; Limitation
on Holdings; Redemption of Shares............................... 35
6.15 Special Voting Requirements for Certain
Business Combinations........................................... 39
ARTICLE VII
LIABILITY OF TRUSTEES, SHAREHOLDERS,
OFFICERS, EMPLOYEES AND AGENTS,
AND OTHER MATTERS
7.1 Limitation of Liability of Shareholders,
Trustees, Officers, Employees and Agents
for Obligations of the Trust.................................... 41
<PAGE>
-iii-
7.2 Express Exculpatory Clauses and Instruments....................... 41
7.3 Limitation of Liability of Trustees, Officers,
Employees and Agents to the Trust and to
Shareholders for Acts and Omissions............................. 42
7.4 Indemnification and Reimbursement of
Trustees, Officers, Employees and
Agents ......................................................... 42
7.5 Certain Definitions............................................... 44
7.6 Indemnification and Reimbursement of
Shareholders.................................................... 45
7.7 Right of Trustees, Officers, Employees and
Agents to Own Shares or Other Property
and to Engage in Other Business................................. 45
7.8 Transactions Between Trustees, Officers,
Employees or Agents and the Trust............................... 46
7.9 Independent Counsel............................................... 48
7.10 Persons Dealing with Trustees, Officers,
Employees or Agents............................................. 48
7.11 Reliance.......................................................... 48
ARTICLE VIII
DURATION, AMENDMENT AND TERMINATION
OF TRUST
8.1 Duration of Trust................................................. 49
8.2 Termination of Trust.............................................. 49
8.3 Amendment Procedure............................................... 50
8.4 Amendments Effective.............................................. 51
8.5 Transfer to Successor............................................. 51
ARTICLE IX
MISCELLANEOUS
9.1 Applicable Law.................................................... 51
9.2 Index and Headings for Reference Only............................. 52
9.3 Successors in Interest............................................ 52
9.4 Inspection of Records............................................. 52
9.5 Counterparts...................................................... 52
9.6 Provisions of the Trust in Conflict with
Law or Regulations; Severability................................ 52
9.7 Certifications.................................................... 53
<PAGE>
THIRD AMENDMENT AND RESTATEMENT OF DECLARATION OF TRUST
OF
HEALTH AND REHABILITATION
PROPERTIES TRUST
Changing its Name to
Health and Retirement Properties Trust
Dated October 9, 1986
As Amended and Restated on July 1, 1994
--------------------------------------
The Declaration of Health and Rehabilitation Properties Trust (the
"Trust"), as filed with the Maryland Department of Assessments and Taxation on
October 9, 1986 and as amended on September 27, 1987, July 23, 1992 and July 30,
1993 (the "Declaration"), is hereby amended and restated as follows:
DECLARATION OF TRUST made as of the date set forth above by the
undersigned Trustees.
WITNESSETH:
WHEREAS, the Trustees desire to create a trust for the principal
purpose of investing in real property and interests therein; and
WHEREAS, the Trustees desire that such trust qualify as a "real estate
investment trust" under the REIT Provisions of the Internal Revenue Code, and
under Title 8 of the Corporations and Associations Article of the Annotated Code
of Maryland; and
WHEREAS, in furtherance of such purpose the Trustees intend to acquire
certain real property and interests therein and to hold, manage and dispose of
all such property as Trustees in the manner hereinafter stated; and
<PAGE>
-2-
WHEREAS, it is proposed that the beneficial interest in the Trust be
divided into transferable Shares of Beneficial Interest, evidenced by
certificates therefor, as hereinafter provided;
NOW, THEREFORE, it is hereby agreed and declared that the Trustees will
hold any and all property of every type and description which they are acquiring
or may hereafter acquire as Trustees, together with the proceeds thereof, in
trust, to manage and dispose of the same for the benefit of the holders from
time to time of the Shares of Beneficial Interest being issued and to be issued
hereunder in the manner and subject to the stipulations contained herein.
ARTICLE I
THE TRUST; DEFINITIONS
1.1 Name. The name of the Trust created by this Declaration of Trust
shall be "Health and Retirement Properties Trust" and so far as may be
practicable the Trustees shall conduct the Trust's activities, execute all
documents and sue or be sued under that name, which name (and the word "Trust"
wherever used in this Declaration of Trust, except where the context otherwise
requires) shall refer to the Trustees collectively but not individually or
personally nor to the officers, agents, employees or Shareholders of the Trust
or of such Trustees. Under circumstances under which the Trustees determine that
the use of such name is not practicable or under circumstances in which the
Trustees are contractually bound to change that name, they may use such other
designation or they may adopt another name under which the Trust may hold
property or conduct its activities.
1.2 Places of Business. The Trust shall maintain an office in Maryland
at CT Corporation or such other place in Maryland as the Trustees may determine
from time to time. The Resident Agent of the Trust at such office shall be The
Corporation Trust Incorporated, 32 South Street, Baltimore, Maryland, 21202. The
Trust may change such Resident Agent from time to time as the Trustees shall
determine. The Trust may have such other offices or places of business within or
without the State of Maryland as the Trustees may from time to time determine.
<PAGE>
-3-
1.3 Nature of Trust. The Trust shall be a real estate investment trust
within the meaning of Title 8 of the Corporations and Associations Article of
the Annotated Code of Maryland. It is also intended that the Trust shall carry
on a business as a "real estate investment trust" as described in the REIT
Provisions of the Internal Revenue Code. The Trust is not intended to be, shall
not be deemed to be, and shall not be treated as a general partnership, limited
partnership, joint venture, corporation or joint stock company (but nothing
herein shall preclude the Trust from being treated for tax purposes as an
association under the Internal Revenue Code) nor shall the Trustees or
Shareholders or any of them for any purpose be, nor be deemed to be, nor be
treated in any way whatsoever to be, liable or responsible hereunder as partners
or joint venturers. The relationship of the Shareholders to the Trustees shall
be solely that of beneficiaries of the Trust in accordance with the rights
conferred upon them by this Declaration.
1.4 Definitions. The terms defined in this Section 1.4., wherever used
in this Declaration, shall, unless the context otherwise requires, have the
respective meanings hereinafter specified. Whenever the singular number is used
in this Declaration and when permitted by the context, the same shall include
the plural, and the masculine gender shall include the feminine and neuter
genders, and vice versa. Where applicable, calculations to be made pursuant to
any such definition shall be made in accordance with generally accepted
accounting principles as in effect from time to time except as otherwise
provided in such definition.
(a) Advisor. "Advisor" shall mean the Person employed by the Trustees
in accordance with the provisions of Article IV.
(b) Affiliate. "Affiliate" shall mean, as to any Person, (i) any other
Person directly or indirectly controlling, controlled by or under common control
with such Person, (ii) any other Person that owns beneficially, directly or
indirectly, five percent (5%) or more of the outstanding capital stock, shares
or equity interests of such Person, or (iii) any officer, director, employee,
general partner or trustee of such Person or of any Person controlling,
controlled by or under common control with such Person (excluding trustees who
are not otherwise an Affiliate of such Person).
<PAGE>
-4-
(c) Affiliated Trustee. "Affiliated Trustee" shall mean a Trustee who
is not an Independent Trustee.
(d) Annual Meeting of Shareholders. "Annual Meeting of Shareholders"
shall mean the meeting described in the first sentence of Section 6.9.
(e) Annual Report. "Annual Report" shall have the meaning set forth in
Section 6.11(a).
(f) Average Invested Real Estate Assets. "Average Invested Real Estate
Assets" for any period shall mean the average of the aggregate book value of the
consolidated assets of the Company invested, directly or indirectly, in equity
interests in, and loans secured by, real estate and personal property associated
with such real estate, before reserves for depreciation or bad debt or other
similar non-cash reserves, calculated by taking the average of such values at
the end of each month during such period.
(g) Book Value. "Book Value" of an asset or assets shall mean the value
of such asset or assets of the Trust on the books of the Trust, without
deduction for depreciation or other asset valuation reserves and without
deduction for mortgages or other security interests to which such asset or
assets are subject, except that no asset shall be valued at more than its fair
market value as determined by or under procedures adopted by the Trustees, and
the underlying assets of a partnership, joint venture or other form of indirect
ownership, to the extent of the Trust's interest therein, shall be valued as if
owned directly by the Trust.
(h) Bylaws. "Bylaws" shall have the meaning set forth in Section 3.3.
(i) Declaration. "Declaration" or "this Declaration" shall mean this
Declaration of Trust, as amended, restated or modified from time to time.
References in this Declaration to "herein" and "hereunder" shall be deemed to
refer to this Declaration and shall not be limited to the particular text,
article or section in which such words appear.
(j) [Intentionally left blank].
<PAGE>
-5-
(k) Independent Trustee. "Independent Trustee" shall mean a Trustee
who, in his individual capacity, (i) is neither an Affiliate of, nor has any
material business or professional relationship with, the Advisor or any other
Person whom the Trustees may pursuant to Section 6.14(c) hereof permit to
purchase in excess of 8.5% of the Trust's Shares (provided, however, that any
Trustee affiliated with an underwriter shall not cease to be an Independent
Trustee solely on the basis of such underwriter's purchase of Shares in
connection with any public offering of the Trust's Shares), and (ii) does not
perform any services for the Trust except as Trustee.
(l) Internal Revenue Code. "Internal Revenue Code" shall mean the
Internal Revenue Code of 1954, as now enacted or hereafter amended, or successor
statutes and applicable rules and regulations thereunder.
(m) Invested Assets. "Invested Assets" shall mean the Book Value of all
the Real Estate Investments of the Trust.
(n) Mortgage Loans. "Mortgage Loans" shall mean notes, debentures,
bonds and other evidences of indebtedness or obligations, whether negotiable or
non-negotiable, and which are secured or collateralized by Mortgages.
(o) Mortgages. "Mortgages" shall mean mortgages, deeds of trust or
other security interests in Real Property.
(p) Net Assets. "Net Assets" shall mean the total assets (other than
intangibles) at cost before deducting depreciation or other non-cash reserves
less total liabilities, calculated at least quarterly on a basis consistently
applied.
(q) Net Income. "Net Income" for any period shall be calculated on the
basis of the Trust's audited financial statements and shall mean total revenues
applicable to such period, less the expenses applicable to such period, other
than additions to reserves for depreciation or bad debts or other similar
non-cash reserves.
(r) Person. "Person" shall mean and include individuals, corporations,
limited partnerships, general partnerships, joint stock companies or
associations, joint ventures, associations, companies, trusts, banks, trust
companies, land trusts, business
<PAGE>
-6-
trusts and other entities and governments and agencies and political
subdivisions thereof.
(s) Real Estate Investment. "Real Estate Investment" shall mean any
direct or indirect investment in any interest in Real Property or in any
Mortgage Loan, or in any Person whose principal purpose is to make any such
investment.
(t) Real Property. "Real Property" shall mean and include land
leasehold interests (including but not limited to interests of a lessor or
lessee therein), rights and interests in land, and in any buildings, structures,
improvements, furnishings and fixtures located on or used in connection with
land or interests therein, but does not include investments in Mortgages,
Mortgage Loans or interests therein.
(u) REIT. "REIT" shall mean a real estate investment trust as defined
in the REIT Provisions of the Internal Revenue Code.
(v) REIT Provisions of the Internal Revenue Code. "REIT Provisions of
the Internal Revenue Code" shall mean Parts II and III of Subchapter M of
Chapter 1 of Subtitle A of the Internal Revenue Code or any successor provision.
(w) Securities. "Securities" shall mean any stock, shares, voting trust
certificates, bonds, debentures, notes or other evidences of indebtedness or in
general any instruments commonly known as "securities" or any certificates of
interest, shares or participations in, temporary or interim certificates for,
receipts for, guarantees of, or warrants, options or rights to subscribe to,
purchase or acquire any of the foregoing.
(x) Shareholders. "Shareholders" shall mean as of any particular time
all holders of record of outstanding Shares at such time.
(y) Shares. "Shares" or, as the context may require, "shares" shall
mean the shares of beneficial interest of the Trust as described in Section 6.1
hereof.
(z) Total Assets. "Total Assets" shall mean the Book Value of all the
assets of the Trust, as such Book Value appears on the most recent quarterly
balance sheet of the Trust.
<PAGE>
-7-
(aa) Total Operating Expenses. "Total Operating Expenses" shall be
calculated on the basis of the Trust's annual audited financial statements and
shall mean the aggregate annual expenses regarded as ordinary operating expenses
(including any compensation payable to the Advisor), exclusive of the following:
(i) interest payments and any other cost of borrowed money;
(ii) taxes on income and taxes and assessments on real property, if
any, and all other taxes applicable to the Trust;
(iii) legal, auditing, accounting, underwriting, brokerage, listing,
reporting, registration and other fees, and printing,
engraving and other expenses and taxes incurred in connection
with the issuance, distribution, transfer, trading,
registration and stock exchange listing of the Trust's
securities, including transfer agent's, registrar's and
indenture trustee's fees and charges;
(A) expenses of organizing, restructuring, reorganizing
or terminating the Trust, or of revising, amending,
converting or modifying the Trust's organizational
documents;
(B) expenses directly connected with the acquisition,
disposition and ownership of real estate interests or
other property (including the costs of foreclosure,
insurance premiums, legal services, brokerage and
sales commissions, maintenance, repair, improvement
and local management of property), other than
expenses with respect thereto of employees of the
Advisor, to the extent that such expenses are to be
borne by the Advisor pursuant to the terms of the
advisory contract;
(iv) non-cash provisions for depreciation, depletion and
amortization;
(v) losses on the disposition of assets and provisions for such
losses; and
<PAGE>
-8-
(vi) other extraordinary charges including, without limitation,
litigation costs.
(bb) Trust. "Trust" shall mean the Trust created by this Declaration.
(cc) Trustees. "Trustees" shall mean, as of any particular time, the
original signatories hereto as long as they hold office hereunder and additional
and successor Trustees, and shall not include the officers, employees or agents
of the Trust or the Shareholders. Nothing herein shall be deemed to preclude the
Trustees from also serving as officers, employees or agents of the Trust or
owning Shares.
(dd) Trust Estate. "Trust Estate" shall mean as of any particular time
any and all property, real, personal or otherwise, tangible or intangible, which
is transferred, conveyed or paid to or purchased by the Trust or Trustees and
all rents, income, profits and gains therefrom and which at such time is owned
or held by or for the Trust or the Trustees.
ARTICLE II
TRUSTEES
2.1 Number, Term of Office and Qualifications of Trustees. There shall
be no fewer than three (3) nor more than twelve (12) Trustees. The exact number
of Trustees shall be five (5) until changed by a two-thirds (2/3) vote of the
Trustees or by an amendment of this Declaration duly adopted by the
Shareholders. The Board of Trustees shall be classified into three groups, with
two (2) Trustees in Group I, two (2) Trustees in Group II, and one (1) Trustee
in Group III. Each Trustee in Group I shall serve for a term ending at the
annual meeting of Shareholders in 1996; each Trustee in Group II shall serve for
a term ending at the annual meeting of Shareholders in 1997; and the Trustee in
Group III shall serve for a term ending at the annual meeting of Shareholders in
1995. After the respective terms of the groups indicated, each such group of
Trustees shall be elected for successive terms ending at the annual meeting of
Shareholders held during the third year after election.
<PAGE>
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The names and business addresses of the current Trustees who will serve
as Trustees until the expiration of their respective terms and until their
successors are elected and qualify are as follows:
Name Address
---- -------
Group I: Barry M. Portnoy Sullivan & Worcester
One Post Office Square
Boston, MA 02109
John L. Harrington 990 Washington Street
Suite 315
Dedham, MA 02026
Group II: Rev. Justinian St. Gabriel's Parish
Manning, C.P. Rectory
139 Washington Street
Brighton, MA 02135
Gerard M. Martin M & P Partners Limited
Partnership
400 Centre Street
Newton, MA 02158
Group III: Arthur G. Cumberland Farms, Inc.
Koumantzelis 777 Dedham Street
Canton, MA 02021-9118
The current Trustees shall be the signatories hereto. No reduction in the number
of Trustees shall have the effect of removing any Trustee from office prior to
the expiration of term. Subject to the provisions of Section 2.3, each Trustee
shall hold office until the election and qualification of his successor. There
shall be no cumulative voting in the election of Trustees. A Trustee shall be an
individual at least twenty-one (21) years of age who is not under legal
disability. A majority of the Trustees shall at all times be persons who are
Independent Trustees; provided, however, that upon a failure to comply with this
requirement because of the resignation, removal or death of a Trustee who is an
Independent Trustee, such requirement shall not be applicable for a period of
ninety (90) days. Nominees to serve as Independent Trustees shall be nominated
by the then current Independent Trustees, if any. Unless otherwise required
<PAGE>
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by law, no Trustee shall be required to give bond, surety or security in any
jurisdiction for the performance of any duties or obligations hereunder. The
Trustees in their capacity as Trustees shall not be required to devote their
entire time to the business and affairs of the Trust.
2.2 Compensation and Other Remuneration. The Trustees shall be entitled
to receive such reasonable compensation for their services as Trustees as the
Trustees may determine from time to time. The Trustees and Trust officers shall
be entitled to receive remuneration for services rendered to the Trust in any
other capacity. Subject to Sections 7.7 and 7.8, such services may include,
without limitation, services as an officer of the Trust, legal, accounting or
other professional services, or services as a broker, transfer agent or
underwriter, whether performed by a Trustee or any person affiliated with a
Trustee.
2.3 Resignation, Removal and Death of Trustees. A Trustee may resign at
any time by giving written notice to the remaining Trustees at the principal
office of the Trust. Such resignation shall take effect on the date specified in
such notice, without need for prior accounting. A Trustee may be removed at any
time with or without cause by vote or consent of holders of Shares representing
two-thirds of the total votes authorized to be cast by Shares then outstanding
and entitled to vote thereon, or with cause by all remaining Trustees. A Trustee
judged incompetent or bankrupt, or for whom a guardian or conservator has been
appointed, shall be deemed to have resigned as of the date of such adjudication
or appointment. Upon the resignation or removal of any Trustee, or his otherwise
ceasing to be a Trustee, he shall execute and deliver such documents as the
remaining Trustees shall require for the conveyance of any Trust property held
in his name, shall account to the remaining Trustees as they require for all
property which he holds as Trustee and shall thereupon be discharged as Trustee.
Upon the incapacity or death of any Trustee, his legal representative shall
perform the acts set forth in the preceding sentence and the discharge mentioned
therein shall run to such legal representative and to the incapacitated Trustee
or the estate of the deceased Trustee, as the case may be.
2.4 Vacancies. If any or all the Trustees cease to be Trustees
hereunder, whether by reason of resignation, removal, incapacity, death or
otherwise, such event shall not terminate
<PAGE>
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the Trust or affect its continuity. Until vacancies are filled, the remaining
Trustee or Trustees (even though fewer than three (3)) may exercise the powers
of the Trustees hereunder. Vacancies (including vacancies created by increases
in number) may be filled by the remaining Trustee or by a majority of the
remaining Trustees (or a majority of the remaining Independent Trustees, if any,
if the vacant position was formerly held by an Independent Trustee or is
required to be held by an Independent Trustee) or by vote of holders of Shares
representing a majority of the total number of votes authorized to be cast by
Shares then outstanding and entitled to vote thereon. If at any time there shall
be no Trustees in office, successor Trustees shall be elected by the
Shareholders as provided in Section 6.9. Any Trustee elected to fill a vacancy
created by the resignation, removal or death of a former Trustee shall hold
office for the unexpired term of such former Trustee.
2.5 Successor and Additional Trustees. The right, title and interest of
the Trustees in and to the Trust Estate shall also vest in successor and
additional Trustees upon their qualification, and they shall thereupon have all
the rights and obligations of Trustees hereunder. Such right, title and interest
shall vest in the Trustees whether or not conveyancing documents have been
executed and delivered pursuant to Section 2.3 or otherwise. Appropriate written
evidence of the election and qualification of successor and additional Trustees
shall be filed with the records of the Trust and in such other offices or places
as the Trustees may deem necessary, appropriate or desirable.
2.6 Actions by Trustees. The Trustees may act with or without a
meeting. A quorum for all meetings of the Trustees shall be a majority of the
Trustees; provided, however, that, whenever pursuant to Section 7.8 or otherwise
the vote of a majority of a particular group of Trustees is required at a
meeting, a quorum for such meeting shall be a majority of the Trustees which
shall include a majority of such group. Unless specifically provided otherwise
in this Declaration, any action of the Trustees may be taken at a meeting by
vote of a majority of the Trustees present (a quorum being present) or without a
meeting by written consents of a majority of the Trustees, which consents shall
be filed with the records of meetings of the Trustees. Any action or actions
permitted to be taken by the Trustees in connection with the business of the
Trust may be
<PAGE>
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taken pursuant to authority granted by a meeting of the Trustees conducted by a
telephone conference call, and the transaction of Trust business represented
thereby shall be of the same authority and validity as if transacted at a
meeting of the Trustees held in person or by written consent. The minutes of any
Trustees' meeting held by telephone shall be prepared in the same manner as a
meeting of the Trustees held in person. The acquisition or disposition of any
investment (other than investments in short-term investment Securities described
in Section 5.1) shall require the approval of a majority of Trustees, except as
otherwise provided in Section 7.8. Any agreement, deed, mortgage, lease or other
instrument or writing executed by one or more of the Trustees or by any
authorized Person shall be valid and binding upon the Trustees and upon the
Trust when authorized or ratified by action of the Trustees or as provided in
the Bylaws.
With respect to the actions of the Trustees, Trustees who have, or are
Affiliates of Persons who have, any direct or indirect interest in or connection
with any matter being acted upon may be counted for all quorum purposes under
this Section 2.6 and, subject to the provisions of Section 7.8, may vote on the
matter as to which they or their Affiliates have such interest or connection.
2.7 Certification of Changes in Trustees. No alteration in the number
of Trustees, no removal of a Trustee and no election or appointment of any
individual as Trustee (other than an individual who was serving as a Trustee
immediately prior to such election or appointment) shall become effective unless
and until there shall be delivered to the secretary of the Trust an instrument
in writing signed by a majority of the Trustees, certifying to such alteration
in the number of Trustees and/or to such removal of a Trustee and/or naming the
individual so elected or appointed as Trustee, together with his written
acceptance thereof and agreement to be bound thereby.
2.8 Committees. The Trustees may appoint an audit committee and such
other standing committees as the Trustees determine. Each standing committee
shall consist of three or more members, provided, however, that the Trustees may
appoint a standing committee consisting of at least one Trustee and two non-
Trustees. Notwithstanding the foregoing, however, all members of the audit
committee shall be Independent Trustees. A majority of
<PAGE>
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the members of each other standing committee comprised solely of Trustees shall
be Independent Trustees; provided, however, that upon a failure to comply with
this requirement because of the resignation, removal or death of a Trustee who
is an Independent Trustee, such requirement shall not be applicable for a period
of ninety (90) days. Each committee shall have such powers, duties and
obligations as the Trustees may deem necessary or appropriate. The standing
committees shall report their activities periodically to the Trustees.
ARTICLE III
TRUSTEES' POWERS
3.1 Power and Authority of Trustees. The Trustees, subject only to the
specific limitations contained in this Declaration, shall have, without further
or other authorization, and free from any power or control on the part of the
Shareholders, full, absolute and exclusive power, control and authority over the
Trust Estate and over the business and affairs of the Trust to the same extent
as if the Trustees were the sole owners thereof in their own right, and may do
all such acts and things as in their sole judgment and discretion are necessary
for or incidental to or desirable for the carrying out of or conducting the
business of the Trust. Any construction of this Declaration or any determination
made in good faith by the Trustees as to the purposes of the Trust or the
existence of any power or authority hereunder shall be conclusive. In construing
the provisions of this Declaration, the presumption shall be in favor of the
grant of powers and authority to the Trustees. The enumeration of any specific
power or authority herein shall not be construed as limiting the aforesaid
powers or the general powers or authority or any other specified power or
authority conferred herein upon the Trustees.
3.2 Specific Powers and Authority. Subject only to the express
limitations contained in this Declaration and in addition to any powers and
authority conferred by this Declaration or which the Trustees may have by virtue
of any present or future statute or rule or law, the Trustees without any action
or consent by the Shareholders shall have and may exercise at any
<PAGE>
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time and from time to time the following powers and authorities which may or may
not be exercised by them in their sole judgment and discretion and in such
manner and upon such terms and conditions as they may from time to time deem
proper:
(a) to retain, invest and reinvest the capital or other funds
of the Trust in, and to acquire, purchase, or own, real or personal
property of any kind, whether tangible or intangible, wherever located
in the world, and make commitments for such investments, all without
regard to whether any such property is authorized by law for the
investment of trust funds or produces or may produce income; to possess
and exercise all the rights, powers and privileges appertaining to the
ownership of the Trust Estate; and to increase the capital of the Trust
at any time by the issuance of any additional authorized Shares
(subject to Section 5.2(e)) or other Securities of the Trust for such
consideration as they deem advisable;
(b) without limitation of the powers set forth in paragraph
(a) above, to invest in, purchase or otherwise acquire for such
consideration as they deem proper, in cash or other property or through
the issuance of shares or through the issuance of notes, debentures,
bonds or other obligations of the Trust, and to hold for investment,
the entire or any participating interests in any Mortgage Loans or
interest in Real Property, including ownership of, or participations in
the ownership of, or rights to acquire, equity interests in Real
Property or in Persons owning, developing, improving, operating or
managing Real Property, which interests may be acquired independently
of or in connection with other investment activities of the Trust and,
in the latter case, may include rights to receive additional payments
based on gross income or rental or other income from the Real Property
or improvements thereon; to invest in loans secured by the pledge or
transfer of Mortgage Loans;
(c) to sell, rent, lease, hire, exchange, release, partition,
assign, mortgage, pledge, hypothecate, grant security interests in,
encumber, negotiate, convey, transfer or otherwise dispose of any and
all the Trust Estate by deeds (including deeds in lieu of foreclosure),
trust deeds, assignments, bills of sale, transfers, leases, mortgages,
<PAGE>
-15-
financing statements, security agreements and other instruments for any
of such purposes executed and delivered for and on behalf of the Trust
or the Trustees by one or more of the Trustees or by a duly authorized
officer, employee, agent or nominee of the Trust, provided that no
disposition of a Real Estate Investment shall be accomplished without
the approval of a majority of the Trustees;
(d) to issue Shares, bonds, debentures, notes or other
evidences of indebtedness, which may be secured or unsecured and may be
subordinated to any indebtedness of the Trust, to such Persons for such
cash, property or other consideration (including Securities issued or
created by, or interests in, any Person) at such time or times and on
such terms as the Trustees may deem advisable and to list any of the
foregoing Securities issued by the Trust on any securities exchange and
to purchase or otherwise acquire, hold, cancel, reissue, sell and
transfer any of such Securities, and to cause the instruments
evidencing such Securities to bear an actual or facsimile imprint of
the seal of the Trust (if the Trustees shall have adopted such a seal)
and to be signed by manual or facsimile signature or signatures (and to
issue such Securities, whether or not any Person whose manual or
facsimile signature shall be imprinted thereon shall have ceased to
occupy the office with respect to which such signature was authorized),
provided that, where only facsimile signatures for the Trust are used,
the instrument shall be countersigned manually by a transfer agent,
registrar or other authentication agent; and to issue any of such
Securities of different types in combinations or units with such
restrictions on the separate transferability thereof as the Trustees
shall determine;
(e) to enter into leases of real and personal property as
lessor or lessee and to enter into contracts, obligations and other
agreements for a term, and to invest in obligations having a term,
extending beyond the term of office of the Trustees and beyond the
possible termination of the Trust, or having a lesser term;
(f) to borrow money and give negotiable or non negotiable
instruments therefor; or guarantee, indemnify or act as surety with
respect to payment or performance of
<PAGE>
-16-
obligations of third parties; to enter into other obligations on behalf
of the Trust; and to assign, convey, transfer, mortgage, subordinate,
pledge, grant security interest in, encumber or hypothecate the Trust
Estate to secure any indebtedness of the Trust or any other of the
foregoing obligations of the Trust;
(g) to lend money, whether secured or unsecured;
(h) to create reserve funds for any purpose;
(i) to incur and pay out of the Trust Estate any charges or
expenses, and to disburse any funds of the Trust, which charges,
expenses or disbursements are, in the opinion of the Trustees,
necessary or incidental to or desirable for the carrying out of any of
the purposes of the Trust or conducting the business of the Trust,
including without limitation taxes and other governmental levies,
charges and assessments, of whatever kind or nature, imposed upon or
against the Trustees in connection with the Trust or the Trust Estate
or upon or against the Trust Estate or any part hereof, and for any of
the purposes herein;
(j) to deposit funds of the Trust in banks, trust companies,
savings and loan associations and other depositories, whether or not
such deposits will draw interest, the same to be subject to withdrawal
on such terms and in such manner and by such Person or Persons
(including any one or more Trustees or officers, employees or agents,
of the Trust) as the Trustees may determine;
(k) to possess and exercise all the rights, powers and
privileges pertaining to the ownership of all or any Mortgages or
Securities issued or created by, or interests in, any Person, forming
part of the Trust Estate, to the same extent that an individual might
do so, and, without limiting the generality of the foregoing, to vote
or give any consent, request or notice, or waive any notice, either in
person or by proxy or power of attorney, with or without power of
substitution, to one or more Persons, which proxies and powers of
attorney may be for meetings or action generally or for any particular
meeting or action, and may include the exercise of discretionary
powers;
<PAGE>
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(l) to cause to be organized or assist in organizing any
Person under the laws of any jurisdiction to acquire the Trust Estate
or any part or parts thereof or to carry on any business in which the
Trust shall directly or indirectly have any interest, and to sell,
rent, lease, hire, convey, negotiate, assign, exchange or transfer the
Trust Estate or any part or parts thereof to or with any such Person or
any existing Person in exchange for the Securities thereof or
otherwise, and to merge or consolidate the Trust with or into any
Person or merge or consolidate any Person into the Trust, and to lend
money to, subscribe for the Securities of, and enter into any contracts
with, any Person in which the Trust holds or is about to acquire
Securities or any other interest;
(m) to enter into joint ventures, general or limited
partnerships, participation or agency arrangements and any other lawful
combinations or associations, and to act as a general or limited
partner provided, however, that the Trustees may not enter into any
such joint venture or other association as aforesaid unless it has
first received from counsel an opinion to the effect that such joint
venture or other association as aforesaid will be treated for tax
purposes as a partnership;
(n) to elect, appoint, engage or employ such officers for the
Trust as the Trustees may determine, who may be removed or discharged
at the discretion of the Trustees, such officers to have such powers
and duties, and to serve such terms, as may be prescribed by the
Trustees or by the Bylaws; to engage or employ any Persons (including,
subject to the provisions of Sections 7.7 and 7.8, any Trustee or
officer, agent or employee of the Trust and any Person in which any
Trustee, officer or agent is directly or indirectly interested or with
which he is directly or indirectly connected) as agents,
representatives, employees, or independent contractors (including
without limitation real estate advisors, investment advisors, transfer
agents, registrars, underwriters, accountants, attorneys at law, real
estate agents, managers, appraisers, brokers, architects, engineers,
construction managers, general contractors or otherwise) in one or more
capacities, and to pay compensation from the Trust for services in as
many capacities as such Person may be so engaged or employed; and
<PAGE>
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to delegate any of the powers and duties of the Trustees to any one or
more Trustees, agents, representatives, officers, employees,
independent contractors or other Persons; provided, however, that no
such delegation shall be made to an Affiliate of the Advisor, except
with the approval of a majority of the Independent Trustees;
(o) to determine or cause to be determined from time to time
the value of all or any part of the Trust Estate and of any services,
Securities, property or other consideration to be furnished to or
acquired by the Trust, and from time to time to revalue or cause to be
revalued all or any part of the Trust Estate in accordance with such
appraisals or other information as are, in the Trustees' sole judgment,
necessary and/or satisfactory;
(p) to collect, sue for and receive all sums of money coming
due to the Trust, and to engage in, intervene in, prosecute, join,
defend, compromise, abandon or adjust, by arbitration or otherwise, any
actions, suits, proceedings, disputes, claims, controversies, demands
or other litigation relating to the Trust, the Trust Estate or the
Trust's affairs, to enter into agreements therefor, whether or not any
suit is commenced or claim accrued or asserted and, in advance of any
controversy, to enter into agreements regarding arbitration,
adjudication or settlement thereof;
(q) to renew, modify, release, compromise, extend, consolidate
or cancel, in whole or in part, any obligation to or of the Trust or
participate in any reorganization of obligors to the Trust;
(r) to self-insure or to purchase and pay for out of the Trust
Estate insurance contracts and policies, including contracts of
indemnity, insuring the Trust Estate against any and all risks and
insuring the Trust and/or all or any of the Trustees, the Shareholders,
or the officers, employees or agents of the Trust against any and all
claims and liabilities of every nature asserted by any Person arising
by reason of any action alleged to have been taken or omitted by the
Trust or by the Trustees, Shareholders, officers, employees or agents,
whether or not the Trust would have the power to indemnify such Person
or Persons against any such claim or liability;
<PAGE>
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(s) to cause legal title to any of the Trust Estate to be held
by and/or in the name of the Trustees, or, except as prohibited by law,
by and/or in the name of the Trust or one or more of the Trustees or
any other Person, on such terms, in such manner and with such powers in
such Person as the Trustees may determine, and with or without
disclosure that the Trust or Trustees are interested therein;
(t) to adopt a fiscal year for the Trust, and from time to
time to change such fiscal year;
(u) to adopt and use a seal (but the use of a seal shall not
be required for the execution of instruments or obligations of the
Trust);
(v) to the extent permitted by law, to indemnify or enter into
agreements with respect to indemnification with any Person with which
the Trust has dealings, including without limitation any broker/dealer,
investment bank, investment advisor or independent contractor, to such
extent as the Trustees shall determine;
(w) to confess judgment against the Trust;
(x) to discontinue the operations of the Trust;
(y) to repurchase or redeem Shares and other Securities issued
by the Trust;
(z) to declare and pay dividends or distributions, consisting
of cash, property or Securities, to the holders of Shares of the Trust
out of any funds legally available therefor; and
(aa) to do all other such acts and things as are incident to
the foregoing, and to exercise all powers which are necessary or useful
to carry on the business of the Trust and to carry out the provisions
of this Declaration.
3.3 Bylaws. The Trustees may make or adopt and from time to time amend
or repeal Bylaws (the "Bylaws") not inconsistent with law or with this
Declaration, containing provisions relating to the business of the Trust and the
conduct of its affairs and
<PAGE>
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in such Bylaws may define the duties of the officers, employees and agents of
the Trust.
ARTICLE IV
ADVISOR
4.1 Employment of Advisor. The Trustees are responsible for the general
policies of the Trust and for the general supervision of the business of the
Trust conducted by all officers, agents, employees, advisors, managers or
independent contractors of the Trust. However, the Trustees are not and shall
not be required personally to conduct the business of the Trust, and, consistent
with their ultimate responsibility as stated above, the Trustees shall have the
power to appoint, employ or contract with any Person (including one or more of
themselves or any corporation, partnership, or trust in which one or more of
them may be directors, officers, stockholders, partners or trustees) as the
Trustees may deem necessary or proper for the transaction of the business of the
Trust. The Trustees may therefore employ or contract with such Person (herein
referred to as the "Advisor") and, consistent with their ultimate responsibility
as set forth in this Section 4.1, the Trustees may grant or delegate such
authority to the Advisor as the Trustees may in their sole discretion deem
necessary or desirable without regard to whether such authority is normally
granted or delegated by trustees. The Advisor shall be required to use its best
efforts to supervise the operation of the Trust in a manner consistent with the
investment policies and objectives of the Trust.
Subject to the provisions of Sections 4.2 and 7.8 hereof, the Trustees
shall have the power to determine the terms and compensation of the Advisor or
any other Person whom they may employ or with whom they may contract for
advisory services. The Trustees may exercise broad discretion in allowing the
Advisor to administer and regulate the operations of the Trust, to act as agent
for the Trust, to execute documents on behalf of the Trustees and to make
executive decisions which conform to general policies and general principles
previously established by the Trustees.
<PAGE>
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4.2 Term. The Trustees shall not enter into any advisory contract with
the Advisor unless such contract has an initial term of not more than one year,
provides for annual renewal or extension thereafter, provides for termination
thereof by the Trustees without cause at any time upon sixty (60) days' written
notice by the Trustees, by affirmative vote or written consent of a majority of
the Independent Trustees, and provides for termination thereof by the Advisor
without cause at any time after the expiration of a period specified in such
contract (which period shall not be shorter than the original term) without
penalty upon sixty (60) days' written notice by the Advisor. In the event of the
termination of an advisory contract, the terminated Advisor shall be required to
cooperate with the Trust and take all reasonable steps requested to assist the
Trustees in making an orderly transition of the advisory function. It shall be
the duty of the Trustees annually to evaluate the performance of the Advisor,
and the Independent Trustees have a fiduciary duty to the Shareholders to
supervise the relationship of the Trust with the Advisor.
4.3 Other Activities of Advisor. The Advisor shall not be required to
administer the Trust as its sole and exclusive function and may have other
business interests and may engage in other activities similar or in addition to
those relating to the Trust, including the rendering of advice or services of
any kind to other investors or any other Persons (including other REITs) and the
management of other investments. The Trustees may request the Advisor to engage
in certain other activities which complement the Trust's investments, and the
Advisor may receive compensation or commissions therefor from the Trust or other
Persons.
Neither the Advisor nor (subject to any applicable provisions of
Section 7.7) any Affiliate of the Advisor shall be obligated to present any
particular investment opportunities to the Trust, even if such opportunities are
of a character such that, if presented to the Trust, they could be taken by the
Trust, and, subject to the foregoing, each of them shall be protected in taking
for its own account or recommending to others any such particular investment
opportunity.
Notwithstanding the foregoing, the Advisor shall be required to use its
best efforts to present the Trust with a continuing and suitable program
consistent with the investment policies and
<PAGE>
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objectives of the Trust and with investments which are representative of,
comparable with and on similar terms as investments being made by Affiliates of
the Advisor, or by the Advisor for its own account or for the account of any
Person for whom the Advisor is providing advisory services. In addition, the
Advisor shall be required to, upon the request of any Trustee, promptly furnish
the Trustees with such information on a confidential basis as to any investments
within the investment policies of the Trust made by Affiliates of the Advisor or
by the Advisor for its own account or for the account of any Person for whom the
Advisor is providing advisory services.
4.4 Advisor Compensation. The Trustees, including a majority of the
Independent Trustees, shall at least annually review generally the performance
of the Advisor in order to determine whether the compensation which the Trust
has contracted to pay to the Advisor is reasonable in relation to the nature and
quality of services performed and whether the provisions of the advisory
contract with the Advisor are being carried out. Each such determination shall
be based on such of the following and other factors as the Trustees (including
the Independent Trustees) deem appropriate and shall be reflected in the minutes
of the meetings of the Trustees:
(a) the size of the advisory fee in relation to the size,
composition and profitability of the portfolio of the Trust;
(b) the success of the Advisor in generating opportunities
that meet the investment objectives of the Trust;
(c) the rates charged to other REITs and to investors other
than REITs by advisors performing similar services;
(d) additional revenues realized by the Advisor and its
Affiliates through their relationship with the Trust, including loan
administration, underwriting or brokerage commissions and servicing,
engineering, inspection and other fees, whether paid by the Trust or by
others with whom the Trust does business;
(e) the quality and extent of service and advice furnished by
the Advisor;
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(f) the performance of the investment portfolio of the Trust,
including income, conservation or appreciation of capital, frequency of
problem investments and competence in dealing with distress situations;
and
(g) the quality of the portfolio of the Trust in relationship
to any investments generated by the Advisor for its own account.
4.5 Annual Total Operating Expenses. Each advisory contract with an
Advisor shall provide that the Total Operating Expenses of the Trust shall not
exceed in any fiscal year the lower of:
(a) the greater of (i) two percent (2%) of the Average
Invested Real Estate Assets for such fiscal year or (ii) twenty-five
percent (25%) of the Net Income for such fiscal year (calculated before
the deduction therefrom of such Total Operating Expenses); or
(b) the lowest of any applicable operating expense limitations
that may be imposed by law or regulation in a state in which any
securities of the Trust are or will be qualified for sale or by a
national securities exchange on which any securities of the Trust are
or may be listed, as such limitations may be altered from time to time.
The Independent Trustees shall at least annually determine whether the
total fees and expenses of the Trust are reasonable in light of the investment
experience of the Trust, its Net Assets, its Net Income and the fees and
expenses of comparable REITs. Each such determination shall be reflected in the
minutes of meetings of the Trustees.
Within sixty (60) days after the end of any fiscal quarter of the Trust
ending on or after December 31, 1987 for which Total Operating Expenses (for the
twelve months then ended) exceed either of the expense limitations provided in
subparagraph (a) of this Section 4.5, the Trust shall send to the Shareholders a
written disclosure of such fact, together with an explanation of the factors, if
any, which the Trustees (including a majority of the Independent Trustees) have
concluded were sufficiently
<PAGE>
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unanticipated, unusual or nonrecurring to justify such higher Total Operating
Expenses.
Each advisory contract with the Advisor shall provide that in the event
that the Total Operating Expenses exceed any of the limitations provided in this
Section 4.5, then the Advisor shall refund to the Trust the amount by which the
aggregate annual Total Operating Expenses paid or incurred by the Trust exceed
the limitations herein provided; provided, however, that with respect to the
limitations provided in subparagraph (a) of this Section 4.5, only so much of
such excess need be refunded as the Trustees, including a majority of the
Independent Trustees, shall have found to be unjustified as provided above.
ARTICLE V
INVESTMENT POLICY AND POLICIES
WITH RESPECT TO CERTAIN
DISTRIBUTIONS TO SHAREHOLDERS
5.1 Statement of Policy. It shall be the general objectives of the
Trust (i) to provide current income for distribution to Shareholders through
investments in income-producing rehabilitation, health care and related
facilities and other real estate investments, (ii) to provide Shareholders with
the opportunity for additional returns through participation in any increases in
the operating revenues of investment properties, (iii) to provide Shareholders
with the opportunity to realize income from investments in income-producing
properties to be financed by the issuance of additional Shares or debt, (iv) to
provide Shareholders with the opportunity to realize capital growth resulting
from appreciation, if any, in the residual value of investment properties and
(v) to preserve and protect Shareholders' capital. These general objectives
shall be pursued in a manner consistent with the investment policies specified
in the remainder of this Section 5.1.
While the Trustees are authorized pursuant to Article III to invest the
Trust Estate in a wide variety of investments, it shall be the policy of the
Trustees to invest the initial portion of the Trust Estate primarily in
income-producing rehabilitation, health care and related facilities including,
without limitation, acute care and rehabilitation hospitals, skilled nursing and
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intermediate care facilities, retirement centers, congregate living facilities,
medical office buildings, health care related hotels, outpatient rehabilitation
centers, community re-entry/re-training facilities and facilities housing other
health care and related products and services.
The Trust may make secured borrowings to make permitted additional Real
Estate Investments and secured or unsecured borrowings for normal working
capital needs, including the repair and maintenance of properties in which it
has invested, tenant improvements and leasing commissions. The Trust may make
such borrowings from third parties or, subject to approval by a majority of the
Independent Trustees, from Affiliates of the Advisor. Interest and other
financing charges or fees to be paid on loans from such Affiliates will not
exceed the interest and other financing charges or fees which would be charged
by third party financing institutions on comparable loans for the same purpose
in the same geographic area.
To the extent that the Trust Estate has assets not otherwise invested
in accordance with this Section 5.1, it shall be the policy of the Trustees to
invest such assets in (i) U.S. government Securities; (ii) Securities of U.S.
government agencies; (iii) bankers' acceptances; (iv) bank certificates of
deposit; (v) interest-bearing deposits in commercial banks; (vi) participations
in pools of mortgages or bonds and notes (such as Federal Home Loan Mortgage
Corporation participation sale certificates, Government National Mortgage
Association modified pass-through certificates and Federal National Mortgage
Association bonds and notes; (vii) bank repurchase agreements covering the
Securities of the United States or agencies or instrumentalities thereof; and
(viii) other short-term investments consistent with the Trust's intention to
qualify as a REIT under the Internal Revenue Code.
It shall be the policy of the Trustees to make investments in such
manner as to comply with the requirements of the Internal Revenue Code with
respect to the composition of the investments and the derivation of the income
of a real estate investment trust as defined in the REIT Provisions of the
Internal Revenue Code; provided, however, that no Trustee, officer, employee or
agent of the Trust shall be liable for any act or omission resulting in the loss
of tax benefits under the Internal Revenue
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Code, except for that arising from his own wilful misfeasance, bad faith, gross
negligence or reckless disregard of duty.
5.2 Prohibited Investments and Activities. The Trustees shall not
engage in any of the following investment practices or activities:
(a) investing in any junior mortgage loan unless by appraisal
or other method the Independent Trustees determine that (a) capital
invested in any such loan is adequately secured on the basis of the
equity of the borrower in the property underlying such investment and
the ability of the borrower to repay the mortgage loan or (b) such loan
is a financing device entered into by the Trust to establish the
priority of its capital investment over the capital invested by others
investing with the Trust in a real estate project;
(b) investing in commodities or commodity futures contracts
(other than interest rate futures, when used solely for hedging
purposes);
(c) investing more than 1% of the Trust's total assets in real
estate contracts of sale unless such contracts of sale are in
recordable form and appropriately recorded in the chain of title;
(d) issuing Securities that are redeemable at the option of
the holders thereof;
(e) granting warrants or options to purchase shares of
beneficial interest of the Trust unless such warrants or options (i)
are issued at an exercise price greater than or equal to the fair
market value of the shares of beneficial interest of the Trust on the
date of the grant and for consideration (including services) that in
the judgment of a majority of the Independent Trustees has a market
value at least equal to the value of the warrant or option on the date
of grant, (ii) are exercisable within ten years from the date of grant
and (iii) when aggregated with all other outstanding options and
warrants are less than 10% of the value of the outstanding shares of
beneficial interest of the Trust on the date of grant; provided that
the terms of warrants or options that are issued ratably to all holders
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of shares of beneficial interest or as part of a financing arrangement
need not meet the above restrictions;
(f) holding equity investments in unimproved, non-income
producing real property, except such properties as are currently
undergoing development or are presently intended to be developed within
one year, together with mortgage loans on such property (other than
first mortgage development loans), aggregating to more than 10% of the
Trust's assets;
(g) engaging in trading (as compared with investment
activities), or engaging in the underwriting of or distributing as
agent of the Securities issued by others;
(h) making secured and unsecured borrowings which in the
aggregate exceed 300% of the Net Assets of the Trust, unless approved
by a majority of the Independent Trustees, and disclosed to
shareholders;
(i) undertaking any activity that would disqualify the Trust
as a real estate investment trust under the provisions of the Code as
long as a real estate investment trust is accorded substantially the
same treatment or benefits under the United States tax laws from time
to time in effect as under Sections 856-860 of the Code at the date of
adoption of the Trust's Declaration of Trust; and
(j) using or applying land for farming, agriculture,
horticulture or similar purposes in violation of Section 8-302(b) of
the Corporations and Associations Article of the Annotated Code of
Maryland.
5.3 Appraisals. If the Trustees shall at any time purchase Real
Property, or interests therein, the consideration paid therefor shall generally
be based upon the fair market value thereof as determined by an appraisal by a
person who is not an Affiliate of the Trust or the Advisor and who is, in the
sole judgment of the Trustees, properly qualified to make such a determination.
5.4 Change in Investment Policies. The investment policies set out in
this Article V may be changed by a vote of a majority
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of the Trustees, including a majority of the Independent Trustees.
ARTICLE VI
THE SHARES AND SHAREHOLDERS
6.1 Description of Shares. The interest of the Shareholders shall be
divided into 200,000,000 shares of beneficial interest which shall be known
collectively as "Shares," all of which shall be validly issued, fully paid and
non-assessable by the Trust upon receipt of full consideration for which they
have been issued or without additional consideration if issued by way of share
dividend or share split. There shall be two classes of Shares: 50,000,000 shares
of one such class shall be known as "Preferred Shares" and 150,000,000 shares of
the other such class shall be known as "Common Shares," each such class having
$.01 par value per share. Each holder of Shares shall as a result thereof be
deemed to have agreed to and be bound by the terms of this Declaration. The
Shares may be issued for such consideration as the Trustees shall deem
advisable. The Trustees are hereby expressly authorized at any time, and from
time to time, to provide for issuance of Shares upon such terms and conditions
and pursuant to such agreements as the Trustees may determine. The Trustees are
hereby expressly authorized at any time, and from time to time, without
Shareholder approval, to amend this Declaration to increase or decrease the
aggregate number of Shares or the number of Shares of any class that the Trust
has authority to issue.
The Trustees are hereby expressly authorized at any time, and from time
to time, without Shareholder approval, to set (or change if such class has
previously been established) the par value, preferences, conversion or other
rights, voting powers, restrictions, limitations as to dividends,
qualifications, or terms, or conditions of redemption, of the Preferred Shares,
and such Preferred Shares may further be divided by the Trustees into classes or
series.
Except as otherwise determined by the Trustees with respect to any
class or series of Preferred Shares, the holders of Shares shall be entitled to
the rights and powers hereinafter set forth in this Section 6.1: The holders of
Shares shall be entitled to
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receive, when and as declared from time to time by the Trustees out of any funds
legally available for the purpose, such dividends or distributions as may be
declared from time to time by the Trustees. In the event of the termination of
the Trust pursuant to Section 8.1 or otherwise, or upon the distribution of its
assets, the assets of the Trust available for payment and distribution to
Shareholders shall be distributed ratably among the holders of Shares at the
time outstanding in accordance with Section 8.2. All Shares shall have equal
non-cumulative voting rights at the rate of one vote per Share, and equal
dividend, distribution, liquidation and other rights, and shall have no
preference, conversion, exchange, sinking fund or redemption rights. Absent a
contrary written agreement of the Trust authorized by the Trustees, and
notwithstanding any other determination by the Trustees with respect to any
class or series of Preferred Shares, no holder of Shares or Preferred Shares
shall be entitled as a matter of right to subscribe for or purchase any part of
any new or additional issue of Shares of any class whatsoever of the Trust, or
of securities convertible into any shares of any class whatsoever of the Trust,
whether now or hereafter authorized and whether issued for cash or other
consideration or by way of dividend.
6.2 Certificates. Ownership of Shares shall be evidenced by
certificates. Every Shareholder shall be entitled to receive a certificate, in
such form as the Trustees shall from time to time approve, specifying the number
of Shares of the applicable class held by such Shareholder. Subject to Sections
6.6 and 6.14(c) hereof, such certificates shall be treated as negotiable and
title thereto and to the Shares represented thereby shall be transferred by
delivery thereof to the same extent in all respects as a stock certificate, and
the Shares represented thereby, of a Maryland business corporation. Unless
otherwise determined by the Trustees, such certificates shall be signed by the
Chairman, if any, and the President and shall be countersigned by a transfer
agent, and registered by a registrar if any, and such signatures may be
facsimile signatures in accordance with Section 3.2(d) hereof. There shall be
filed with each transfer agent a copy of the form of certificate so approved by
the Trustees, certified by the Chairman, President, or Secretary, and such form
shall continue to be used unless and until the Trustees approve some other form.
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In furtherance of the provisions of Sections 6.1 and 6.14(c) hereof,
each Certificate evidencing Shares shall contain a legend imprinted thereon to
substantially the following effect or such other legend as the Trustees may from
time to time adopt:
REFERENCE IS MADE TO THE DECLARATION OF TRUST OF THE TRUST FOR A
STATEMENT OF ALL THE DESIGNATIONS, PREFERENCES, LIMITATIONS, AND
RELATIVE RIGHTS OF EACH CLASS OR SERIES OF SHARES THAT THE TRUST IS
AUTHORIZED TO ISSUE, THE VARIATIONS IN THE RELATIVE RIGHTS AND
PREFERENCES OF ANY PREFERRED OR SPECIAL CLASS OF SHARES IN SERIES, TO
THE EXTENT THEY HAVE BEEN FIXED AND DETERMINED, AND THE AUTHORITY OF
THE TRUSTEES TO FIX AND DETERMINE THE RELATIVE RIGHTS AND PREFERENCES
OF SUBSEQUENT SERIES. ANY SUCH STATEMENT SHALL BE FURNISHED WITHOUT
CHARGE ON REQUEST TO THE TRUST AT ITS PRINCIPAL PLACE OF BUSINESS OR
REGISTERED OFFICE.
IF NECESSARY TO EFFECT COMPLIANCE BY THE TRUST WITH REQUIREMENTS OF THE
INTERNAL REVENUE CODE RELATING TO REAL ESTATE INVESTMENT TRUSTS, THE
SHARES REPRESENTED BY THIS CERTIFICATE MAY BE REDEEMED BY THE TRUST
AND/OR THE TRANSFER THEREOF MAY BE PROHIBITED ALL UPON THE TERMS AND
CONDITIONS SET FORTH IN THE DECLARATION OF TRUST. THE TRUST WILL
FURNISH A COPY OF SUCH TERMS AND CONDITIONS TO THE REGISTERED HOLDER OF
THIS CERTIFICATE UPON REQUEST AND WITHOUT CHARGE.
6.3 Fractional Shares. In connection with any issuance of Shares, the
Trustees may issue fractional Shares or may adopt provisions for the issuance of
scrip including without limitation, the time within which any such scrip must be
surrendered for exchange into full Shares and the rights, if any, of holders of
scrip upon the expiration of the time so fixed, the rights, if any, to receive
proportional distributions, and the rights, if any, to redeem scrip for cash, or
the Trustees may in their discretion, or if they see fit at the option of, each
holder, provide in lieu of scrip for the adjustment of the fractions in cash.
The provisions of Section 6.2 hereof relative to certificates for Shares shall
apply so far as applicable to such scrip, except that such scrip may in the
discretion of the Trustees be signed by a transfer agent alone.
6.4 Legal Ownership of Trust Estate. The legal ownership of the Trust
Estate and the right to conduct the business of the
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Trust are vested exclusively in the Trustees (subject to Section 3.2(s)), and
the Shareholders shall have no interest therein (other than beneficial interest
in the Trust conferred by their Shares issued hereunder) and they shall have no
right to compel any partition, division, dividend or distribution of the Trust
or any of the Trust Estate.
6.5 Shares Deemed Personal Property. The Shares shall be personal
property and shall confer upon the holders thereof only the interest and rights
specifically set forth or provided for in this Declaration. The death,
insolvency or incapacity of a Shareholder shall not dissolve or terminate the
Trust or affect its continuity nor give his legal representative any rights
whatsoever, whether against or in respect of other Shareholders, the Trustees or
the Trust Estate or otherwise, except the sole right to demand and, subject to
the provisions of this Declaration, the Bylaws and any requirements of law, to
receive a new certificate for Shares registered in the name of such legal
representative, in exchange for the certificate held by such Shareholder.
6.6 Share Record; Issuance and Transferability of Shares. Records shall
be kept by or on behalf of and under the direction of the Trustees, which shall
contain the names and addresses of the Shareholders, the number of Shares held
by them respectively, and the numbers of the certificates representing the
Shares, and in which there shall be recorded all transfers of Shares. The Trust,
the Trustees and the officers, employees and agents of the Trust shall be
entitled to deem the Persons in whose names certificates are registered on the
records of the Trust to be the absolute owners of the Shares represented thereby
for all purposes of the Trust; but nothing herein shall be deemed to preclude
the Trustees or officers, employees or agents of the Trust from inquiring as to
the actual ownership of Shares. Until a transfer is duly effected on the records
of the Trust, the Trustees shall not be affected by any notice of such transfer,
either actual or constructive.
Shares shall be transferable on the records of the Trust only by the
record holder thereof or by his agent thereunto duly authorized in writing upon
delivery to the Trustees or a transfer agent of the certificate or certificates
therefor, properly endorsed or accompanied by duly executed instruments of
transfer and accompanied by all necessary documentary stamps together with
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such evidence of the genuineness of each such endorsement, execution or
authorization and of other matters as may reasonably be required by the Trustees
or such transfer agent. Upon such delivery, the transfer shall be recorded in
the records of the Trust and a new certificate for the Shares so transferred
shall be issued to the transferee and in case of a transfer of only a part of
the Shares represented by any certificate, a new certificate for the balance
shall be issued to the transferor. Any Person becoming entitled to any Shares in
consequence of the death of a Shareholder or otherwise by operation of law shall
be recorded as the holder of such Shares and shall receive a new certificate
therefor but only upon delivery to the Trustees or a transfer agent of
instruments and other evidence required by the Trustees or the transfer agent to
demonstrate such entitlement, the existing certificate for such Shares and such
releases from applicable governmental authorities as may be required by the
Trustees or transfer agent. In case of the loss, mutilation or destruction of
any certificate for shares, the Trustees may issue or cause to be issued a
replacement certificate on such terms and subject to such rules and regulations
as the Trustees may from time to time prescribe. Nothing in this Declaration
shall impose upon the Trustees or a transfer agent a duty, or limit their
rights, to inquire into adverse claims.
6.7 Dividends or Distributions to Shareholders. Subject to Section 5.1,
the Trustees may from time to time declare and pay to Shareholders such
dividends or distributions in cash, property or assets of the Trust or
Securities issued by the Trust, out of current or accumulated income, capital,
capital gains, principal, interest, surplus, proceeds from the increase or
financing or refinancing of Trust obligations, or from the sale of portions of
the Trust Estate or from any other source as the Trustees in their discretion
shall determine. Shareholders shall have no right to any dividend or
distribution unless and until declared by the Trustees. The Trustees shall
furnish the Shareholders with a statement in writing advising as to the source
of the funds so distributed not later than ninety (90) days after the close of
the fiscal year in which the distribution was made.
6.8 Transfer Agent, Dividend Disbursing Agent and Registrar. The
Trustees shall have power to employ one or more transfer agents, dividend
disbursing agents and registrars (including the Advisor or its Affiliates) and
to authorize them on behalf of the Trust to keep records to hold and to disburse
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any dividends or distributions and to have and perform, in respect of all
original issues and transfers of Shares, dividends and distributions and reports
and communications to Shareholders, the powers and duties usually had and
performed by transfer agents, dividend disbursing agents and registrars of a
Maryland business corporation.
6.9 Shareholders' Meetings. There shall be an annual meeting of the
Shareholders, at such time and place as shall be determined by or in the manner
prescribed in the Bylaws, at which the Trustees shall be elected and any other
proper business may be conducted. The Annual Meeting of Shareholders shall be
held no fewer than 30 days after delivery to the Shareholders of the Annual
Report and within six (6) months after the end of each fiscal year, commencing
with the fiscal year ending December 31, 1986. Special meetings of Shareholders
may be called by the chief executive officer of the Trust or by a majority of
the Trustees or of the Independent Trustees and shall be called by the chief
executive officer of the Trust upon the written request of Shareholders holding
in the aggregate not less than ten percent (10%) of the total votes authorized
to be cast by the outstanding Shares of the Trust entitled to vote at such
meeting in the manner provided in the Bylaws. If there shall be no Trustees, the
officers of the Trust shall promptly call a special meeting of the Shareholders
entitled to vote for the election of successor Trustees. Notice of any special
meeting shall state the purposes of the meeting.
The holders of Shares entitled to vote at the meeting representing a
majority of the total number of votes authorized to be cast by Shares then
outstanding and entitled to vote on any question present in person or by proxy
shall constitute a quorum at any such meeting for action on such question. Any
meeting may be adjourned from time to time by a majority of the votes properly
cast upon the question, without regard to class, whether or not a quorum is
present, and, except as otherwise provided in the Bylaws, the meeting may be
reconvened without further notice. At any reconvened session of the meeting at
which there shall be a quorum, any business may be transacted at the meeting as
originally noticed.
Except as otherwise clearly indicated in this Declaration or the
Bylaws, whenever any action is to be taken by the Shareholders, it shall be
authorized by the affirmative vote of
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the holders of Shares representing a majority of the total number of votes
authorized to be cast by shares then outstanding and entitled to vote thereon.
At all elections of Trustees, voting by Shareholders shall be conducted under
the non-cumulative method and the election of Trustees shall be by the
affirmative vote of the holders of Shares representing a majority of the total
number of votes authorized to be cast by shares then outstanding and entitled to
vote thereon.
Whenever Shareholders are required or permitted to take any action
(unless a vote at a meeting is specifically required as in Sections 8.1, 8.3 and
8.5), such action may be taken without a meeting by written consents setting
forth the action so taken, signed by the holders of a majority (or such higher
percentage as may be specified elsewhere in this Declaration) of the total
number of votes authorized to be cast by shares then outstanding and entitled to
vote thereon.
6.10 Proxies. Whenever the vote or consent of a Shareholder entitled to
vote is required or permitted under this Declaration, such vote or consent may
be given either directly by such Shareholder or by a proxy in the form
prescribed in, and subject to the provisions of, the Bylaws. The Trustees may
solicit such proxies from the Shareholders or any of them entitled to vote in
any matter requiring or permitting the Shareholders' vote or consent.
6.11 Reports to Shareholders.
(a) Not later than ninety (90) days after the close of each
fiscal year of the Trust following the end of fiscal year 1986, the
Trustees shall mail or deliver a report of the business and operations
of the Trust during such fiscal year to the Shareholders, which report
shall constitute the accounting of the Trustees for such fiscal year.
Subject to Section 8-401 of the Annotated Code of Maryland, the report
(the "Annual Report") shall be in such form and have such content as
the Trustees deem proper. The Annual Report shall include a balance
sheet, an income statement and a surplus statement, each prepared in
accordance with generally accepted accounting principles. Such
financial statements shall be certified by an independent public
accountant based on a full examination of the books and records of the
Trust conducted in accordance with generally
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accepted auditing procedure. Manually signed copies of the Annual
Report and of the auditor's certificate will be filed with the Maryland
Department of Assessments and Taxation. A manually signed copy of the
accountant's report shall be filed with the Trustees.
(b) Not less than forty-five (45) days after the end of each
of the first three fiscal quarters the Trustees shall send interim
reports to the Shareholders containing financial information which may
be unaudited and otherwise having such form and content as the Trustees
deem proper.
6.12 Fixing Record Date. The Bylaws may provide for fixing or, in the
absence of such provision, the Trustees may fix, in advance, a date as the
record date for determining the Shareholders entitled to notice of or to vote at
any meeting of Shareholders or to express consent to any proposal without a
meeting or for the purpose of determining Shareholders entitled to receive
payment of any dividend or distribution (whether before or after termination of
the Trust) or any Annual Report or other communication from the Trustees, or for
any other purpose. The record date so fixed shall be not less than ten (10) days
nor more than sixty (60) days prior to the date of the meeting or event for the
purposes of which it is fixed.
6.13 Notice to Shareholders. Any notice of meeting or other notice,
communication or report to any Shareholder shall be deemed duly delivered to
such Shareholder when such notice, communication or report is deposited, with
postage thereon prepaid, in the United States mail, addressed to such
Shareholder at his address as it appears on the records of the Trust or is
delivered in person to such Shareholder.
6.14 Shareholders' Disclosure; Trustees' Right to Refuse to Transfer
Shares; Limitation on Holdings; Redemption of Shares.
(a) The Shareholders shall upon demand disclose to the
Trustees in writing such information with respect to direct and
indirect ownership of the Shares as the Trustees deem necessary or
appropriate to comply with the REIT provisions of the Internal Revenue
Code or to comply with the requirements of any taxing authority or
governmental agency.
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(b) Whenever in good faith the Trustees deem it reasonably
necessary to protect the status of the Trust as a REIT they may require
a statement or affidavit from each Shareholder or proposed transferee
of Shares setting forth the number of Shares already owned, directly or
indirectly, by him and any related Person specified in the form
prescribed by the Trustees for that purpose. If, in the opinion of the
Trustees, which shall be binding upon any proposed transferee of
Shares, any proposed transfer would jeopardize the status of the Trust
as a REIT, the Trustees shall have the right, but not the duty, to
refuse to permit such transfer.
(c) The Trustees, by notice to the holder thereof, may
purchase any or all Shares that have been transferred pursuant to a
transfer which, in the opinion of the Trustees, would jeopardize the
status of the Trust as a REIT. Without limiting the generality of the
foregoing, as a condition to the transfer and/or registration of
transfer of any Shares which could result in direct or indirect
ownership (as hereafter defined) of Shares representing more than 8.5%
in value of the total Shares outstanding (the "Excess Shares") becoming
concentrated in the hands of one owner other than an Excepted Person,
such potential owner shall file with the Trust the statement or
affidavit described in subsection (b) of this Section 6.14 no later
than the fifteenth day prior to any transfer, registration of transfer
or transaction which, if consummated, would result in such ownership.
The Trustees shall have the power (i) by lot or other means deemed
equitable by them to call for the purchase from the beneficial owner or
the Shareholder of such Excess Shares, and (ii) to refuse to transfer
or issue Shares to any Person whose acquisition of such Shares would,
in the opinion of the Trustees, result in the direct or indirect
beneficial ownership of any Excess Shares by a person other than any of
the Excepted Persons. The purchase price for any Excess Shares shall be
equal to the fair market value of the Shares reflected in the closing
sale price for the Shares, if then listed on a national securities
exchange, or such price for the Shares on the principal exchange if
then listed on more than one national securities exchange, or if the
Shares are not then listed on a national securities exchange, the
latest bid quotation for the Shares if then traded over-the-counter, on
the last
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trading day immediately preceding the day on which notices of such
acquisition are sent, or, if no such closing sales prices or quotations
are available, then the purchase price shall be equal to the net asset
value of such Shares as determined by the Trustees in accordance with
the provisions of applicable law. Prompt payment of the purchase price
shall be made in cash by the Trust in such manner as may be determined
by the Trustees. From and after the date fixed for purchase by the
Trustees, and so long as payment of the purchase price for the Shares
to be so redeemed shall have been made or duly provided for, the holder
of any Excess Shares so called for purchase shall cease to be entitled
to distributions, voting rights and other benefits with respect to such
Shares, excepting only the right to payment of the purchase price fixed
as aforesaid. Any transfer of Shares, options, warrants or other
securities convertible into Shares that would create a direct or
indirect beneficial owner of Excess Shares other than any of the
Excepted Persons shall be deemed void ab initio and the intended
transferee shall be deemed never to have an interest therein. If the
foregoing provision is determined to be void or invalid by virtue of
any legal decision, statute, rule or regulation, then the transferee of
such Shares, options, warrants or other securities convertible into
Shares shall be deemed, at the option of the Trust, to have acted as
agent on behalf of the Trust in acquiring such Shares and to hold such
Shares on behalf of the Trust.
The following persons are "Excepted Persons": (i) the Advisor,
(ii) persons to whom the Advisor's Share ownership is attributed or
whose Share ownership is attributed to the Advisor, or (iii) other
persons approved by the Trustees, at their option and in their sole
discretion, provided only that such approval shall not be granted to
any person whose ownership of more than 8.5% in value of the total
Shares outstanding would result, directly, indirectly or as a result of
attribution of ownership, in termination of the status of the Trust as
a REIT.
(d) Notwithstanding any other provision in this Declaration of
Trust or the Bylaws, the foregoing provision may not be amended or
repealed without the affirmative vote of 75% of the Shares entitled to
vote.
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(e) Notwithstanding any other provision of this Declaration of
Trust to the contrary, any purported acquisition of Shares of the Trust
(whether such purported acquisition results from the direct or indirect
acquisition or ownership (as hereafter defined) of Shares) which would
result in the disqualification of the Trust as a REIT shall be null and
void. Any such Shares may be treated by the Trustees in the manner
prescribed for Excess Shares in subsection (c) of this Section 6.14.
(f) Nothing contained in this Section 6.14 or in any other
provision of this Declaration of Trust shall limit the authority of the
Trustees to take such other action as they deem necessary or advisable
to protect the Trust and the interests of the Shareholders by
preservation of the Trust's status as a REIT.
(g) If any provision of this Section 6.14 or any application
of any such provision is determined to be invalid by any federal or
state court having jurisdiction over the issues, the validity of the
remaining provision shall not be affected and other applications of
such provision shall be affected only to the extent necessary to comply
with the determination of such court. To the extent this Section 6.14
may be inconsistent with any other provision of this Declaration of
Trust, this Section 6.14 shall be controlling.
(h) It shall be the policy of the Trustees to consult with the
appropriate officials of any stock exchange on which the relevant
Shares of the Trust are listed as far as reasonably possible in advance
of the final exercise (at any time when the Shares are listed on such
exchange) of any powers granted by subsections (b) or (c) of this
Section 6.14.
(i) For purposes of this Declaration of Trust, Shares not
owned directly shall be deemed to be owned indirectly by a person if
that person or a group of which he is a member would be the beneficial
owner of such Shares, as defined as of September 1, 1986 in Rule 13d-3
under the Securities
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Exchange Act of 1934 and/or would be considered to own such Shares by
reason of the attribution rules of Section 544 or Section 856(d)(5) of
the Internal Revenue Code.
6.15 Special Voting Requirements for Certain Business Combinations.
(a) The affirmative vote of the holders of not less than 75%
of the Shares then outstanding and entitled to vote thereon shall be
required for the approval or authorization of any "Business
Combination" (as hereinafter defined) of the Trust with any "Related
Person" (as hereinafter defined). However, such 75% voting requirement
shall not be applicable if: (1) the Board of Trustees by unanimous vote
or written consent shall have expressly approved in advance the
acquisition of the outstanding Shares of the Trust that caused the
Related Person to become a Related Person or shall have approved the
Business Combination prior to the Related Person involved in the
Business Combination having become a Related Person; or (2) the
Business Combination is solely between the Trust and another limited
partnership, partnership, trust or corporation, 100% of the voting
securities of which is owned directly or indirectly by the Trust.
(b) For purposes of this Section 6.15:
(i) The term "Business Combination" shall mean (a) any
merger or consolidation of the Trust with or into a
Related Person, (b) any sale, lease, exchange,
transfer or other disposition, including without
limitation a mortgage or any other security device,
of all or any "Substantial Part" (as hereinafter
defined) of the assets of the Trust (including
without limitation any voting securities of a
subsidiary) to a Related Person, (c) any merger or
consolidation of a Related Person with or into the
Trust, (d) any sale, lease, exchange, transfer or
other disposition of assets of a Related Person to
the Trust having a book value equal to more than 10%
of the Invested Assets of the Trust as of the end of
the Trust's most recent fiscal year ending prior to
the time the
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determination is made, (e) the issuance of any
Securities (other than by way of pro rata
distribution to all Shareholders) of the Trust to a
Related Person, and (f) any agreement, contract or
other arrangement providing for any of the
transactions described in this definition of Business
Combination.
(ii) The term "Related Person" shall mean and include any
individual, corporation, partnership, limited
partnership or other person or entity other than the
Advisor or any wholly owned subsidiary of the Advisor
which, together with its "affiliates" and
"associates" (as defined as of September 1, 1986, in
Rule 12b-2 under the Securities Exchange Act of
1934), "beneficially owns" (as defined as of
September 1, 1986, in Rule 13d-3 under the Securities
Exchange Act of 1934) in the aggregate 10% or more of
the outstanding Shares of the Trust.
(iii) The term "Substantial Part" shall mean an amount
equal to more than 10% of the Invested Assets of the
Trust as of the end of its most recent fiscal year
ending prior to the time the determination is being
made.
(iv) Without limitation, any Shares that any Related
Person has the right to acquire pursuant to any
agreement, or upon exercise of conversion rights,
warrants or options, or otherwise, shall be deemed
beneficially owned by the Related Person.
(c) The Trust elects not to be governed by the provisions of
Subtitle 6 of Title 3 of the Corporations and Associations Article of
the Annotated Code of Maryland, and the provisions of subparagraphs (a)
and (b) of this Section 6.15 shall be in substitution for and to the
exclusion of said Subtitle 6 of Title 3.
(d) Except as otherwise provided in this Section 6.15, the
Trust may effect any merger or consolidation in accordance with
applicable law.
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ARTICLE VII
LIABILITY OF TRUSTEES, SHAREHOLDERS, OFFICERS,
EMPLOYEES AND AGENTS, AND OTHER MATTERS
7.1 Limitation of Liability of Shareholders, Trustees, Officers,
Employees and Agents for Obligations of the Trust. The Trustees and the
officers, employees and agents (including the Advisor) of the Trust, in
incurring any debts, liabilities or obligations or in taking or omitting any
other actions for or in connection with the Trust, are, and shall be deemed to
be, acting as trustees, officers, employees or agents of the Trust and not in
their own individual capacities. Except as otherwise provided in Sections 7.3
hereof with respect to liability of Trustees or officers, agents or employees of
the Trust to the Trust or to Shareholders, no Shareholder, Trustee or officer,
employee or agent (including the Advisor) of the Trust shall be liable for any
debt, claim, demand, judgment decree, liability or obligation of any kind (in
tort, contract or otherwise) of, against or with respect to the Trust or arising
out of any action taken or omitted for or on behalf of the Trust, and the Trust
shall be solely liable therefor and resort shall be had solely to the Trust
Estate for the payment or performance thereof, and no Shareholder, Trustee or
officer, employee or agent (including the Advisor) of the Trust shall be subject
to any personal liability whatsoever, in tort, contract or otherwise, to any
other Person or Persons in connection with the Trust Estate or the affairs of
the Trust (or any actions taken or omitted for or on behalf of the Trust), and
all such other Persons shall look solely to the Trust Estate for satisfaction of
claims of any nature arising in connection with the Trust Estate or the affairs
of the Trust (or any action taken or omitted for or on behalf of the Trust).
7.2 Express Exculpatory Clauses and Instruments. Any written instrument
creating an obligation of the Trust shall include a reference to this
Declaration and provide that neither the Shareholders nor the Trustees nor any
officers, employees or agents (including the Advisor) of the Trust shall be
liable thereunder and that all Persons shall look solely to the Trust Estate for
the payment of any claim thereunder or for the performance thereof; however, the
omission of such provision from any such instrument shall not render the
Shareholders, any
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Trustee, or any officer, employee or agent (including the Advisor) of the Trust
liable nor shall the Shareholders, any Trustee or any officer, employee or agent
(including the Advisor) of the Trust be liable to any one for such omission.
7.3 Limitation of Liability of Trustees, Officers, Employees and Agents
to the Trust and to Shareholders for Acts and Omissions. (a) No Independent
Trustee or officer, employee or agent of the Trust shall have any greater duties
than those established by this Declaration of Trust or, in cases as to which
such duties are not so established, than those of the directors, officers,
employees and agents of a Maryland business corporation in effect from time to
time. No Independent Trustee, officer, employee or agent of the Trust shall be
liable to the Trust, Shareholders or to any other Person for any act or omission
except for his own willful misfeasance, bad faith, gross negligence or reckless
disregard of duty.
(b) No Affiliated Trustee shall have liability to the Trust,
Shareholders or any other Person for any loss suffered by the Trust which arises
out of any action or inaction of such Affiliated Trustee if such Affiliated
Trustee in good faith had determined that such course of conduct was in the best
interest of the Trust and if such course of conduct did not constitute
negligence or misconduct of such Affiliated Trustee.
7.4 Indemnification and Reimbursement of Trustees, Officers, Employees
and Agents.
(a) Except as otherwise provided in paragraph (b) of this
Section 7.4, any Person made a party to any action, suit or proceeding
or against whom a claim or liability is asserted by reason of the fact
that he, his testator or intestate was or is a Independent Trustee,
officer, employee or agent of the Trust shall be indemnified and held
harmless by the Trust against judgments, fines, amounts paid on account
thereof (whether in settlement or otherwise) and reasonable expenses,
including attorneys' fees, actually and reasonably incurred by him in
connection with the defense of such action, suit, proceeding, claim or
alleged liability or in connection with any appeal therein, whether or
not the same proceeds to judgment or is settled or otherwise brought to
a conclusion; provided, however, that no such Person shall be so
indemnified or reimbursed for any claim,
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obligation or liability which shall have been adjudicated to have
arisen out of or been based upon his willful misfeasance, bad faith,
gross negligence or reckless disregard of duty; and provided, further,
that such Person gives prompt notice thereof, executes such documents
and takes such action as will permit the Trust to conduct the defense
or settlement thereof and cooperates therein. In the event of a
settlement approved by the Trustees of any such claim, alleged
liability, action, suit or proceeding, indemnification and
reimbursement shall be provided except as to such matters covered by
the settlement which the Trust is advised by its counsel would, if
adjudicated, likely be adjudicated to have arisen out of or been based
upon such Person's willful misfeasance, bad faith, gross negligence or
reckless disregard of duty. Such rights of indemnification and
reimbursement shall be satisfied only out of the Trust Estate. The
rights accruing to any Person under these provisions shall not exclude
any other right to which he may be lawfully entitled, nor shall
anything contained herein restrict such Person's right to contribution
as may be available under applicable law. The Trustees may make advance
payments in connection with indemnification under this Section 7.4,
provided that the indemnified Person shall have given a written
undertaking to reimburse the Trust in the event it is subsequently
determined that he is not entitled to such indemnification. Any action
taken by or conduct on the part of an Independent Trustee, officer,
employee or agent of the Trust in conformity with or in good faith
reliance upon the provisions of this Declaration (including without
limitation any provision in Article VII hereof) shall not constitute
willful misfeasance, bad faith, gross negligence or reckless disregard
of duty.
(b) Each Affiliated Trustee and any Affiliates (as defined in
Section 7.5 hereof) of such Affiliated Trustee shall be indemnified by
the Trust against any losses, judgments, liabilities, expenses and
amounts paid in settlement of any claims sustained by them in
connection with any action or inaction of such Affiliated Trustee or
Affiliate if such Affiliated Trustee or Affiliate, in good faith,
determined that such course of conduct was in the best interest of the
Trust and if such conduct did not constitute negligence or misconduct
on the part of such Affiliated Trustee or Affiliate. Notwithstanding
the
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foregoing, Affiliated Trustees and their Affiliates and any person
acting for the Trust as a broker/dealer shall not be indemnified for
any losses, liabilities or expenses arising from or out of an alleged
violation of federal or state securities laws unless (i) there has been
a successful adjudication on the merits of each count involving alleged
securities law violations as to the particular indemnitee, or (ii) such
claims have been dismissed with prejudice on the merits by a court of
competent jurisdiction as to the particular indemnitee or (iii) a court
of competent jurisdiction approves a settlement of the claim against
the particular indemnitee. In any claim for indemnification for federal
or state securities law violations, the party seeking indemnification
shall place before the court the position of the Securities and
Exchange Commission and the Massachusetts Securities Division (and any
other state securities commissioner or administrator who may so
require) with respect to the issue of indemnification for securities
law violations. The Trust shall not incur the cost of that portion of
any insurance, other than public liability insurance, which insures any
party against any liability the indemnification of which is prohibited
by this Section 7.4(b). The provision of advances from Trust funds to
the Affiliated Trustees and any Affiliates for legal expenses and other
costs incurred as a result of any legal action initiated against the
Affiliated Trustees by Shareholders of the Trust is prohibited.
(c) Notwithstanding anything herein to the contrary, and to
the fullest extent permitted by Maryland statutory or decisional law,
as amended or interpreted, no Trustee or officer of the Trust shall be
personally liable to the Trust or its shareholders for money damages.
No amendment of this Declaration or repeal of any of its provisions
shall limit or eliminate the limitation on liability provided to
Trustees and officers hereunder with respect to any act or omission
occurring prior to such amendment or repeal.
7.5 Certain Definitions. For the purposes of Section 7.4(b) hereof, the
term "Affiliate," when used in connection with the term "Affiliated Trustee,"
shall mean any person performing services on behalf of the Trust who (i)
directly or indirectly controls, is controlled by, or is under common control
with such Affiliated Trustee; (ii) owns or
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controls ten percent (10%) or more of the outstanding voting securities of such
Affiliated Trustee; (iii) is an officer, director, partner or trustee of such
Affiliated Trustee; or (iv) is a company for which such Affiliated Trustee acts
as an officer, director, partner or trustee. For the purposes of the above
definition, the terms "control," "controlling," "controlled by," and "under
common control with" refer to the possession, direct or indirect, of the power
to direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract, or otherwise.
7.6 Indemnification and Reimbursement of Shareholders. Any Shareholder
made a party to any action, suit or proceeding or against him a claim or
liabilities asserted by reason of the fact that he, his testate or intestate was
or is a Shareholder shall be indemnified and held harmless by the Trust against
judgments, fines, amounts paid on account thereof (whether in settlement or
otherwise) and reasonable expenses, including attorneys' fees, actually and
reasonably incurred by him in connection with the defense of such action, suit,
proceeding, claim or alleged liability or in connection with any appeal therein,
whether or not the same proceeds to judgment or is settled or otherwise brought
to a conclusion; provided however, that such Shareholder gives prompt notice
thereof, executes such documents and takes such action as will permit the Trust
to conduct the defense or settlement thereof and cooperates therein. In the
event that the assets of the Trust Estate are insufficient to satisfy the
Trust's indemnity obligations hereunder, each Shareholder shall be entitled to
such indemnification pro rata from the Trust Estate.
7.7 Right of Trustees, Officers, Employees and Agents to Own Shares or
Other Property and to Engage in Other Business. Any Trustee or officer, employee
or agent of the Trust may acquire, own, hold and dispose of Shares in the Trust,
for his individual account, and may exercise all rights of a Shareholder to the
same extent and in the same manner as if he were not a Trustee or officer,
employee or agent of the Trust. Any Trustee or officer, employee or agent of the
Trust may, in his personal capacity or in the capacity of trustee, officer,
director, stockholder, partner, member, advisor or employee of any Person or
otherwise, have business interests and engage in business activities similar to
or in addition to those relating to the Trust, which interests and activities
may be similar to and
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competitive with those of the Trust and may include the acquisition,
syndication, holding, management, development, operation or disposition, for his
own account, or for the account of such Person or others, of interests in
Mortgages, interests in Real Property, or interests in Persons engaged in the
real estate business. Each Trustee, officer, employee and agent of the Trust
shall be free of any obligation to present to the Trust any investment
opportunity which comes to him in any capacity other than solely as Trustee,
officer, employee or agent of the Trust even if such opportunity is of a
character which, if presented to the Trust, could be taken by the Trust. Subject
to the provisions of Article IV and Section 7.8, any Trustee or officer,
employee or agent of the Trust may be interested as trustee, officer, director,
stockholder, partner, member, advisor or employee of, or otherwise have a direct
or indirect interest in, any Person who may be engaged to render advice or
services to the Trust, and may receive compensation from such Person as well as
compensation as Trustee, officer, employee or agent or otherwise hereunder. None
of these activities shall be deemed to conflict with his duties and powers as
Trustee or officer, employee or agent of the Trust.
7.8 Transactions Between Trustees, Officers, Employees or Agents and
the Trust. Except as otherwise provided by this Declaration, and in the absence
of fraud, a contract, act or other transaction between the Trust and any other
Person in which the Trust is interested, shall be valid, and no Trustee or
officer, employee or agent of the Trust shall have any liability as a result of
entering into any such contract, act or transaction, even though (a) one or more
of the Trustees or officers, employees or agents of the Trust are directly or
indirectly interested in or connected with or are trustees, partners, directors,
employees, officers or agents of such other Person, or (b) one or more of the
Trustees or officers, employees or agents of the Trust individually or jointly
with others, is a party or are parties to, or are directly or indirectly
interested in or connected with, such contract, act or transaction; provided
that in each such case (i) such interest or connection is disclosed or known to
the Trustees and thereafter the Trustees authorize or ratify such contract, act
or other transaction by affirmative vote of a majority of the Trustees who are
not so interested or (ii) such interest or connection is disclosed or known to
the Shareholders, and thereafter such contract, act or
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transaction is approved by Shareholders holding a majority of the Shares then
outstanding and entitled to vote thereon.
Notwithstanding any other provision of this Declaration, the Trust
shall not engage in a transaction with (a) any Trustee, officer, employee or
agent of the Trust (acting in his individual capacity), (b) any director,
trustee, partner, officer, employee or agent (acting in his individual capacity)
of the Advisor or any other investment advisor of the Trust, (c) the Advisor or
any other investment advisor of the Trust or (d) an Affiliate of any of the
foregoing, except to the extent that such transaction has, after disclosure of
such affiliation, been approved or ratified by the affirmative vote of a
majority of the Trustees including a majority of the Independent Trustees (or,
if the transaction is with a Person other than the Advisor or its Affiliates, a
majority of the Trustees not having any interest in such transaction and not
Affiliates of any party to the transaction) after a determination by them that
to the extent applicable:
(A) such transaction is fair and reasonable to the Trust and
the Shareholders;
(B) based upon an appraisal by a qualified independent real
estate appraiser, such qualification to be determined in each instance
by a majority of the Independent Trustees who shall, in each case, have
been approved by a majority of the Independent Trustees (or, if the
transaction is with a Person other than the Advisor its Affiliates, a
majority of the Trustees not having any interest in such transaction
and not Affiliates of any party to the transaction), the total
consideration is not in excess of the appraised value of the interest
in Real Property being acquired, if an acquisition is involved, or not
less than the appraised value of the interest in Real Property being
disposed of, if a disposition is involved; and
(C) if such transaction involves payment by the Trust for
services rendered to the Trust by a Person in a capacity other than
that of Advisor, Trustee or Trust officer, (1) the compensation is not
in excess of the compensation, if any, paid to such Person by any other
Person who is not an Affiliate of such Person, for any comparable
services in the same geographic area, and (2) the compensation is not
greater than the charges for comparable services generally
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available in the same geographic area from other Persons who are
competent and not affiliated with any of the parties involved.
This Section 7.8 shall not prevent any sale of Shares issued by the Trust for
the public offering thereof in accordance with a registration statement filed
with the Securities and Exchange Commission under the Securities Act of 1933.
The Trustees are not restricted by this Section 7.8 from forming a corporation,
partnership, trust or other business association owned by any Trustee, officer,
employee or agent or by their nominees for the purpose of holding title to
property of the Trust or managing property of the Trust, provided that the
Trustees make a determination that the creation of such entity for such purpose
is in the best interest of the Trust.
7.9 Independent Counsel. In the event of a dispute between the Trust
and the Advisor or its Affiliates, or should it be necessary for the Trust to
prepare and negotiate contracts and agreements between the Trust and the Advisor
or its Affiliates which in the good faith judgment of a majority of the
Independent Trustees require the advice or assistance of separate counsel or
accountants from that of the Advisor or its Affiliates, the Trust will retain
such separate counsel or accountants for such matters, the choice of which shall
be made by a majority of the Independent Trustees.
7.10 Persons Dealing with Trustees, Officers, Employees or Agents. Any
act of the Trustees or of the officers, employees or agents of the Trust
purporting to be done in their capacity as such, shall, as to any Persons
dealing with such Trustees, officers, employees or agents, be conclusively
deemed to be within the purposes of this Trust and within the powers of such
Trustees or officers, employees or agents. No Person dealing with the Trustees
or any of them or with the officers, employees or agents of the Trust shall be
bound to see to the application of any funds or property passing into their
hands or control. The receipt of the Trustees or any of them, or of authorized
officers, employees or agents of the Trust, for moneys or other consideration,
shall be binding upon the Trust.
7.11 Reliance. The Trustees and the officers, employees and agents of
the Trust may consult with counsel (which may be a firm in which one or more of
the Trustees or the officers,
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employees or agents of the Trust is or are members) and the advice or opinion of
such counsel shall be full and complete personal protection to all the Trustees
and the officers, employees and agents of the Trust in respect of any action
taken or suffered by them in good faith and in reliance on or in accordance with
such advice or opinion. In discharging their duties, Trustees or officers,
employees or agents of the Trust, when acting in good faith, may rely upon
financial statements of the Trust represented to them to fairly present the
financial position or results of operations of the Trust by the chief financial
officer of the Trust or the officer of the Trust having charge of its books of
account, or stated in a written report by an independent certified public
accountant fairly to present the financial position or results of operations of
the Trust. The Trustees and the officers, employees and agents of the Trust may
rely, and shall be personally protected in acting, upon any instrument or other
document believed by them to be genuine.
ARTICLE VIII
DURATION, AMENDMENT AND TERMINATION OF TRUST
8.1 Duration of Trust. The duration of the Trust shall be perpetual;
provided, however, the Trust may be terminated at any time by the affirmative
vote at a meeting of Shareholders of the holders of Shares representing
two-thirds of the total number of Shares then outstanding and entitled to vote
thereon.
8.2 Termination of Trust.
(a) Upon the termination of the Trust:
(i) the Trust shall carry on no business except for the
purpose of winding up its affairs;
(ii) the Trustees shall proceed to wind up the affairs of
the Trust and all the powers of the Trustees under
this Declaration shall continue until the affairs of
the Trust shall have been wound up, including the
power to fulfill or discharge the contracts of the
Trust, collect its assets, sell, convey, assign,
exchange, transfer or otherwise dispose of all or any
part
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of the remaining Trust Estate to one or more persons
at public or private sale (for consideration which
may consist in whole or in part of cash, Securities
or other property of any kind), discharge or pay its
liabilities, and do all other acts appropriate to
liquidate its business; and
(iii) after paying or adequately providing for the payment
of all liabilities, and upon receipt of such
releases, indemnities and refunding agreements, as
they deem necessary for their protection, the
Trustees may distribute the remaining Trust Estate
(in cash or in kind or partly each) among the
Shareholders according to their respective rights.
(b) After termination of the Trust and distribution of the
Trust Estate to the Shareholders as herein provided, the Trustees shall
execute and lodge among the records of the Trust an instrument in
writing setting forth the fact of such termination and such
distribution, a copy of which instrument shall be filed with the
Maryland Department of Assessments and Taxation, and the Trustees shall
thereupon be discharged from all further liabilities and duties
hereunder and the rights and interests of all Shareholders shall
thereupon cease.
8.3 Amendment Procedure. This Declaration may be amended (except that
the provisions governing the personal liability of the Shareholders, Trustees
and of the officers, employees and agents of the Trust and the prohibition of
assessments upon Shareholders may not be amended in any respect that could
increase the personal liability of such Shareholders, Trustees or officers,
employees and agents of the Trust) at a meeting of Shareholders by holders of
Shares representing a majority (or, with respect to amendments of Article V,
amendments to the provisions of Section 8.1, amendments to this Section 8.3 that
would reduce the percentage vote required to approve any amendments to this
Declaration, and with respect to amendments inconsistent with Sections 2.1, 6.14
and 6.15, seventy-five percent (75%)) of the total number of votes authorized to
be cast in respect of Shares then outstanding and entitled to vote thereon. The
approval of a majority of the Trustees (including a
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majority of the Independent Trustees) shall also be required for any such
amendment. Two-thirds (2/3) of the Trustees may, after fifteen (15) days written
notice to the Shareholders, also amend this Declaration without the vote or
consent of Shareholders if in good faith they deem it necessary to conform this
Declaration to the requirements of the REIT Provisions of the Internal Revenue
Code, but the Trustees shall not be liable for failing to do so. Actions by the
Trustees pursuant to Section 6.1 or pursuant to Section 9.6(a) that result in an
amendment to this Declaration shall be effected without vote or consent of
Shareholders.
8.4 Amendments Effective. Any amendment pursuant to any Section of this
Declaration shall not become effective until it is duly filed with the Maryland
Department of Assessments and Taxation.
8.5 Transfer to Successor. The Trustees, with the approval of a
majority of the Trustees (including a majority of the Independent Trustees) and
the affirmative vote, at a meeting approving a plan for this purpose, of the
holders of Shares representing a majority of all votes cast at a meeting at
which a quorum is present, may (a) cause the organization of a limited
partnership, partnership, corporation, association, trust or other organization
to take over the Trust Estate and carry on the affairs of the Trust, (b) merge
the Trust into, or sell, convey and transfer the Trust Estate to, any such
limited partnership, partnership, corporation, association, trust or
organization in exchange for Securities thereof, or beneficial interests
therein, and the assumption by such transferee of the liabilities of the Trust
and (c) thereupon terminate this Declaration and deliver such shares, Securities
or beneficial interests among the Shareholders in accordance with such plan.
ARTICLE IX
MISCELLANEOUS
9.1 Applicable Law. This Declaration is executed and acknowledged by
the Trustees with reference to the statutes and laws of the State of Maryland,
and the rights of all parties and the construction and effect of every provision
hereof shall be
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subject to and construed according to the statutes and laws of such State.
9.2 Index and Headings for Reference Only. The index and headings
preceding the text, articles and sections hereof have been inserted for
convenience and reference only and shall not be construed to affect the meaning,
construction or effect of this Declaration.
9.3 Successors in Interest. This Declaration and the Bylaws shall be
binding upon and inure to the benefit of the undersigned Trustees and their
successors, assigns, heirs, distributees and legal representatives, and every
Shareholder and his successors, assigns, heirs, distributees and legal
representatives.
9.4 Inspection of Records. Trust records shall be available for
inspection by Shareholders at the same time and in the same manner and to the
extent that comparable records of a Maryland business corporation would be
available for inspection by shareholders under the laws of the State of
Maryland. Except as specifically provided for in this Declaration or in Title 8
of the Annotated Code of Maryland, Shareholders shall have no greater right than
shareholders of a Maryland business corporation to require financial or other
information from the Trust, Trustees or officers of the Trust. Any Federal or
state securities administrator or the Maryland Department of Assessments and
Taxation shall have the right, at reasonable times during business hours and for
proper purposes, to inspect the books and records of the Trust.
9.5 Counterparts. This Declaration may be simultaneously executed in
several counterparts, each of which when so executed shall be deemed to be an
original, and such counterparts together shall constitute one and the same
instrument, which shall be sufficiently evidenced by any such original
counterpart.
9.6 Provisions of the Trust in Conflict with Law or Regulations;
Severability.
(a) The provisions of this Declaration are severable, and if
the Trustees shall determine, with the advice of counsel, that any one
or more of such provisions (the "Conflicting Provisions") are in
conflict with the REIT
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Provisions of the Internal Revenue Code, the Conflicting Provisions
shall be deemed never to have constituted a part of the Declaration;
provided, however, that such determination by the Trustees shall not
affect or impair any of the remaining provisions of this Declaration or
render invalid or improper any action taken or omitted (including but
not limited to the election of Trustees) prior to such determination.
An amendment in recordable form signed by a majority of the Trustees
setting forth any such determination and reciting that it was duly
adopted by the Trustees, or a copy of this Declaration, with the
Conflicting Provisions removed pursuant to such a determination, in
recordable form, signed by a majority of the Trustees, shall be
conclusive evidence of such determination when filed with the Maryland
Department of Assessments and Taxation. The Trustees shall not be
liable for failure to make any determination under this Section 9.6(a).
Nothing in this Section 9.6(a) shall in any way limit or affect the
right of the Trustees to amend this Declaration as provided in Section
8.3.
(b) If any provision of this Declaration shall be held invalid
or unenforceable, such invalidity or unenforceability shall attach only
to such provision and shall not in any manner affect or render invalid
or unenforceable any other provision of this Declaration, and this
Declaration shall be carried out as if any such invalid or
unenforceable provision were not contained herein.
9.7 Certifications. The following certifications shall be final and
conclusive as to any Persons dealing with the Trust:
(a) a certification of a vacancy among the Trustees by reason
of resignation, removal, increase in the number of Trustees,
incapacity, death or otherwise, when made in writing by a majority of
the remaining Trustees;
(b) a certification as to the individuals holding office as
Trustees or officers at any particular time, when made in writing by
the secretary of the Trust;
(c) a certification that a copy of this Declaration or of the
Bylaws is a true and correct copy thereof as then in force, when made
in writing by the secretary of the Trust;
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(d) the certifications referred to in Sections 2.7, 8.4 and
9.6(a); and
(e) a certification as to any actions by Trustees, other than
the above, when made in writing by the secretary of the Trust or by any
Trustee.
------------------------------------------------
These amendments do not affect the total number of common shares of
beneficial interest, $.01 par value, ("Common Shares") authorized or issued by
the Trust. The amendment and restatement of the Declaration was authorized by
the Board of Trustees of the Trust acting at a meeting duly called and held on
March 5, 1994 and by the holders of more than two-thirds (2/3) of the issued and
outstanding Common Shares, at the annual meeting of the Trust's shareholders
duly called and held on May 17, 1994.
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cuted and delivered as
IN WITNESS WHEREOF, this amendment has been executed and delivered as
of the First day of July, 1994, by the undersigned Trustees, each of whom
acknowledges, under penalties of perjury, that this document is such Trustee's
free act and deed, and that, to the best of his knowledge, information and
belief, the matters and facts set forth herein are true in all material
respects.
BY THE TRUSTEES:
/s/ John L. Harrington
John L. Harrington
/s/ Arthur G. Koumantzelis
Arthur G. Koumantzelis
/s/ Justinian Manning, C.P.
Rev. Justinian Manning, C.P.
/s/ Gerard M. Martin
Gerard M. Martin
/s/ Barry M. Portnoy
Barry M. Portnoy
EXHIBIT 3.2
HEALTH AND RETIREMENT PROPERTIES TRUST
BYLAWS
Conformed Composite Copy
Originally adopted as of October 9, 1986
Amended and Restated as of October 17, 1994
As Further Amended through May 12, 1998
<PAGE>
TABLE OF CONTENTS
ARTICLE I
TRUSTEES
Section 1.1 Qualifying Shares Not Required..............................1
Section 1.2 Quorum......................................................1
Section 1.3 Number and Term; Election...................................1
Section 1.4 Place of Meeting............................................1
Section 1.5 Organizational Meeting......................................1
Section 1.6 Regular Meetings............................................1
Section 1.7 Special Meetings............................................1
Section 1.8 Adjourned Meetings..........................................2
Section 1.9 Waiver of Notice............................................2
Section 1.10 Action Without Meeting......................................2
Section 1.11 Telephone Meetings..........................................2
Section 1.12 Committee Rules.............................................2
ARTICLE II
OFFICERS
Section 2.1 Enumeration..................................................3
Section 2.2 Powers and Duties of the Chairman............................3
Section 2.3 Powers and Duties of the President...........................3
Section 2.4 Powers and Duties of VicePresident...........................3
Section 2.5 Duties of the Secretary......................................3
(a) Minutes...............................................3
(b) Books and Other Records...............................4
(c) Share Register........................................4
(d) General Duties........................................4
Section 2.6 Duties of the Treasurer......................................4
ARTICLE III
SHAREHOLDERS
Section 3.1 Effect of Quorum.............................................4
Section 3.2 Place of Meeting.............................................4
Section 3.3 Annual Meeting...............................................4
Section 3.4 Special Meetings.............................................4
Section 3.5 Notice of Regular or Special Meetings........................5
Section 3.6 Notice of Adjourned Meetings.................................5
Section 3.7 Proxies......................................................5
Section 3.8 Consent of Absentees.........................................6
Section 3.9 Voting Rights................................................6
Section 3.10 Advance Notice for Nomination of
Trustees ...........................................6
Section 3.11 Advance Notice for Transaction of
Business ...........................................7
Section 3.12 Record Date.................................................9
Section 3.13 Action Without Meeting......................................9
<PAGE>
-ii-
ARTICLE IV
MISCELLANEOUS
Section 4.1 Record Dates and Closing
of Transfer Books ..................................10
Section 4.2 Inspection of Bylaws........................................10
Section 4.3 Control Share Acquisition...................................10
ARTICLE V
AMENDMENTS
Section 5.1 By Trustees.................................................10
ARTICLE VI
DEFINITIONS
Section 6.1 Definitions.................................................10
ARTICLE VII
FISCAL YEAR
Section 7.1 Fiscal Year.................................................10
<PAGE>
ARTICLE I
TRUSTEES
Section 1.1 Qualifying Shares Not Required. Trustees need not
be Shareholders of Health and Retirement Properties Trust (the "Trust").
Section 1.2 Quorum. A majority of the Trustees shall
constitute a quorum subject to the provisions of Section 2.6 of the Trust's
Declaration of Trust, as it may be amended from time to time (the
"Declaration").
Section 1.3 Number and Term; Election. The number and terms of
the Trustees shall be as provided in Section 2.1 of the Declaration. Trustees
shall be elected at annual meetings of Shareholders as provided in Section 2.1
of the Declaration. If Trustees are not so elected at an annual meeting or if
such meeting is not held, Trustees may be elected at a special meeting of
Shareholders.
Section 1.4 Place of Meeting. Meetings of the Trustees shall
be held at the principal office of the Trust or at such place within or without
the State of Maryland as the President shall direct or as is fixed from time to
time by resolution of the Trustees. Whenever a place other than the principal
office is fixed by the President or by resolution as the place at which future
meetings are to be held, written notice thereof shall be sent to all Trustees a
reasonable time in advance of any meeting to be held at such place.
Section 1.5 Organizational Meeting. Immediately following each
Annual Meeting of Shareholders, a regular meeting of the Trustees shall be held
for the purpose of organizing, electing officers and transacting other business.
Notice of such meetings need not be given.
Section 1.6 Regular Meetings. Regular meetings of the Trustees
shall be held at the place determined pursuant to Section 1.4 on the dates, if
any, established at each organizational meeting of the Trustees and notice of
such regular meetings of the Trustees is hereby dispensed with.
Section 1.7 Special Meetings. Special meetings of the Trustees
may be called at any time by the Chairman or President and shall be called by
the Chairman or President upon the written request of three (3) Trustees.
Written notice of the time and place of a special meeting shall be given to each
Trustee, either personally or by sending a copy thereof by mail or by facsimile
or telex, charges prepaid, to the address of the Trustee appearing on the books
of the Trust or theretofore given by the Trustee to the Trust for the purpose of
notice. In case of personal service, such notice shall be so delivered at least
twenty-four (24) hours prior to the time fixed for the meeting. If such notice
is mailed, it shall be deposited in the United States mail in the place in which
the principal office of the Trust is located at least seventy-two (72) hours
prior to the time fixed for the holding of the meeting. If sent by facsimile or
telex, it shall be sent at least forty-eight (48) hours prior to the time fixed
for the holding of the meeting. If notice is not so given by the Secretary, it
may be given in the same manner by the Chairman, President or the Trustees
requesting the meeting.
<PAGE>
Section 1.8 Adjourned Meetings. A quorum of the Trustees may
adjourn any Trustees' meeting to meet again at a stated day and hour. In the
absence of a quorum, a majority of the Trustees present may adjourn from time to
time to meet again at a stated day and hour prior to the time fixed for the next
regular meeting of the Trustees. The motion for adjournment shall be lodged with
the records of the Trust. Notice of the time and place of an adjourned meeting
need not be given to any Trustee present at the adjourned meeting if the time
and place is fixed at the meeting adjourned.
Section 1.9 Waiver of Notice. The transactions of any meeting
of the Trustees, however called and noticed or wherever held, shall be as valid
as though had at a meeting duly held after regular call and notice if a quorum
is present and if, either before or after the meeting, each of the Trustees not
present signs a written waiver of notice, a consent to the holding of such
meeting or an approval of the minutes thereof. All such waivers, consents or
approvals shall be lodged with the Trust records or made a part of the minutes
of the meeting.
Section 1.10 Action Without Meeting. Unless specifically
otherwise provided in the Declaration, any action required or permitted to be
taken by the Trustees may be taken without a meeting if a majority of the
Trustees (or a majority of the Independent Trustees as to any action which
requires such a majority) shall individually or collectively consent in writing
to such action. Such written consent or consents shall be lodged with the
records of the Trust and shall have the same force and effect as the affirmative
vote of such Trustees at a duly held meeting of the Trustees at which a quorum
were present.
Section 1.11 Telephone Meetings. The Trustees may meet by
means of a telephone conference circuit or similar communications equipment by
means of which all persons participating in the meeting shall be able to hear
one another and participate therein. Such meeting shall be deemed to have been
held at a place designated by the Trustees at the meeting. Participation in a
telephone conference meeting shall constitute presence in person at such
meeting.
Section 1.12 Committee Rules. Unless the Trustees otherwise
provide, each committee designated by the Trustees may adopt, amend and repeal
rules for the conduct of such committee's business. In the absence of a
provision by the Trustees or a provision in the rules of such committee to the
contrary, a majority of the entire authorized number of members of such
committee shall constitute a quorum for the transaction of business, the vote of
a majority of the members present at a meeting at the time of such-vote if a
quorum is then present shall be the act of such committee, and in other respects
each committee shall conduct its business in the same manner as the Trustees
conduct their business pursuant to Article II of the Declaration and this
Article I of these Bylaws.
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ARTICLE II
OFFICERS
Section 2.1 Enumeration. The officers of the Trust shall be a
President, a Secretary, a Treasurer, and such other officers as are elected by
the Trustees including, in their discretion, a Chairman, with such duties as are
assigned to them by the Trustees. Officers shall be elected by and shall hold
office at the pleasure of the Trustees.
Section 2.2 Powers and Duties of the Chairman. The Chairman,
if there shall be such an officer, shall, if present, preside at all meetings of
the Shareholders and the Trustees and may be the chief executive officer of the
Trust if the Trustees so elect.
Section 2.3 Powers and Duties of the President. Subject to
such supervisory powers, if any, as may be given by the Trustees to the
Chairman, the President shall, subject to the control of the Trustees and the
supervision of the Chairman, have general supervision, direction and control of
the business of the Trust and its employees and shall exercise such general
powers of management as are usually vested in the office of president of a
corporation. In the absence of the Chairman, or if there be none, he shall
preside at all meetings of the Shareholders and/or Trustees and, unless the
Chairman has been designated as chief executive officer, shall be chief
executive officer of the Trust. He shall be, ex officio, a member of all
standing committees.
Section 2.4 Powers and Duties of Vice-President. Each
Vice-President, if any, designated by the Trustees shall be an administrative
officer of the Trust and have such duties as are designated by the President or
the Trustees.
3
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Section 2.5 Duties of the Secretary. The Secretary shall:
(a) Minutes. Keep full and complete minutes of the
meetings (or actions in lieu thereof) of the Trustees, any committees of the
Trustees and the Shareholders and give notice, as required, of all such
meetings;
(b) Books and Other Records. Maintain custody of and keep
the books of account and other records of the Trust except such as are in
custody of the Treasurer;
(c) Share Register. Maintain at the principal office of
the Trust a share register, showing the ownership and transfers of ownership of
all shares of the Trust, unless a transfer agent is employed to maintain and
does maintain such a share register; and
(d) General Duties. Generally, perform all duties which
pertain to his office and which are required by the Trustees.
An Assistant Secretary or Secretaries may be appointed to
act in the absence of the Secretary.
Section 2.6 Duties of the Treasurer. The Treasurer shall
perform all duties which pertain to his office and which are required by the
Trustees, including without limitation the receipt, deposit and disbursement of
funds belonging to the Trust.
An Assistant Treasurer or Treasurers may be appointed to act
in the absence of the Treasurer.
ARTICLE III
SHAREHOLDERS
Section 3.1 Effect of Quorum. Subject to the provisions of the
Declaration, the Shareholders present at a duly called or held meeting at which
a quorum is present may continue to do business until adjournment
notwithstanding the withdrawal of enough Shareholders so that the remaining
Shareholders constitute less than a quorum.
Section 3.2 Place of Meeting. Meetings of the Shareholders
shall be held at the principal office of the Trust or at such place within or
without the State of Maryland as is designated by the Trustees or the Chairman
or President or by the written consent of a majority of the Shareholders
entitled to vote thereat, given either before or after the meeting and filed
with the Secretary of the Trust.
4
<PAGE>
Section 3.3 Annual Meeting. A regular annual meeting of the
Shareholders shall be called by the Chairman or President within six months
after the end of each fiscal year, commencing with the fiscal year ending
December 31, 1987.
Section 3.4 Special Meetings. Special meetings of the
Shareholders may be held at any time for any purpose or purposes permitted by
the Declaration and shall be called as provided in Section 6.9 of the
Declaration.
Section 3.5 Notice of Regular or Special Meetings. Written
notice specifying the place, day and hour of any regular or special meeting, the
purposes of the meeting, and all other matters required by law shall be given to
each Shareholder of record entitled to vote, either personally or by sending a
copy thereof by mail or telegraph, charges prepaid, to his address appearing on
the books of the Trust or theretofore given by him to the Trust for the purpose
of notice or, if no address appears or has been given, addressed to the place
where the principal office of the Trust is situated. It shall be the duty of the
Secretary to give notice of each Annual Meeting of the Shareholders at least
fifteen (15) days and not more than sixty (60) days before the date on which it
is to be held. Whenever an officer has been duly requested to call a special
meeting of Sharehold ers, it shall be his duty to fix the date and hour thereof,
which date shall be not less than twenty (20) days and not more than sixty (60)
days after the receipt of such request if the request has been delivered in
person or after the date of mailing the request, as the case may be, and to give
notice of such special meeting within ten (10) days after receipt of such
request. If the date of such special meeting is not so fixed and notice thereof
given within ten (10) days after the date of receipt of the request, the date
and hour of such meeting may be fixed by the Person or Persons calling or
requesting the meeting and notice thereof shall be given by such Person or
Persons not less than twenty (20) nor more than sixty (60) days before the date
on which the meeting is to be held.
Section 3.6 Notice of Adjourned Meetings. It shall not be
necessary to give notice of the time and place of any adjourned meeting or of
the business to be transacted thereat other than by announcement at the meeting
at which such adjournment is taken, except that when a meeting is adjourned for
thirty (30) days or more, notice of the adjourned meeting shall be given as in
the case of an original meeting.
Section 3.7 Proxies. The appointment of a proxy or proxies for
any meeting of Shareholders entitled to vote shall be made by an instrument in
writing executed by the Shareholder or his duly authorized agent and filed with
such officer of the Trust as the Trustees shall have designated for such purpose
for verification prior to such meeting. Any proxy relating to the Trust's shares
of beneficial interest shall be valid until the expiration date therein or, if
no expiration is so indicated, for such period as is permitted pursuant to
Maryland law. At a meeting of Shareholders all questions concerning the
qualification of voters, the validity of proxies, and the acceptance or
rejection of votes, shall be decided by the Secretary of the meeting unless
inspectors of election are appointed pursuant to Section 3.10 in which event
such inspectors shall pass upon all questions and shall have all other duties
specified in said section.
Section 3.8 Consent of Absentees. The transactions of any
meeting of Shareholders, either annual, special or adjourned, however called and
noticed, shall be as valid as though had at a meeting duly held after the
regular call and notice if a quorum is present and if, either before or after
the meeting, each Shareholder entitled to vote, not present in person or by
proxy, signs a written waiver of notice, a consent to the holding of such
meeting or an approval of the minutes
5
<PAGE>
thereof. All such waivers, consents or approvals shall be lodged with the Trust
records or made a part of the minutes of the meeting.
Section 3.9 Voting Rights. If no date is fixed for the
determination of the Shareholders entitled to vote at any meeting of
Shareholders, only Persons in whose names Shares entitled to vote stand on the
share records of the Trust at the opening of business on the day of any meeting
of Shareholders shall be entitled to vote at such meeting.
Section 3.10 Advance Notice for Nomination of Trustees. Only
persons who are nominated in accordance with the following procedures shall be
eligible for election as Trustees of the Trust. Nominations of persons for
election to the Board of Trustees may be made (a) by or at the direction of the
Board of Trustees (or any duly authorized committee thereof) or (b) by any
Shareholder of the Trust (i) who is a Shareholder of record on the date of the
giving of the notice provided for in this Section 3.10 and on the record date
for the determination of Shareholders entitled to vote upon such nominations and
(ii) who complies with the notice procedures set forth in this Section 3.10.
In addition to any other applicable requirements, for a
nomination to be made by a Shareholder, such Shareholder must have
given timely notice thereof in proper written form to the Secretary of
the Trust.
To be timely, a Shareholder's notice to the Secretary must be
delivered to or mailed and received at the principal executive offices
of the Trust (a) in the case of an annual meeting, not less than
seventy (70) days nor more than one hundred-twenty (120) days prior to
the anniversary date of the immediately preceding annual meeting;
provided, however, that in the event that the meeting is called for a
date more than seventy (70) days prior to such anniversary date, notice
by the Shareholder in order to be timely must be so received not later
than the close of business on the twentieth (20th) day following the
day on which such notice of the date of the annual meeting was mailed
or such public disclosure of the date of the annual meeting was made,
whichever first occurs; and (b) in the case of a special meeting of
Shareholders called (other than at the request of Shareholders) for the
purpose of electing Trustees, not later than the close of business on
the twentieth (20th) day following the day on which notice of the date
of the special meeting was mailed or public disclosure of the date of
the special meeting was made, whichever first occurs.
To be in proper written form, a Shareholder's notice to the
Secretary must set forth (a) as to each person whom the Shareholder
proposes to nominate for election as a Trustee (i) the name, age,
business address and residence address of the person, (ii) the
principal occupation or employment of the person, (iii) the class or
series and number of shares of capital stock of the Trust which are
owned beneficially or of record by the person, (iv) any other
information relating to the person that would be required to be
disclosed in a proxy statement or other filings required to be made in
connection with solicitations of proxies for election of Trustees
pursuant to Section 14 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and the rules and regulations promulgated
thereunder and
6
<PAGE>
(v) the consent of each nominee to serve as a Trustee if so elected;
and (b) as to the Share holder giving the notice (i) the name and
record address of such Shareholder, (ii) the class or series and number
of shares of capital stock of the Trust which are owned beneficially or
of record by such Shareholder, (iii) a description of all arrangements
or understandings between such Shareholder and each proposed nominee
and any other person or persons (including their names) pursuant to
which the nomination(s) are to be made by such Shareholder, (iv) a
representation that such Shareholder intends to appear in person or by
proxy at the meeting, if there be a meeting, to nominate the persons
named in its notice and (v) any other information relating to such
Shareholder that would be required to be disclosed in a proxy statement
or other filings required to be made in connection with solicitations
of proxies for election of Trustees pursuant to Section 14 of the
Exchange Act and the rules and regulations promulgated thereunder. Such
notice must be accompanied by a written consent of each proposed
nominee to being named as a nominee and to serve as a Trustee if
elected.
No person shall be eligible for election as a Trustee of the
Trust unless nominated in accordance with the procedures set forth in
this Section 3.10. If the Chairman of the meeting determines that a
nomination was not made in accordance with the foregoing procedures,
the Chairman shall declare to the meeting that the nomination was
defective, and such defective nomination shall be disregarded.
Section 3.11 Advance Notice for Transaction of Business. No
business may be transacted by the Shareholders at an annual or special meeting,
other than business that is either (a) specified in the notice of meeting (or
any supplement thereto) given by or at the direction of the Board of Trustees
(or any duly authorized committee thereof), (b) otherwise properly brought
before the Shareholders by or at the direction of the Board of Trustees (or any
duly authorized committee thereof) or (c) otherwise properly brought before the
Shareholders by any Shareholder of the Trust (i) who is a Shareholder of record
on the date of the giving of the notice provided for in this Section 3.11 and on
the record date for the determination of Shareholders entitled to vote or
express consent therefor and (ii) who complies with the notice procedures set
forth in this Section 3.11.
In addition to any other applicable requirements, for business
to be properly brought before an annual or special meeting by a
Shareholder (other than a shareholder proposal included in the Trust's
proxy statement pursuant to Rule 14a-8 under the Exchange Act), such
Shareholder must have given timely notice thereof in proper written
form to the Secretary of the Trust.
To be timely, a Shareholder's notice to the Secretary must be
delivered to or mailed and received at the principal executive offices
of the Trust not less than seventy (70) days nor more than one
hundred-twenty (120) days prior to the anniversary date of the
immediately preceding annual meeting; provided, however, that in the
event that the meeting is called for a date more than seventy (70) days
prior to such anniversary date, notice by the Shareholder in order to
be timely must be so received not later than the close of business on
the twentieth (20th) day following the day on which such notice of the
date of the annual meeting was mailed or such public disclosure of the
date of the annual meeting was made,
7
<PAGE>
whichever first occurs; and (b) in the case of a special meeting of
Shareholders called (other than at the request of Shareholders) for the
purpose of transacting business, not later than the close of business
on the twentieth (20th) day following the day on which notice of the
date of the special meeting was mailed or public disclosure of the date
of the special meeting was made, whichever first occurs.
To be in proper written form, a Shareholder's notice to the
Secretary must set forth as to each matter such Shareholder proposes to
bring before the Shareholders (i) a brief description of the business
desired to be brought before the Shareholders and the reasons therefor,
(ii) the name and record address of such Shareholder, (iii) the class
or series and number of shares of capital stock of the Trust which are
owned beneficially or of record by such Shareholder, (iv) a description
of all arrangements or understandings between such Shareholder and any
other person or persons (including their names) in connection with the
proposal of such business by such Shareholder and any material interest
of such Shareholder in such business and (v) a representation that such
Shareholder intends to appear in person or by proxy at the annual
meeting to bring such business before the meeting.
No business shall be conducted by the Shareholders except
business brought before them in accordance with the procedures set
forth in this Section 3.11; provided, however, that, once business has
been properly brought before an annual or special meeting in accor
dance with such procedures, nothing in this Section 3.11 shall be
deemed to preclude discussion by any Shareholder of any such business.
If the Chairman of the meeting determines that business was not
properly brought before the meeting in accordance with the foregoing
procedures, the Chairman shall declare to the meeting that the business
was not properly brought before the meeting, and such business shall
not be transacted.
Section 3.12 Record Date. In order to permit the Trustees to
appropriately fix a record date for determining the Shareholders entitled to
notice of or to vote at any special meeting of Shareholders or to express
consent to any proposal without a meeting in accordance with Section 6.12 of the
Declaration, any Shareholder requesting the call of a special meeting or
proposing to solicit such consents shall give notice in proper written form to
the Secretary of the Trust. To be in proper written form, a Shareholder's notice
to the Secretary shall set forth, with respect to nominations of persons for
election to the Board of Trustees, those matters required by Section 3.10 of
these Bylaws, and with respect to transaction of other business, those matters
required by Section 3.11 of these Bylaws.
Section 3.13 Action Without Meeting. Whenever the Declaration
permits an action by Shareholders without a meeting, in order that the
Trust's Shareholders shall have an opportunity to receive and consider
the information germane to an informed judgment as to whether to give a
written consent, any action to be taken by written consent shall not be
effective until, and the Shareholders of the Trust shall be able to
give or revoke written consents for, at least sixty (60) days from the
date of the commencement of a solicitation (as such term is defined in
Rule 14a-l(l) promulgated under the Exchange Act) of consents. For
purposes of this Section 3.13, a consent solicitation shall be deemed
to have commenced
8
<PAGE>
when a proxy statement or information statement containing the
information required by law is first furnished to the Trust's
Shareholders. Consents shall be valid for a maximum of sixty (60) days
after the date of the earliest dated consent delivered to the Trust.
ARTICLE IV
MISCELLANEOUS
Section 4.1 Record Dates and Closing of Transfer Books.
Pursuant to the Declaration, the Trustees may fix record dates for specified
purposes. If a record date is so fixed, only Shareholders of record on the date
so fixed shall be entitled to the rights to which the record date pertains.
Section 4.2 Inspection of Bylaws. The Trustees shall keep at
the principal office for the transaction of business of the Trust the original
or a copy of the Bylaws as amended or otherwise altered to date, certified by
the Secretary, which shall be open to inspection by the Shareholders at all
reasonable times during office hours.
Section 4.3 Control Share Acquisition. Until such time as this
Section 4.3 shall be repealed or these Bylaws shall be amended to provide
otherwise, in each case in accordance with Article V of these Bylaws, the
provisions of Subtitle 7 of Title 3 of the Corporations and Associations Article
of the Annotated Code of Maryland (the "Code") shall not apply to "control share
acquisitions" of the Trust within the meaning of the Code.
ARTICLE V
AMENDMENTS
Section 5.1 By Trustees. Except for any change for which the
Declaration or these Bylaws require approval by more than a majority vote, these
Bylaws may be amended or repealed or new or additional Bylaws may be adopted by
the vote or written consent of a majority of the Trustees.
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<PAGE>
ARTICLE VI
DEFINITIONS
Section 6.1 Definitions. All terms defined in the Declaration
shall have the same meaning when used in these Bylaws.
ARTICLE VII
FISCAL YEAR
Section 7.1 Fiscal Year. The fiscal year of the Trust shall be
the calendar year.
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EXHIBIT 3.3
HEALTH AND RETIREMENT PROPERTIES TRUST
ARTICLES SUPPLEMENTARY
HEALTH AND RETIREMENT PROPERTIES TRUST, a Maryland real estate
investment trust, having its principal office in Baltimore City, Maryland
(hereinafter called the "Trust"), hereby certifies to the State Department of
Assessments and Taxation of Maryland that:
FIRST: Pursuant to authority expressly vested in the Board of Trustees
by Article VI, Section 6.1 of the Declaration of Trust of the Trust, as amended
and restated on July 1, 1994 (the "Declaration"), the Board of Trustees has duly
reclassified 1,000,000 unissued Preferred Shares, par value $.01 per share, of
the Trust (from among the 50,000,000 Preferred Shares, par value $.01 per share,
of the Trust which are authorized) into 1,000,000 Junior Participating Preferred
Shares, par value $.01 per share, of the Trust.
SECOND: The terms (including preferences, conversion or other rights,
voting powers, restrictions, limitations as to dividends, qualifications, or
terms or conditions of redemption) of the Junior Participating Preferred Shares,
par value $.01 per share, are as follows:
1. Designation and Amount. The shares of such series shall be
designated as "Junior Participating Preferred Shares" and the number of shares
constituting such series shall be 1,000,000.
2. Dividends and Distributions.
(a) Subject to the prior and superior rights of the holders of
any shares of any series of Preferred Shares ranking prior and superior
to the Junior Par ticipating Preferred Shares with respect to dividends
(if any), the holders of Junior Participating Preferred Shares shall be
entitled to receive, when, as and if declared by the Board out of funds
legally available for the purpose, quarterly dividends payable in cash
on the 15th day of March, June, September and December in each year
(each such date being referred to herein as a "Quarterly Dividend
Payment Date"), commencing on the first Quarterly Dividend Payment Date
after the first issuance of a Junior Participating Preferred Share or
fraction thereof, in an amount per share (rounded to the nearest cent)
equal to the greater of (X) $5 or (Y) subject to the provision for
adjustment hereinafter set forth, 100 times the aggregate per share
amount of all
<PAGE>
2
cash dividends, plus 100 times the aggregate per share amount (payable
in kind) of all noncash dividends or other distributions other than a
dividend payable in Common Shares of beneficial interest, par value
$.01 per share, of the Trust (the "Common Shares") or a subdivision of
the outstanding Common Shares (by re classification or otherwise),
declared on the Common Shares, since the immediately preceding
Quarterly Dividend Payment Date, or, with respect to the first
Quarterly Dividend Payment Date, since the first issu ance of any
Junior Participating Preferred Share or fraction thereof. In the event
the Trust shall at any time after October 17, 1994 (the "Rights
Declaration Date") (i) declare any dividend on Common Shares pay able
in Common Shares, (ii) subdivide the outstanding Common Shares or (iii)
combine the outstanding Common Shares into a smaller number of shares,
then in each such case the amount to which holders of shares of Junior
Participating Preferred Shares were entitled immediately prior to such
event under clause (Y) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the
number of Common Shares outstanding immediately after such event and
the denominator of which is the number of Common Shares that were
outstanding immedi ately prior to such event.
(b) The Board shall declare a dividend or distri bution on the
Junior Participating Preferred Shares as provided in paragraph (a)
above immediately after it declares a dividend or distribution on the
Common Shares (other than a dividend payable in Common Shares);
provided that, in the event no dividend or distribution shall have been
declared on the Common Shares during the period between any Quarterly
Dividend Payment Date and the next subsequent Quarterly Dividend
Payment Date, a dividend of $5 per share on the Junior Participating
Preferred Shares shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date.
(c) Dividends shall begin to accrue and be cumu lative on
outstanding Junior Participating Preferred Shares from the Quarterly
Dividend Payment Date next preceding the date of issue of such Junior
Partici pating Preferred Shares unless the date of issue of such shares
is prior to the record date for the first Quarterly Dividend Payment
Date, in which case dividends on such shares shall begin to accrue
from the
<PAGE>
3
date of issue of such shares, or unless the date of issue is a
Quarterly Dividend Payment Date or is a date after the record date for
the determination of holders of Junior Participating Preferred Shares
entitled to receive a quarterly dividend and before such Quarterly
Dividend Payment Date, in either of which events such dividends shall
begin to accrue and be cumulative from such Quarterly Dividend Payment
Date. Accrued but unpaid dividends shall not bear interest. Dividends
paid on the Junior Participating Preferred Shares in an amount less
than the total amount of such dividends at the time accrued and payable
on such shares shall be allocated pro rata on a share-by-share basis
among all such shares at the time outstanding. The Board may fix a
record date for the determination of holders of Junior Participating
Preferred Shares entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be not less than
10 and not more than 60 days prior to the date fixed for the payment
thereof.
3. Voting Rights. The holders of Junior Participating Preferred Shares
shall have the following voting rights:
(a) Subject to the provision for adjustment hereinafter set
forth, each Junior Participating Pre ferred Share shall entitle the
holder thereof to 100 votes on all matters submitted to a vote of the
share holders of the Trust. In the event that the Board shall at any
time after the Rights Declaration Date (i) declare any dividend on
Common Shares payable in Common Shares, (ii) subdivide the outstanding
Common Shares or (iii) combine the outstanding Common Shares into a
smaller number of shares, then in each such case the number of votes
per share to which holders of Junior Participating Preferred Shares
were entitled immediate ly prior to such event shall be adjusted by
multiplying such number by a fraction the numerator of which is the
number of Common Shares outstanding immediately after such event and
the denominator of which is the number of Common Shares that were
outstanding immediately prior to such event.
(b) Except as otherwise provided herein or by law, the holders
of Junior Participating Preferred Shares and the holders of Common
Shares shall vote together as one class on all matters submitted to a
vote of shareholders of the Trust.
<PAGE>
4
(c) (i) If at any time dividends on any Junior Participating
Preferred Shares shall be in arrears in an amount
equal to six (6) quarterly dividends thereon, the
occur rence of such contingency shall mark the
beginning of a period (a "Default Period") which
shall extend until such time when all accrued and
unpaid dividends for all previous quarterly dividend
periods and for the current quarterly dividend period
on all Junior Participating Preferred Shares then
outstanding shall have been declared and paid or set
apart for pay ment. During each Default Period, all
holders of Preferred Shares (including holders of the
Junior Participating Pre ferred Shares) with
dividends in arrears in an amount equal to six (6)
quarterly dividends thereon, voting as a class, ir
respective of series, shall have the right to elect
two (2) Trustees.
(ii) During any Default Period, such voting right of the
holders of Junior Participating Preferred Shares may
be exercised initially at a special meeting called
pursuant to subparagraph (iii) of this Section 3(c)
or at an annual meeting of shareholders, and
thereafter at annual meetings of shareholders,
provided that neither such voting right nor the right
of the holders of any other series of Preferred
Shares, if any, to increase, in certain cases, the
authorized number of Trustees shall be exercised
unless the holders of ten percent (10%) in number of
Preferred Shares outstanding shall be present in
person or by proxy. The absence of a quorum of the
holders of Common Shares shall not af fect the
exercise by the holders of Preferred Shares of such
voting right. At any meeting at which the holders of
Preferred Shares shall exercise such voting right
initially during an existing Default Period, they
shall have the right, voting as a class, to elect
Trustees to fill up to two (2) vacancies, if any, in
the Board or, if such right is exercised at an annual
meeting, to elect two (2) Trustees. The holders of
Preferred Shares shall have the right to make such
increase in the number of Trustees as shall be
necessary to permit the election by them at any
special meeting of two
<PAGE>
5
(2) Trustees. After the holders of Preferred Shares
shall have exercised their right to elect Trustees in
any Default Period and during the continuance of such
period, the number of Trustees shall not be increased
or decreased except by vote of the holders of
Preferred Shares as herein provided or pursuant to
the rights of any equity securities ranking senior to
or pari passu with the Junior Participating Preferred
Shares, if any.
(iii) Unless the holders of Preferred Shares shall, during
an existing Default Period, have previ ously
exercised their right to elect Trustees, the Board
may order, or any shareholder or shareholders owning
in the aggregate not less than ten percent (10%) of
the total number of Preferred Shares outstanding,
irrespective of series, may request, the calling of a
special meeting of the holders of Preferred Shares,
which meeting shall thereupon be called by the Board
or the Chief Executive Officer of the Trust. The
Secretary of the Trust shall give notice of such
meeting and of any annual meet ing at which holders
of Preferred Shares are entitled to vote pursuant to
this paragraph (c)(iii) to each holder of record of
Preferred Shares by mailing a copy of such notice to
him at his last address as the same appears on the
books of the Trust. Such meeting shall be called for
a time not earlier than fifteen (15) days and not
later than sixty (60) days after such order or
request. If such meeting is not called within sixty
(60) days after such order or request, such meeting
may be called on simi lar notice by any shareholder
or shareholders owning in the aggregate not less than
ten per cent (10%) of the total number of Preferred
Shares outstanding. Notwithstanding the provi sions
of this paragraph (c)(iii), no such spe cial meeting
shall be called during the period within sixty (60)
days immediately preceding the date fixed for the
next annual meeting of the shareholders.
(iv) In any Default Period, the holders of Common Shares,
and (if applicable) other classes of Shares of
beneficial interest of the Trust (all Trust shares
being referred to as "Shares"), shall continue to be
entitled to elect the
<PAGE>
6
whole number of Trustees until the holders of
Preferred Shares shall have exercised their rights to
elect two (2) Trustees voting as a class, after the
exercise of which right, (X) the Trustees so elected
by the holders of Pre ferred Shares shall continue in
office until their successors shall have been elected
by such holders or until the expiration of the
Default Period, and (Y) any vacancy in the Board
shall (except as provided in paragraph (c)(ii) of
this Section 3) be filled by vote of a majority of
the remaining Trustees thereto fore elected by the
holders of the class or classes of Shares which
elected the Trustee whose office shall have become
vacant. Refer ences in this paragraph (c) to Trustees
elected by the holders of a particular class of
Shares shall include Trustees elected by such
Trustees to fill vacancies as provided in clause (Y)
of the foregoing sentence.
(v) Immediately upon the expiration of a Default Period,
(X) the right of the holders of Pre ferred Shares as
a class to elect Trustees shall cease, (Y) the term
of any Trustees elected by the holders of Preferred
Shares as a class shall terminate, and (Z) the number
of Trustees shall be such number as may be provid ed
for in the Declaration, any Article Supple mentary or
the By-Laws of the Trust, irrespec tive of any
increase made pursuant to the pro visions of
paragraph (c)(ii) of this Section 3 (such number
being subject, however, to change thereafter in any
manner provided by law, or in the Declaration, any
Article Supplementary or the By-Laws of the Trust).
Any vacancies in the Board effected by the provisions
of clauses (Y) and (Z) in the preceding sentence may
be filled by a majority of the remaining Trustees.
(d) Except as set forth herein, holders of Junior
Participating Preferred Shares shall have no special voting rights and
their consent shall not be required (except to the extent they are
entitled to vote with holders of Common Shares as set forth herein) for
taking any trust action.
<PAGE>
7
4. Certain Restrictions.
(a) Whenever quarterly dividends or other divi dends or
distributions payable on the Junior Partici pating Preferred Shares as
provided in Section 2 are in arrears, thereafter and until all accrued
and unpaid dividends and distributions, whether or not declared, on
Junior Participating Preferred Shares outstanding shall have been paid
in full, the Trust shall not:
(i) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise
acquire for consideration any Shares ranking junior
(either as to dividends or upon liquidation,
dissolution or winding up) to the Junior
Participating Preferred Shares;
(ii) declare or pay dividends on or make any other
distributions on any Shares ranking on a parity
(either as to dividends or upon liquidation,
dissolution or winding up) with the Junior
Participating Preferred Shares except dividends paid
ratably on the Junior Participating Pre ferred Shares
and all such parity Shares on which dividends are
payable or in arrears in proportion to the total
amounts to which the holders of all such Shares are
then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration Shares ranking on a parity (ei ther as
to dividends or upon liquidation, dis solution or
winding up) with the Junior Partic ipating Preferred
Shares provided that the Trust may at any time
redeem, purchase or oth erwise acquire any such
parity Shares in ex change for any Shares ranking
junior (either as to dividends or upon dissolution,
liquidation or winding up) to the Junior
Participating Pre ferred Shares;
(iv) purchase or otherwise acquire for consideration any
Junior Participating Preferred Shares, or any Shares
ranking on a parity with the Junior Participating
Preferred Shares, except pursuant to Section 8 or in
accordance with a purchase offer made in writing or
by publication (as determined by the Board) to all
holders of such shares upon such terms as the Board,
after consideration of the respective annual dividend
rates and other relative rights and preferences
<PAGE>
8
of the respective series and classes, shall determine
in good faith will result in fair and equitable
treatment among the respective series or classes.
(b) The Trust shall not permit any subsidiary of the Trust to
purchase or otherwise acquire for con sideration any Shares of the
Trust unless the Trust could, under paragraph (a) of this Section 4,
purchase or otherwise acquire such shares at such time and in such
manner.
5. Reacquired Shares. Any Junior Participating Preferred Shares,
purchased or otherwise acquired by the Trust in any manner whatsoever shall be
retired and cancelled promptly after the acquisition thereof. All such shares
shall upon their cancellation become authorized but unissued Preferred Shares
and may be reissued as part of a new series of Preferred Shares to be created by
resolution or resolutions of the Board, subject to the conditions and
restrictions on issuance set forth herein.
6. Liquidation, Dissolution or Winding Up.
(a) Upon any liquidation (voluntary or other wise),
dissolution or winding up of the Trust, no dis tribution shall be made
to the holders of Shares rank ing junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Junior
Participating Preferred Shares, unless, prior thereto, the holders of
Junior Participating Preferred Shares shall have re ceived $100.00 per
share, plus an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date of such
payment (the "Liquidation Preference"). Following the payment of the
full amount of the Liquidation Preference, no additional distributions
shall be made to the holders of Junior Participating Preferred Shares,
unless, prior thereto, the holders of Common Shares shall have re
ceived an amount per share (the "Common Adjustment") equal to the
quotient obtained by dividing (i) the Liquidation Preference by (ii)
100 (as appropriately adjusted as set forth in subparagraph (c) below
to re flect such events as stock splits, stock dividends and
recapitalization with respect to the Common Shares) (such number in
clause (ii) immediately above being referred to as the "Adjustment
Number"). Subject to the rights of any other series of Preferred Shares
then outstanding, if any, following the payment of the full amount of
the Liquidation Preference and the Common Adjustment in respect of all
outstanding shares of
<PAGE>
9
Junior Participating Preferred Shares and Common Shares, respectively,
holders of Junior Participating Preferred Shares and holders of shares
of Common Shares shall receive their ratable and proportionate share of
the remaining assets to be distributed in the ratio of the Adjustment
Number to one (1) with respect to such Junior Participating Preferred
Shares and Common Shares, on a per Share basis, respectively.
(b) In the event, however, that there are not sufficient
assets available to permit payment in full of the Liquidation
Preference and the liquidation preferences of all other series of
Preferred Shares, if any, which rank on a parity with the Junior
Participat ing Preferred Shares, then such remaining assets shall be
distributed ratably to the holders of such parity Shares (including the
Junior Participating Preferred Shares) in proportion to their
respective liquidation preferences. In the event, however, that there
are not sufficient assets available to permit payment in full of the
Common Adjustment after satisfaction of the liquidation preferences of
all series of Preferred Shares, if any, then such remaining assets
shall be distributed ratably to the holders of Common Shares.
(c) In the event the Trust shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Shares payable in
Common Shares, (ii) subdivide the outstanding Common Shares or (iii)
combine the outstanding Common Shares into a smaller number of shares,
then in each such case the Adjustment Number in effect immediately
prior to such event shall be adjusted by multiplying such Adjustment
Number by a fraction the numerator of which is the number of Common
Shares outstanding immediately after such event and the denominator of
which is the number of shares of Common Shares that were outstanding
immediately prior to such event.
7. Consolidation, Merger, etc. In case the Trust shall enter into any
consolidation, merger, combination or other trans action in which the Common
Shares are exchanged for or changed into other stock or securities, cash or any
other property, then in any such case the Junior Participating Preferred Shares
shall at the same time be similarly exchanged or changed in an amount per share
(subject to the provision for adjustment hereinafter set forth) equal to 100
times the aggregate amount of shares, securities, cash or any other property
(payable in kind), as the case may be, into which or for which each Common Share
is changed or exchanged. In the event the Trust shall at any time after the
<PAGE>
10
Rights Declaration Date (i) declare any dividend on Common Shares payable in
Common Shares, (ii) subdivide the outstanding Common Shares or (iii) combine the
outstanding Common Shares into a smaller number of Shares, then in each such
case the amount set forth in the preceding sentence with respect to the exchange
or change of Junior Participating Preferred Shares shall be adjusted by
multiplying such amount by a fraction the numerator of which is the number of
Common Shares outstanding immediately after such event and the denominator of
which is the number of Common Shares that were outstanding immediately prior to
such event.
8. Redemption. The Junior Participating Preferred Shares shall not be
redeemable.
9. Ranking. The Junior Participating Preferred Shares shall rank junior
to all other series of the Trust's Preferred Shares as to the payment of
dividends and the distribution of assets, unless the terms of any such series
shall provide other wise.
10. Amendment. At such time as Junior Participating Pre ferred Shares
are outstanding, the Declaration shall not be amended, nor shall an Article
Supplemental of the Trust be filed or amended, in any manner which would
materially alter or change the powers, preferences or special rights of the
Junior Partici pating Preferred Shares so as to affect them adversely without
the affirmative vote of the holders of a majority or more of the outstanding
Junior Participating Preferred Shares voting sepa rately as a class.
11. Fractional Shares. Junior Participating Preferred Shares may be
issued in fractions of a share which shall entitle the holder, in proportion to
such holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and have the benefit of all other rights of a
holder of Junior participating Preferred Shares.
<PAGE>
11
IN WITNESS WHEREOF, HEALTH AND RETIREMENT PROPERTIES TRUST has caused
these Articles Supplementary to be signed in its name and on its behalf by a
majority of its entire Board of Trustees and witnessed by its Secretary on
November 4, 1994.
WITNESS: HEALTH AND RETIREMENT
PROPERTIES TRUST
/s/ David J. Hegarty By: /s/ John L. Harrington
David J. Hegarty John L. Harrington
Secretary Trustee
By:____________________________
Arthur G. Koumantzelis
Trustee
By:/s/ Rev. Justinian Manning, C.P.
Rev. Justinian Manning, C.P.
Trustee
By:/s/ Gerard M. Martin
Gerard M. Martin
Trustee
By:/s/ Barry M. Portnoy
Barry M. Portnoy
Trustee
THE UNDERSIGNED, Vice President of HEALTH AND RETIREMENT PROPER TIES
TRUST, with respect to the foregoing Articles Supplementary of which this
Certificate is made a part, hereby acknowledges in the name and on behalf of
said Trust, the foregoing Articles Supplementary to be the act of said Trust and
hereby certifies that the matters and facts set forth herein with respect to the
authorization and approval thereof are true in all material respects under the
penalties of perjury.
/s/ David J. Hegarty
David J. Hegarty
Vice President
EXHIBIT 3.4
HEALTH AND RETIREMENT PROPERTIES TRUST
ARTICLES SUPPLEMENTARY
TO
THIRD AMENDMENT AND RESTATEMENT OF
DECLARATION OF TRUST DATED JULY 1, 1994
Health and Retirement Properties Trust, a Maryland real estate
investment trust, having its principal office in Baltimore City, Maryland
(hereinafter called, the "Trust"), hereby certifies to the State Department of
Assessments and Taxation of Maryland that:
FIRST: Pursuant to authority expressly vested in the Board of Trustees
of the Trust by Article SIXTH of the Third Amendment and Restatement of
Declaration of Trust, as amended and as supplemented by the Articles
Supplementary (the "Articles Supplementary") creating the series of Junior
Participating Preferred Shares and filed with the State Department of
Assessments and Taxation of Maryland on November 4, 1994, and as further amended
by Articles of Amendment on July 10, 1996 and February 27, 1997 (as amended, the
"Declaration of Trust") the Board of Trustees has duly divided and classified
250,000 additional shares of the authorized preferred shares of beneficial
interest ("Preferred Shares") of the Trust into the series of such class
designated as Junior Participating Preferred Shares, bringing the total number
of authorized shares of such series to 1,250,000.
SECOND: The terms of the Junior Participating Preferred Shares
established by the Board of Trustees are as set forth in the Articles
Supplementary in addition to those set forth in Article SIXTH of the Declaration
of Trust applicable to all classes of Preferred Shares.
IN WITNESS WHEREOF, the Trust has caused these Articles Supplementary
to be signed in its name and on its behalf by the undersigned, being at least a
majority of the Trustees of the Trust, who executed this instrument as of May
13, 1997.
/s/ Bruce M. Gans /s/ Rev. Justinian Manning
Bruce M. Gans The Rev. Justinian C. Manning
/s/ Gerard M. Martin /s/ Barry M. Portnoy
Gerard M. Martin Barry M. Portnoy
/s/ Ralph J. Watts
Ralph J. Watts
<PAGE>
COMMONWEALTH OF MASSACHUSETTS)
COUNTY OF SUFFOLK)
On May 13, 1997 before me Julianne M. Ells, a Notary Public in and for said
Commonwealth, personally appeared Bruce M. Gans, the Reverend Justinian C.
Manning, Gerard M. Martin, Barry M. Portnoy and Ralph J. Watts, known to me or
proved to me on the basis of satisfactory evidence, to be the person whose names
are subscribed to the within instrument and acknowledged that each of them
executed the same.
WITNESS my hand and official seal,
Signature: /s/ Julianne M. Ells
Notary Public
My Commission expires: November 25, 1999
- 2 -
EXHIBIT 3.5
HEALTH AND RETIREMENT PROPERTIES TRUST
ARTICLES SUPPLEMENTARY
TO
THIRD AMENDMENT AND RESTATEMENT OF
DECLARATION OF TRUST DATED JULY 1, 1994
Health and Retirement Properties Trust, a Maryland real estate
investment trust, having its principal office in Baltimore City, Maryland
(hereinafter called the "Trust"), hereby certifies to the State Department of
Assessments and Taxation of Maryland that:
FIRST: Pursuant to authority expressly vested in the Board of Trustees
of the Trust by Article SIXTH of the Third Amendment and Restatement of
Declaration of Trust, as amended to date (the "Declaration of Trust"), and as
supplemented by the Articles Supplementary (the "Articles Supplementary")
creating the series of Junior Participating Preferred Shares and filed with the
State Department of Assessments and Taxation of Maryland on November 4, 1994,
the Board of Trustees has duly divided and classified 250,000 additional shares
of the authorized preferred shares of beneficial interest ("Preferred Shares")
of the Trust into the series of such class designated as Junior Participating
Preferred Shares, bringing the total number of authorized shares of such series
to 1,500,000.
SECOND: The terms of the Junior Participating Preferred Shares
established by the Board of Trustees are as set forth in the Articles
Supplementary in addition to those set forth in Article SIXTH of the Declaration
of Trust applicable to all classes of Preferred Shares.
IN WITNESS WHEREOF, HEALTH AND RETIREMENT PROPERTIES TRUST has caused
these presents to be signed in its name and on its behalf by its President and
witnessed by its Assistant Secretary on May 22, 1998.
WITNESS: HEALTH AND RETIREMENT PROPERTIES TRUST
/s/ Alexander A. Notopoulos, Jr. By: /s/ David J. Hegarty
Alexander A. Notopoulos, Jr. David J. Hegarty
Assistant Secretary President
THE UNDERSIGNED, President of HEALTH AND RETIREMENT PROPERTIES TRUST, who
executed on behalf of the Trust the Articles Supplementary which this
certificate is made a part, hereby acknowledges in the name and on behalf of
said Trust the foregoing Articles Supplementary to be the corporate act of said
Trust and hereby certifies that the matters and facts set forth herein with
respect to the authorization and approval thereof are true in all material
respects under the penalties of perjury.
/s/ David J. Hegarty
David J. Hegarty
Exhibit 8.1
SULLIVAN & WORCESTER LLP
One Post Office Square
Boston, Massachusetts 02109
May 27, 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 its common
shares of beneficial interest, the following opinion is furnished to you to be
filed with the Securities and Exchange Commission (the "SEC") as Exhibit 8.1 to
the Company's Current Report on Form 8-K dated the date hereof and to be filed
on or about 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 Statements on Form S-3, File Nos. 333-26887 and 333-52353 (the
"Registration Statements") 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 Statements, 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 Statements; (iii) the Prospectus dated May
30, 1997 (the "Base Prospectus") relating to the Registration Statements; and
(iv) the Prospectus Supplement to the Base Prospectus dated May 27, 1998 (the
"Prospectus Supplement" and the Base Prospectus, as so supplemented, the
"Prospectus"). We have reviewed the sections in the Company's Annual Report on
Form 10-K for the year ended December 31, 1997, filed under the Exchange Act
(the "Form 10-K") captioned "Federal Income Tax Considerations" and "ERISA
Plans, Keogh Plans and Individual Retirement Accounts," as supplemented by the
statements in the Prospectus Supplement under the caption "Federal Income Tax
and ERISA Considerations." With respect to all questions of fact on which such
opinions are based, we have assumed the accuracy and completeness of and
<PAGE>
Health and Retirement Properties Trust
May 27, 1998
Page 2
have relied on the information set forth in the Prospectus and in the documents
incorporated therein by reference, and on representations made to us by the
officers of the Company. We have not independently verified such information;
nothing has come to our attention, however, which would lead us to believe that
we are not entitled to rely on such information.
The opinion set forth below is based upon the Internal Revenue Code of
1986, as amended, the Treasury Regulations issued thereunder, published
administrative interpretations thereof, and judicial decisions with respect
thereto, all as of the date hereof (collectively the "Tax Laws"), and upon the
Employee Retirement Income Security Act of 1974, as amended, the Department of
Labor regulations issued thereunder, published administrative interpretations
thereof, and judicial decisions with respect thereto, all as of the date hereof
(collectively, the "ERISA Laws"). No assurance can be given that the Tax Laws or
the ERISA Laws will not change. In preparing the discussions with respect to 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 "Federal Income Tax and ERISA Considerations," we have made certain
assumptions and expressed certain conditions and qualifications therein, all of
which assumptions, conditions and qualifications are incorporated herein by
reference.
Based upon and subject to the foregoing, we are of the opinion that the
discussions 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 "Federal Income Tax and ERISA Considerations," 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 Statements and to the reference to our firm in
the Prospectus. In giving such consent, we do not thereby admit that we come
within the category of persons whose consent is required under Section 7 of the
Act or under the rules and regulations of the SEC promulgated thereunder.
Very truly yours,
/s/ Sullivan & Worcester LLP
SULLIVAN & WORCESTER LLP
