SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 19, 1999
HRPT PROPERTIES TRUST
(Exact name of registrant as specified in its charter)
Maryland 1-9317 04-6558834
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
400 Centre Street, Newton, Massachusetts 02458
(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 RISKS AND UNCERTAINTIES 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 March 19, 1999, by and among HRPT
Properties Trust and the several Underwriters named therein
pertaining to $90,000,000 in aggregate principal amount of 7-7/8%
Monthly Income Senior Notes due 2009.
4.1. Form of Supplemental Indenture No. 6, dated as of March 24, 1999, by
and between HRPT Properties Trust and State Street Bank and Trust
Company, relating to $90,000,000 in aggregate principal amount of
7-7/8% Monthly Income Senior Notes due 2009, including form thereof.
8.1. Opinion of Sullivan & Worcester LLP re: tax matters.
12.1. Computation of Ratio of Earnings to Fixed Charges.
23.1. Consent of Sullivan & Worcester LLP (contained in Exhibit 8.1).
<PAGE>
HRPT PROPERTIES TRUST
Unaudited Pro Forma Consolidated Financial Statements
The following unaudited pro forma consolidated balance sheet at
December 31, 1998 is intended to present the consolidated financial position of
the Company as if the transactions described in the notes hereto were
consummated as of December 31, 1998. The following unaudited pro forma
consolidated statement of income is intended to present the consolidated results
of operations of the Company as if the transactions were consummated as of
January 1, 1998. 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, 1998, filed in the Company's Current Report on Form
8-K dated March 5, 1999. These unaudited pro forma consolidated financial
statements are not necessarily indicative of what the actual consolidated
financial position or results of operations of the Company would have been as of
the date or for the period indicated, nor do they represent the expected
consolidated financial position or results of operations 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, changes in the occupancies of properties,
changes in rent which the Company receives, delays in the acquisition of
properties and changes in property level operating expenses.
F-1
<PAGE>
HRPT PROPERTIES TRUST
Pro Forma Consolidated Balance Sheet
December 31, 1998
(dollars in thousands, except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
Recent
Historical Dispositions (A) Offering (B) Pro Forma
---------------- ------------------ --------------- -------------
ASSETS
<S> <C> <C> <C> <C>
Real estate properties, at cost:
Land $ 369,770 $ (330) $ -- $ 369,440
Buildings and improvements 2,586,712 (6,097) -- 2,580,615
------------- ----------- ------------- ------------
2,956,482 (6,427) -- 2,950,055
Less accumulated depreciation (169,811) 2,200 -- (167,611)
------------- ----------- ------------- ------------
2,786,671 (4,227) -- 2,782,444
Real estate mortgages and notes, net 69,228 (2,973) -- 66,255
Investment in Hospitality Properties Trust 110,554 -- -- 110,554
Cash and cash equivalents 15,643 (7,800) 2,275 10,118
Interest and rents receivable 36,229 -- -- 36,229
Other assets, net 45,732 -- 2,725 48,457
------------- ----------- ------------- ------------
$ 3,064,057 $ (15,000) $ 5,000 $ 3,054,057
============= =========== ============= ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Bank notes payable $ 100,000 $ (15,000) $ (85,000) $ --
Senior notes payable, net 802,439 -- 90,000 892,439
Mortgage notes payable 24,779 -- -- 24,779
Convertible subordinated debentures 204,863 -- -- 204,863
Accounts payable and accrued expenses 44,446 -- -- 44,446
Deferred rents 34,162 -- -- 34,162
Security deposits 18,383 -- -- 18,383
Due to affiliates 7,192 -- -- 7,192
Shareholders' equity:
Preferred shares of beneficial interest, $.01 par value;
50,000,000 shares authorized; none issued -- -- -- --
Common shares of beneficial interest, $.01 par value;
150,000,000 shares authorized and pro forma,
131,547,178 shares issued and outstanding and pro forma 1,315 -- -- 1,315
Additional paid-in capital 1,964,878 -- -- 1,964,878
Cumulative net income 564,814 -- -- 564,814
Dividends (703,214) -- -- (703,214)
------------- ----------- ------------- ------------
Total shareholders' equity 1,827,793 -- -- 1,827,793
------------- ----------- ------------- ------------
$ 3,064,057 $ (15,000) $ 5,000 $ 3,054,057
============= =========== ============= ============
</TABLE>
See accompanying notes to unaudited pro forma consolidated financial statements.
F-2
<PAGE>
HRPT PROPERTIES TRUST
Pro Forma Consolidated Statement of Income
For the Year Ended December 31, 1998
(amounts in thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
1998 1998
First Quarter 1600 Market Second Quarter
Historical Acquisitions (C) Street (D) Acquisitions (C)
------------- --------------- ------------ --------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 340,851 $ 2,455 $ 4,721 $ 10,184
Interest and other income 15,703 -- -- --
------------- --------------- ------------ --------------
Total revenues 356,554 2,455 4,721 10,184
------------- --------------- ------------ --------------
Expenses:
Operating expenses 77,536 338 1,915 2,965
Interest 64,326 1,028 1,869 3,962
Depreciation and amortization 60,764 479 650 1,619
General and administrative 17,172 104 145 361
------------- --------------- ------------ --------------
Total expenses 219,798 1,949 4,579 8,907
------------- --------------- ------------ --------------
Income (loss) before equity in earnings of
Hospitality Properties Trust 136,756 506 142 1,277
Equity in earnings of Hospitality Properties Trust 7,687 -- -- --
Gain on equity transaction of Hospitality Properties Trust 2,213 -- -- --
------------- --------------- ------------ --------------
Income (loss) before extraordinary item $ 146,656 $ 506 $ 142 $ 1,277
============= =============== ============ ==============
Weighted average shares outstanding 119,867
=============
Basic and diluted earnings per common share:
Income before extraordinary item $ 1.22
=============
</TABLE>
<TABLE>
<CAPTION>
1998 1998
Third Fourth
1735 Market Quarter Quarter
Street (E) Acquisitions (C) Acquisitions (C) Other (F)
------------ --------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 12,472 $ 8,915 $ 17,352 $ --
Interest and other income -- -- -- --
------------ --------------- ------------- -------------
Total revenues 12,472 8,915 17,352 --
------------ --------------- ------------- -------------
Expenses:
Operating expenses 4,098 1,726 5,206 --
Interest 6,641 3,630 4,964 (9,405)
Depreciation and amortization 2,784 1,666 2,734 --
General and administrative 525 370 678 --
------------ --------------- ------------- -------------
Total expenses 14,048 7,392 13,582 (9,405)
------------ --------------- ------------- -------------
Income (loss) before equity in earnings of
Hospitality Properties Trust (1,576) 1,523 3,770 9,405
Equity in earnings of Hospitality Properties Trust -- -- -- --
Gain on equity transaction of Hospitality Properties Trust -- -- -- --
------------ --------------- ------------- -------------
Income (loss) before extraordinary item $ (1,576) $ 1,523 $ 3,770 $ 9,405
============ =============== ============= =============
Weighted average shares outstanding
Basic and diluted earnings per common share:
Income before extraordinary item
</TABLE>
<TABLE>
<CAPTION>
Recent
Dispositions (G) Offering (H) Pro Forma
------------ --------- -----------
<S> <C> <C> <C>
Revenues:
Rental income $ (1,008) $ -- $ 395,942
Interest and other income (265) -- 15,438
------------ ---------- -------------
Total revenues (1,273) -- 411,380
------------ ---------- -------------
Expenses:
Operating expenses -- -- 93,784
Interest (975) 1,563 77,603
Depreciation and amortization (235) 273 70,734
General and administrative (47) -- 19,308
------------ ---------- -------------
Total expenses (1,257) 1,836 261,429
------------ ---------- -------------
Income (loss) before equity in earnings of
Hospitality Properties Trust (16) (1,836) 149,951
Equity in earnings of Hospitality Properties Trust -- -- 7,687
Gain on equity transaction of Hospitality Properties Trust -- -- 2,213
------------ ---------- -------------
Income (loss) before extraordinary item $ (16) $(1,836) $ 159,851
============ ========== =============
Weighted average shares outstanding 131,380
=============
Basic and diluted earnings per common share:
Income before extraordinary item $ 1.22
=============
</TABLE>
See accompanying notes to unaudited pro forma consolidated financial statements.
F-3
<PAGE>
HRPT Properties Trust
Notes To Unaudited Pro Forma Consolidated Financial Statements
(dollars in thousands)
Consolidated Balance Sheet Adjustments
A. Represents the disposition of a nursing facility in Akron, Ohio and the
repayment of a mortgage loan secured by two nursing facilities in Spencer,
North Carolina (the "Recent Dispositions") and the use of proceeds to repay
amounts outstanding under the Company's revolving line of credit.
B. Represents the debt offering of 7-7/8% $90,000 senior notes due 2009 (the
"Offering"). Net proceeds from the Offering will be used to repay amounts
outstanding under the Company's revolving line of credit.
Consolidated Statement of Income Adjustments for the Year Ended December 31,
1998
C. Represents the increases in rental income, operating expenses, depreciation
and amortization and general and administrative expenses arising from a)
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, two commercial office properties and
two medical office properties located in Texas, one medical office property
located in Massachusetts, one commercial office property located in
Maryland, three commercial office properties located in Minnesota and three
medical office properties and one commercial office property located in
Florida (collectively, "1998 First Quarter Acquisitions"), b) the Company's
acquisitions during April 1998, May 1998 and June 1998 of three commercial
office properties located in Massachusetts, one medical office property
located in California, three commercial office properties located in New
Jersey, one commercial office property located in Connecticut, one
commercial office property located in Pennsylvania, one commercial office
property located in Ohio, one commercial office property located in
Washington, D.C., and one commercial office property located in New York
(collectively, "1998 Second Quarter Acquisitions"), c) the Company's
acquisitions during July 1998, August 1998, and September 1998 of one
medical office property located in Texas, one commercial office property
located in Delaware, one commercial office property located in New Jersey,
one commercial office property located in Virginia, one commercial office
property located in Tennessee and one commercial office property located in
Pennsylvania (collectively, "1998 Third Quarter Acquisitions") and d) the
Company's acquisitions during October 1998, November 1998 and December 1998
of one commercial office property located in Maryland, one commercial
office property located in Pennsylvania, one commercial office property
located in Virginia, one commercial office property located in Connecticut
and developable land and five commercial office properties located in
Texas, (collectively, "1998 Fourth Quarter Acquisitions"), and the increase
in interest expense from the use of the Company's revolving line of credit
to fund these acquisitions.
D. Represents the increases 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.
E. Represents the increases in rental income, operating expenses, depreciation
and amortization and general and administrative expenses arising from the
Company's acquisition on May 22, 1998 of a mortgage secured by, and
subsequent acquisition on June 30, 1998 of a controlling interest in, a
commercial office property located in Philadelphia, Pennsylvania ("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.
F. Represents the net decrease in interest expense relating to the issuance of
additional Remarketed Reset Notes due 2007 and 6.7% Senior Notes due 2005
in February 1998, the issuance of 6 7/8% Senior Notes due 2002 in August
1998, the issuance of 8.5% Senior Notes due 2013 in November 1998 and the
issuance of 31,977,575 common shares in February 1998, March 1998 and June
1998. The proceeds of these offerings were used to repay amounts then
outstanding on the Company's revolving credit facility.
G. Represents the decreases in rental income, interest income, interest
expense, depreciation and amortization and general and administrative
expenses arising from the Recent Dispositions.
H. Reflects the increase in interest and amortization expense as a result of
the Offering and the application of the net proceeds to the Company's
revolving line of credit.
F-4
<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.
HRPT PROPERTIES TRUST
By: /s/ Ajay Saini
-----------------------------
Ajay Saini, Treasurer and
Chief Financial Officer
Date: March 19, 1999
HRPT PROPERTIES TRUST
(a Maryland real estate investment trust)
7-7/8% Monthly Income Senior Notes due 2009
PURCHASE AGREEMENT
March 19, 1999
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
SALOMON SMITH BARNEY INC.
A.G. EDWARDS & SONS, INC.
LEGG MASON WOOD WALKER, INCORPORATED
MORGAN STANLEY & CO. INCORPORATED
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
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:
HRPT 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"), Salomon Smith Barney
Inc., A.G. Edwards & Sons, Inc., Legg Mason Wood Walker, Incorporated, Morgan
Stanley & Co. Incorporated, PaineWebber Incorporated and Prudential Securities
Incorporated (collectively, the "Underwriters," which term shall include any
underwriter substituted as hereinafter provided in Section 10 hereof), with
respect to the sale by the Company of $90,000,000 principal amount of the
Company's 7-7/8% Monthly Income Senior Notes due 2009 (the "Notes") and the
purchase by each such Underwriter, severally, of the principal amount of such
Notes set forth opposite the name of each such Underwriter listed in Schedule A
hereto at a purchase price of 97.25% of the principal amount of the Notes 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
$13,500,000 aggregate principal amount of such Notes to cover over-allotments.
The aforesaid $90,000,000 principal amount of such Notes (the "Initial Notes"),
together with all or any part of the $13,500,000 additional principal amount
subject to the option described in Section 2 hereof (the
<PAGE>
"Option Notes"), are collectively hereinafter called the "Notes". The Notes are
to be issued pursuant to an indenture dated as of July 9, 1997 and a
supplemental indenture dated as of March 24, 1999 (together, the "Indenture"),
each between the Company and State Street Bank and Trust Company (the
"Trustee").
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (No. 333-56051) for the
registration of debt securities, preferred shares of beneficial interest,
depositary shares, common shares of beneficial interest and warrants under the
Securities Act of 1933, as amended (the "1933 Act"), and has filed such
amendments thereto, if any, as may have been required to the date hereof. Such
registration statement has been declared effective under the 1933 Act. Such
registration statement (as amended, if applicable) and the prospectus
constituting a part thereof, as supplemented by the prospectus supplement
relating to the Notes (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. 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 rules and regulations under the 1933
Act (the "1933 Act Regulations") and did not contain an untrue statement of
a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading. The
Prospectus, at the date hereof (unless the term "Prospectus" refers to a
prospectus which has been provided to the Underwriters by the Company for
use in connection with the offering of the Notes 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.
2
<PAGE>
(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, 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, present fairly the
consolidated financial position, results of operations, shareholders'
equity and changes in financial position of the Company and its
subsidiaries, at the dates or for the 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
3
<PAGE>
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 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) The Indenture has been duly qualified under the Trust Indenture
Act of 1939 (the "1939 Act") and has been duly authorized, executed and
delivered by the Company and is a valid and binding agreement of the
Company enforceable in accordance with its terms, except as limited by (a)
the effect of bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer or other similar laws relating to or affecting the
rights or remedies of creditors or (b) the effect of general principles of
equity (regardless of whether enforcement is sought in a proceeding in
equity or at law).
(vii) All of the issued and outstanding indebtedness of the Company is
duly and validly authorized and issued; the Notes have been authorized by
all necessary trust action and, when executed and authenticated in
accordance with the provisions of the Indenture and delivered and paid for
pursuant to this Agreement, will be valid and binding obligations of the
Company enforceable in accordance with their terms, except as limited by
(a) the effect of bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer or other similar laws relating to or affecting the
rights or remedies of creditors or (b) the effect of general principles of
equity (regardless of whether enforcement is sought in a proceeding in
equity or at law).
(viii) The Notes and the Indenture conform to the descriptions thereof
in the Registration Statement and in the Prospectus.
(ix) The authorized capital of the Company, including the Notes,
conforms as to legal matters to the description thereof contained in the
Prospectus (or the documents incorporated therein by reference).
(x) 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
4
<PAGE>
than the issuance of common shares of beneficial interest ("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.
(xi) 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.
(xii) 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 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.
(xiii) 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 Notes. 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.
(xiv) The execution, delivery and performance by the Company of this
Agreement, the issuance, offering and sale by the Company of the Notes 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
5
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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.
(xv) 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 Notes 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.
(xvi) 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, 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.
(xvii) 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
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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.
(xviii) 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.
(xix) Except for those matters which in the aggregate do not have a
material adverse effect on the business, operations, earnings, prospects,
properties or condition (financial or otherwise) of the Company and its
subsidiaries taken as a whole, and except for Hazardous Materials (as
defined below) or substances which are handled and/or disposed of in
compliance with all applicable federal, state and local requirements, to
the Company's knowledge, after due investigation, the real property owned,
leased or otherwise operated by the Company and each of its subsidiaries in
connection with the operation of their respective businesses, including,
without limitation, any subsurface soils and ground water (the "Realty"),
is free of contamination from any Hazardous Materials. To the Company's
knowledge, after due investigation, the Realty does not contain any
underground storage or treatment tanks, 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
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quasi-government authority, or any petroleum products, asbestos, lead-based
paint, polychlorinated biphenyls, flammable explosives or radioactive
materials.
(xx) 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 material 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.
(xxi) To the knowledge of the Company, no labor problem exists or is
imminent with employees of the Company or any of its subsidiaries that
could have a material adverse effect on the business, operations, earnings,
prospects, properties or condition (financial or otherwise) of the Company
and its subsidiaries, taken as a whole.
(xxii) 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.
(xxiii) All of the outstanding shares of beneficial interest of, or
other ownership interests in, each of the Company's subsidiaries have been
duly authorized and validly issued and are fully paid and, 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.
(xxiv) 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
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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.
(xxv) Except as disclosed in the Registration Statement and in the
Prospectus, there are no material outstanding loans or advances or material
guarantees of indebtedness by the Company or any of its subsidiaries to or
for the benefit of any of the officers, trustees or directors of the
Company or any of its subsidiaries or any of the members of the families of
any of them.
(xxvi) The Company and each of its subsidiaries maintains insurance,
duly in force, with insurers of recognized financial responsibility; such
insurance insures against such losses and risks as are adequate in
accordance with customary industry practice to protect the Company and its
subsidiaries and their respective businesses; and neither the Company nor
any such subsidiary has any reason to believe that it will not be able to
renew its existing insurance coverage as and when such coverage expires or
to obtain similar coverage from similar insurers as may be necessary to
continue its business at a cost that would not materially and adversely
affect the business, operations, earnings, prospects, properties or
condition (financial or otherwise) of the Company and its subsidiaries,
taken as a whole, except as disclosed in or contemplated by the
Registration Statement and by the Prospectus.
(xxvii) Neither the Company nor any of its officers and directors (as
defined in the 1933 Act Regulations) has taken or will take, directly or
indirectly, prior to the termination of the offering contemplated by this
Agreement, any action designed to stabilize or manipulate the price of any
security of the Company, or which has caused or resulted in, or which might
in the future reasonably be expected to cause or result in, stabilization
or manipulation of the price of any security of the Company to facilitate
the sale or resale of the Notes.
(xxviii) Neither the Company nor any of its subsidiaries is an
"investment company" or an "affiliated person" of, or "promoter" or
"principal underwriter" for, an "investment company" as such terms are
defined in the Investment Company Act of 1940, as amended (the "1940 Act"),
or an "investment adviser" as such term is defined in the Investment
Advisers Act of 1940, as amended.
(xxix) The Company is organized in conformity with the requirements
for qualification, and, as of the date hereof the Company operates, and as
of Closing Time the Company will operate, in a manner that qualifies the
Company as a "real estate investment trust" under the Internal Revenue Code
of 1986, as amended (the "Code"), and the rules and regulations thereunder,
for 1999 and subsequent years. The Company qualified as a real estate
investment trust under the Code for each of its taxable years from 1987
through 1998.
(xxx) No default exists, and no event has occurred which, with notice
or lapse of time or both, would constitute a default in the due performance
and observance of any
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term, covenant or condition of any indenture, mortgage, deed of trust,
lease or other agreement or instrument to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries
or any of their respective properties is bound or may be affected, except
such defaults which, singly or in the aggregate, would not have a material
adverse effect on the business, operations, earnings, prospects, properties
or condition (financial or otherwise) of the Company and its subsidiaries,
considered as a whole, except as disclosed in the Registration Statement
and in the Prospectus.
(xxxi) 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 Underwriters 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.
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, the Notes as set forth in
Schedule A.
(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 $13,500,000 principal amount of Notes at the
purchase price set forth on the first page of this Agreement. 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 Notes upon notice by Merrill Lynch to the Company
setting forth the principal amount of Option Notes as to which the several
Underwriters are then exercising the option and the time, date and place of
payment and delivery for such Option Notes. Any such time and date of delivery
(a "Date of Delivery") shall be determined by Merrill Lynch 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
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Time, unless otherwise agreed upon by the Underwriters and the Company. If the
option is exercised as to all or any portion of the Option Notes, such Option
Notes shall be purchased by the Underwriters, severally and not jointly, in
proportion to their respective Initial Note underwriting obligations as set
forth in Schedule A.
(c) Payment of the purchase price for and delivery of the Initial Notes
shall be made, subject to Section 9, 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 Underwriters 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
Underwriters 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 the Option Notes shall be made at the
above-mentioned office of Sullivan & Worcester LLP, or at such other place as
shall be agreed upon by Merrill Lynch and the Company on each Date of Delivery
as specified in the notice 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 Underwriters of the Notes to be purchased by them. It is
understood that each Underwriter has authorized Merrill Lynch, for its account,
to accept delivery of, receipt for, and make payment of the purchase price for,
the Notes which it has severally agreed to purchase. Merrill Lynch, individually
and not as representative of the Underwriters, may (but shall not be obligated
to) make payment of the purchase price for the Notes to be purchased by any
Underwriter whose funds have not been received by the Closing Time or the Date
of Delivery, as the case may be, but such payment shall not relieve such
Underwriter from its obligations hereunder. The Notes shall be in such
authorized denominations and registered in such names as the Underwriters may
request in writing at least one business day before 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 aggregate principal amount of
Notes covered thereby and their terms not otherwise specified in the Prospectus,
the Underwriters' names, the price at which the Notes are to be purchased by the
Underwriters from the Company, and such other information as the Underwriters
and the Company deem appropriate in connection with the offering of the Notes;
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 Underwriters 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 Notes, the Company
will notify the Underwriters 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 Notes,
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(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
Notes 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 Underwriters 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 Notes) to the
Prospectus (including any revised prospectus which the Company proposes for use
by the Underwriters in connection with the offering of the Notes 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 Underwriters 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.
(d) The Company will deliver to each of the Underwriters 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 Notes (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 Underwriters, 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 Underwriters 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 Underwriters 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
Underwriters, to qualify the Notes 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 Underwriters 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
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<PAGE>
each jurisdiction in which the Notes 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 Notes.
(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 Notes in the manner specified in the Prospectus under the caption "Use of
Proceeds" in all material respects.
(j) The Company currently intends to continue to qualify as a "real estate
investment trust" under the Code, and use its best efforts to continue to meet
the requirements to qualify as a "real estate investment trust".
(k) The Company will timely file any document which it is required to file
pursuant to the 1934 Act prior to the termination of the offering of the Notes.
(l) The Company will not, between the date of this Agreement and the
termination of any trading restrictions or Closing Time, whichever is later,
with respect to the Notes, without your prior written consent, offer or sell,
grant any option for the sale of, or enter into any agreement to sell, any debt
securities of the Company with a maturity of more than one year (other than the
Notes which are to be sold pursuant to this Agreement and additional or expanded
commitments to participate in the Company's revolving line of credit) except as
may otherwise be provided in this Agreement.
Section 4. Payment of Expenses. The Company will pay all expenses incident
to the performance of its obligations under this Agreement, including (i) the
preparation and filing of the Registration Statement as originally filed and of
each amendment thereto, (ii) the preparation and filing of this Agreement, (iii)
the preparation, issuance and delivery of the Notes 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 Notes
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) any fees charged by nationally
recognized statistical rating organizations for the rating of the Notes, (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 Notes, and (x) the fees and expenses of any
depositary in connection with the Notes.
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If this Agreement is terminated by the Underwriters 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.
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 Notes 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 Underwriters 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 Underwriters 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) 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).
(iii) The Company has the requisite trust power and authority to enter
into and perform this Agreement and to issue and deliver the Notes.
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(iv) This Agreement and the Indenture have been duly authorized,
executed and delivered by the Company.
(v) The Indenture is a valid and binding obligation of the Company
enforceable in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting
creditors' rights generally and equitable principles; and the Indenture has
been duly qualified under the 1939 Act.
(vi) The Notes have been duly authorized and, when executed and
authenticated in accordance with the provisions of the Indenture and
delivered and paid for in accordance with the terms of this Agreement, will
be valid and binding obligations of the Company enforceable in accordance
with their terms subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors' rights
generally and equitable principles; and the holders of the Notes are
entitled to the benefit of the Indenture.
(vii) 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.
(viii) 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 Notes 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.
(ix) 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.
(x) 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
15
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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 Notes; 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.
(xi) 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.
(xii) 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.
(xiii) The Registration Statement and the Prospectus and any
supplements or amendments thereto (except for the financial statements and
the notes thereto and the schedules and other financial and statistical
data included therein, the Excluded Proceedings (as defined in paragraph
(xx) below) and the part of the Registration Statement that constitutes the
Statement of Eligibility (Form T-1) of the Trustee under the 1939 Act, as
to which such counsel need not express any opinion) comply as to form in
all material respects with the requirements of the 1933 Act.
(xiv) Each document incorporated by reference in the Registration
Statement and in the Prospectus (except for the financial statements and
the notes thereto and the schedules and other financial and statistical
data included therein 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.
(xv) To the extent required to be described therein, the Notes conform
in all material respects to the descriptions in the Registration Statement
and the Prospectus.
16
<PAGE>
(xvi) The statements (a) in the Prospectus under the captions
"Description of Debt Securities", "Description of the Notes", "Description
of Shares", "Redemption; Business Combinations and Control Share
Acquisitions," "Limitation of Liability; Shareholder Liability" and
"Certain Federal Income Tax 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.
(xvii) 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, 1998, 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.
(xviii) The Company is not required to register as an "investment
company" within the meaning of the 1940 Act.
(xix) 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.
(xx) 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.
(xxi) Although counsel has not undertaken, except as otherwise
indicated in their opinion, to determine independently, and does not assume
any responsibility for, the accuracy or completeness of the statements in
the Registration Statement, such counsel has participated in the
preparation of the Registration Statement and the Prospectus, including
review and discussion of the contents thereof (including review and
discussion of the contents of all documents incorporated by reference in
the Registration Statement and the Prospectus), and nothing has come to the
attention of such counsel that has
17
<PAGE>
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 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"), or (c) the part of the
Registration Statement that constitutes the Statement of Eligibility (Form
T-1) of the Trustee under the 1939 Act.
In rendering their opinion as aforesaid, Sullivan & Worcester LLP may rely
upon an opinion, dated as of Closing Time, of Ballard Spahr Andrews & Ingersoll,
LLP as to matters governed by Maryland law, provided that such reliance is
expressly authorized by such opinion and a copy of such opinion is delivered to
the Underwriters and is, in form and substance, satisfactory to the Underwriters
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 Ballard Spahr Andrews & Ingersoll, LLP described in the
paragraph above shall be rendered to the Underwriters at the request of the
Company and shall so state therein.
In addition, the Underwriters shall have received at Closing Time an
opinion (satisfactory to the Underwriters 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 Underwriters 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 (iv), (v), (vi), (ix), (xiii), (xv) and (xxi) of
the foregoing paragraph (b). In giving such opinion with respect to the matters
covered by clause (xxi), such counsel may state that their opinion and belief
are based upon their participation in the preparation of the Registration
Statement and the Prospectus and any amendments or supplements thereto and
review and
18
<PAGE>
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 Ballard Spahr Andrews & Ingersoll, LLP
as to matters governed by Maryland law, and the opinion of Sullivan & Worcester
LLP referred to above as to matters governed by Massachusetts law. In addition,
in rendering such opinion, such counsel may state that their opinion as to laws
of the State of Delaware is limited to the Delaware General Corporation Law.
(d) At Closing Time (i) the Registration Statement and the Prospectus shall
contain all statements which are required to be stated therein in accordance
with the 1933 Act and the 1933 Act Regulations and in all material respects
shall conform to the requirements of the 1933 Act and the 1933 Act Regulations,
and neither the Registration Statement nor the Prospectus shall contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not misleading
and no action, suit or proceeding at law or in equity shall be pending or to the
knowledge of the Company threatened against the Company which would be required
to be set forth in the Prospectus other than as set forth therein, (ii) there
shall not have been, since the respective dates as of which information is given
in the Registration Statement and the Prospectus, any material adverse change in
the condition, financial or otherwise, of the Company or in its earnings,
business affairs or business prospects, whether or not arising in the ordinary
course of business from that set forth in the Registration Statement, and (iii)
no proceedings shall be pending or, to the knowledge of the Company, threatened
against the Company before or by any federal, state or other commission, board
or administrative agency wherein an unfavorable decision, ruling or finding
would materially and adversely affect the business, property, financial
condition or income of the Company other than as set forth in the Prospectus;
and the Underwriters 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 Underwriters
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 Notes, Ernst & Young LLP shall
have furnished to the Underwriters a letter, dated the date of its delivery,
addressed to the Underwriters and in form and substance satisfactory to the
Underwriters, 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
19
<PAGE>
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 Notes 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 Notes as herein contemplated shall
be reasonably satisfactory in form and substance to the Underwriters and counsel
for the Underwriters.
(h) In the event the Underwriters exercise the option described in Section
2 hereof to purchase all or any portion of the Option Notes, 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 Underwriters shall have received:
(i) A certificate of the President and Chief Executive Officer and the
chief financial officer or chief accounting officer of the Company, dated
such Date of Delivery, confirming that their certificate delivered at
Closing Time pursuant to Section 5(d) hereof remains 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 Notes 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 LLP, dated such Date of Delivery,
substantially the same in scope and substance as the letter furnished to
the Underwriters 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
Underwriters 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:
20
<PAGE>
(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 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 Notes 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
21
<PAGE>
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 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 Notes 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 Notes
pursuant to this Agreement shall be deemed to be in the same respective
proportions as the total net proceeds from the offering of the Notes 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 Notes.
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.
22
<PAGE>
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 Notes 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 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 Notes to the Underwriters.
Section 9. Termination of Agreement. (a) The Underwriters 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 Underwriters'
reasonable judgment, impracticable or inadvisable to market the Notes or enforce
contracts for the sale of the Notes, (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 Underwriters' reasonable judgment, impracticable or inadvisable
to market the Notes or enforce contracts for the sale of the Notes, 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.
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<PAGE>
(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 Notes which it or they are obligated to purchase
under this Agreement (the "Defaulted Notes"), the Underwriters 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 Notes in such amounts as may be agreed upon and
upon the terms herein set forth; if, however, the Underwriters shall not have
completed such arrangements within such 24-hour period, then:
(i) if the total principal amount of Defaulted Notes does not exceed
10% of the Initial Notes to be purchased pursuant to this Agreement, the
non-defaulting Underwriters shall be obligated to purchase the full amount
thereof in the proportions that their respective underwriting obligations
hereunder bear to the underwriting obligations of all non-defaulting
Underwriters, or
(ii) if the total principal amount of Defaulted Notes exceeds 10% of
the Initial Notes to be purchased pursuant to this Agreement, 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 Underwriters 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 Underwriters in 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 02458, 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.
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<PAGE>
No purchaser of Notes 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 "HRPT PROPERTIES
TRUST" REFERS TO THE TRUSTEES UNDER THE DECLARATION COLLECTIVELY AS TRUSTEES,
BUT NOT INDIVIDUALLY OR PERSONALLY, AND THAT NO TRUSTEE, OFFICER, SHAREHOLDER,
EMPLOYEE OR AGENT OF THE COMPANY SHALL BE HELD TO ANY PERSONAL LIABILITY,
JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, THE COMPANY. ALL
PERSONS DEALING WITH THE COMPANY, IN ANY WAY, SHALL LOOK ONLY TO THE ASSETS OF
THE COMPANY FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION.
25
<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,
HRPT PROPERTIES TRUST
By /s/ Ajay Saini
---------------------------------------------
Name: Ajay Saini
Title: Treasurer and Chief Financial Officer
CONFIRMED AND ACCEPTED, as of the date first above written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
SALOMON SMITH BARNEY INC.
A.G. EDWARDS & SONS, INC.
LEGG MASON WOOD WALKER, INCORPORATED
MORGAN STANLEY & CO. INCORPORATED
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
By: MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
By /s/ Tjarda Clagett
--------------------------------------------
Name:
Title:
Acting on behalf of themselves and
the other named Underwriters in Schedule A
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<PAGE>
SCHEDULE A
Underwriter Aggregate Principal
---------- Amount of Initial Notes
-----------------------
Merrill Lynch, Pierce, Fenner & Smith
Incorporated........................ $13,750,000
Salomon Smith Barney Inc.......................... $13,750,000
A.G. Edwards & Sons, Inc.......................... $12,500,000
Legg Mason Wood Walker, Incorporated.............. $12,500,000
Morgan Stanley & Co. Incorporated................. $12,500,000
PaineWebber Incorporated.......................... $12,500,000
Prudential Securities Incorporated................ $12,500,000
----------
Total............................... $90,000,000
==========
SUPPLEMENTAL INDENTURE NO. 6
by and between
HRPT PROPERTIES TRUST
and
STATE STREET BANK AND TRUST COMPANY
as of March 24, 1999
SUPPLEMENTAL TO THE INDENTURE DATED AS OF JULY 9, 1997
------------------------------------
HRPT PROPERTIES TRUST
7-7/8% Monthly Income Senior Notes due 2009
<PAGE>
This SUPPLEMENTAL INDENTURE NO. 6 (this "Supplemental Indenture") made
and entered into as of March 24, 1999 between HRPT PROPERTIES TRUST, a Maryland
real estate investment trust (the "Company"), and STATE STREET BANK AND TRUST
COMPANY, a Massachusetts trust company, as Trustee (the "Trustee").
WITNESSETH THAT:
WHEREAS, the Company and the Trustee have executed and delivered an
Indenture, dated as of July 9, 1997 (the "Indenture"), relating to the Company's
issuance, from time to time, of various series of debt securities; and
WHEREAS, the Company has determined to issue debt securities known as
its 7-7/8% Monthly Income Senior Notes due 2009; and
WHEREAS, the Indenture provides that certain terms and conditions for
each series of debt securities issued by the Company thereunder may be set forth
in an indenture supplemental to the Indenture;
NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE WITNESSETH:
ARTICLE 1
DEFINED TERMS
Section 1.1 The following definitions supplement, and, to the extent
inconsistent with, replace the definitions in Section 101 of the Indenture:
"Acquired Debt" means Debt of a Person (i) existing at the time such
Person becomes a Subsidiary or (ii) assumed in connection with the acquisition
of assets from such Person, in each case, other than Debt incurred in connection
with, or in contemplation of, such Person becoming a Subsidiary or such
acquisition. Acquired Debt shall be deemed to be incurred on the date of the
related acquisition of assets from any Person or the date the acquired Person
becomes a Subsidiary.
"Annual Debt Service" as of any date means the maximum amount which is
expensed in any 12-month period for interest on Debt of the Company and its
Subsidiaries.
"Business Day" means any day other than a Saturday or Sunday or a day
on which banking institutions in The City of New York or in the city in which
the Corporate Trust Office of the Trustee is located, are required or authorized
to close.
"Capital Stock" means, with respect to any Person, any capital stock
(including preferred stock), shares, interests, participation or other ownership
interests (however designated) of such Person and any rights (other than debt
securities convertible into or exchangeable for capital stock), warrants or
options to purchase any thereof.
"Consolidated Income Available for Debt Service" for any period means
Earnings from Operations of the Company and its Subsidiaries plus amounts which
have been deducted, and minus amounts which have been added, for the following
(without duplication): (i) interest on Debt of the Company and its Subsidiaries,
(ii) provision for taxes of the Company and its Subsidiaries based on income,
(iii) amortization of debt discount and deferred financing costs, (iv)
provisions for gains and losses on properties and property depreciation and
amortization, (v) the effect of any noncash charge resulting from a change in
accounting
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<PAGE>
principles in determining Earnings from Operations for such period and (vi)
amortization of deferred charges.
"Debt" of the Company or any Subsidiary means, without duplication, any
indebtedness of the Company or any Subsidiary, whether or not contingent, in
respect of (i) borrowed money or evidenced by bonds, notes, debentures or
similar instruments, (ii) indebtedness for borrowed money secured by any
Encumbrance existing on property owned by the Company or any Subsidiary, to the
extent of the lesser of (x) the amount of indebtedness so secured and (y) the
fair market value of the property subject to such Encumbrance, (iii) the
reimbursement obligations, contingent or otherwise, in connection with any
letters of credit actually issued (other than letters of credit issued to
provide credit enhancement or support with respect to other indebtedness of the
Company or any Subsidiary otherwise reflected as Debt hereunder) or amounts
representing the balance deferred and unpaid of the purchase price of any
property or services, except any such balance that constitutes an accrued
expense or trade payable, or all conditional sale obligations or obligations
under any title retention agreement, (iv) the principal amount of all
obligations of the Company or any Subsidiary with respect to redemption,
repayment or other repurchase of any Disqualified Stock, or (v) any lease of
property by the Company or any Subsidiary as lessee which is reflected on the
Company's consolidated balance sheet as a capitalized lease in accordance with
GAAP, to the extent, in the case of items of indebtedness under (i) through
(iii) above, that any such items (other than letters of credit) would appear as
a liability on the Company's consolidated balance sheet in accordance with GAAP,
and also includes, to the extent not otherwise included, any obligation by the
Company or any Subsidiary to be liable for, or to pay, as obligor, guarantor or
otherwise (other than for purposes of collection in the ordinary course of
business), Debt of another Person (other than the Company or any Subsidiary) (it
being understood that Debt shall be deemed to be incurred by the Company or any
Subsidiary whenever the Company or such Subsidiary shall create, assume,
guarantee or otherwise become liable in respect thereof).
"Disqualified Stock" means, with respect to any Person, any Capital
Stock of such Person which by the terms of such Capital Stock (or by the terms
of any security into which it is convertible or for which it is exchangeable or
exercisable), upon the happening of any event or otherwise (i) matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise
(other than Capital Stock which is redeemable solely in exchange for common
stock or shares), (ii) is convertible into or exchangeable or exercisable for
Debt or Disqualified Stock, or (iii) is redeemable at the option of the holder
thereof, in whole or in part (other than Capital Stock which is redeemable
solely in exchange for common stock or shares), in each case on or prior to the
Stated Maturity of the Notes.
"Earnings from Operations" for any period means net earnings excluding
gains and losses on sales of investments, extraordinary items and property
valuation losses, as reflected in the financial statements of the Company and
its Subsidiaries for such period, determined on a consolidated basis in
accordance with GAAP.
"Encumbrance" means any mortgage, lien, charge, pledge or security
interest of any kind.
"Notes" means the Company's 7-7/8% Monthly Income Senior Notes due
2009, issued under this Supplemental Indenture and the Indenture, as amended or
supplemented from time to time.
"Secured Debt" means Debt secured by any mortgage, lien, charge, pledge
or security interest of any kind.
"Subsidiary" means any corporation or other entity of which a majority
of (i) the voting power of the voting equity securities or (ii) the outstanding
equity interests of which are owned, directly or indirectly, by the Company or
one or more other Subsidiaries of the Company. For the purposes of this
definition,
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"voting equity securities" means equity securities having voting power for the
election of directors, whether at all times or only so long as no senior class
of security has such voting power by reason of any contingency.
"Total Assets" as of any date means the sum of (i) the Undepreciated
Real Estate Assets and (ii) all other assets of the Company and its Subsidiaries
determined in accordance with GAAP (but excluding accounts receivable and
intangibles).
"Total Unencumbered Assets" means the sum of (i) those Undepreciated
Real Estate Assets not subject to an Encumbrance for borrowed money and (ii) all
other assets of the Company and its Subsidiaries not subject to an Encumbrance
for borrowed money determined in accordance with GAAP (but excluding accounts
receivable and intangibles).
"Undepreciated Real Estate Assets" as of any date means the cost
(original cost plus capital improvements) of real estate assets of the Company
and its Subsidiaries on such date, before depreciation and amortization,
determined on a consolidated basis in accordance with GAAP.
"Unsecured Debt" means Debt which is not secured by any of the
properties of the Company or any Subsidiary.
ARTICLE 2
TERMS OF THE NOTES
Section 2.1 Pursuant to Section 301 of the Indenture, the Notes shall
have the following terms and conditions:
(a) Title; Aggregate Principal Amount; Form of Notes. The Notes shall
be Registered Securities under the Indenture and shall be known as the Company's
"7-7/8% Monthly Income Senior Notes due 2009." The Notes will be limited to an
aggregate principal amount of $103,500,000, subject to the right of the Company
to reopen such series for issuances of additional securities of such series and
except as provided in this Section and in Section 306 of the Indenture. The
Notes (together with the Trustee's certificate of authentication) shall be
substantially in the form of Exhibit A hereto, which is hereby incorporated in
and made a part of this Supplemental Indenture.
The Notes will be issued in the form of one or more registered global
securities without coupons ("Global Notes") that will be deposited with, or on
behalf of, The Depository Trust Company ("DTC"), and registered in the name of
DTC's nominee, Cede & Co. Except under the circumstance described below, the
Notes will not be issuable in definitive form. Unless and until it is exchanged
in whole or in part for the individual notes represented thereby, a Global Note
may not be transferred except as a whole by DTC to a nominee of DTC or by a
nominee of DTC to DTC or another nominee of DTC or by DTC or any nominee of DTC
to a successor depositary or any nominee of such successor.
So long as DTC or its nominee is the registered owner of a Global Note,
DTC or such nominee, as the case may be, will be considered the sole owner or
holder of the Notes represented by such Global Note for all purposes under this
Supplemental Indenture. Except as described below, owners of beneficial interest
in Notes evidenced by a Global Note will not be entitled to have any of the
individual Notes represented by such Global Note registered in their names, will
not receive or be entitled to receive physical delivery of any such Notes in
definitive form and will not be considered the owners or holders thereof under
the Indenture or this Supplemental Indenture.
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If DTC is at any time unwilling, unable or ineligible to continue as
depositary and a successor depositary is not appointed by the Company within 90
days, the Company will issue individual Notes in exchange for the Global Note or
Global Notes representing such Notes. In addition, the Company may at
any time and in its sole discretion, subject to certain limitations set forth in
the Indenture, determine not to have any of such Notes represented by one or
more Global Notes and, in such event, will issue individual Notes in exchange
for the Global Note or Global Notes representing the Notes. Individual Notes so
issued will be issued in denominations of $1,000 and integral multiples thereof.
(b) Interest and Interest Rate. The Notes will bear interest at a rate
of 7-7/8% per annum, from March 24, 1999 (or, in the case of Notes issued upon
the reopening of this series of Notes, from the date designated by the Company
in connection with such reopening) or from the immediately preceding Interest
Payment Date to which interest has been paid or duly provided for, payable
monthly in arrears on the 15th of each month, commencing May 15, 1999 (each of
which shall be an "Interest Payment Date"), to the Persons in whose names the
Notes are registered in the Security Register at the close of business on the
1st of each month (whether or not a Business Day), as the case may be, next
preceding such Interest Payment Date (each, a "Regular Record Date").
(c) Principal Repayment; Currency. The Stated Maturity of the Notes is
April 15, 2009, provided, however, the Notes may be earlier redeemed at the
option of the Company as provided in paragraph (d) below. The principal of each
Note payable on its maturity date shall be paid against presentation and
surrender thereof at the Corporate Trust Office of the Trustee, located
initially at Two International Place, Boston, Massachusetts 02110, in such coin
or currency of the United States of America as at the time of payment is legal
tender for the payment of public or private debts. The Company will not pay
Additional Amounts (as defined in the Indenture) on the Notes.
(d) Redemption at the Option of the Company; Acceleration. The Notes
may not be redeemed prior to April 15, 2002. From and after April 15, 2002, the
Notes will be subject to redemption at any time at the option of the Company, in
whole or in part, upon not less than 30 nor more than 60 days' notice to each
Holder of Notes to be redeemed at its address appearing in the Security
Register, at a price equal to the principal amount of the Notes being redeemed,
plus accrued and unpaid interest to but excluding the applicable Redemption
Date. Upon the acceleration of the Notes in accordance with Section 502 of the
Indenture, the principal amount of the Notes, plus accrued and unpaid interest
thereon shall become due and payable immediately.
(e) Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if mailed or transmitted by
any standard form of telecommunication. Notices to the Company shall be directed
to it at 400 Centre Street, Newton, Massachusetts 02458, Attention: President;
notices to the Trustee shall be directed to it at Two International Place,
Boston, Massachusetts 02110, Attention: Corporate Trust Department, Re: HRPT
Properties Trust 7-7/8% Monthly Income Senior Notes due 2009; or as to either
party, at such other address as shall be designated by such party in a written
notice to the other party.
(f) Global Note Legend. Each Global Note shall bear the following
legend on the face thereof:
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND
ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
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PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
(g) Applicability of Discharge, Defeasance and Covenant Defeasance
Provisions. The Discharge, Defeasance and Covenant Defeasance provisions in
Article Fourteen of the Indenture will apply to the Notes.
ARTICLE 3
ADDITIONAL COVENANTS
Section 3.1 In addition to the covenants of the Company set forth in
Article Ten of the Indenture, for the benefit of the holders of the Notes:
(a) Limitations on Incurrence of Debt.
(i) The Company will not, and will not permit any Subsidiary
to, incur any Debt if, immediately after giving effect to the
incurrence of such additional Debt and the application of the proceeds
thereof, the aggregate principal amount of all outstanding Debt of the
Company and its Subsidiaries on a consolidated basis determined in
accordance with GAAP is greater than 60% of the sum ("Adjusted Total
Assets") of (without duplication) (i) the Total Assets of the Company
and its Subsidiaries as of the end of the calendar quarter covered in
the Company's Annual Report on Form 10-K, or the Quarterly Report on
Form 10-Q, as the case may be, most recently filed with the Securities
and Exchange Commission (or, if such filing is not permitted under the
Securities Exchange Act of 1934, as amended, with the Trustee) prior to
the incurrence of such additional Debt and (ii) the purchase price of
any real estate assets or mortgages receivable acquired, and the amount
of any securities offering proceeds received (to the extent that such
proceeds were not used to acquire real estate assets or mortgages
receivable or used to reduce Debt), by the Company or any Subsidiary
since the end of such calendar quarter, including those proceeds
obtained in connection with the incurrence of such additional Debt.
(ii) In addition to the foregoing limitations on the
incurrence of Debt, the Company will not, and will not permit any
Subsidiary to, incur any Secured Debt if, immediately after giving
effect to the incurrence of such additional Secured Debt and the
application of the proceeds thereof, the aggregate principal amount of
all outstanding Secured Debt of the Company and its Subsidiaries on a
consolidated basis is greater than 40% of Adjusted Total Assets.
(iii) In addition to the foregoing limitations on the
incurrence of Debt, the Company will not, and will not permit any
Subsidiary to, incur any Debt if the ratio of Consolidated Income
Available for Debt Service to the Annual Debt Service for the four
consecutive fiscal quarters most recently ended prior to the date on
which such additional Debt is to be incurred shall have been less than
1.5 to 1.0, on a pro forma basis after giving effect thereto and to the
application of the proceeds therefrom, and calculated on the assumption
that (i) such Debt and any other Debt incurred by the Company and its
Subsidiaries since the first day of such four-quarter period and the
application of the proceeds therefrom, including to refinance other
Debt, had occurred at the beginning of such period; (ii) the repayment
or retirement of any other Debt by the Company and its Subsidiaries
since the first date of such four-quarter period had been repaid or
retired at the beginning of such period (except that, in making such
computation, the amount of Debt under any revolving credit facility
shall be computed based upon the average daily balance of such Debt
during such period); (iii) in the case of Acquired Debt or Debt
incurred in connection with any acquisition since the first day of such
four-quarter period, the related acquisition had occurred as of the
first day of
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such period with appropriate adjustments with respect to such
acquisition being included in such pro forma calculation; and (iv) in
the case of any acquisition or disposition by the Company or its
Subsidiaries of any asset or group of assets since the first day of
such four-quarter period, whether by merger, stock purchase or sale, or
asset purchase or sale, such acquisition or disposition or any related
repayment of Debt had occurred as of the first day of such period with
the appropriate adjustments with respect to such acquisition or
disposition being included in such pro forma calculation. If the Debt
giving rise to the need to make the foregoing calculation or any other
Debt incurred after the first day of the relevant four-quarter period
bears interest at a floating rate then, for purposes of calculating the
Annual Debt Service, the interest rate on such Debt shall be computed
on a pro forma basis as if the average interest rate which would have
been in effect during the entire such four-quarter period had been the
applicable rate for the entire such period.
(b) Maintenance of Total Unencumbered Assets. The Company and its
Subsidiaries will maintain at all times Total Unencumbered Assets of not less
than 200% of the aggregate outstanding principal amount of the Unsecured Debt of
the Company and its Subsidiaries on a consolidated basis.
ARTICLE 4
ADDITIONAL EVENTS OF DEFAULT
For purposes of this Supplemental Indenture and the Notes, in addition
to the Events of Default set forth in Section 501 of the Indenture, it shall
also constitute an "Event of Default" if a default under any bond, debenture,
note or other evidence of indebtedness of the Company (including a default with
respect to any other series of securities), or under any mortgage, indenture or
other instrument of the Company under which there may be issued or by which
there may be secured or evidenced any indebtedness for money borrowed by the
Company (or by any Subsidiary, the repayment of which the Company has guaranteed
or for which the Company is directly responsible or liable as obligor or
guarantor) having an aggregate principal amount outstanding of at least
$20,000,000, whether such indebtedness now exists or shall hereafter be incurred
or created, which default shall have resulted in such indebtedness becoming or
being declared due and payable prior to the date on which it would otherwise
have become due and payable, without such indebtedness having been discharged,
or such acceleration having been rescinded or annulled, within a period of ten
days after there shall have been given, by registered or certified mail, to the
Company by the Trustee or to the Company and the Trustee by the Holders of at
least 25% in principal amount of the outstanding Notes, a written notice
specifying such default and requiring the Company to cause such indebtedness to
be discharged or cause such acceleration to be rescinded or annulled and stating
that such notice is a "Notice of Default" hereunder.
ARTICLE 5
EFFECTIVENESS
This Supplemental Indenture shall be effective for all purposes as of
the date and time this Supplemental Indenture has been executed and delivered by
the Company and the Trustee in accordance with Article Nine of the Indenture. As
supplemented hereby, the Indenture is hereby confirmed as being in full force
and effect.
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<PAGE>
ARTICLE 6
MISCELLANEOUS
Section 6.1 In the event any provision of this Supplemental Indenture
shall be held invalid or unenforceable by any court of competent jurisdiction,
such holding shall not invalidate or render unenforceable any other provision
hereof or any provision of the Indenture.
Section 6.2 To the extent that any terms of this Supplemental Indenture
or the Notes are inconsistent with the terms of the Indenture, the terms of this
Supplemental Indenture or the Notes shall govern and supersede such inconsistent
terms.
Section 6.3 This Supplemental Indenture shall be governed by and
construed in accordance with the laws of The Commonwealth of Massachusetts.
Section 6.4 This Supplemental Indenture may be executed in several
counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
[Remainder of page intentionally left blank.]
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<PAGE>
IN WITNESS WHEREOF, the Company and the Trustee have caused this
Supplemental Indenture to be executed as an instrument under seal in their
respective corporate names as of the date first above written.
HRPT PROPERTIES TRUST
By:
--------------------------------
David J. Hegarty
President
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By:
--------------------------------
Name:
Title:
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<PAGE>
EXHIBIT A
FORM OF NOTE
(Face of Note)
7-7/8% Monthly Income Senior Note due 2009
No. $__________
HRPT PROPERTIES TRUST
promises to pay to ______________________________________ or registered assigns,
the principal sum of ______________________________________ on April 15, 2009.
Interest Payment Dates: the 15th of each month.
Record Dates: the 1st of each month.
CUSIP No.: 40426W AH 4
HRPT PROPERTIES TRUST
Attest:____________________________ By:___________________________
[SEAL]
Dated:
CERTIFICATE OF AUTHENTICATION
This is one of the Notes referred to in the
within-mentioned Indenture:
STATE STREET BANK AND TRUST COMPANY, as Trustee
By:
-------------------------------------
Authorized Officer
A - 1
<PAGE>
(Back of Note)
HRPT PROPERTIES TRUST
7-7/8% Monthly Income Senior Note due 2009
Capitalized terms used herein have the meanings assigned to them in the
Indenture (as defined below) unless otherwise indicated.
1. Interest. HRPT Properties Trust, a Maryland real estate investment
trust (the "Company"), promises to pay interest on the principal amount of this
Note at the rate and in the manner specified below.
The Company shall pay in cash interest on the principal amount of this
Note at the rate per annum of 7-7/8%. The Company will pay interest monthly in
arrears on the 15th of each month, commencing on May 15, 1999 or if any such day
is not a Business Day (as defined in the Indenture), on the next succeeding
Business Day (each an "Interest Payment Date"), to Holders of record on the
immediately preceding 1st of each month (whether or not a Business Day).
Interest will be computed on the basis of a 360-day year consisting of
twelve 30-day months. Interest shall accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from March 24, 1999.
2. Method of Payment. The Company will pay interest on the Notes
(except defaulted interest) to the Persons who are registered Holders of Notes
at the close of business on the record date next preceding the Interest Payment
Date, even if such Notes are canceled after such record date and on or before
such Interest Payment Date. The Company will pay principal and interest in money
of the United States that at the time of payment is legal tender for payment of
public and private debts. The Company, however, may pay principal, premium, if
any, and interest by check payable in such money. It may mail an interest check
to a Holder's registered address.
3. Indenture. The Company issued the Notes under an Indenture, dated as
of July 9, 1997, and a Supplemental Indenture No. 6 thereto, dated as of March
24, 1999 (collectively, the "Indenture"), between the Company and the Trustee.
The terms of the Notes include those stated in the Indenture and those made part
of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S. Code
ss.ss. 77aaa-77bbbb) as in effect on the date of the Indenture. The Notes are
subject to all such terms, and Holders of the Notes are referred to the
Indenture and such Act for a statement of such terms. The terms of the Indenture
shall govern any inconsistencies between the Indenture and the Notes. The Notes
are unsecured general obligations of the Company limited to $103,500,000 in
aggregate principal amount, except as otherwise provided in the Indenture.
4. Optional Redemption. The Notes may not be redeemed prior to April
15, 2002. From and after April 15, 2002, the Notes will be subject to redemption
at any time at the option of the Company, in whole or in part, upon not less
than 30 nor more than 60 days' notice, at a redemption price equal to the
principal amount of the Notes being redeemed, plus accrued and unpaid interest
to but excluding the applicable Redemption Date.
5. Mandatory Redemption. The Company shall not be required to make
sinking fund or redemption payments with respect to the Notes.
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<PAGE>
6. Notice of Redemption. Notice of redemption shall be mailed at least
30 days but not more than 60 days before the Redemption Date to each Holder of
Notes to be redeemed at its registered address. Notes may be redeemed in part
but only in whole multiples of $1,000, unless all of the Notes held by a Holder
are to be redeemed. On and after the Redemption Date, interest ceases to accrue
on Notes or portions of them called for redemption.
7. Denominations, Transfer, Exchange. The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples of $1,000 in
excess thereof. The transfer of Notes may be registered and Notes may be
exchanged as provided in the Indenture. The Security Registrar and the Trustee
may require a Holder, among other things, to furnish appropriate endorsements
and transfer documents and to pay any taxes and fees required by law or
permitted by the Indenture. The Security Registrar need not exchange or register
the transfer of any Note or portion of a Note selected for redemption. Also, it
need not exchange or register the transfer of any Notes for a period of 15 days
before the mailing of a notice of redemption of Notes, or during the period
between a record date and the corresponding Interest Payment Date.
8. Defaults and Remedies. In case an Event of Default (as defined in
the Indenture) with respect to the Notes shall have occurred and be continuing,
the principal hereof may be declared, and upon such declaration shall become,
due and payable, in the manner, with the effect and subject to the provisions
provided in the Indenture.
9. Actions of Holders. The Indenture contains provisions permitting the
holders of not less than a majority of the aggregate principal amount of the
outstanding Notes, subject to certain exceptions as provided in the Indenture,
on behalf of the holders of all such Notes at a meeting duly called and held as
provided in the Indenture, to make, give or take any request, demand,
authorization, direction, notice, consent, waiver or other action provided in
the Indenture to be made, given or taken by the holders of the Notes, including
without limitation, waiving (a) compliance by the Company with certain
provisions of the Indenture, and (b) certain past defaults under the Indenture
and their consequences. Any resolution passed or decision taken at any meeting
of the holders of the Notes in accordance with the provisions of the Indenture
shall be conclusive and binding upon such holders and upon all future holders of
this Note and other Notes issued upon the registration of transfer hereof or in
exchange heretofore or in lieu hereof
10. Persons Deemed Owners. The Company, the Trustee, and any agent of
the Company or the Trustee may deem and treat the Person in whose name this Note
is registered on the Security Register as its absolute owner for all purposes.
11. Authentication. This Note shall not be valid until authenticated by
the manual signature of the Trustee or an authenticating agent.
12. Governing Law. THE INTERNAL LAW OF THE COMMONWEALTH OF
MASSACHUSETTS SHALL GOVERN AND BE USED TO CONSTRUE THE INDENTURE AND THE
NOTES.
13. No Personal Liability. THE AMENDED AND RESTATED DECLARATION OF
TRUST OF THE COMPANY, DATED JULY 1, 1994, A COPY OF WHICH, TOGETHER WITH ALL
AMENDMENTS THERETO (THE "DECLARATION"), IS DULY FILED IN THE OFFICE OF THE
DEPARTMENT OF ASSESSMENTS AND TAXATION OF THE STATE OF MARYLAND, PROVIDES THAT
THE NAME "HRPT PROPERTIES TRUST" REFERS TO THE TRUSTEES UNDER THE DECLARATION
COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY, AND THAT NO
TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF THE COMPANY SHALL BE HELD
TO ANY PERSONAL LIABILITY, JOINTLY OR
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SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, THE COMPANY. ALL PERSONS
DEALING WITH THE COMPANY, IN ANY WAY, SHALL LOOK ONLY TO THE ASSETS OF THE
COMPANY FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION.
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture. Request may be made to:
HRPT Properties Trust
400 Centre Street
Newton, MA 02458
Telecopier No.: (617) 332-2261
Attention: President
or such other address as the Company may specify pursuant to the Indenture.
A - 4
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below:
(I) or (we) assign and transfer this Note to
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
- --------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
and irrevocably appoint
--------------------------------------------------------
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
Date:
-------------- Your Signature:
-----------------------------
(Sign exactly as your name appears on the
face of this Note)
Signature Guarantee:
--------------------------------------------
(The signature must be guaranteed by an
officer of a participant in a recognized
signature guarantee program. Notarized or
witnessed signatures are not acceptable.)
A - 5
Exhibit 8.1
SULLIVAN & WORCESTER LLP
One Post Office Square
Boston, Massachusetts 02109
March 19, 1999
HRPT Properties Trust
400 Centre Street
Newton, Massachusetts 02458
Ladies and Gentlemen:
In connection with the registration by HRPT Properties Trust, a
Maryland real estate investment trust (the "Company"), of $90,000,000 of its
7-7/8% Monthly Income Senior Notes due 2009, the following opinion is furnished
to you to be filed with the Securities and Exchange Commission (the "SEC") as
Exhibit 8.1 to the Company's Current Report on Form 8-K, to be filed within one
week of the date hereof, under the Securities Exchange Act of 1934, as amended
(the "Exchange Act").
We have acted as counsel for the Company in connection with its
Registration Statement on Form S-3, File No. 333-56051 (the "Registration
Statement"), under the Securities Act of 1933, as amended (the "Act"), and we
have examined originals or copies, certified or otherwise identified to our
satisfaction, of the Registration Statement, corporate records, certificates and
statements of officers and accountants of the Company and of public officials,
and such other documents as we have considered relevant and necessary in order
to furnish the opinion hereinafter set forth. Specifically, and without limiting
the generality of the foregoing, we have reviewed the Company's declaration of
trust, as amended and restated, the by-laws of the Company, the prospectus
supplement dated March 19, 1999 (the "Prospectus Supplement") to the final
prospectus dated June 15, 1998 (as supplemented by the Prospectus Supplement,
the "Prospectus") which forms a part of the Registration Statement, and the
Company's Annual Report on Form 10-K for the year ended December 31, 1997, filed
under the Exchange Act (the "Annual Report"). We have reviewed the sections of
the Annual Report captioned "Federal Income Tax Considerations" and "ERISA
Plans, Keogh Plans and
<PAGE>
HRPT Properties Trust
March 19, 1999
Page 2
Individual Retirement Accounts," as supplemented by the section in the
Prospectus Supplement captioned "Certain Federal Income Tax Considerations."
With respect to all questions of fact on which the opinion set forth below is
based, we have assumed the accuracy and completeness of and have relied on the
information set forth in the Prospectus and the Annual Report, 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.
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 Tax
Laws and ERISA Laws matters in the sections of the Annual Report captioned
"Federal Income Tax Considerations" and "ERISA Plans, Keogh Plans and Individual
Retirement Accounts," and in the section of the Prospectus Supplement captioned
"Certain Federal Income Tax Considerations," we have made certain assumptions
and expressed certain conditions and qualifications therein, all of which
assumptions, conditions and qualifications are incorporated herein by reference.
Based upon and subject to the foregoing, we are of the opinion that the
discussions with respect to Tax Laws and ERISA Laws matters in the sections of
the Annual Report captioned "Federal Income Tax Considerations" and "ERISA
Plans, Keogh Plans and Individual Retirement Accounts," as supplemented by the
discussion in the Prospectus Supplement captioned "Certain Federal Income Tax
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 Statement and to the reference to our firm in the
Prospectus. In giving such consent, we do not thereby admit that we come within
the category of persons whose consent is required under Section 7 of the Act or
under the rules and regulations of the SEC promulgated thereunder.
Very truly yours,
/s/ Sullivan & Worcester LLP
SULLIVAN & WORCESTER LLP
Exhibit 12.1
HRPT PROPERTIES TRUST
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(dollars in thousands, except ratio amounts)
<TABLE>
<CAPTION>
For the Years Ended December 31,
------------------------------------------------------------------------------
1998 1997 1996 1995 1994
---------------- ---------------- --------------- --------------- ------------
<S> <C> <C> <C> <C> <C>
Income before gain on sale of properties
and extraordinary items $ 146,656 $ 112,204 $ 77,164 $ 61,760 $ 57,878
Fixed charges 66,253 38,564 23,279 26,218 10,096
---------------- ---------------- --------------- --------------- ------------
Adjusted Earnings $ 212,909 $ 150,768 $ 100,443 $ 87,978 $ 67,974
================ ================ =============== =============== ============
Fixed Charges:
Interest expense $ 64,326 $ 36,766 $ 22,545 $ 24,274 $ 8,965
Amortization of deferred financing costs 1,927 1,798 734 1,944 1,131
---------------- ---------------- --------------- --------------- ------------
Total Fixed Charges $ 66,253 $ 38,564 $ 23,279 $ 26,218 $ 10,096
================ ================ =============== =============== ============
Ratio of Earnings to Fixed Charges 3.2x 3.9x 4.3x 3.4x 6.7x
================ ================ =============== =============== ============
</TABLE>
