EXHIBIT 1.1
25,000,000 Shares
HEALTH AND RETIREMENT PROPERTIES TRUST
(a Maryland real estate investment trust)
Common Shares of Beneficial Interest
PURCHASE AGREEMENT
May 27, 1998
XXXXXXX XXXXX & CO.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
XXXXXXXXX, LUFKIN & XXXXXXXX
SECURITIES CORPORATION
X.X. XXXXXXX & SONS, INC.
XXXX XXXXX XXXX XXXXXX INCORPORATED
XXXXXX XXXXXXX & CO. INCORPORATED
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
XXXXX XXXXXX INC.
as Representatives of the
several Underwriters named
in Schedule A hereto
x/x XXXXXXX XXXXX & XX.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
World Financial Center - North Tower
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Ladies and Gentlemen:
Health and Retirement Properties Trust, a Maryland real estate
investment trust (the "Company"), confirms its agreement with Xxxxxxx Xxxxx &
Co., Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated ("Xxxxxxx Xxxxx"),
Xxxxxxxxx Xxxxxx & Xxxxxxxx Securities Corporation ("Xxxxxxxxx Lufkin"), X.X.
Xxxxxxx & Sons, Inc. ("X.X. Xxxxxxx"), Xxxx Xxxxx Xxxx Xxxxxx Incorporated
("Xxxx Xxxxx"), Xxxxxx Xxxxxxx & Co. Incorporated ("Xxxxxx Xxxxxxx"),
PaineWebber Incorporated ("PaineWebber"), Prudential Securities Incorporated
("Prudential") and Xxxxx Xxxxxx Inc. ("Xxxxx Xxxxxx"), together with each of the
other Underwriters named in
Schedule A hereto (collectively, the "Underwriters" which term shall also
include any underwriter substituted as hereinafter provided in Section 10), for
whom Xxxxxxx Xxxxx, Xxxxxxxxx Xxxxxx, X.X. Xxxxxxx, Xxxx Xxxxx, Xxxxxx Xxxxxxx,
PaineWebber, Prudential and Xxxxx Xxxxxx are acting as representatives (in such
capacity, Xxxxxxx Xxxxx, Xxxxxxxxx Xxxxxx, X.X. Xxxxxxx, Xxxx Xxxxx, Xxxxxx
Xxxxxxx, PaineWebber, Prudential and Xxxxx Xxxxxx are hereinafter collectively
referred to as the "Representatives"), with respect to the sale by the Company
and the purchase by the Underwriters, acting severally and not jointly, of the
number of common shares of beneficial interest, par value $.01 per share, of the
Company (the "Common Shares") set forth in said Schedule A and with respect to
the grant by the Company to the Underwriters of the option described in Section
2 hereof to purchase all or any part of an additional 3,750,000 Common Shares to
cover over-allotments. The aforesaid 25,000,000 Common Shares (the "Initial
Shares"), together with all or any part of the 3,750,000 Common Shares subject
to the option described in Section 2 hereof (the "Option Shares"), are
collectively hereinafter called the "Shares".
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (No. 333-26887) for the
registration of debt securities, preferred shares of beneficial interest,
depositary shares, Common Shares and warrants under the Securities Act of 1933,
as amended (the "1933 Act"), and has filed such amendments thereto, if any, as
may have been required to the date hereof. Such registration statement has been
declared effective under the 1933 Act. Such registration statement (as amended,
if applicable) and the prospectus constituting a part thereof, as supplemented
by the prospectus supplement relating to the Shares (including, in each case,
all documents incorporated or deemed to be incorporated by reference therein),
as from time to time amended or supplemented pursuant to the 1933 Act, the
Securities Exchange Act of 1934, as amended (the "1934 Act"), or otherwise, are
hereinafter referred to as the "Registration Statement" and the "Prospectus",
respectively. The Company has also filed with the Commission a registration
statement on Form S-3 (No. 333-52353) pursuant to Rule 462(b) of the rules and
regulations of the Commission under the 1933 Act (the "1933 Act Regulations"),
which is referred to herein as the "Rule 462(b) Registration Statement." The
term "Registration Statement" includes the Rule 462(b) Registration Statement.
All references in this Agreement to financial statements and schedules and other
information which is "contained", "included" or "stated" in the Registration
Statement or the Prospectus (and all other references of like import) shall be
deemed to mean and include all such financial statements and schedules and other
information which is or is deemed to be incorporated by reference in the
Registration Statement or in the Prospectus, as the case may be.
Section 1. Representations and Warranties.
(a) The Company represents and warrants to each Underwriter as of the
date hereof as follows:
(i) At the time the Registration Statement became effective,
the Registration Statement complied in all material respects with the
requirements of the 1933 Act and the 1933 Act Regulations and did not
contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading. The Prospectus, at the date hereof
(unless the term "Prospectus"
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refers to a prospectus which has been provided to the Underwriters by
the Company for use in connection with the offering of the Shares which
differs from the Prospectus on file at the Commission at the date of
effectiveness of the Registration Statement, in which case at the time
it is first provided to the Underwriters for such use) and at the
Closing Time referred to in Section 2 hereof, does not and will not
include an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
provided, however, that the representations and warranties in this
subsection (i) shall not apply to statements or omissions in the
Registration Statement or the Prospectus made in reliance upon and in
conformity with information furnished to the Company in writing by any
Underwriter through Xxxxxxx Xxxxx expressly for use in the Registration
Statement or the Prospectus.
(ii) The documents incorporated or deemed to be incorporated
by reference in the Prospectus, at the time they were or hereafter are
filed with the Commission, complied and will comply in all material
respects with the requirements of the 1934 Act and the rules and
regulations of the Commission under the 1934 Act (the "1934 Act
Regulations"), and, when read together with the other information in
the Prospectus, at the time the Registration Statement became effective
and at Closing Time, did not and will not include an untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(iii) The Company is a Maryland real estate investment trust
duly organized, validly existing and in good standing under the laws of
the State of Maryland. Each of its subsidiaries has been duly organized
and is validly existing as a corporation or trust in good standing
under the laws of its jurisdiction of incorporation or organization.
Each of the Company and its subsidiaries has full power and authority
(corporate and other) to carry on its business as described in the
Registration Statement and in the Prospectus and to own, lease and
operate its properties. Each of the Company and its subsidiaries is
duly qualified and is in good standing as a foreign corporation or
trust, as the case may be, and is authorized to do business in each
jurisdiction in which the nature of its business or its ownership or
leasing of property requires such qualification, except where the
failure to be so qualified would not have a material adverse effect on
the Company and its subsidiaries, taken as a whole.
(iv) The financial statements of the Company and its
subsidiaries, together with the related schedules and notes thereto,
and, to the actual knowledge of the Company (including without
limitation, for purposes of this Agreement, its managing trustees)
without independent inquiry (the "Actual Knowledge of the Company"), of
Marriott International Inc. (f/k/a New Marriott MI, Inc.) ("MII"),
included or incorporated by reference in the Registration Statement and
in the Prospectus, comply as to form in all material respects with the
requirements of the 1933 Act. Such financial statements of the Company,
together with the related schedules and notes thereto, and, to the
Actual Knowledge of the Company, of MII, present fairly the
consolidated financial position, results of operations, shareholders'
equity and changes in financial position of the Company and its
subsidiaries and MII, respectively, at the respective dates or for the
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respective periods therein specified and have been prepared in
accordance with generally accepted accounting principles ("GAAP")
consistently applied throughout the periods involved. The pro forma
financial statements and other pro forma financial information
(including the notes thereto) included or incorporated by reference in
the Registration Statement and in the Prospectus (i) present fairly the
information shown therein, (ii) have been prepared in accordance with
the Commission's rules and guidelines with respect to pro forma
financial statements and (iii) have been properly compiled on the basis
described therein and the assumptions used in the preparation of such
pro forma financial statements and other pro forma financial
information (including the notes thereto) are reasonable and the
adjustments used therein are appropriate to give effect to the
transactions or circumstances referred to therein. The adjusted pro
forma financial statements and other adjusted pro forma financial
information (including the notes thereto) included or incorporated by
reference in the Registration Statement and in the Prospectus (i)
present fairly the information shown therein and (ii) have been
properly compiled on the basis described therein and the assumptions
used in the preparation of such adjusted pro forma financial statements
and other adjusted pro forma financial information (including the notes
thereto) are reasonable and the adjustments used therein are
appropriate to give effect to the transactions or circumstances
referred to therein.
(v) The accountants who have certified the financial
statements of the Company and its subsidiaries and, to the Actual
Knowledge of the Company, of MII, included or incorporated by reference
in the Registration Statement and in the Prospectus are independent
certified public accountants as required by the 1933 Act.
(vi) All of the outstanding shares of beneficial interest of
the Company have been duly authorized and are validly issued, fully
paid, non-assessable (except as otherwise described in the Registration
Statement) and free of preemptive or similar rights or other rights to
subscribe for or to purchase securities provided for by law or by its
Declaration of Trust or bylaws; the Shares to be issued and sold
pursuant to this Agreement have been duly authorized and, when issued
and delivered to the Underwriters against payment therefor as provided
hereunder, will have been validly issued and will be fully paid,
non-assessable (except as otherwise described in the Registration
Statement) and free of preemptive or similar rights; the Company has no
outstanding preferred shares of beneficial interest; there are no
outstanding subscriptions, rights, warrants, options, calls,
convertible securities, commitments of sale or liens related to or
entitling any person to purchase or otherwise to acquire any Common
Shares of, or other ownership interest in, the Company, except as
otherwise disclosed in the Registration Statement or the Prospectus and
except for (i) awards under the Company's Incentive Share Award Plan
made in the ordinary course of business and (ii) a grant of Common
Shares to the children of the late Xxxxx X. Xxxxx, a former Trustee of
the Company, which have been authorized but are not yet issued; all
outstanding Common Shares, except for shares issued pursuant to the
Company's Incentive Share Award Plan, are listed on the New York Stock
Exchange (the "NYSE") and the Company knows of no reason or set of
facts which is likely to result in the delisting of such Common Shares
or the inability to list the Shares; and there are no rights of holders
of securities of the Company to the registration of Common Shares or
other securities that would require inclusion of such Common Shares or
other securities in the offering of the Shares.
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(vii) All of the outstanding shares of beneficial interest of,
or other ownership interests in, each of the Company's subsidiaries
have been duly authorized and validly issued and are fully paid and,
except as to subsidiaries that are partnerships, nonassessable, and,
except as disclosed in the Registration Statement or in the Prospectus,
are or will be owned by the Company free and clear of any security
interest, claim, lien, encumbrance or adverse interest of any nature.
(viii) The authorized capital of the Company, including the
Common Shares, conforms as to legal matters to the description thereof
contained in the Prospectus (or the documents incorporated therein by
reference).
(ix) Since the respective dates as of which information is
given in the Prospectus, and except as otherwise disclosed therein, (i)
there has been no material adverse change in the business, operations,
earnings, prospects, properties or condition (financial or otherwise)
of the Company and its subsidiaries, taken as a whole, whether or not
arising in the ordinary course of business, (ii) there have been no
material transactions entered into by the Company and its subsidiaries,
on a consolidated basis, other than transactions in the ordinary course
of business, (iii) neither the Company nor its subsidiaries has
incurred any material liabilities or obligations, direct or contingent,
(iv) the Company and its subsidiaries, on a consolidated basis, have
not, (A) other than regular quarterly dividends, declared, paid or made
a dividend or distribution of any kind on any class of its shares of
beneficial interest (other than dividends or distributions from wholly
owned subsidiaries to the Company), (B) issued any shares of beneficial
interest of the Company or any of its subsidiaries or any options,
warrants, convertible securities or other rights to purchase the shares
of beneficial interest of the Company or any of its subsidiaries (other
than the issuance of Common Shares upon conversion of certain
convertible debentures of the Company) or (C) repurchased or redeemed
shares of beneficial interest, and (v) there has not been (A) any
material decrease in the Company's net worth or (B) any material
increase in the short-term or long-term debt (including capitalized
lease obligations but excluding borrowings under existing bank lines of
credit) of the Company and its subsidiaries, on a consolidated basis.
(x) The Company and each of its subsidiaries maintains a
system of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with
management's general or specific authorizations; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with GAAP and to maintain asset accountability; (iii) access
to assets is permitted only in accordance with management's general or
specific authorization; and (iv) the recorded accountability for assets
is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(xi) Neither the Company nor any of its subsidiaries is in
violation of its respective charter or by-laws or other organizational
documents or in default in the performance of any obligation, agreement
or condition contained in any bond, debenture, note or any other
evidence of indebtedness or in any other agreement, indenture or
instrument to which the Company or any of its subsidiaries is a party
or by which any of their respective properties or assets may be bound
or affected, except for any such
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violation that would not have a material adverse effect on the
condition, financial or otherwise or in the earnings, business affairs
or business prospects of the Company and its subsidiaries, taken as a
whole. The Company is not in violation of any law, ordinance,
governmental rule or regulation or court decree to which it is subject,
except for any such violations that would not, individually or in the
aggregate, have a material adverse effect on the business, operations,
earnings, prospects, properties or condition (financial or otherwise)
of any of the Company and its subsidiaries, taken as a whole.
(xii) Except as disclosed in the Registration Statement or in
the Prospectus, there is not now pending or, to the knowledge of the
Company, threatened, any litigation, action, suit or proceeding to
which the Company is or will be a party before or by any court or
governmental agency or body, which (A) might result in any material
adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company or (B)
might materially and adversely affect the property or assets of the
Company or (C) concerns the Company and is required to be disclosed in
the Registration Statement or the Prospectus, or (D) could adversely
affect the consummation of this Agreement and the issuance, purchase
and sale of the Shares. No contract or other document is required to be
described in the Registration Statement or in the Prospectus or to be
filed as an exhibit to the Registration Statement that is not described
therein or filed as required.
(xiii) The execution, delivery and performance by the Company
of this Agreement, the issuance, offering and sale by the Company of
the Shares as contemplated by the Registration Statement and by the
Prospectus and the consummation of the transactions contemplated hereby
and compliance with the terms and provisions hereof, will not violate
or conflict with or constitute a breach of any of the terms or
provisions of, or a default under, (i) the Amended and Restated
Declaration of Trust (the "Declaration of Trust") or the By-laws of the
Company or the charter or by-laws or other organizational documents of
any subsidiaries of the Company, (ii) any agreement, indenture or other
instrument to which the Company or any of its subsidiaries is a party
or by which the Company or any of its subsidiaries or their respective
properties or assets is bound, or (iii) any laws, administrative
regulations or rulings or decrees to which the Company or any of its
subsidiaries or their respective properties or assets may be subject.
(xiv) No consent, approval, authorization or order of, or
registration, filing or qualification with, any governmental body or
regulatory agency having jurisdiction over the Company or any of its
subsidiaries or any of their respective properties or assets is
required for the execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby,
including, without limitation, the issuance, sale and delivery of the
Shares pursuant to this Agreement, except such as have been obtained
and such as may be required under foreign and state securities or "Blue
Sky" or real estate syndication laws.
(xv) Except as otherwise disclosed in the Registration
Statement or in the Prospectus, the Company and each of its
subsidiaries has good and marketable title or ground leases, free and
clear of all liens, claims, encumbrances and restrictions, except liens
for taxes not yet due and payable and other liens and encumbrances
which do not,
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either individually or in the aggregate, materially and adversely
affect the current use or value thereof, to all property and assets
described in the Registration Statement or in the Prospectus as being
owned by them. Except as otherwise set forth in the Registration
Statement or in the Prospectus, all leases to which the Company and
each of its subsidiaries is a party relating to real property, and all
other leases which are material to the business of the Company and its
subsidiaries, taken as a whole, are valid and binding, and no default
(to the Company's knowledge, in the case of leases to which the Company
is a party as lessor, that would, individually or in the aggregate,
have a material adverse effect on the business, operations, earnings,
prospects, properties or condition (financial or otherwise) of the
Company and its subsidiaries, taken as a whole) has occurred and is
continuing thereunder, and the Company and each of its subsidiaries
enjoys peaceful and undisturbed possession under all such leases to
which it is a party as lessee. With respect to all properties owned or
leased by the Company and each of its subsidiaries, the Company or such
subsidiary has such documents, instruments, certificates, opinions and
assurances, including without limitation, fee, leasehold owners or
mortgage title insurance policies (disclosing no encumbrances or title
exceptions which are material to the Company and its subsidiaries
considered as a whole, except as otherwise set forth in the
Registration Statement and in the Prospectus), legal opinions and
property insurance policies in each case in form and substance as are
usual and customary in transactions involving the purchase of similar
real estate and are appropriate for the Company or such subsidiary to
have obtained.
(xvi) The Company and each of its subsidiaries owns, or
possesses adequate rights to use, all patents, trademarks, trade names,
service marks, copyrights, licenses and other rights necessary for the
conduct of their respective businesses as described in the Registration
Statement and in the Prospectus, and neither the Company nor any of its
subsidiaries has received any notice of conflict with, or infringement
of, the asserted rights of others with respect to any such patents,
trademarks, trade names, service marks, copyrights, licenses and other
such rights (other than conflicts or infringements that, if proven,
would not have a material adverse effect on the business, operations,
earnings, prospects, properties or condition (financial or otherwise)
of the Company and its subsidiaries, taken as a whole), and neither the
Company nor any of its subsidiaries knows of any basis therefor.
(xvii) All material tax returns required to be filed by the
Company and each of its subsidiaries in any jurisdiction have been
timely filed, other than those filings being contested in good faith,
and all material taxes, including withholding taxes, penalties and
interest, assessments, fees and other charges due pursuant to such
returns or pursuant to any assessment received by the Company or any of
its subsidiaries have been paid, other than those being contested in
good faith and for which adequate reserves have been provided.
(xviii) Except for those matters which in the aggregate do not
have a material adverse effect on the business, operations, earnings,
prospects, properties or condition (financial or otherwise) of the
Company and its subsidiaries taken as a whole, and except for Hazardous
Materials (as defined below) or substances which are handled and/or
disposed of in compliance with all applicable federal, state and local
requirements, to the
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Company's knowledge, after due investigation, the real property owned,
leased or otherwise operated by the Company and each of its
subsidiaries in connection with the operation of their respective
businesses, including, without limitation, any subsurface soils and
ground water (the "Realty"), is free of contamination from any
Hazardous Materials. To the Company's knowledge, after due
investigation, the Realty does not contain any underground storage or
treatment tanks, active or abandoned water, gas or oil xxxxx, or any
other underground improvements or structures, other than the
foundations, footings, or other supports for the improvements located
thereon which, based on present knowledge, could, in their present
condition, reasonably be expected to presently cause a material
detriment to or materially impair the beneficial use thereof by the
Company or constitute or cause a significant health, safety or other
environmental hazard to occupants or users thereof without regard to
any special conditions of such occupants or users. The Company
represents that, after due investigation, it has no knowledge of any
material violation, with respect to the Realty, of any Environmental
Law, or of any material liability on the part of the Company with
respect to the Realty, resulting from the presence, use, release,
threatened release, emission, disposal, pumping, discharge, generation
or processing of any Hazardous Materials. As used herein,
"Environmental Law" means any federal, state or local statute,
regulation, judgment, order or authorization relating to emissions,
discharges, releases or threatened releases of Hazardous Materials into
ambient air, surface water, ground water, publicly-owned treatment
works, septic systems or land, or otherwise relating to the pollution
or protection of public health or the environment, and "Hazardous
Materials" means any substance, material or waste which is regulated,
defined, or listed as a "hazardous waste", "hazardous substance",
"toxic substance", "medical waste", "infectious waste" or other similar
terms in any Environmental Law or by any federal, state or local
government or quasi-government authority, or any petroleum products,
asbestos, lead-based paint, polychlorinated biphenyls, flammable
explosives or radioactive materials.
(xix) Each of the Company and its subsidiaries has such
permits, licenses, franchises and authorizations of governmental or
regulatory authorities (together, "permits"), including, without
limitation, under any applicable Environmental Law, as are necessary to
own, lease and operate its properties and to engage in the business
currently conducted by it, except such licenses and permits as to which
the failure to own or possess will not in the aggregate have a material
adverse effect on the business, operations, earnings, prospects,
properties or condition (financial or otherwise) of the Company, and
the Company does not have any reason to believe that any governmental
body or agency is considering limiting, suspending or revoking any such
license, certificate, permit, authorization, approval, franchise or
right; each of the Company and its subsidiaries has fulfilled and
performed all of its obligations with respect to such permits and no
event has occurred which allows, or after notice or lapse of time would
allow, revocation or termination thereof or results in any other
material impairment of the rights of the holder of any such permit;
and, except as described in the Registration Statement and in the
Prospectus, such permits contain no restrictions that are materially
burdensome to the Company or any of its subsidiaries.
(xx) To the knowledge of the Company, no labor problem exists
or is imminent with employees of the Company or any of its subsidiaries
that could have a material
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adverse effect on the business, operations, earnings, prospects,
properties or condition (financial or otherwise) of the Company and its
subsidiaries, taken as a whole.
(xxi) Neither the Company nor any of its subsidiaries nor, to
the knowledge of the Company, any officer, trustee or director
purporting to act on behalf of the Company or any of its subsidiaries,
has at any time: (i) made any contributions to any candidate for
political office, or failed to disclose fully any such contributions,
in violation of law; (ii) made any payment of funds to, or received or
retained any funds from, any state, federal or foreign governmental
officer or official, or other person charged with similar public or
quasi-public duties, other than payments required or allowed by
applicable law; or (iii) engaged in any transactions, maintained any
bank accounts or used any corporate funds except for transactions, bank
accounts and funds, which have been and are reflected in the normally
maintained books and records of the Company and its subsidiaries.
(xxii) Except as referred to or described in the Registration
Statement and in the Prospectus, none of the subsidiaries of the
Company owns any shares of stock or any other securities of any
corporation or has any equity interest in any firm, partnership,
association or other entity other than the issued capital shares of its
subsidiaries, and the Company does not own, directly or indirectly, any
shares of stock or any other securities of any corporation or have any
equity interest in any firm, partnership, association or other entity
other than the issued capital shares of its subsidiaries, except in
each case for non-controlling positions acquired in the ordinary course
of business.
(xxiii) Except as disclosed in the Registration Statement and
in the Prospectus, there are no material outstanding loans or advances
or material guarantees of indebtedness by the Company or any of its
subsidiaries to or for the benefit of any of the officers, trustees or
directors of the Company or any of its subsidiaries or any of the
members of the families of any of them
(xxiv) The Company and each of its subsidiaries maintains
insurance, duly in force, with insurers of recognized financial
responsibility; such insurance insures against such losses and risks as
are adequate in accordance with customary industry practice to protect
the Company and its subsidiaries and their respective businesses; and
neither the Company nor any such subsidiary has any reason to believe
that it will not be able to renew its existing insurance coverage as
and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business at a cost
that would not materially and adversely affect the business,
operations, earnings, prospects, properties or condition (financial or
otherwise) of the Company and its subsidiaries, taken as a whole,
except as disclosed in or contemplated by the Registration Statement
and by the Prospectus.
(xxv) Neither the Company nor any of its officers and
directors (as defined in the 1933 Act Regulations) has taken or will
take, directly or indirectly, prior to the termination of the offering
contemplated by this Agreement, any action designed to stabilize or
manipulate the price of any security of the Company, or which has
caused or resulted in, or which might in the future reasonably be
expected to cause or result in,
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stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Shares.
(xxvi) Neither the Company nor any of its subsidiaries is an
"investment company" or an "affiliated person" of, or "promoter" or
"principal underwriter" for, an "investment company" as such terms are
defined in the Investment Company Act of 1940, as amended (the "1940
Act"), or an "investment adviser" as such term is defined in the
Investment Advisers Act of 1940, as amended.
(xxvii) The Company is organized in conformity with the
requirements for qualification, and, as of the date hereof the Company
operates, and as of Closing Time the Company will operate, in a manner
that qualifies the Company as a "real estate investment trust" under
the Internal Revenue Code of 1986, as amended (the "Code"), and the
rules and regulations thereunder, for 1998 and subsequent years. The
Company qualified as a real estate investment trust under the Code for
each of its taxable years from 1987 through 1997.
(xxviii) No default exists, and no event has occurred which,
with notice or lapse of time or both, would constitute a default in the
due performance and observance of any term, covenant or condition of
any indenture, mortgage, deed of trust, lease or other agreement or
instrument to which the Company or any of its subsidiaries is a party
or by which the Company or any of its subsidiaries or any of their
respective properties is bound or may be affected, except such defaults
which, singly or in the aggregate, would not have a material adverse
effect on the business, operations, earnings, prospects, properties or
condition (financial or otherwise) of the Company and its subsidiaries,
considered as a whole, except as disclosed in the Registration
Statement and in the Prospectus.
(xxix) Except as otherwise disclosed in the Prospectus, since
the respective dates as of which information is given in the
Prospectus, there has been no material adverse change in the business,
operations, earnings, prospects, properties or condition (financial or
otherwise) of REIT Management & Research, Inc. (the "Advisor"), whether
or not arising in the ordinary course of business, that would have a
material adverse effect on the Company and its subsidiaries, taken as a
whole. The Advisory Agreement, dated as of January 1, 1998 (the
"Advisory Agreement"), between the Company and the Advisor, has been
duly authorized, executed and delivered by the parties thereto and
constitutes the valid agreement of the parties thereto, enforceable in
accordance with its terms, except as limited by (a) the effect of
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer
or other similar laws relating to or affecting the rights or remedies
of creditors or (b) the effect of general principles of equity
(regardless of whether enforcement is sought in a proceeding in equity
or at law).
(b) Any certificate signed by any officer of the Company or any of its
subsidiaries and delivered to the Representatives or to counsel for the
Underwriters shall be deemed a representation and warranty by the Company to
each Underwriter as to the matters covered thereby.
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Section 2. Sale and Delivery to the Underwriters; Closing.
(a) On the basis of the representations and warranties herein contained
and subject to the terms and conditions herein set forth, the Company agrees to
sell to each Underwriter, severally and not jointly, and each Underwriter,
severally and not jointly, agrees to purchase from the Company, at a price per
share of $17.93, the number of Initial Shares set forth in Schedule A opposite
the name of such Underwriter, plus any additional number of Initial Shares which
such Underwriter may become obligated to purchase pursuant to the provisions of
Section 10 hereof.
(b) In addition, on the basis of the representations and warranties
herein included and subject to the terms and conditions herein set forth, the
Company hereby grants an option to the Underwriters, severally and not jointly,
to purchase up to an additional 3,750,000 Shares at the price per share set
forth in (a) above. The option hereby granted will expire 30 days after the date
of this Agreement and may be exercised in whole or in part from time to time
only for the purpose of covering over-allotments which may be made in connection
with the offering and distribution of the Initial Shares upon notice by the
Representatives to the Company setting forth the number of Option Shares as to
which the several Underwriters are then exercising the option and the time, date
and place of payment and delivery for such Option Shares. Any such time and date
of delivery (a "Date of Delivery") shall be determined by the Representatives
but shall not be later than seven full business days, nor earlier than two full
business days, after the exercise of said option, nor in any event prior to
Closing Time, unless otherwise agreed upon by the Representatives and the
Company. If the option is exercised as to all or any portion of the Option
Shares, such Option Shares shall be purchased by the Underwriters, severally and
not jointly, in proportion to their respective Initial Share underwriting
obligations as set forth in Schedule A.
(c) Payment of the purchase price for and delivery of certificates for
the Initial Shares shall be made at the offices of Xxxxxxxx & Worcester LLP, Xxx
Xxxx Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, or at such other place as shall
be agreed upon by the Representatives and the Company, at 9:00 A.M. on the third
(fourth, if the pricing occurs after 4:30 P.M. (Eastern time) on any given
day)business day (unless postponed in accordance with the provisions of Section
10 hereof) following the date of this Agreement, or such other time not later
than ten business days after such date as shall be agreed upon by the
Representatives and the Company (such time and date of payment and delivery
being herein called "Closing Time"). In addition, in the event that the
over-allotment option described in (b) above is exercised by the Underwriters,
payment of the purchase price for and delivery of certificates for the related
Option Shares shall be made at the above-mentioned office of Xxxxxxxx &
Worcester LLP, or at such other place as shall be mutually agreed upon by the
Representatives and the Company, on each Date of Delivery as specified in the
notice from the Representatives to the Company. Payment shall be made by wire
transfer of immediately available funds payable to the order of the Company
against delivery to the Representatives for the respective accounts of the
Underwriters of certificates for the Shares to be purchased by them. The
certificates for the Initial Shares and the Option Shares shall be in such
authorized denominations and registered in such names as the Representatives may
request in writing at least one full business day before Closing Time or the
Date of Delivery, as the case may be. It is understood that each Underwriter has
authorized the Representatives, for its account, to accept delivery of and
receipt for, and to make payment of,
11
the purchase price for, the Initial Shares and the Option Shares which it has
agreed to purchase. The Representatives, individually and not as representatives
of the several Underwriters may (but shall not be obligated to) make payment of
the purchase price for the Initial Shares or the Option Shares to be purchased
by any Underwriter whose check has not been received by Closing Time, but any
such payment shall not relieve such Underwriter from its obligations hereunder.
The certificates for the Initial Shares and the Option Shares will be made
available for examination and packaging by the Representatives not later than
10:00 A.M. (Eastern time) on the business day prior to Closing Time or the Date
of Delivery, as the case may be.
Section 3. Covenants of the Company. The Company covenants with each
Underwriter as follows:
(a) Immediately following the execution of this Agreement, the Company
will prepare a Prospectus Supplement setting forth the number of Shares covered
thereby and their terms not otherwise specified in the Prospectus, the
Underwriters' names, the price at which the Shares are to be purchased by the
Underwriters from the Company, and such other information as the Representatives
and the Company deem appropriate in connection with the offering of the Shares;
and the Company will promptly transmit copies of the Prospectus Supplement to
the Commission for filing pursuant to Rule 424(b) of the 1933 Act Regulations
and will furnish to the Representatives as many copies of the Prospectus
(including such Prospectus Supplement) as they shall reasonably request.
(b) Until the termination of the initial offering of the Shares, the
Company will notify the Representatives immediately, and confirm the notice in
writing, (i) of the effectiveness of any amendment to the Registration
Statement, (ii) of the transmittal to the Commission for filing of any
supplement or amendment to the Prospectus or any document to be filed pursuant
to the 1934 Act, (iii) of the receipt of any comments from the Commission with
respect to the Shares, (iv) of any request by the Commission for any amendment
to the Registration Statement or any amendment or supplement to the Prospectus
with respect to the Shares or for additional information relating thereto, and
(v) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the initiation of any proceedings
for that purpose. The Company will make every reasonable effort to prevent the
issuance of any such stop order and, if any stop order is issued, to obtain the
lifting thereof at the earliest possible moment.
(c) The Company will give the Representatives notice of its intention
to file or prepare any post-effective amendment to the Registration Statement or
any amendment or supplement (including any document to be filed pursuant to the
1934 Act prior to the termination of the initial offering of the Shares) to the
Prospectus (including any revised prospectus which the Company proposes for use
by the Underwriters in connection with the offering of the Shares which differs
from the prospectus on file at the Commission at the time that the Registration
Statement becomes effective, whether or not such revised prospectus is required
to be filed pursuant to Rule 424(b) of the 1933 Act Regulations), will furnish
the Representatives with copies of any such amendment or supplement a reasonable
amount of time prior to such proposed filing or use, as the case may be, and
will not file any such amendment or supplement or use any such prospectus to
which counsel for the Underwriters shall reasonably object.
12
(d) The Company will deliver to each of the Representatives a conformed
copy of the Registration Statement as originally filed and of each amendment
thereto filed prior to the termination of the initial offering of the Shares
(including exhibits filed therewith or incorporated by reference therein and the
documents incorporated by reference into the Prospectus pursuant to Item 12 of
Form S-3).
(e) The Company will furnish to the Representatives, from time to time
during the period when the Prospectus is required to be delivered under the 1933
Act or the 1934 Act, such number of copies of the Prospectus (as amended or
supplemented) as the Representatives may reasonably request for the purposes
contemplated by the 1933 Act, the 1933 Act Regulations, the 1934 Act or 1934 Act
Regulations.
(f) If any event shall occur as a result of which it is necessary, in
the opinion of counsel for the Underwriters, to amend or supplement the
Prospectus in order to make the Prospectus not misleading in the light of the
circumstances existing at the time it is delivered, the Company will either (i)
forthwith prepare and furnish to the Representatives an amendment of or
supplement to the Prospectus or (ii) make an appropriate filing pursuant to
Section 13, 14 or 15 of the 1934 Act, in form and substance reasonably
satisfactory to counsel for the Underwriters, which will amend or supplement the
Prospectus so that it will not include an untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements therein,
in the light of the circumstances existing at the time it is delivered, not
misleading.
(g) The Company will endeavor in good faith, in cooperation with the
Representatives, to qualify the Shares for offering and sale under the
applicable securities laws and real estate syndication laws of such states and
other jurisdictions of the United States as the Representatives may designate;
provided that, in connection therewith, the Company shall not be required to
qualify as a foreign corporation or trust or to file any general consent to
service of process. In each jurisdiction in which the Shares have been so
qualified the Company will file such statements and reports as may be required
by the laws of such jurisdiction to continue such qualification in effect for so
long as required for the distribution of the Shares.
(h) The Company will make generally available to its security holders
as soon as reasonably practicable, but not later than 90 days after the close of
the period covered thereby, an earning statement of the Company (in form
complying with the provisions of Rule 158 of the 1933 Act Regulations) covering
a period of at least twelve months beginning not later than the first day of the
Company's fiscal quarter next following the effective date of the Registration
Statement. "Earning statement", "make generally available" and "effective date"
will have the meanings contained in Rule 158 of the 1933 Act Regulations.
(i) The Company will use the net proceeds received by it from the sale
of the Shares in the manner specified in the Prospectus under the caption "Use
of Proceeds" in all material respects.
(j) The Company will use its best efforts to effect the listing of the
Shares on the NYSE.
13
(k) The Company currently intends to continue to elect to qualify as a
"real estate investment trust" under the Code, and use its best efforts to
continue to meet the requirements to qualify as a "real estate investment
trust".
(l) The Company will timely file any document which it is required to
file pursuant to the 1934 Act prior to the termination of the offering of the
Shares.
(m) The Company will not, during a period of 90 days from the date of
this Agreement, without the prior written consent of Xxxxxxx Xxxxx, register,
offer, sell, contract to sell, grant any option to purchase or otherwise dispose
of any Common Shares or any securities convertible into or exercisable or
exchangeable for Common Shares, or warrants to purchase Common Shares, other
than (i) the Shares which are to be sold pursuant to this Agreement, (ii) Common
Shares issued or to be issued pursuant to the Company's Incentive Share Award
Plan, (iii) Common Shares to be issued upon conversion of the Company's
outstanding convertible debentures, (iv) Common Shares to be issued as partial
or full payment for properties directly or indirectly acquired or to be acquired
by the Company or its subsidiaries; provided that, the Company shall have
conditioned the issuance of such Common Shares upon the agreement of the
recipients to the restrictions of this paragraph (m); provided, however, that
any Common Shares issued as a post-closing adjustment in connection with the
acquisition previously agreed to of the government office properties from
Government Properties Investors, Inc. and related parties shall not be subject
to such condition, (v) the issuance of Common Shares to any sponsor or
underwriter of a unit investment trust; provided that, the unit investment trust
shall have a limitation upon the sale of such Common Shares until the expiration
of the 90-day period in this paragraph (m), (vi) Common Shares to be issued to
the children of the late Xxxxx X. Xxxxx and (vii) the registration of Common
Shares on an omnibus shelf registration statement.
Section 4. Payment of Expenses. The Company will pay all expenses
incident to the performance of its obligations under this Agreement, including
(i) the preparation and filing of the Registration Statement as originally filed
and of each amendment thereto, (ii) the preparation and filing of this
Agreement, (iii) the preparation, issuance and delivery of the Shares to the
Underwriters, (iv) the fees and disbursements of counsel for the Company,
referred to in Section 5(b) hereof, and the Company's accountants, (v) the
qualification of the Shares under securities laws and real estate syndication
laws in accordance with the provisions of Section 3(g) hereof, including filing
fees and the fee and disbursements of counsel for the Company in connection
therewith and in connection with the preparation of any Blue Sky Survey, (vi)
the printing and delivery to the Underwriters of copies of the Registration
Statement as originally filed and of each amendment thereto, and of the
Prospectus and any amendments or supplements thereto, (vii) the fees and
expenses incurred in connection with the listing of the Shares on the NYSE,
(viii) the cost of printing or reproducing and delivering to the Underwriters
copies of any Blue Sky Survey, (ix) the cost of providing any CUSIP or other
identification numbers for the Shares, and (x) any transfer taxes imposed on the
sale of the Shares to the Underwriters.
If this Agreement is terminated by the Representatives in accordance
with the provisions of Section 5 or Section 9(a)(i), the Company shall reimburse
the Underwriters for all of their out-of-pocket expenses, including the
reasonable fees and disbursements of counsel for the Underwriters.
14
Section 5. Conditions of the Underwriters' Obligations. The obligations
of the Underwriters hereunder are subject to the accuracy of the representations
and warranties of the Company herein contained, to the performance by the
Company of its obligations hereunder, and to the following further conditions:
(a) At Closing Time no stop order suspending the effectiveness of the
Registration Statement shall have been issued under the 1933 Act or proceedings
therefor initiated or threatened by the Commission. The price of the Shares and
any other information previously omitted from the effective Registration
Statement pursuant to Rule 415 of the 1933 Act Regulations shall have been
transmitted to the Commission for filing pursuant to Rule 424(b) of the 1933 Act
Regulations within the prescribed time period, and prior to Closing Time the
Company shall have provided evidence satisfactory to the Representatives of such
timely filing, or a post-effective amendment providing such information shall
have been filed and declared effective in accordance with the requirements of
the 1933 Act Regulations.
(b) At Closing Time the Representatives shall have received the
favorable opinion, dated as of Closing Time, of Xxxxxxxx & Worcester LLP,
counsel for the Company, in form and substance satisfactory to counsel for the
Underwriters, to the effect that:
(i) The Company is a Maryland real estate investment trust
duly organized, validly existing and in good standing under the laws of
the State of Maryland; each of its Significant Subsidiaries (as defined
in Rule 1-02 of Regulation S-X under the 1933 Act) has been duly
organized, is validly existing as a corporation or trust in good
standing under the laws of its jurisdiction of incorporation or
organization; each of the Company and its subsidiaries has the trust or
corporate (as applicable) power and authority to carry on its business
as described in the Registration Statement and in the Prospectus and to
own, lease and operate its properties; each of the Company and its
subsidiaries is duly qualified and is in good standing as a foreign
corporation or trust, as the case may be, authorized to do business in
each jurisdiction in which its ownership or leasing of property
requires such qualification, except where the failure to be so
qualified would not have a material adverse effect on the Company and
its subsidiaries, taken as a whole.
(ii) (A) All of the outstanding shares of beneficial interest
of the Company have been duly authorized and are validly issued, fully
paid and non-assessable (except as otherwise described in the
Registration Statement) and (B) the Shares have been duly authorized
and, when issued and delivered to the Underwriters against payment
therefor in accordance with the terms of this Agreement, will be
validly issued, fully paid and nonassessable, and will be free of any
preemptive or, to such counsel's knowledge, similar rights that entitle
any person (other than the Underwriters, their successors and assigns)
to acquire any Shares upon the issuance thereof by the Company.
(iii) All of the issued and outstanding shares of beneficial
interest of, or other ownership interests in, each of the Company's
subsidiaries have been duly authorized and validly issued and are fully
paid and, except as to subsidiaries that are partnerships,
non-assessable, and are owned by the Company free and clear of any
security interest or other adverse interest (within the meaning of
Article 8 of the Massachusetts Uniform Commercial Code).
15
(iv) The Company has the requisite trust power and authority
to enter into and perform this Agreement and to issue and deliver the
Shares.
(v) This Agreement has been duly authorized, executed and
delivered by the Company.
(vi) The execution, delivery and performance of this
Agreement, and the consummation of the transactions herein contemplated
will not conflict with or constitute a breach or violation of any of
the terms or provisions of, or constitute a default under, (A) the
Declaration of Trust or the By-laws of the Company or the charter or
by-laws or other organizational documents of any Significant Subsidiary
of the Company, (B) except as disclosed in the Prospectus, any material
agreement, indenture or other instrument to which the Company, or any
of its Significant Subsidiaries or their respective material properties
or assets is bound, or (C) any laws, administrative regulations or
rulings or decrees known to such counsel to which the Company, any of
its Significant Subsidiaries or their respective material properties or
assets may be subject.
(vii) No consent, approval, authorization, order,
registration, filing, qualification, license or permit of or with any
federal, Massachusetts or Maryland court or public, governmental or
regulatory agency or body having jurisdiction over the Company or any
of its Significant Subsidiaries or any of their respective material
properties or assets is required for the Company's execution, delivery
and performance of this Agreement and the consummation of the
transactions contemplated hereby, including, without limitation, the
issuance, sale and delivery of the Shares pursuant to this Agreement,
except such as have been obtained and such as may be required under
foreign and state securities or "Blue Sky" laws.
(viii) The Registration Statement has become effective under
the 1933 Act, and, to the knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement is in
effect, and no proceedings for such purpose are pending before or
threatened by the Commission; and any required filing of the Prospectus
pursuant to Rule 424 under the 1933 Act has been made in accordance
with said Rule 424.
(ix) To such counsel's knowledge, except as disclosed in the
Registration Statement or in the Prospectus, there is not now pending
or threatened, any litigation, action, suit or proceeding to which the
Company or any of its subsidiaries is or will be a party before or by
any court or governmental agency or body, which (A) might result in any
material adverse change in the condition, financial or otherwise, or in
the business, operations, earnings, prospects or properties of the
Company and its subsidiaries, taken as a whole, or (B) might materially
and adversely affect the property or assets of the Company and its
subsidiaries, taken as a whole, or (C) concerns the Company or any of
its subsidiaries and is required to be disclosed in the Prospectus, or
(D) could adversely affect the consummation of this Agreement and the
issuance of the Shares; to such counsel's knowledge, no contract or
other document is required to be described in the Registration
Statement or in the Prospectus or to be filed as an exhibit to the
Registration Statement that is not described therein or filed as
required.
16
(x) Except as otherwise disclosed in the Prospectus, to such
counsel's knowledge, neither the Company nor any of its subsidiaries is
in violation of its respective charter or by-laws or other
organizational documents or in default in the performance of any
obligation, agreement or condition contained in any bond, debenture,
note or any other evidence of indebtedness or in any other material
agreement, indenture or instrument to which the Company or any of its
subsidiaries is a party or by which any of their respective properties
or assets may be bound or affected, except for any such violation that
would not have a material adverse effect on the business, operations,
earnings, business prospects, properties or condition (financial or
otherwise) of the Company and its subsidiaries taken as a whole.
(xi) To such counsel's knowledge, each of the Company and its
subsidiaries has such permits, licenses, franchises and authorizations
of governmental or regulatory authorities (together, "permits"),
including, without limitation, under any applicable Environmental Law,
as are necessary to own, lease and operate its properties and to engage
in the business currently conducted by it, except such licenses and
permits as to which the failure to own or possess will not in the
aggregate have a material adverse effect on the business, operations,
earnings, business prospects, properties or condition (financial or
otherwise) of the Company and its subsidiaries, taken as a whole.
(xii) The Registration Statement and the Prospectus and any
supplements or amendments thereto (except for the financial statements
and the notes thereto and the schedules and other financial and
statistical data included therein and the Excluded Proceedings (as
defined in paragraph (xx) below), as to which such counsel need not
express any opinion) comply as to form in all material respects with
the requirements of the 1933 Act.
(xiii) Each document incorporated by reference in the
Registration Statement and in the Prospectus (except for the financial
statements and the notes thereto and the schedules and other financial
and statistical data included therein and the Excluded Proceedings, as
to which such counsel need not express any opinion) complied as to form
when filed with the Commission in all material respects with the
requirements of the 1934 Act.
(xiv) To the extent required to be described therein, the
Shares conform in all material respects to the descriptions in the
Registration Statement and the Prospectus.
(xv) The statements (a) in the Prospectus under the captions
"Description of Shares", "Redemption; Business Combinations and Control
Share Acquisitions," "Limitation of Liability; Shareholder Liability"
and "Federal Income Tax and ERISA Considerations" and (b) in Item 1 of
the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997 under the captions "Regulation and Reimbursement,"
"Federal Income Tax Considerations" and "ERISA Plans, Xxxxx 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.
17
(xvi) The Company has qualified to be taxed as a real estate
investment trust pursuant to Sections 856-860 of the Code for each of
the fiscal years ended December 31, 1987 through December 31, 1997, and
the Company's current anticipated investments and its current plan of
operation will enable it to continue to meet the requirements for
qualification and taxation as a real estate investment trust under the
Code; actual qualification of the Company as a real estate investment
trust, however, will depend upon the Company's continued ability to
meet, and its meeting, through actual annual operating results and
distributions, the various qualification tests imposed under the Code.
(xvii) The Company is not required to register as an
"investment company" within the meaning of the 1940 Act.
(xviii) The Advisor (A) is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware, and (B) has the requisite corporate power and authority to
conduct its business as described in the Prospectus and to own and
operate its material properties.
(xix) The Advisory Agreement has been duly authorized,
executed and delivered by the parties thereto and constitutes the valid
agreement of the parties thereto, enforceable in accordance with its
terms, except (a) as limited by the effect of bankruptcy, insolvency,
reorganization, fraudulent transfer, moratorium or other similar laws
relating to or affecting the rights or remedies of creditors, (b) as
limited by the effect of general principles of equity (regardless of
whether enforcement is sought in a proceeding in equity or at law) and
(c) insofar as the enforceability of the indemnity and contribution
provisions contained in such agreement may be limited by federal or
state securities laws and the public policy underlying such laws. (xx)
Although counsel has not undertaken, except as otherwise indicated in
their opinion, to determine independently, and does not assume any
responsibility for, the accuracy or completeness of the statements in
the Registration Statement, such counsel has participated in the
preparation of the Registration Statement and the Prospectus, including
review and discussion of the contents thereof (including review and
discussion of the contents of all documents incorporated by reference
in the Registration Statement and the Prospectus), and nothing has come
to the attention of such counsel that has caused them to believe that
the Registration Statement (including the documents incorporated by
reference therein) at the time the Registration Statement became
effective, or the Prospectus, as of its date and as of Closing Time, as
the case may be, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading or that any
amendment or supplement to the Prospectus, as of its respective date,
and as of Closing Time, as the case may be, contained any untrue
statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading (it being
understood that such counsel need express no view with respect to (a)
the financial statements and the notes thereto and the schedules and
other financial and statistical data included or incorporated by
reference in the Registration Statement or in the Prospectus
18
or (b) the proceedings referred to in Item 3 of the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1997 under
the caption "Legal Proceedings" and any claims related thereto
(collectively, the "Excluded Proceedings").
In rendering their opinion as aforesaid, Xxxxxxxx & Worcester
LLP may rely upon an opinion, dated as of Closing Time, of Piper &
Marbury L.L.P. as to matters governed by Maryland law, provided that
such reliance is expressly authorized by such opinion and a copy of
such opinion is delivered to the Representatives and is, in form and
substance, satisfactory to the Representatives and counsel for the
Underwriters. In addition, in rendering such opinion, such counsel may
state that their opinion as to laws of the State of Delaware is limited
to the Delaware General Corporation Law and that their opinion with
respect to the qualification of the Company and its subsidiaries to do
business in jurisdictions other than their respective jurisdictions of
organization is based solely upon certificates to such effect issued by
an appropriate official of the applicable jurisdictions.
The opinion of Piper & Marbury L.L.P. described in the
paragraph above shall be rendered to the Representatives at the request
of the Company and shall so state therein.
In addition, the Representatives shall have received at
Closing Time an opinion (satisfactory to the Representatives and
counsel for the Underwriters) of Sherin & Lodgen LLP, special counsel
for the Company, dated as of Closing Time, to the effect that the
statements describing the proceedings in Item 3 of the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1997 under
the caption "Legal Proceedings", insofar as they purport to summarize
legal proceedings, constitute a fair summary of such legal proceedings.
(c) The Representatives shall have received at Closing Time an opinion,
dated as of Closing Time, of Xxxxx & Xxxx LLP, counsel for the Underwriters, as
to the matters referred to in clauses (ii)(B), (v), (viii), (xii), (xiv) and
(xx) of the foregoing paragraph (b). In giving such opinion with respect to the
matters covered by clause (xx), such counsel may state that their opinion and
belief are based upon their participation in the preparation of the Registration
Statement and the Prospectus and any amendments or supplements thereto and
review and discussion of the contents thereof, but are without independent check
or verification except as specified.
In rendering their opinion as aforesaid, Xxxxx & Wood LLP may rely upon
an opinion, dated as of Closing Time, of Piper & Marbury L.L P. as to matters
governed by Maryland law, and the opinion of Xxxxxxxx & 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
19
or proceeding at law or in equity shall be pending or to the knowledge of the
Company threatened against the Company which would be required to be set forth
in the Prospectus other than as set forth therein, (ii) there shall not have
been, since the respective dates as of which information is given in the
Registration Statement and the Prospectus, any material adverse change in the
condition, financial or otherwise, of the Company or in its earnings, business
affairs or business prospects, whether or not arising in the ordinary course of
business from that set forth in the Registration Statement, and (iii) no
proceedings shall be pending or, to the knowledge of the Company, threatened
against the Company before or by any federal, state or other commission, board
or administrative agency wherein an unfavorable decision, ruling or finding
would materially and adversely affect the business, property, financial
condition or income of the Company other than as set forth in the Prospectus;
and the Representatives shall have received, at Closing Time, a certificate of
the President and Chief Operating Officer and the chief financial officer of the
Company, dated as of Closing Time, evidencing compliance with the provisions of
this subsection (d) and stating that the representations and warranties set
forth in Section 1(a) hereof are accurate as though expressly made at and as of
Closing Time.
(e) At Closing Time, there shall not have been, since the respective
dates as of which information is given in the Registration Statement and the
Prospectus, any material adverse change in the business, operations, earnings,
prospects, properties or condition (financial or otherwise) of the Advisor,
whether or not arising in the ordinary course of business; and the
Representatives shall have received, at Closing Time, a certificate of the
President of the Advisor evidencing compliance with this subsection (e).
(f) Concurrently with the execution and delivery of this Agreement, and
at Closing Time prior to payment and delivery of the Shares, Ernst & Young LLP
shall have furnished to the Representatives a letter, dated the date of its
delivery, addressed to the Representatives and in form and substance
satisfactory to the Representatives, confirming that they are independent
accountants with respect to the Company as required by the 1933 Act and the 1933
Act Regulations and with respect to the financial and other statistical and
numerical information contained in the Registration Statement and the Prospectus
or incorporated by reference therein. Each such letter shall contain information
of the type customarily included in accountants' comfort letters to
underwriters.
(g) At Closing Time counsel for the Underwriters shall have been
furnished with such documents and opinions as they may reasonably require for
the purpose of enabling them to pass upon the issuance and sale of the Shares as
herein contemplated and related proceedings, or in order to evidence the
accuracy of any of the representations or warranties, or the fulfillment of any
of the conditions, herein contained; and all proceedings taken by the Company in
connection with the issuance and sale of the Shares as herein contemplated shall
be reasonably satisfactory in form and substance to the Representatives and
counsel for the Underwriters.
(h) In the event the Representatives exercise the option described in
Section 2 hereof to purchase all or any portion of the Option Shares, the
representations and warranties of the Company included herein and the statements
in any certificates furnished by the Company hereunder shall be true and correct
as of the Date of Delivery, and the Representatives shall have received:
20
(i) A certificate of the President and Chief Executive Officer
and the chief financial officer of the Company, dated such date of
Delivery, confirming that their certificate delivered at Closing Time
pursuant to Section 5(d) hereof remain true as of such Date of
Delivery.
(ii) The favorable opinion of Xxxxxxxx & Worcester LLP,
counsel for the Company, in form and substance satisfactory to counsel
for the Underwriters, dated such Date of Delivery, relating to the
Option Shares and otherwise to the same effect as the opinion required
by Section 5(b) hereof.
(iii) Certificate of the President of the Advisor confirming
that his certificate delivered at Closing Time pursuant to Section 5(e)
hereof remains true as of such Date of Delivery.
(iv) The favorable opinion of Xxxxx & Wood LLP, counsel for
the Underwriters, dated such Date of Delivery, relating to the Option
Shares and otherwise to the same effect as the opinion required by
Section 5(c) hereof.
(v) A letter from Ernst & Young, in form and substance
satisfactory to the Representatives, dated such Date of Delivery,
substantially the same in scope and substance as the letter furnished
to the Representatives pursuant to Section 5(f) hereof.
If any condition specified in this Section 5 shall not have been
fulfilled when and as required to be fulfilled, this Agreement may be terminated
by the Representatives by notice to the Company at any time at or prior to
Closing Time, and such termination shall be without liability of any party to
any other party except as provided in Section 4 hereof.
Section 6. Indemnification. (a) The Company hereby agrees to indemnify
and hold harmless each Underwriter and each person, if any, who controls each
Underwriter within the meaning of Section 15 of the 1933 Act as follows:
(1) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto), or the omission or
alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein not misleading or
arising out of any untrue statement or alleged untrue statement of a
material fact included in any preliminary prospectus or the Prospectus
(or any amendment or supplement thereto), or the omission, or alleged
omission therefrom of a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading:
(2) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened,
or of any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or
21
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 Xxxxxxx Xxxxx), 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 Xxxxxxx Xxxxx expressly for use in the Registration
Statement (or any amendment thereto) or the Prospectus (or any amendment or
supplement thereto); and provided, further, that the foregoing indemnity
agreement with respect to any preliminary prospectus shall not inure to the
benefit of any Underwriter, or the benefit of any person controlling any
Underwriter, if a copy of the Prospectus (as then amended or supplemented if the
Company shall have furnished any amendments or supplements thereto and excluding
documents incorporated or deemed to be incorporated by reference therein) was
not sent or given by or on behalf of such Underwriter to such person asserting
any such losses, claims, damages or liabilities at or prior to the written
confirmation of the sale of such Shares to such person, if required by law so to
have been delivered, and if the Prospectus (as so amended or supplemented) would
have cured the defect giving rise to such loss, claim, damage or expense.
(b) Each Underwriter agrees to indemnify and hold harmless the Company,
each of the Company's trustees, each of the Company's officers who signed the
Registration Statement and each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act against any and all loss, liability,
claim, damage and expense described in the indemnity contained in subsection (a)
of this Section 6, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Registration
Statement (or any amendment thereto) or the Prospectus (or any amendment or
supplement thereto) in reliance upon and in conformity with written information
furnished to the Company by any Underwriter through Xxxxxxx Xxxxx 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
22
indemnified parties in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances.
Section 7. Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement provided for in
Section 6 hereof is for any reason held to be unenforceable by the indemnified
parties although applicable in accordance with its terms, the Company and the
Underwriters shall contribute to the aggregate losses, liabilities, claims,
damages and expenses of the nature contemplated by said indemnity agreement
incurred by the Company and the Underwriters, as incurred, (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and the Underwriters on the other hand from the offering
of the Shares pursuant to this Agreement or (ii) if the allocation provided by
clause (i) is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and of the
Underwriters on the other hand in connection with the statements or omissions
which resulted in such losses, liabilities, claims, damages or expenses, as well
as any other relevant equitable considerations.
The relative benefits received by the Company on the one hand and the
Underwriters on the other hand in connection with the offering of the Shares
pursuant to this Agreement shall be deemed to be in the same respective
proportions as the total net proceeds from the offering of the Shares pursuant
to this Agreement (before deducting expenses) received by the Company and the
total discount received by the Underwriters, bear to the aggregate initial
offering price of the Shares.
The relative fault of the Company on the one hand and the Underwriters
on the other hand shall be determined by reference to, among other things,
whether any such untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to information
supplied by the Company or by the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation or by any other method of allocation which does not take into account
the equitable considerations referred to above in this Section 7. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 7 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 0000 Xxx) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. Notwithstanding the
provisions of this Section 7, the Underwriters shall not be required to
contribute any amount in excess of the amount by which the total price at which
the Shares purchased from the Company by the Underwriters and distributed to the
public were offered to the public exceeds the amount of any damages which the
Underwriters have
23
otherwise been required to pay in respect of such losses, liabilities, claims,
damages and expenses. For purposes of this Section 7, each person, if any, who
controls any Underwriter within the meaning of Section 15 of the 1933 Act shall
have the same rights to contribution as such Underwriter, and each trustee of
the Company, each officer of the Company who signed the Registration Statement,
and each person, if any, who controls the Company within the meaning of Section
15 of the 1933 Act shall have the same rights to contribution as the Company.
Section 8. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Company submitted pursuant
hereto, shall remain operative and in full force and effect, regardless of any
investigation made by or on behalf of the Underwriters or any controlling
person, or by or on behalf of the Company, and shall survive delivery of the
Shares to the Underwriters.
Section 9. Termination of Agreement. (a) The Representatives may
terminate this Agreement, by notice to the Company, at any time at or prior to
Closing Time (i) if there has been, since the respective dates as of which
information is given in the Registration Statement, any material adverse change
in the condition, financial or otherwise, or in the earnings, business affairs
or business prospects of the Company or the Advisor, whether or not arising in
the ordinary course of business, which would make it, in the Representatives'
reasonable judgment, impracticable or inadvisable to market the Shares or
enforce contracts for the sale of the Shares, (ii) if there has occurred any
material adverse change in the financial markets in the United States or any
outbreak of hostilities or escalation of existing hostilities or other calamity
or crisis the effect of which on the financial markets of the United States is
such as to make it, in the Representatives' reasonable judgment, impracticable
or inadvisable to market the Shares or enforce contracts for the sale of the
Shares, or (iii) if trading in the Company's Common Shares has been suspended by
the Commission, or if trading generally on either the New York Stock Exchange or
the American Stock Exchange has been suspended, or minimum or maximum prices for
trading have been fixed, or maximum ranges for prices for securities have been
required, by either of said exchanges or by order of the Commission or any other
governmental authority, or if a banking moratorium has been declared by Federal
or New York authorities.
(b) If this Agreement is terminated pursuant to this Section 9, such
termination shall be without liability of any party to any other party except as
provided in Section 4, and provided further that Sections 6 and 7 hereof shall
survive such termination.
Section 10. Default. If one or more of the Underwriters shall fail at
Closing Time to purchase the Initial Shares which it or they are obligated to
purchase under this Agreement (the "Defaulted Shares"), the Representatives
shall have the right, within 24 hours thereafter, to make arrangements for one
or more of the non-defaulting Underwriters, or any other underwriters, to
purchase all, but not less than all, of the Defaulted Shares in such amounts as
may be agreed upon and upon the terms herein set forth; if, however, the
Representatives shall not have completed such arrangements within such 24-hour
period, then:
(i) if the number of Defaulted Shares does not exceed 10% of
the Initial Shares, the non-defaulting Underwriters shall be obligated
to purchase the full amount
24
thereof in the proportions that their respective underwriting
obligations hereunder bear to the underwriting obligations of all
non-defaulting Underwriters, or
(ii) if the number of Defaulted Shares exceeds 10% of the
Initial Shares, this Agreement shall terminate without liability on the
part of any non-defaulting Underwriter and the Company.
No action taken pursuant to this Section 10 shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination
of this Agreement, either the Representatives or the Company shall have the
right to postpone Closing Time for a period not exceeding seven days in order to
effect any required changes in the Prospectus or in any other documents or
arrangements.
Section 11. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to the Representatives c/o Merrill Lynch, Pierce,
Xxxxxx & Xxxxx Incorporated at World Financial Center, North Tower, 000 Xxxxx
Xxxxxx, Xxx Xxxx, XX 00000-0000, Attention: Tjarda van X. Xxxxxxx, Director; and
notices to the Company shall be directed to it at 000 Xxxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000, Attention: Xxxxx X. Xxxxxxx, President.
Section 12. Parties. This Agreement shall inure to the benefit of and
be binding upon the Underwriters and the Company and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than those
referred to in Sections 6 and 7 and their heirs and legal representatives, any
legal or equitable right, remedy or claim under or in respect of this Agreement
or any provision herein contained. This Agreement and all conditions and
provisions hereof are intended to be for the sole and exclusive benefit of the
parties hereto and thereto and their respective successors and said controlling
persons and officers, trustees and directors and their heirs and legal
representatives, and for the benefit of no other person, firm or corporation. No
purchaser of Shares from any Underwriter shall be deemed to be a successor by
reason merely of such purchase.
Section 13. Governing Law and Time; Miscellaneous. This Agreement shall
be governed by and construed in accordance with the laws of the State of New
York applicable to agreements made and to be performed in said State. Specified
times of day refer to New York City time.
THE AMENDED AND RESTATED DECLARATION OF TRUST ESTABLISHING THE COMPANY,
DATED JULY 1, 1994, A COPY OF WHICH, TOGETHER WITH ALL AMENDMENTS THERETO (THE
"DECLARATION"), IS DULY FILED IN THE OFFICE OF THE STATE DEPARTMENT OF
ASSESSMENTS AND TAXATION OF MARYLAND, PROVIDES THAT THE NAME "HEALTH AND
RETIREMENT PROPERTIES TRUST" REFERS TO THE TRUSTEES UNDER THE DECLARATION
COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY, AND THAT NO
TRUSTEE,
25
OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF THE COMPANY SHALL BE HELD TO ANY
PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM
AGAINST, THE COMPANY. ALL PERSONS DEALING WITH THE COMPANY, IN ANY WAY, SHALL
LOOK ONLY TO THE ASSETS OF THE COMPANY FOR THE PAYMENT OF ANY SUM OR THE
PERFORMANCE OF ANY OBLIGATION.
26
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us a counterpart hereof, whereupon this
instrument along with all counterparts will become a binding agreement between
the Underwriters and the Company in accordance with its terms.
Very truly yours,
HEALTH AND RETIREMENT PROPERTIES TRUST
By /s/ Xxxx Xxxxx
Name: Xxxx Xxxxx
Title: Treasurer
CONFIRMED AND ACCEPTED, as of
the date first above written:
XXXXXXX XXXXX & CO.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
XXXXXXXXX, LUFKIN & XXXXXXXX
SECURITIES CORPORATION
X.X. XXXXXXX & SONS, INC.
XXXX XXXXX XXXX XXXXXX INCORPORATED
XXXXXX XXXXXXX & CO. INCORPORATED
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
XXXXX XXXXXX INC.
By: XXXXXXX XXXXX & CO.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
By /s/ Tjarda van X. Xxxxxxx
Name: Tjarda van X. Xxxxxxx
Title: Director
For themselves and as Representatives
of the other Underwriters named in
Schedule A hereto
27
SCHEDULE A
Number of
Name of Underwriter Initial Shares
------------------- --------------
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated 2,675,000
Xxxxxxxxx, Lufkin & Xxxxxxxx
Securities Corporation 2,675,000
X.X. Xxxxxxx & Sons, Inc. 2,675,000
Xxxx Xxxxx Xxxx Xxxxxx
Incorporated 2,675,000
Xxxxxx Xxxxxxx & Co. Incorporated 2,675,000
PaineWebber Incorporated 2,675,000
Prudential Securities Incorporated 2,675,000
Xxxxx Xxxxxx Inc. 2,675,000
Xxxxxx Brothers Inc. 300,000
Xxxxxxx and S. Bleichroeder, Inc. 300,000
Credit Lyonnais Securities (USA) Inc. 300,000
Dresdner Kleinwort Xxxxxx North America LLC 300,000
Xxxxxxx Xxxxx Securities Inc. 300,000
Societe Generale 300,000
Xxxxx & Company 300,000
Cruttenden Xxxx Incorporated 300,000
X.X. Xxxxxxxx & Co. 300,000
Sands Brothers & Co., Ltd. 300,000
Sutro & Co. Incorporated 300,000
Wheat First Securities, Inc. 300,000
----------
Total 25,000,000
==========
