<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
----------------
Pursuant to Section 13 of 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 30, 1998
BOSTON PROPERTIES, INC.
(Exact name of Registrant as specified in its Charter)
Delaware
(State of Incorporation)
1-13087 04-2473675
(Commission File Number) (IRS Employer Id. Number)
8 Arlington Street
Boston, Massachusetts 02116
(Address of principal executive offices) (Zip Code)
(617) 859-2600
(Registrant's telephone number, including area code)
<PAGE>
ITEM 2. Acquisition or Disposition of Assets.
On June 30, 1998, the Company entered into various agreements (the
"Contribution Agreements") providing for the acquisition of a portfolio of
properties in Princeton, New Jersey and East Brunswick, New Jersey and related
management operations (collectively, the "Portfolio"). The properties in
Princeton constitute a major portion of the Carnegie Center office complex. The
property in East Brunswick, a 420,006 net rentable square foot Class A office
building, is known as Tower Center One and is leased in its entirety to AT&T.
Major tenants of the Carnegie Center properties include Raytheon, Covance,
Nycomed, Bell Atlantic and Marsh & McLennan.
On June 30, 1998, the Company completed the acquisition of Tower Center
One, nine buildings in Carnegie Center and the management operations of The
Landis Group, the developer and manager of the properties (collectively, the
"Acquired Properties"). The agreements provide for the acquisition of three
additional developed properties in Carnegie Center and for the acquisition of
two additional properties currently under development and expected to be
completed during the fourth calendar quarter of 1998.
The following Acquired Properties were acquired on June 30, 1998:
<TABLE>
<CAPTION>
Approximate
Net Rentable
Property Location Square Feet
<S> <C> <C>
101 Carnegie Center Princeton, NJ 131,982
104 Carnegie Center Princeton, NJ 102,198
105 Carnegie Center Princeton, NJ 69,648
202 Carnegie Center Princeton, NJ 128,929
210 Carnegie Center Princeton, NJ 159,498
211 Carnegie Center Princeton, NJ 47,917
212 Carnegie Center Princeton, NJ 150,063
214 Carnegie Center Princeton, NJ 153,305
Childcare Property Princeton, NJ 6,500
Tower Center One East Brunswick, NJ 420,006
-------
TOTAL: 1,370,046
</TABLE>
<PAGE>
The following additional properties in Carnegie Center are under agreement
to purchase:
<TABLE>
<CAPTION>
Approximate
Net Rentable
Property Location Square Feet
<S> <C> <C>
504 Carnegie Center Princeton, NJ 121,990
506 Carnegie Center Princeton, NJ 146,362
508 Carnegie Center Princeton, NJ 131,085
-------
TOTAL: 399,437
</TABLE>
The two properties under development (the "Development Properties"), which
will be purchased upon completion, are preleased in their entirety and will
contain approximately 394,000 net rentable square feet in the aggregate.
The consideration paid for the Acquired Properties was $276.0 million. In
addition, an $8.0 million deposit was paid against the future acquisition of the
two Development Properties. The aggregate consideration paid on June 30, 1998
consisted of $137.0 million in cash; the assumption of $64.0 million of existing
debt; and the issuance of Series One Preferred Units of Limited Partnership (the
"Preferred Units") in Boston Properties Limited Partnership, the Company's
operating partnership subsidiary (the "Operating Partnership"), having an
aggregate liquidation preference of approximately $83 million. The Preferred
Units bear a preferred distribution of 7.25% per annum and are convertible into
Common Units of Limited Partnership ("Common Units") in the Operating
Partnership at the rate of $38.25 per Common Unit. Common Units may be redeemed
by the holder thereof for cash equal to the then current value of a share of
Boston Properties common stock ("Company Common Stock") or, at the Company's
election, for one share of Company Common Stock. The Preferred Units are
convertible into Common Units (i) at the holder's election at any time or (ii)
at the election of the Company on or after June 30, 2003, provided that the
shares of Company Common Stock at the time of such election by the Company have
a 20-day trading average of $42.08 per share.
In connection with the acquisition, the Company has entered into a
Development Agreement with an affiliate of Alan Landis providing for up to
approximately 2,000,000 square feet of development in or adjacent to Carnegie
Center, which will be controlled by the Company. An entity controlled by the
Company (and in which Alan Landis or an affiliate of Mr. Landis will have an
interest) will generally acquire land upon the commencement of development
projects.
In connection with the acquisition, the Company has entered into agreements
with the
2
<PAGE>
parties that contributed their direct and indirect interest in the Acquired
Properties (the "Contributors") that generally provide that, for a period of ten
years, the Company may not sell or otherwise transfer any of the Acquired
Properties in a taxable transaction and that during such period the Company will
maintain a level of indebtedness or provide the Contributors with the
opportunity to enter into one or more guarantees in amounts sufficient to
prevent recognition of gain by the Contributors under certain specified
circumstances.
In connection with the transaction, Alan B. Landis of The Landis Group, the
developer of the properties, has been appointed to the Board of Directors of the
Company.
ITEM 7. Financial Statements, Pro Forma Financial Information And Exhibits.
(a) Financial Statements of Business Acquired.
Financial Statements for the Acquired Properties will be filed by amendment
as soon as practicable, but not later than September 14, 1998.
(b) Pro Forma Financial Information.
Pro forma financial information will be filed by amendment as soon as
practicable, but not later than September 14, 1998.
(c) Exhibits:
Exhibit No.
- -----------
99.1 Second Amended and Restated Agreement of Limited Partnership of the
Operating Partnership, dated as of June 29, 1998.
99.2 Certificate of Designations, dated June 30, 1998, constituting an
amendment to the Second Amended and Restated Agreement of Limited
Partnership of the Operating Partnership.
99.3 Contribution and Conveyance Agreement concerning the Carnegie
Portfolio, dated June 30, 1998 by and among the Company, the Operating
Partnership, and the parties named therein as Landis Parties.
99.4 Contribution Agreement, dated June 30, 1998, by and among the Company,
the Operating Partnership, and the parties named therein as Landis Parties.
3
<PAGE>
99.5 Registration Rights and Lock-Up Agreement, dated June 30, 1998 by and
among the Company, the Operating Partnership and the parties named therein
as Holders.
99.6 Non-Competition Agreement, dated as of June 30, 1998, by and between
Alan B. Landis and the Company.
99.7 Agreement Regarding Directorship, dated as of June 30, 1998, by and
between the Company and Alan B. Landis.
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.
BOSTON PROPERTIES, INC.
/S/ WILLIAM J. WEDGE
------------------------
William J. Wedge
Senior Vice President
Date: July 15, 1998
<PAGE>
Exhibit 99.1
SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
BOSTON PROPERTIES LIMITED PARTNERSHIP
June 29, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 1 DEFINED TERMS.................................................................. 3
ARTICLE 2 ORGANIZATIONAL MATTERS......................................................... 16
Section 2.1 Formation.............................................................. 16
Section 2.2 Name................................................................... 16
Section 2.3 Registered Office and Agent; Principal Office.......................... 16
Section 2.4 Power of Attorney...................................................... 17
Section 2.5 Term................................................................... 18
ARTICLE 3 PURPOSE........................................................................ 18
Section 3.1 Purpose and Business................................................... 18
Section 3.2 Powers................................................................. 19
ARTICLE 4 CAPITAL CONTRIBUTIONS.......................................................... 19
Section 4.1 Capital Contributions of the Partners.................................. 19
Section 4.2 Issuances of Additional Partnership Interests.......................... 21
Section 4.3 Contribution of Proceeds of Issuance of REIT Shares.................... 22
ARTICLE 5 DISTRIBUTIONS.................................................................. 22
Section 5.1 Requirement and Characterization of Distributions...................... 22
Section 5.2 Amounts Withheld....................................................... 24
Section 5.3 Distributions Upon Liquidation......................................... 24
Section 5.4 Revisions to Reflect Issuance of Additional Partnership Interests...... 24
ARTICLE 6 ALLOCATIONS.................................................................... 24
Section 6.1 Allocations For Capital Account Purposes............................... 24
ARTICLE 7 MANAGEMENT AND OPERATIONS OF BUSINESS.......................................... 27
Section 7.1 Management............................................................. 27
Section 7.2 Certificate of Limited Partnership..................................... 31
Section 7.3 Restrictions on General Partner Authority.............................. 31
Section 7.4 Reimbursement of the General Partner and the Company; DRIP's and
Repurchase Programs.................................................... 31
Section 7.5 Outside Activities of the General Partner.............................. 33
Section 7.6 Contracts with Affiliates.............................................. 33
Section 7.7 Indemnification........................................................ 34
Section 7.8 Liability of the General Partner....................................... 36
Section 7.9 Other Matters Concerning the General Partner........................... 36
Section 7.10 Title to Partnership Assets............................................ 37
</TABLE>
(i)
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 7.11 Reliance by Third Parties................................................. 37
ARTICLE 8 RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS........................................ 38
Section 8.1 Limitation of Liability................................................... 38
Section 8.2 Management of Business.................................................... 38
Section 8.3 Outside Activities of Limited Partners.................................... 39
Section 8.4 Return of Capital......................................................... 39
Section 8.5 Rights of Limited Partners Relating to the Partnership.................... 39
Section 8.6 Redemption Right.......................................................... 40
Section 8.7 Consent and Guarantee Rights of Certain Limited Partners.................. 42
ARTICLE 9 BOOKS, RECORDS, ACCOUNTING AND REPORTS............................................ 43
Section 9.1 Records and Accounting.................................................... 43
Section 9.2 Fiscal Year............................................................... 43
Section 9.3 Reports................................................................... 43
ARTICLE 10 TAX MATTERS....................................................................... 44
Section 10.1 Preparation of Tax Returns................................................ 44
Section 10.2 Tax Elections............................................................. 44
Section 10.3 Tax Matters Partner....................................................... 44
Section 10.4 Organizational Expenses................................................... 46
Section 10.5 Withholding............................................................... 46
ARTICLE 11 TRANSFERS AND WITHDRAWALS......................................................... 47
Section 11.1 Transfer.................................................................. 47
Section 11.2 Transfer of the Company's General Partner Interest and Limited Partner
Interest; Extraordinary Transactions...................................... 48
Section 11.3 Limited Partners' Rights to Transfer...................................... 50
Section 11.4 Substituted Limited Partners.............................................. 51
Section 11.5 Assignees................................................................. 52
Section 11.6 General Provisions........................................................ 52
ARTICLE 12 ADMISSION OF PARTNERS............................................................. 53
Section 12.1 Admission of Successor General Partner.................................... 53
Section 12.2 Admission of Additional Limited Partners.................................. 53
Section 12.3 Amendment of Agreement and Certificate of Limited Partnership............. 54
</TABLE>
(ii)
<PAGE>
<TABLE>
<S> <C>
ARTICLE 13 DISSOLUTION, LIQUIDATION AND TERMINATION........................................... 54
Section 13.1 Dissolution................................................................. 54
Section 13.2 Winding Up.................................................................. 55
Section 13.3 Compliance with Timing Requirements of Regulations.......................... 57
Section 13.4 Deemed Termination.......................................................... 58
Section 13.5 Rights of Limited Partners.................................................. 59
Section 13.6 Notice of Dissolution....................................................... 59
Section 13.7 Termination of Partnership and Cancellation of Certificate of Limited
Partnership................................................................. 59
Section 13.8 Reasonable Time for Winding-Up.............................................. 59
Section 13.9 Waiver of Partition......................................................... 60
ARTICLE 14 AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS....................................... 60
Section 14.1 Amendments.................................................................. 60
Section 14.2 Meetings of the Partners.................................................... 61
ARTICLE 15 GENERAL PROVISIONS................................................................. 62
Section 15.1 Addresses and Notice........................................................ 63
Section 15.2 Titles and Captions......................................................... 63
Section 15.3 Pronouns and Plurals........................................................ 63
Section 15.4 Further Action.............................................................. 63
Section 15.5 Binding Effect.............................................................. 63
Section 15.6 Creditors................................................................... 63
Section 15.7 Waiver...................................................................... 64
Section 15.8 Counterparts................................................................ 64
Section 15.9 Applicable Law.............................................................. 64
Section 15.10 Invalidity of Provisions.................................................... 64
Section 15.11 Entire Agreement............................................................ 65
</TABLE>
EXHIBITS
Exhibit A - Partners Contributions and Partnership Interests
Exhibit B - Capital Account Maintenance
Exhibit C - Special Allocation Rules
Exhibit D - Notice of Redemption
Exhibit E - Designated Properties
Exhibit F - Recourse Debt Level Schedule
(iii)
<PAGE>
SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
BOSTON PROPERTIES LIMITED PARTNERSHIP
THIS SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF BOSTON
PROPERTIES LIMITED PARTNERSHIP (this "Agreement"), dated as of June 29, 1998, is
entered into by and among Boston Properties, Inc., a Delaware corporation (the
"Company"), and the Persons (as defined below) whose names are set forth on
Exhibit A attached hereto (as it may be amended from time to time).
Original Agreement and First Restatement
WHEREAS, this Limited Partnership was formed on April 8, 1997 and an
original agreement of limited partnership was entered into between the Company,
as general partner, and Edward H. Linde, as limited partner;
WHEREAS, prior to the date of the First Restatement (as defined below)
certain partnerships merged into the Partnership and the partners of such
partnerships ("Merging Partners") were issued or became entitled to receive, as
a result of such mergers, Partnership Interests;
WHEREAS, immediately prior to or contemporaneously with the execution on
June 23, 1997, of the First Amended and Restated Agreement of Limited
Partnership (the "First Restatement"), certain partnerships (the "Contributing
Partnerships") conveyed to the Partnership all right, title and interest of such
partnerships to the real property and other assets owned by them and received in
exchange therefor Partnership Interests;
WHEREAS, the Company effected an initial public offering of its common
stock, acquired and caused the Partnership to acquire direct and indirect
interests in certain office properties and other assets, caused the Partnership
to enter into certain financing arrangements and contributed the remaining net
proceeds from the initial public offering and the other assets of the Company to
the Partnership;
WHEREAS, the Merging Partners and the Contributing Partnerships and persons
with direct and indirect interests in them in certain instances engaged in a
series of distributions whereby certain persons with direct or indirect
interests in the Merging Partners and the Contributing Partnerships (the "New
Partners") were assigned and conveyed Partnership Interests, and the Merging
Partners and the Contributing Partnerships directed that the Partnership issue
directly to the New Partners the Partnership Interests to which such persons
thus became entitled;
WHEREAS, in connection with the First Restatement, the Partnership issued
Partnership Interests to the Company and other persons, and additional
Partnership Interests to
<PAGE>
certain of the Merging Partners and the New Partners, in accordance with the
foregoing transactions;
WHEREAS, upon the completion of the foregoing transactions, in connection
with the First Restatement, the Partnership returned the original capital
contributions made by the Company and Mr. Linde and any ongoing interest in the
Partnership of the Company and Mr. Linde has thereafter been based on their
respective contributions as Merging Partners or as contemplated below; and
WHEREAS, as evidenced by their respective execution of the First
Restatement, the Company and Mr. Linde and the other persons who thereby became
Limited Partners thereby consented to the amendment and restatement of the
original agreement of limited partnership.
Subsequent Amendments
WHEREAS, the General Partner has since the date of the First Restatement,
pursuant to Section 14.1.B, effected amendments to this Agreement (the
"Subsequent Amendments") for the purpose of reflecting the admission of
Additional Limited Partners, clarifying Sections 8.6.B. and 11.1.A., and
amending Section 5.1
Second Restatement
WHEREAS, the General Partner desires to denominate all Partnership Units
outstanding prior to the execution hereof as "Common Units" and further desires
to create a new series of Partnership Units to be denominated Series One
Preferred Units, which shall have certain rights, preferences and limitations
associated therewith; and
WHEREAS, the General Partner has determined that such amendment is not
adverse to the Limited Partners and is otherwise permitted without the consent
of the Limited Partners pursuant to Section 14.1.B(3) of this Agreement.
NOW, THEREFORE, the General Partner hereby amends and restates this
Agreement as set forth in full below pursuant to the authority granted to the
General Partner under Sections 14.1.B(2), (3) and (4) of this Agreement and
adopts this Second Amended and Restated Agreement in full substitution of the
First Restatement and the Subsequent Amendments.
ARTICLE 1
DEFINED TERMS
The following definitions shall be for all purposes, unless otherwise
clearly indicated to the contrary, applied to the terms used in this Agreement.
2
<PAGE>
"Act" means the Delaware Revised Uniform Limited Partnership Act, as it may
be amended from time to time, and any successor to such statute.
"Additional Limited Partner" means a Person admitted to the Partnership as
a Limited Partner pursuant to Sections 4.2 and 12.2 hereof and who is shown as
such on the books and records of the Partnership.
"Adjusted Capital Account" means the Capital Account maintained for each
Partner as of the end of each Partnership taxable year (i) increased by any
amounts which such Partner is obligated to restore pursuant to any provision of
this Agreement or is deemed to be obligated to restore pursuant to the
penultimate sentences of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5);
and (ii) decreased by the items described in Regulations Sections 1.704-
1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), and 1.704-1(b)(2)(ii)(d)(6). The
foregoing definition of Adjusted Capital Account is intended to comply with the
provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted
consistently therewith.
"Adjusted Capital Account Deficit" means, with respect to any Partner, the
deficit balance, if any, in such Partner's Adjusted Capital Account as of the
end of the relevant Partnership taxable year.
"Adjusted Property" means any property, the Carrying Value of which has
been adjusted pursuant to Exhibit B hereof. Once an Adjusted Property is deemed
distributed by, and recontributed to, the Partnership for federal income tax
purposes upon a termination thereof pursuant to Section 708 of the Code, such
property shall thereafter constitute a Contributed Property until the Carrying
Value of such property is further adjusted pursuant to Exhibit B hereof.
"Affiliate" means, with respect to any Person, any Person directly or
indirectly controlling, controlled by or under common control with such Person.
For purposes of this definition, "control," when used with respect to any
Person, means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise, and the terms "controlling" and "controlled" have
meanings correlative to the foregoing. No officer, director or stockholder of
the General Partner shall be considered an Affiliate of the General Partner
solely as a result of serving in such capacity or being a stockholder of the
General Partner.
"Agreed Value" means (i) in the case of any Contributed Property as of the
time of its contribution to the Partnership, the 704(c) Value of such property,
reduced by any liabilities either assumed by the Partnership upon such
contribution or to which such property is subject when contributed, and (ii) in
the case of any property distributed to a Partner by the Partnership, the
Partnership's Carrying Value of such property at the time such property is
distributed, reduced by any indebtedness either assumed by such Partner upon
such distribution or to which such property is subject at the time of
distribution as determined under Section 752
3
<PAGE>
of the Code and the Regulations thereunder. The aggregate Agreed Value of the
Contributed Property contributed or deemed contributed by each Partner as of the
date hereof is as set forth in Exhibit A.
"Agreement" means this Amended and Restated Agreement of Limited
Partnership, as it may be amended, supplemented or restated from time to time,
including by way of adoption of a Certificate of Designations.
"Assignee" means a Person to whom one or more Partnership Units have been
transferred in a manner permitted under this Agreement, but who has not become a
Substituted Limited Partner, and who has the rights set forth in Section 11.5.
"Available Cash" means, with respect to any period for which such
calculation is being made, (i) the sum of:
(a) the Partnership's Net Income or Net Loss (as the case may be) for
such period (without regard to adjustments resulting from allocations
described in Sections 1.A through 1.E of Exhibit C);
(b) Depreciation and all other noncash charges deducted in determining
Net Income or Net Loss for such period;
(c) the amount of any reduction in the reserves of the Partnership
referred to in clause (ii)(f) below (including, without limitation,
reductions resulting because the General Partner determines such amounts
are no longer necessary);
(d) the excess of proceeds from the sale, exchange, disposition, or
refinancing of Partnership property for such period over the gain
recognized from such sale, exchange, disposition, or refinancing during
such period (excluding Terminating Capital Transactions); and
(e) all other cash received by the Partnership for such period that
was not included in determining Net Income or Net Loss for such period;
(ii) less the sum of:
(a) all principal debt payments made by the Partnership during such
period;
(b) capital expenditures made by the Partnership during such period;
(c) investments made by the Partnership during such period in any
entity (including loans made thereto) to the extent that such investments
are not otherwise described in clause (ii)(a) or (ii)(b);
4
<PAGE>
(d) all other expenditures and payments not deducted in determining
Net Income or Net Loss for such period;
(e) any amount included in determining Net Income or Net Loss for such
period that was not received or disbursed by the Partnership during such
period;
(f) the amount of any increase in reserves during such period which
the General Partner determines to be necessary or appropriate in its sole
and absolute discretion; and
(g) the amount of any working capital accounts and other cash or
similar balances which the General Partner determines to be necessary or
appropriate, in its sole and absolute discretion.
Notwithstanding the foregoing, Available Cash shall not include any cash
received or reductions in reserves, or take into account any disbursements made
or reserves established, after commencement of the dissolution and liquidation
of the Partnership.
"Book-Tax Disparities" means, with respect to any item of Contributed
Property or Adjusted Property, as of the date of any determination, the
difference between the Carrying Value of such Contributed Property or Adjusted
Property and the adjusted basis thereof for federal income tax purposes as of
such date. A Partner's share of the Partnership's Book-Tax Disparities in all
of its Contributed Property and Adjusted Property will be reflected by the
difference between such Partner's Capital Account balance as maintained pursuant
to Exhibit B and the hypothetical balance of such Partner's Capital Account
computed as if it had been maintained strictly in accordance with federal income
tax accounting principles.
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in New York, New York or Boston, Massachusetts are
authorized or required by law to close.
"Capital Account" means the Capital Account maintained for a Partner
pursuant to Exhibit B hereof.
"Capital Contribution" means, with respect to any Partner, any cash, cash
equivalents or the Agreed Value of Contributed Property which such Partner
contributes or is deemed to contribute to the Partnership pursuant to Section
4.1, 4.2, or 4.3 hereof.
"Carrying Value" means (i) with respect to a Contributed Property or
Adjusted Property, the 704(c) Value of such property, reduced (but not below
zero) by all Depreciation with respect to such Contributed Property or Adjusted
Property, as the case may be, charged to the Partners' Capital Accounts
following the contribution of or adjustment with respect to such Property; and
(ii) with respect to any other Partnership property, the adjusted basis of
5
<PAGE>
such property for federal income tax purposes, all as of the time of
determination. The Carrying Value of any property shall be adjusted from time to
time in accordance with Exhibit B hereof, and to reflect changes, additions or
other adjustments to the Carrying Value for dispositions and acquisitions of
Partnership properties, as deemed appropriate by the General Partner.
"Cash Amount" means an amount of cash per Common Unit equal to the Value on
the Valuation Date of the REIT Shares Amount.
"Certificate of Designations" means an amendment to this Agreement that
sets forth the designations, rights, powers, duties and preferences of holders
of any Partnership Interests issued pursuant to Section 4.2.A., which amendment
is in the form of a certificate signed by the General Partner and appended to
this agreement. A Certificate of Designations is not the exclusive manner in
which such an amendment may be effected. The General partner may adopt a
Certificate of Designations without the consent of the Limited Partners to the
extent permitted pursuant to Section 14.1.B hereof.
"Certificate of Incorporation" means the Certificate of Incorporation or
other organizational document governing the General Partner, as amended or
restated from time to time.
"Certificate of Limited Partnership" means the Certificate of Limited
Partnership relating to the Partnership filed in the office of the Delaware
Secretary of State, as amended from time to time in accordance with the terms
hereof and the Act.
"Code" means the Internal Revenue Code of 1986, as amended and in effect
from time to time, as interpreted by the applicable regulations thereunder. Any
reference herein to a specific section or sections of the Code shall be deemed
to include a reference to any corresponding provision of future law.
"Common Unit" means a Partnership Unit which is designated as a Common Unit
and which has the rights, preferences and other privileges designated herein in
respect of Common Unitholders. The allocation of Common Units among the
Partners shall be set forth on Exhibit A, as may be amended from time to time.
"Common Unitholder" means a Partner that holds Common Units.
"Consent" means the consent or approval of a proposed action by a Partner
given in accordance with Section 14.2 hereof.
"Consenting Partner" or "Consenting Partners" means Mortimer B. Zuckerman
and Edward H. Linde, individually or collectively, as the case may be.
6
<PAGE>
"Contributed Property" means each property or other asset, in such form as
may be permitted by the Act (but excluding cash), contributed or deemed
contributed to the Partnership (including deemed contributions to the
Partnership on termination and reconstitution thereof pursuant to Section 708 of
the Code). Once the Carrying Value of a Contributed Property is adjusted
pursuant to Exhibit B hereof, such property shall no longer constitute a
Contributed Property for purposes of Exhibit B hereof, but shall be deemed an
Adjusted Property for such purposes.
"Conversion Factor" means 1.0, provided that in the event that the Company
(i) declares or pays a dividend on its outstanding REIT Shares in REIT Shares or
makes a distribution to all holders of its outstanding REIT Shares in REIT
Shares; (ii) subdivides its outstanding REIT Shares; or (iii) combines its
outstanding REIT Shares into a smaller number of REIT Shares, the Conversion
Factor shall be adjusted by multiplying the Conversion Factor by a fraction, the
numerator of which shall be the number of REIT Shares issued and outstanding on
the record date for such dividend, distribution, subdivision or combination
(assuming for such purpose that such dividend, distribution, subdivision or
combination has occurred as of such time), and the denominator of which shall be
the actual number of REIT Shares (determined without the above assumption)
issued and outstanding on the record date for such dividend, distribution,
subdivision or combination. Any adjustment to the Conversion Factor shall
become effective immediately after the effective date of such event retroactive
to the record date, if any, for such event (provided, however, if a Notice of
Redemption is given prior to such a record date and the Specified Redemption
Date is after such a record date, then the adjustment to the Conversion Factor
shall, with respect to such redeeming Partner, be retroactive to the date of
such Notice of Redemption). It is intended that adjustments to the Conversion
Factor are to be made in order to avoid unintended dilution or anti-dilution as
a result of transactions in which REIT Shares are issued, redeemed or exchanged
without a corresponding issuance, redemption or exchange of Common Units or of
Preferred Units that are convertible into Common Units. If, prior to a
Specified Redemption Date, Rights (other than Rights issued pursuant to an
employee benefit plan or other compensation arrangement) were issued and have
expired, and such Rights were issued with an exercise price that, together with
the purchase price for such Rights, was below fair market value in relation to
the security or other property to be acquired upon the exercise of such Rights,
and such Rights were issued to all holders of outstanding REIT shares or the
General Partner cannot in good faith represent that the issuance of such Rights
benefitted the Limited Partners, then the Conversion Factor applicable upon a
Notice of Redemption shall be equitably adjusted in a manner consistent with
antidilution provisions in warrants and other instruments in the case of such a
below market issuance or exercise price. A similar equitable adjustment to
protect the value of Common Units shall be made in all events if any Rights
issued under a "Shareholder Rights Plan" became exercisable and expired prior to
a Specified Redemption Date.
"Depreciation" means, for each taxable year, an amount equal to the federal
income tax depreciation, amortization, or other cost recovery deduction
allowable with respect to an asset for such year, except that if the Carrying
Value of an asset differs from its adjusted basis for
7
<PAGE>
federal income tax purposes at the beginning of such year or other period,
Depreciation shall be an amount which bears the same ratio to such beginning
Carrying Value as the federal income tax depreciation, amortization, or other
cost recovery deduction for such year bears to such beginning adjusted tax
basis; provided, however, that if the federal income tax depreciation,
amortization, or other cost recovery deduction for such year is zero,
Depreciation shall be determined with reference to such beginning Carrying Value
using any reasonable method selected by the General Partner.
"Designated Property" or "Designated Properties" has the meanings set forth
in Section 8.7 hereof.
"Effective Date" means June 23, 1997, the date of closing of the initial
public offering of REIT Shares by the Company.
"Extraordinary Transaction" shall mean, with respect to the Company, the
occurrence of one or more of the following events: (i) a merger (including a
triangular merger), consolidation or other combination with or into another
Person; (ii) the direct or indirect sale, lease, exchange or other transfer of
all or substantially all of its assets in one transaction or a series of
transactions; (iii) any reclassification, recapitalization or change of its
outstanding equity interests (other than a change in par value, or from par
value to no par value, or as a result of a split, dividend or similar
subdivision); (iv) any issuance of equity securities of the Company in exchange
for assets (other than an issuance of securities for cash or an issuance of
securities pursuant to an employee benefit plan); (v) any Change of Control (as
defined in the Company's Certificate of Incorporation) or (vi) the adoption of
any plan of liquidation or dissolution of the Company (whether or not in
compliance with the provisions of this Agreement).
"General Partner" means the Company, in its capacity as the general partner
of the Partnership, or its successors as general partner of the Partnership.
"General Partner Interest" means a Partnership Interest held by the General
Partner, in its capacity as general partner. A General Partner Interest may be
expressed as a number of Partnership Units.
"IRS" means the Internal Revenue Service, which administers the internal
revenue laws of the United States.
"Incapacity" or "Incapacitated" means, (i) as to any individual Partner,
death, total physical disability or entry by a court of competent jurisdiction
adjudicating him incompetent to manage his or her Person or estate; (ii) as to
any corporation which is a Partner, the filing of a certificate of dissolution,
or its equivalent, for the corporation or the revocation of its charter; (iii)
as to any partnership which is a Partner, the dissolution and commencement of
winding up of the partnership; (iv) as to any estate which is a Partner, the
distribution by the
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fiduciary of the estate's entire interest in the Partnership; (v) as to any
trustee of a trust which is a Partner, the termination of the trust (but not the
substitution of a new trustee); or (vi) as to any Partner, the bankruptcy of
such Partner. For purposes of this definition, bankruptcy of a Partner shall be
deemed to have occurred when (a) the Partner commences a voluntary proceeding
seeking liquidation, reorganization or other relief under any bankruptcy,
insolvency or other similar law now or hereafter in effect; (b) the Partner is
adjudged as bankrupt or insolvent, or a final and nonappealable order for relief
under any bankruptcy, insolvency or similar law now or hereafter in effect has
been entered against the Partner; (c) the Partner executes and delivers a
general assignment for the benefit of the Partner's creditors; (d) the Partner
files an answer or other pleading admitting or failing to contest the material
allegations of a petition filed against the Partner in any proceeding of the
nature described in clause (b) above; (e) the Partner seeks, consents to or
acquiesces in the appointment of a trustee, receiver or liquidator for the
Partner or for all or any substantial part of the Partner's properties; (f) any
proceeding seeking liquidation, reorganization or other relief of or against
such Partner under any bankruptcy, insolvency or other similar law now or
hereafter in effect has not been dismissed within one hundred twenty (120) days
after the commencement thereof; (g) the appointment without the Partner's
consent or acquiescence of a trustee, receiver or liquidator has not been
vacated or stayed within ninety (90) days of such appointment; or (h) an
appointment referred to in clause (g) which has been stayed is not vacated
within ninety (90) days after the expiration of any such stay.
"Indemnitee" means (i) any Person made a party to a proceeding by reason of
(A) his status as the General Partner, or as a director or officer of the
Partnership or the General Partner, or (B) his or its liabilities, pursuant to a
loan guarantee or otherwise, for any indebtedness of the Partnership or any
Subsidiary of the Partnership (including, without limitation, any indebtedness
which the Partnership or any Subsidiary of the Partnership has assumed or taken
assets subject to); and (ii) such other Persons (including Affiliates of the
General Partner or the Partnership) as the General Partner may designate from
time to time (whether before or after the event giving rise to potential
liability), in its sole and absolute discretion.
"Limited Partner" means any Person (including the Company) named as a
Limited Partner in Exhibit A attached hereto, as such Exhibit may be amended
from time to time, or any Substituted Limited Partner or Additional Limited
Partner, in such Person's capacity as a Limited Partner of the Partnership.
"Limited Partner Interest" means a Partnership Interest of a Limited
Partner in the Partnership representing a fractional part of the Partnership
Interests of all Partners and includes any and all benefits to which the holder
of such a Partnership Interest may be entitled, as provided in this Agreement,
together with all obligations of such Person to comply with the terms and
provisions of this Agreement. A Limited Partner Interest may be expressed as a
number of Partnership Units.
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"Limited Partner Recourse Debt Percentage" means with respect to certain of
the Limited Partners the percentage listed with respect to such Limited Partner
on the recourse debt level schedule attached hereto as Exhibit F.
"Liquidating Event" has the meaning set forth in Section 13.1.
"Liquidator" has the meaning set forth in Section 13.2.
"Merging Partners" has the meaning set forth in the recitals.
"Modified Adjusted Capital Account Balance" means, with respect to any
Partner, the Capital Account maintained for each Partner as of the end of each
Partnership taxable year (i) increased by any amounts which such Partner is
deemed to be obligated to restore pursuant to the penultimate sentences of
Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5); and (ii) decreased by the
items described in Regulations Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-
1(b)(2)(ii)(d)(5), and 1.704-1(b)(2)(ii)(d)(6).
"Net Income" means, for any taxable period, the excess, if any, of the
Partnership's items of income and gain for such taxable period over the
Partnership's items of loss and deduction for such taxable period. The items
included in the calculation of Net Income shall be determined in accordance with
federal income tax accounting principles, subject to the specific adjustments
provided for in Exhibit B.
"Net Loss" means, for any taxable period, the excess, if any, of the
Partnership's items of loss and deduction for such taxable period over the
Partnership's items of income and gain for such taxable period. The items
included in the calculation of Net Loss shall be determined in accordance with
federal income tax accounting principles, subject to the specific adjustments
provided for in Exhibit B.
"Nonrecourse Built-in Gain" means, with respect to any Contributed
Properties or Adjusted Properties that are subject to a mortgage or negative
pledge securing a Nonrecourse Liability, the amount of any taxable gain that
would be allocated to the Partners pursuant to Section 2.B of Exhibit C if such
properties were disposed of in a taxable transaction in full satisfaction of
such liabilities and for no other consideration.
"Nonrecourse Deductions" has the meaning set forth in Regulations Section
1.704-2(b)(1), and the amount of Nonrecourse Deductions for a Partnership
taxable year shall be determined in accordance with the rules of Regulations
Section 1.704-2(c).
"Nonrecourse Liability" has the meaning set forth in Regulations Section
1.752-1(a)(2).
"Notice of Redemption" means the Notice of Redemption substantially in the
form of Exhibit D to this Agreement.
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"Partner" means a General Partner or a Limited Partner, and "Partners"
means the General Partner and the Limited Partners collectively.
"Partner Minimum Gain" means an amount, with respect to each Partner
Nonrecourse Debt, equal to the Partnership Minimum Gain that would result if
such Partner Nonrecourse Debt were treated as a Nonrecourse Liability,
determined in accordance with Regulations Section 1.704-2(i)(3).
"Partner Nonrecourse Debt" has the meaning set forth in Regulations Section
1.704-2(b)(4).
"Partner Nonrecourse Deductions" has the meaning set forth in Regulations
Section 1.704-2(i)(2), and the amount of Partner Nonrecourse Deductions with
respect to a Partner Nonrecourse Debt for a Partnership taxable year shall be
determined in accordance with the rules of Regulations Section 1.704-2(i)(2).
"Partnership" means the limited partnership formed under the Act and
pursuant to this Agreement, as it may be amended and/or restated, and any
successor thereto.
"Partnership Interest" means an ownership interest in the Partnership
representing a Capital Contribution by either a Limited Partner or the General
Partner and includes any and all benefits to which the holder of such a
Partnership Interest may be entitled as provided in this Agreement, together
with all obligations of such Person to comply with the terms and provisions of
this Agreement. A Partnership Interest may be expressed as a number of
Partnership Units.
"Partnership Minimum Gain" has the meaning set forth in Regulations Section
1.704-2(b)(2), and the amount of Partnership Minimum Gain, as well as any net
increase or decrease in a Partnership Minimum Gain, for a Partnership taxable
year shall be determined in accordance with the rules of Regulations Section
1.704-2(d).
"Partnership Record Date" means the record date established by the General
Partner for the distribution of Available Cash pursuant to Section 5.1 hereof,
which record date shall be the same as the record date established by the
Company for a distribution to its shareholders of some of all of its portion of
such distribution.
"Partnership Unit" or "Unit" means a fractional, undivided share of the
Partnership Interests of all Partners issued pursuant to Sections 4.1, 4.2 and
4.3 (and includes any series or class of Preferred Units). The number of
Partnership Units outstanding and (in the case of Common Units) the Percentage
Interest in the Partnership represented by such Units are set forth in Exhibit A
attached hereto, as such Exhibit may be amended from time to time. The
ownership of Partnership Units shall be evidenced by such form of certificate
for units as the
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General Partner adopts from time to time unless the General Partner determines
that the Partnership Units shall be uncertificated securities.
"Partnership Year" means the fiscal year of the Partnership, which shall be
the calendar year.
"Percentage Interest" means, as to a Partner, its percentage interest as a
Common Unitholder determined by dividing the Common Units owned by such Partner
by the total number of Common Units then outstanding and as specified in Exhibit
A attached hereto, as such Exhibit may be amended from time to time.
"Person" means an individual or a corporation, partnership, trust,
unincorporated organization, association or other entity.
"Preferred Unit" means a limited partnership interest (of any series),
other than a Common Unit, represented by a fractional, undivided share of the
Partnership Interests of all Partners issued hereunder and which is designated
as a "Preferred Unit" (or as a particular class or series of Preferred Units)
herein and which has the rights, preferences and other privileges designated
herein (including by way of a Certificate of Designations) in respect of a
Preferred Unitholder. The allocation of Preferred Units among the Partners
shall be set forth on Exhibit A, as may be amended from time to time.
"Preferred Unitholder" means a limited partner that holds Preferred Units
(of any class or series).
"Recapture Income" means any gain recognized by the Partnership upon the
disposition of any property or asset of the Partnership, which gain is
characterized as ordinary income because it represents the recapture of
deductions previously taken with respect to such property or asset.
"Recourse Debt Amount" has the meaning set forth in Section 6.1B(2) hereof.
"Redeeming Partner" has the meaning set forth in Section 8.6 hereof.
"Redemption Right" shall have the meaning set forth in Section 8.6 hereof.
"Regulations" means the Income Tax Regulations promulgated under the Code,
as such regulations may be amended from time to time (including corresponding
provisions of succeeding regulations).
"REIT" means a real estate investment trust under Section 856 of the Code.
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"REIT Share" shall mean a share of common stock, par value $.01 per share,
of the Company.
"REIT Shares Amount" shall mean a number of REIT Shares equal to the
product of the number of Common Units offered for redemption by a Redeeming
Partner, multiplied by the Conversion Factor in effect on the date of receipt by
the General Partner of a Notice of Redemption, provided that in the event the
Company issues to all holders of REIT Shares rights, options, warrants or
convertible or exchangeable securities entitling the shareholders to subscribe
for or purchase REIT Shares, or any other securities or property (collectively,
"Rights"), and the Rights have not expired at the Specified Redemption Date,
then the REIT Shares Amount shall also include the Rights that were issuable to
a holder of the REIT Shares Amount of REIT Shares on the applicable record date
relating to the issuance of such Rights.
"Residual Gain" or "Residual Loss" means any item of gain or loss, as the
case may be, of the Partnership recognized for federal income tax purposes
resulting from a sale, exchange or other disposition of Contributed Property or
Adjusted Property, to the extent such item of gain or loss is not allocated
pursuant to Section 2.B.1(a) or 2.B.2(a) of Exhibit C to eliminate Book-Tax
Disparities.
"Rights" shall have the meaning set forth in the definition of "REIT Shares
Amount."
"704(c) Value" of any Contributed Property means the fair market value of
such property or other consideration at the time of contribution, as determined
by the General Partner using such reasonable method of valuation as it may
adopt; provided, however, that the 704(c) Value of any property deemed
contributed to the Partnership for federal income tax purposes upon termination
and reconstitution thereof pursuant to Section 708 of the Code shall be
determined in accordance with Exhibit B hereof. Subject to Exhibit B hereof,
the General Partner shall, in its sole and absolute discretion, use such method
as it deems reasonable and appropriate to allocate the aggregate of the 704(c)
Values of Contributed Properties in a single or integrated transaction among the
separate properties on a basis proportional to their respective fair market
values.
"Series One Preferred Unit" means a limited partnership interest
represented by a fractional, undivided share of the Partnership Interests of all
Partners issued hereunder which is designated as a Series One Preferred Unit and
which has the rights, preferences and other privileges designated herein in
respect of Series One Preferred Unitholders and designated in the Certificate of
Designations for Series One Preferred Units attached hereto. The allocation of
Series One Preferred Units among the Partners shall be set forth on Exhibit A,
as may be amended from time to time.
"Series One Preferred Unitholder" means a limited partner that holds Series
One Preferred Units.
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"Specified Redemption Date" means the tenth (10th) Business Day after
receipt by the Company of a Notice of Redemption; provided that no Specified
Redemption Date shall occur before that date that is fourteen (14) months after
the Effective Date, provided further that if the Company combines its
outstanding REIT Shares, no Specified Redemption Date shall occur after the
record date of such combination of REIT Shares and prior to the effective date
of such combination.
"Subsidiary" means, with respect to any Person, any corporation,
partnership or other entity of which a majority of (i) the voting power of the
voting equity securities; or (ii) the outstanding equity interests, is owned,
directly or indirectly, by such Person.
"Substituted Limited Partner" means a Person who is admitted as a Limited
Partner to the Partnership pursuant to Section 11.4.
"Successor Designated Property" has the meaning set forth in Section 8.7
hereof.
"Terminating Capital Transaction" means any sale or other disposition of
all or substantially all of the assets of the Partnership or a related series of
transactions that, taken together, result in the sale or other disposition of
all or substantially all of the assets of the Partnership.
"Unrealized Gain" attributable to any item of Partnership property means,
as of any date of determination, the excess, if any, of (i) the fair market
value of such property (as determined under Exhibit B hereof) as of such date;
over (ii) the Carrying Value of such property (prior to any adjustment to be
made pursuant to Exhibit B hereof) as of such date.
"Unrealized Loss" attributable to any item of Partnership property means,
as of any date of determination, the excess, if any, of (i) the Carrying Value
of such property (prior to any adjustment to be made pursuant to Exhibit B
hereof) as of such date; over (ii) the fair market value of such property (as
determined under Exhibit B hereof) as of such date.
"Valuation Date" means the date of receipt by the General Partner of a
Notice of Redemption or, if such date is not a Business Day, the first Business
Day thereafter.
"Value" means, with respect to a REIT Share, the average of the daily
market price for the ten (10) consecutive trading days immediately preceding the
Valuation Date. The market price for each such trading day shall be: (i) if the
REIT Shares are listed or admitted to trading on any securities exchange or the
Nasdaq National Market System, the closing price on such day, or if no such sale
takes place on such day, the average of the closing bid and asked prices on such
day; (ii) if the REIT Shares are not listed or admitted to trading on any
securities exchange or the Nasdaq National Market System, the last reported sale
price on such day or, if no sale takes place on such day, the average of the
closing bid and asked prices on such day, as reported by a reliable quotation
source designated by the General Partner; or (iii) if the REIT
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Shares are not listed or admitted to trading on any securities exchange or the
Nasdaq National Market System and no such last reported sale price or closing
bid and asked prices are available, the average of the reported high bid and low
asked prices on such day, as reported by a reliable quotation source designated
by the General Partner, or if there shall be no bid and asked prices on such
day, the average of the high bid and low asked prices, as so reported, on the
most recent day (not more than ten (10) days prior to the date in question) for
which prices have been so reported; provided that if there are no bid and asked
prices reported during the ten (10) days prior to the date in question, the
Value of the REIT Shares shall be determined by the General Partner acting in
good faith on the basis of such quotations and other information as it
considers, in its reasonable judgment, appropriate. In the event the REIT Shares
Amount includes Rights, then the Value of such Rights shall be determined by the
General Partner acting in good faith on the basis of such quotations and other
information as it considers, in its reasonable judgment, appropriate, provided
that the Value of any rights issued pursuant to a "Shareholder Rights Plan"
shall be deemed to have no value unless a "triggering event" shall have occurred
(i.e., if the Rights issued pursuant thereto are no longer "attached" to the
REIT Shares and are able to trade independently).
ARTICLE 2
ORGANIZATIONAL MATTERS
Section 2.1 Formation
The Partnership is a limited partnership organized pursuant to the
provisions of the Act. The Partners hereby agree to continue the Partnership
upon the terms and conditions set forth in this Agreement. Except as expressly
provided herein to the contrary, the rights and obligations of the Partners and
the administration and termination of the Partnership shall be governed by the
Act. The Partnership Interest of each Partner shall be personal property for
all purposes.
Section 2.2 Name
The name of the Partnership is Boston Properties Limited Partnership. The
Partnership's business may be conducted under any other name or names deemed
advisable by the General Partner, including the name of the General Partner or
any Affiliate thereof. The words "Limited Partnership," "L.P.," "Ltd." or
similar words or letters shall be included in the Partnership's name where
necessary for the purposes of complying with the laws of any jurisdiction that
so requires. The General Partner in its sole and absolute discretion may change
the name of the Partnership at any time and from time to time and shall notify
the Limited Partners of such change in the next regular communication to the
Limited Partners.
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Section 2.3 Registered Office and Agent; Principal Office
The address of the registered office of the Partnership in the State of
Delaware and the name and address of the registered agent for service of process
on the Partnership in the State of Delaware is The Corporation Trust Company,
Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801. The
principal office of the Partnership shall be 8 Arlington Street, Boston, MA
02116, or such other place as the General Partner may from time to time
designate by notice to the Limited Partners. The Partnership may maintain
offices at such other place or places within or outside the State of Delaware as
the General Partner deems advisable.
Section 2.4 Power of Attorney
A. Each Limited Partner and each Assignee hereby constitutes and appoints
the General Partner, any Liquidator, and authorized officers and attorneys-in-
fact of each, and each of those acting singly, in each case with full power of
substitution, as its true and lawful agent and attorney-in-fact, with full power
and authority in its name, place and stead to:
(1) execute, swear to, acknowledge, deliver, file and record in the
appropriate public offices (a) all certificates, documents and
other instruments (including, without limitation, this Agreement
and the Certificate of Limited Partnership and all amendments or
restatements thereof) that the General Partner or the Liquidator
deems appropriate or necessary to form, qualify or continue the
existence or qualification of the Partnership as a limited
partnership (or a partnership in which the Limited Partners have
limited liability) in the State of Delaware and in all other
jurisdictions in which the Partnership may or plans to conduct
business or own property; (b) all instruments that the General
Partner deems appropriate or necessary to reflect any amendment,
change, modification or restatement of this Agreement in
accordance with its terms; (c) all conveyances and other
instruments or documents that the General Partner or the
Liquidator deems appropriate or necessary to reflect the
dissolution and liquidation of the Partnership pursuant to the
terms of this Agreement, including, without limitation, a
certificate of cancellation; (d) all instruments relating to the
admission, withdrawal, removal or substitution of any Partner
pursuant to, or other events described in, Article 11, 12 or 13
hereof or the Capital Contribution of any Partner; and (e) all
certificates, documents and other instruments relating to the
determination of the rights, preferences and privileges of
Partnership Interests; and
(2) execute, swear to, seal, acknowledge and file all ballots,
consents, approvals, waivers, certificates and other instruments
appropriate or
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necessary, in the sole and absolute discretion of the General
Partner or any Liquidator, to make, evidence, give, confirm or
ratify any vote, consent, approval, agreement or other action
which is made or given by the Partners hereunder or is consistent
with the terms of this agreement or appropriate or necessary, in
the sole discretion of the General Partner or any Liquidator, to
effectuate the terms or intent of this Agreement.
Nothing contained herein shall be construed as authorizing the General Partner
or any Liquidator to amend this Agreement except in accordance with Article 14
hereof or as may be otherwise expressly provided for in this Agreement.
B. The foregoing power of attorney is hereby declared to be irrevocable
and a power coupled with an interest, in recognition of the fact that each of
the Partners will be relying upon the power of the General Partner and any
Liquidator to act as contemplated by this Agreement in any filing or other
action by it on behalf of the Partnership, and it shall survive and not be
affected by the subsequent Incapacity of any Limited Partner or Assignee and the
transfer of all or any portion of such Limited Partner's or Assignee's
Partnership Units and shall extend to such Limited Partner's or Assignee's
heirs, successors, assigns and personal representatives. Each such Limited
Partner or Assignee hereby agrees to be bound by any representation made by the
General Partner or any Liquidator, acting in good faith pursuant to such power
of attorney, and each such Limited Partner or Assignee hereby waives any and all
defenses which may be available to contest, negate or disaffirm the action of
the General Partner or any Liquidator, taken in good faith under such power of
attorney. Each Limited Partner or Assignee shall execute and deliver to the
General Partner or the Liquidator, within fifteen (15) days after receipt of the
General Partner's or Liquidator's request therefor, such further designation,
powers of attorney and other instruments as the General Partner or the
Liquidator, as the case may be, deems necessary to effectuate this Agreement and
the purposes of the Partnership.
Section 2.5 Term
The term of the Partnership commenced on April 8, 1997, the date on which
the Certificate of Limited Partnership was filed in the office of the Secretary
of State of the State of Delaware, and shall continue until December 31, 2095,
unless the Partnership is dissolved sooner pursuant to the provisions of Article
13 or as otherwise provided by law.
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ARTICLE 3
PURPOSE
Section 3.1 Purpose and Business
The purpose and nature of the business to be conducted by the Partnership
is (i) to conduct any business that may be lawfully conducted by a limited
partnership organized pursuant to the Act; provided, however, that such business
shall be limited to and conducted in such a manner as to permit the Company at
all times to be classified as a REIT, unless the Company ceases to qualify as a
REIT for reasons other than the conduct of the business of the Partnership; (ii)
to enter into any partnership, joint venture, limited liability company or other
similar arrangement to engage in any of the foregoing or to own interests in any
entity engaged, directly or indirectly, in any of the foregoing; and (iii) to do
anything necessary or incidental to the foregoing. In connection with the
foregoing, and without limiting the Company's right, in its sole discretion, to
cease qualifying as a REIT, the Partners acknowledge the Company's current
status as a REIT inures to the benefit of all of the Partners and not solely the
General Partner. The General Partner shall also be empowered to do any and all
acts and things necessary or prudent to ensure that the Partnership will not be
classified as a "publicly traded partnership" for purposes of Section 7704 of
the Code, including but not limited to imposing restrictions on transfers and
restrictions on redemptions.
Section 3.2 Powers
The Partnership is empowered to do any and all acts and things necessary,
appropriate, proper, advisable, incidental to or convenient for the furtherance
and accomplishment of the purposes and business described herein and for the
protection and benefit of the Partnership, including, without limitation, full
power and authority, directly or through its ownership interest in other
entities, to enter into, perform and carry out contracts of any kind, borrow
money and issue evidences of indebtedness whether or not secured by mortgage,
deed of trust, pledge or other lien, acquire, own, manage, improve and develop
real property, and lease, sell, transfer and dispose of real property; provided,
however, that the Partnership shall not take, or refrain from taking, any action
which, in the judgment of the General Partner, in its sole and absolute
discretion, (i) could adversely affect the ability of the Company to continue to
qualify as a REIT; (ii) could subject the Company to any additional taxes under
Section 857 or Section 4981 of the Code; or (iii) could violate any law or
regulation of any governmental body or agency having jurisdiction over the
Company or its securities, unless such action (or inaction) shall have been
specifically consented to by the General Partner in writing.
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ARTICLE 4
CAPITAL CONTRIBUTIONS
Section 4.1 Capital Contributions of the Partners
A. Initial Capital Contributions and Recapitalization of the Partnership
on the Effective Date. The Company and Edward H. Linde previously made Capital
Contributions to the Partnership upon its formation, which contributions were
returned to them on the Effective Date. On the Effective Date, the Company, as
General Partner and as a Limited Partner, Edward H. Linde, as a Limited Partner,
and the other Persons listed on Schedule A made Capital Contributions to the
Partnership as set forth therein (except that certain of such Persons, as
described in the recitals hereof, were deemed to have made Capital Contributions
prior to the Effective Date). On the Effective Date, the Partnership was
recapitalized, and the General Partner completed Exhibit A to reflect the
Capital Contributions made by each Partner, the Partnership Units assigned to
each Partner and (in the case of Common Units) the Percentage Interest in the
Partnership represented by such Common Units. The Capital Accounts of the
Partners and the Carrying Values of the Partnership's Assets were determined as
of the Effective Date pursuant to Section I.D of Exhibit B hereto to reflect the
Capital Contributions made prior to and on the Effective Date. On the date of
the Subsequent Amendments as described in the recitals, the General Partner
completed Exhibit A to reflect the Capital Contributions made by each Partner,
the Partnership Units assigned to each Partner and the Percentage Interest in
the Partnership represented by such Partnership Units, and the Carrying Values
of the Partnership's Assets were redetermined as of the date of the Subsequent
Amendments pursuant to Section I.D of Exhibit B hereto.
B. General Partnership Interest. A number of Common Units held by the
Company equal to one percent (1%) of all outstanding Common Units shall be
deemed to be the General Partner Partnership Units and shall be the General
Partnership Interest. All other Partnership Units held by the Company shall be
deemed to be Limited Partnership Interests and shall be held by the General
Partner in its capacity as a Limited Partner in the Partnership.
C. Capital Contributions By Merger. To the extent the Partnership
acquires any property by the merger of any other Person into the Partnership,
Persons who receive Partnership Interests in exchange for their interests in the
Person merging into the Partnership shall become Partners and shall be deemed to
have made Capital Contributions as provided in the applicable merger agreement
and as set forth in Exhibit A, as amended to reflect such deemed Capital
Contributions.
D. No Obligation to Make Additional Capital Contributions. Each Partner
shall own the number of Common Units and other Partnership Units set forth for
such Partner in Exhibit A and shall have a Percentage Interest in the
Partnership as set forth in Exhibit A, which Percentage Interest shall be
adjusted in Exhibit A from time to time by the General Partner to the extent
necessary to reflect accurately redemptions, additional Capital
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Contributions, the issuance of additional Common Units (pursuant to any merger
or otherwise), or similar events having an effect on any Partner's Percentage
Interest. The number of Common Units held by the General Partner, in its
capacity as general partner, (equal to one percent (1%) of all outstanding
Common Units from time to time) shall be deemed to be the General Partner
Interest. Except as provided in Sections 4.2, 10.5 or elsewhere in this
Agreement, the Partners shall have no obligation to make any additional Capital
Contributions or loans to the Partnership.
Section 4.2 Issuances of Additional Partnership Interests
A. The General Partner is hereby authorized to cause the Partnership from
time to time to issue to the Partners (including the General Partner and its
Affiliates) or other Persons (including, without limitation, in connection with
the contribution of property to the Partnership) additional Common Units or
other Partnership Interests in one or more classes, or one or more series of any
of such classes, with such designations, preferences and relative,
participating, optional or other special rights, powers and duties, including
rights, powers and duties senior to the Limited Partner Interests issued on the
Effective Date and any other Common Units thereafter issued, all as shall be
determined by the General Partner in its sole and absolute discretion subject to
Delaware law, including, without limitation, (i) the allocations of items of
Partnership income, gain, loss, deduction and credit to each such class or
series of Partnership Interests; (ii) the right of each such class or series of
Partnership Interests to share in Partnership distributions; and (iii) the
rights of each such class or series of Partnership Interests upon dissolution
and liquidation of the Partnership; provided that no such additional Partnership
Units or other Partnership Interests shall be issued to the General Partner,
unless either (a)(1) the additional Partnership Interests are issued in
connection with the grant, award or issuance of REIT Shares or other equity
interests by the Company, which REIT shares or other equity interests have
designations, preferences and other rights such that the economic interests
attributable to such REIT shares or other equity interests are substantially
similar to the designations, preferences and other rights of the additional
Partnership Interests issued to the General Partner in accordance with this
Section 4.2.A, and (2) the Company shall make a Capital Contribution to the
Partnership in an amount equal to the proceeds raised in connection with such
issuance, or (b) the additional Partnership Interests are issued to all Partners
in proportion to their respective Percentage Interests. In addition, the
Company may acquire Units from other Partners pursuant to this Agreement. In
the event that the Partnership issues Partnership Interests pursuant to this
Section 4.2.A, the General Partner shall make such revisions to this Agreement
(without any requirement of receiving approval of the Limited Partners)
including but not limited to the revisions described in Section 5.4, Section 6.1
and Section 8.6 hereof, as it deems necessary to reflect the issuance of such
additional Partnership Interests and the special rights, powers and duties
associated therewith. Unless specifically set forth otherwise by the General
Partner, any Partnership Interest issued after the Effective Date shall
represent Common Units.
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B. From and after the date hereof, the Company shall not issue any
additional REIT Shares (other than REIT Shares issued pursuant to Section 8.6),
or rights, options, warrants or convertible or exchangeable securities
containing the right to subscribe for or purchase REIT Shares (collectively "New
Securities") other than to all holders of REIT Shares unless (i) the General
Partner shall cause the Partnership to issue to the Company, Partnership
Interests or rights, options, warrants or convertible or exchangeable securities
of the Partnership having designations, preferences and other rights, all such
that the economic interests are substantially similar to those of the New
Securities; and (ii) the Company contributes to the Partnership the proceeds
from the issuance of such New Securities and from the exercise of rights
contained in such New Securities. Without limiting the foregoing, the Company
is expressly authorized to issue New Securities for no tangible value or for
less than fair market value, and the General Partner is expressly authorized to
cause the Partnership to issue to the Company corresponding Partnership
Interests, so long as (x) the General Partner concludes in good faith that such
issuance is in the interests of the Company and the Partnership (for example,
and not by way of limitation, the issuance of REIT Shares and corresponding
Units pursuant to an employee stock purchase plan providing for employee grants
or purchases of REIT Shares or employee stock options that have an exercise
price that is less than the fair market value of the REIT Shares, either at the
time of issuance or at the time of exercise); and (y) the Company contributes
all proceeds, if any, from such issuance and exercise to the Partnership.
Section 4.3 Contribution of Proceeds of Issuance of REIT Shares
In connection with the initial public offering of REIT Shares by the
Company and any other issuance of New Securities pursuant to Section 4.2, the
Company shall contribute to the Partnership any proceeds (or a portion thereof)
raised in connection with such issuance; provided that if the proceeds actually
received by the Company are less than the gross proceeds of such issuance as a
result of any underwriter's discount or other expenses paid or incurred in
connection with such issuance, then the Company shall be deemed to have made a
Capital Contribution to the Partnership in the amount equal to the sum of the
net proceeds of such issuance plus the amount of such underwriter's discount and
other expenses paid by the Company (which discount and expense shall be treated
as an expense for the benefit of the Partnership for purposes of Section 7.4).
In the case of employee acquisitions of New Securities at a discount from fair
market value or for no value in connection with a grant of New Securities, the
amount of such discount representing compensation to the employee, as determined
by the General Partner, shall be treated as an expense of the issuance of such
New Securities.
ARTICLE 5
DISTRIBUTIONS
Section 5.1 Requirement and Characterization of Distributions
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Subject to the rights and preferences of any outstanding class or series of
Preferred Units as set forth in the Certificate of Designations therefor
attached hereto, or as otherwise provided herein with respect to Partnership
Interests other than Common Units, and except as provided in Section 5.1.B the
General Partner shall distribute at least quarterly an amount equal to one
hundred percent (100%) of Available Cash generated by the Partnership during
such quarter or shorter period to the Common Unitholders who are Partners on the
Partnership Record Date with respect to such quarter or shorter period in
accordance with their respective Percentage Interests on such Partnership Record
Date; provided that in no event may a Partner receive a distribution of
Available Cash with respect to a Common Unit if such Partner is entitled to
receive a distribution out of such Available Cash with respect to a REIT Share
for which such Common Unit has been exchanged and such distribution shall
instead be made to the Company. The General Partner shall take such reasonable
efforts, as determined by it in its sole and absolute discretion and consistent
with the Company's qualification as a REIT, to distribute Available Cash (a) to
the Limited Partners so as to preclude any such distribution or portion thereof
from being treated as part of a sale of property to the Partnership by a Limited
Partner under Section 707 of the Code or the Regulations thereunder; provided
that the General Partner and the Partnership shall not have liability to a
Limited Partner under any circumstances as a result of any distribution to a
Limited Partner being so treated and (b) to satisfy the requirements for
qualifying as a REIT under the Code. Unless otherwise expressly provided for
herein or in an agreement at the time a new class of Partnership Interests is
created in accordance with Article 4 hereof, no Partnership Interest shall be
entitled to a distribution in preference to any other Partnership Interest.
B. Notwithstanding the provisions of Section 5.1.A above or any
other provision of this Agreement, if for any quarter or shorter period with
respect to which a distribution is to be made (a "Distribution Period"), a
"Newly Issued Unit" (as such term is defined below) is outstanding on the
Partnership Record Date for such Distribution Period, there shall not be
distributed in respect of such Newly Issued Unit the amount (the "Full
Distribution Amount") that would otherwise be distributed in respect of such
Unit in accordance with Section 5.1.A. Rather, the General Partner shall cause
to be distributed with respect to each such Newly Issued Unit an amount equal to
the Full Distribution Amount multiplied by a fraction, the numerator of which
equals the number of days such Newly Issued Unit has been outstanding during the
Distribution Period and the denominator of which equals the total number of days
in such Distribution Period. Any Available Cash not distributed to the holders
of Units by operation of this Section 5.1.B shall be retained by the Partnership
and applied toward future distributions or payment of Partnership expenses. The
General Partner may, in its sole discretion, with respect to any distribution,
waive the application of this Section 5.1.B such that a Newly Issued Unit shall
receive the Full Distribution Amount (or any greater amount than would otherwise
be received under this Section 5.1.B but not in excess of the Full Distribution
Amount). For purposes of this Section 5.1.B, the term "Newly Issued Unit" shall
mean, with respect to any Distribution Period, a Common Unit issued during such
Distribution Period, except that the term "Newly Issued Unit" shall not include
(i) a Common Unit issued to the Company as a result of the contribution by it of
proceeds from the issuance
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of New Securities (as contemplated by Sections 4.2 and 4.3) or (ii) (unless
otherwise provided by the General Partner) any Common Units issued in connection
with a split on or unit dividend of the Common Units.
Section 5.2 Amounts Withheld
All amounts withheld pursuant to the Code or any provisions of any state or
local tax law and Section 10.5 hereof with respect to any allocation, payment or
distribution to the Partners or Assignees shall be treated as amounts
distributed to the Partners or Assignees pursuant to Section 5.1 for all
purposes under this Agreement.
Section 5.3 Distributions Upon Liquidation
Proceeds from a Terminating Capital Transaction and any other cash received
or reductions in reserves made after commencement of the liquidation of the
Partnership shall be distributed to the Partners in accordance with Section
13.2.
Section 5.4 Revisions to Reflect Issuance of Additional Partnership
Interests
In the event that the Partnership issues additional Partnership Interests
to the General Partner or any Additional Limited Partner pursuant to Article 4
hereof, the General Partner shall make such revisions to this Article 5 as it
deems necessary to reflect the issuance of such additional Partnership Interests
and any special rights, duties or powers with respect thereto.
ARTICLE 6
ALLOCATIONS
Section 6.1 Allocations For Capital Account Purposes
For purposes of maintaining the Capital Accounts and in determining the
rights of the Partners among themselves, the Partnership's items of income,
gain, loss and deduction (computed in accordance with Exhibit B hereof) shall be
allocated among the Partners in each taxable year (or portion thereof) as
provided herein below.
A. After taking into account the provisions of Section 6.1.B below, Net
Income shall be allocated
(i) First, to the Partners in the same ratio and reverse order as Net
Loss was allocated to such Partners pursuant to Section
6.1.C(ii), (iii), (iv), (v) and (vi) for all fiscal years until
the aggregate amount allocated to such
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Partners pursuant to such
provisions of Section 6.1.C equals the aggregate amount allocated
pursuant to this Section 6.1.A(i);
(ii) Thereafter, Net Income shall be allocated to the Partners in
accordance with their respective Percentage Interests.
B. (i) Notwithstanding the provisions of Section 6.1.A above, items of
gross income shall first be allocated to the holders of each class of Preferred
Units, (a) on a class by class basis (1) in the order of priority in which each
such class is entitled to receive distributions pursuant to the provisions of
Section 5.1 and/or the Certificate of Designations attached hereto and (2) in an
amount equal to the aggregate distributions made to each such class of Preferred
Units pursuant to the provisions of Section 5.1 or the Certificates of
Designations attached hereto (other than distributions properly treated as
return of capital), and (b) within each such class of Preferred Units in
proportion to the distributions with respect to such class referred to in clause
(2) above received by each holder of Preferred Units (other than distributions
properly treated as return of capital).
(ii) In the event of the redemption of any Common Units which have been
converted from Preferred Units ("Converted units") pursuant to Section 8.6.A or
in the event of a liquidation of the Partnership (or a Partner's interest
therein, who is a holder of any such Converted Units), there shall be a special
allocation of Net Income (or items of gross income if there is insufficient Net
Income) to the Partner who holds such Converted Units being redeemed or
liquidated and with respect to such Converted Units in an amount such that the
Adjusted Capital Account balance allocable to each such Converted Unit is equal
to the Adjusted Capital Account balance allocable to each other Common Unit
(other than any Converted Unit not being redeemed at such time). This Section
6.1.B(ii) shall not apply if the Company exercises its right to purchase such
Converted Units pursuant to Section 8.6.B. However, this Section 6.1.B(ii) shall
apply if the Company or any other transferee of a Converted Unit subsequently
has such Converted Unit redeemed or liquidated by the Partnership.
C. After giving effect to the special allocations set forth in Section 1
of Exhibit C attached hereto, Net Losses shall be allocated to the Partners in
the following order:
(i) First, in the same ratio and reverse order as Net Income was
allocated to the Partners pursuant to the provisions of Section
6.1.A(ii) for all fiscal years until the aggregate amount of
Net Income previously allocated to such Partners pursuant to
such provisions of Section 6.1.A(ii) equals the aggregate
amount of Net Loss allocated to such Partners pursuant to this
Section 6.1.B(i);
(ii) Second, to the Partners, in proportion to their Percentage
Interests until each Partner's Modified Adjusted Capital
Account balance has been reduced to zero, excluding, for this
purpose, the portion of any such Capital Account attributable
to Capital Contributions made with respect to Preferred Units;
(iii) Third, to the holders of each class of Preferred Units, on a
class by class basis, in the reverse priority in which each
such class is entitled to distributions pursuant to the
provisions of Section 5.1.A and/or the Certificate of
Designations attached hereto, and within such class to each
holder of such class of Preferred Units, pro rata, in
proportion to the portion of their Modified Adjusted Capital
Account balance attributable to Capital Contributions made with
respect to such class of Preferred Units until such portion of
their Modified Adjusted Capital Account balance has been
reduced to zero;
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(iv) Fourth, to the General Partner until the General Partner's
negative Modified Adjusted Capital Account balance is equal to
the excess, if any, of the aggregate recourse liabilities of
the Partnership over the aggregate amount of recourse
partnership debt (the "Recourse Debt Amount") set forth on the
recourse debt level schedule attached hereto as Exhibit F, as
appropriately amended from time to time;
(v) Fifth, to the Limited Partners listed on the recourse debt
level schedule attached hereto as Exhibit F, in proportion to
each such Limited Partner's Limited Partner Recourse Debt
Percentage, until the sum of such Limited Partners' negative
Modified Adjusted Capital Account balances equals the Recourse
Debt Amount; and
(vi) Sixth, 100% to the General Partner.
C. The Partners agree that Nonrecourse Liabilities of the Partnership
shall be allocated among the Partners in accordance with the provisions of
Regulations Section 1.752-3, as modified by any guidance published by the
Internal Revenue Service, or otherwise reasonably interpreted.
D. Any gain allocated to the Partners upon the sale or other taxable
disposition of any Partnership asset shall, to the extent possible, after taking
into account other required allocations of gain pursuant to Exhibit C, be
characterized as Recapture Income in the same proportions and to the same extent
as such Partners have been allocated any deductions directly or indirectly
giving rise to the treatment of such gains as Recapture Income.
In the event that the Partnership issues additional Partnership Interests
to the General Partner, or any Additional Limited Partner pursuant to Article 4
hereof, the General Partner shall make such revisions to this Section 6.1 as it
determines are necessary to reflect the terms of the issuance of such additional
Partnership Interests, including making preferential allocations to certain
classes of Partnership Interests.
ARTICLE 7
MANAGEMENT AND OPERATIONS OF BUSINESS
Section 7.1 Management
A. Except as otherwise expressly provided in this Agreement, all
management powers over the business and affairs of the Partnership are and shall
be exclusively vested in the General Partner, and no Limited Partner shall have
any right to participate in or exercise control or management power over the
business and affairs of the Partnership. The General Partner may not be removed
by the Limited Partners with or without cause. In addition to the
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powers now or hereafter granted a general partner of a limited partnership under
applicable law or which are granted to the General Partner under any other
provision of this Agreement, the General Partner, subject to Section 7.3 hereof,
shall have full power and authority to do all things deemed necessary or
desirable by it to conduct the business of the Partnership, to exercise all
powers set forth in Section 3.2 hereof and to effectuate the purposes set forth
in Section 3.1 hereof, including, without limitation:
(1) the making of any expenditures, the lending or borrowing of money
(including, without limitation, making prepayments on loans and
borrowing money to permit the Partnership to make distributions
to its Partners in such amounts as will permit the Company (so
long as the Company qualifies as a REIT) to avoid the payment of
any federal income tax (including, for this purpose, any excise
tax pursuant to Section 4981 of the Code) and to make
distributions to its shareholders in amounts sufficient to permit
the Company to maintain REIT status), the assumption or guarantee
of, or other contracting for, indebtedness and other liabilities,
the issuance of evidence of indebtedness (including the securing
of the same by deed, mortgage, deed of trust or other lien or
encumbrance on the Partnership's assets) and the incurring of any
obligations it deems necessary for the conduct of the activities
of the Partnership;
(2) the making of tax, regulatory and other filings, or rendering of
periodic or other reports to governmental or other agencies
having jurisdiction over the business or assets of the
Partnership, the registration of any class of securities of the
Partnership under the Securities Exchange Act of 1934, as
amended, and the listing of any debt securities of the
Partnership on any exchange;
(3) the acquisition, disposition, mortgage, pledge, encumbrance,
hypothecation or exchange of any assets of the Partnership
(including the exercise or grant of any conversion, option,
privilege, or subscription right or other right available in
connection with any assets at any time held by the Partnership)
or the merger or other combination of the Partnership with or
into another entity (all of the foregoing subject to any prior
approval only to the extent required by Section 7.3 hereof);
(4) the use of the assets of the Partnership (including, without
limitation, cash on hand) for any purpose consistent with the
terms of this Agreement and on any terms it sees fit, including,
without limitation, the financing of the conduct of the
operations of the Company, the Partnership or any of the
Partnership's Subsidiaries, the lending of funds to other Persons
(including, without limitation, the Subsidiaries of the
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Partnership and/or the Company) and the repayment of obligations
of the Partnership and its Subsidiaries and any other Person in
which it has an equity investment, and the making of capital
contributions to its Subsidiaries;
(5) the management, operation, leasing, landscaping, repair,
alteration, demolition or improvement of any real property or
improvements owned by the Partnership or any Subsidiary of the
Partnership;
(6) the negotiation, execution, and performance of any contracts,
conveyances or other instruments that the General Partner
considers useful or necessary to the conduct of the Partnership's
operations or the implementation of the General Partner's powers
under this Agreement, including contracting with contractors,
developers, consultants, accountants, legal counsel, other
professional advisors and other agents and the payment of their
expenses and compensation out of the Partnership's assets;
(7) the distribution of Partnership cash or other Partnership assets
in accordance with this Agreement;
(8) holding, managing, investing and reinvesting cash and other
assets of the Partnership;
(9) the collection and receipt of revenues and income of the
Partnership;
(10) the establishment of one or more divisions of the Partnership,
the selection and dismissal of employees of the Partnership
(including, without limitation, employees having titles such as
"president," "vice president," "secretary" and "treasurer" of the
Partnership), and agents, outside attorneys, accountants,
consultants and contractors of the Partnership, and the
determination of their compensation and other terms of employment
or hiring;
(11) the maintenance of such insurance for the benefit of the
Partnership, the Partner and directors and officers thereof as it
deems necessary or appropriate;
(12) the formation of, or acquisition of an interest in, and the
contribution of property to, any further limited or general
partnerships, joint ventures or other relationships that it deems
desirable (including, without limitation, the acquisition of
interests in, and the contributions of property to, its
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Subsidiaries and any other Person in which it has an equity
investment from time to time);
(13) the control of any matters affecting the rights and obligations
of the Partnership, including the settlement, compromise,
submission to arbitration or any other form of dispute
resolution, or abandonment of, any claim, cause of action,
liability, debt or damages, due or owing to or from the
Partnership, the commencement or defense of suits, legal
proceedings, administrative proceedings, arbitration or other
forms of dispute resolution, and the representation of the
Partnership in all suits or legal proceedings, administrative
proceedings, arbitrations or other forms of dispute resolution,
the incurring of legal expense, and the indemnification of any
Person against liabilities and contingencies to the extent
permitted by law;
(14) the undertaking of any action in connection with the
Partnership's direct or indirect investment in its Subsidiaries
or any other Person (including, without limitation, the
contribution or loan of funds by the Partnership to such
Persons);
(15) the determination of the fair market value of any Partnership
property distributed in kind using such reasonable method of
valuation as the General Partner may adopt;
(16) the exercise, directly or indirectly, through any attorney-in-
fact acting under a general or limited power of attorney, of any
right, including the right to vote, appurtenant to any asset or
investment held by the Partnership;
(17) the exercise of any of the powers of the General Partner
enumerated in this Agreement on behalf of or in connection with
any Subsidiary of the Partnership or any other Person in which
the Partnership has a direct or indirect interest, or jointly
with any such Subsidiary or other Person;
(18) the exercise of any of the powers of the General Partner
enumerated in this Agreement on behalf of any Person in which the
Partnership does not have an interest pursuant to contractual or
other arrangements with such Person;
(19) the making, execution and delivery of any and all deeds, leases,
notes, mortgages, deeds of trust, security agreements,
conveyances, contracts, guarantees, warranties, indemnities,
waivers, releases or legal instruments or agreements in writing
necessary or appropriate, in the
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judgment of the General Partner,
for the accomplishment of any of the powers of the General
Partner enumerated in this Agreement; and
(20) the issuance of additional Partnership Units, as appropriate, in
connection with Capital Contributions by Additional Limited
Partners and additional Capital Contributions by Partners
pursuant to Article 4 hereof.
B. Each of the Limited Partners agrees that the General Partner is
authorized to execute, deliver and perform the above-mentioned agreements and
transactions on behalf of the Partnership without any further act, approval or
vote of the Partners, notwithstanding any other provision of this Agreement
(except as provided in Section 7.3 or Section 8.7), the Act or any applicable
law, rule or regulation, to the fullest extent permitted under the Act or other
applicable law, rule or regulation. The execution, delivery or performance by
the General Partner or the Partnership of any agreement authorized or permitted
under this Agreement shall not constitute a breach by the General Partner of any
duty that the General Partner may owe the Partnership or the Limited Partners or
any other Persons under this Agreement or of any duty stated or implied by law
or equity.
C. At all times from and after the date hereof, the General Partner may
cause the Partnership to establish and maintain at any and all times working
capital accounts and other cash or similar balances in such amounts as the
General Partner, in its sole and absolute discretion, deems appropriate and
reasonable from time to time.
D. In exercising its authority under this Agreement, the General Partner
may, but shall be under no obligation to, take into account the tax consequences
to any Partner of any action taken by it. The General Partner and the
Partnership shall not have liability to a Limited Partner under any
circumstances, as a result of an income tax liability incurred by such Limited
Partner as a result of an action (or inaction) by the General Partner taken
pursuant to its authority under this Agreement and in accordance with the terms
of Section 7.3 and Section 8.7. The Limited Partners expressly acknowledge that
the General Partner is acting on behalf of the Partnership, the Company and the
Company's stockholders collectively.
Section 7.2 Certificate of Limited Partnership
The General Partner has previously filed the Certificate of Limited
Partnership with the Secretary of State of the State of Delaware as required by
the Act. The General Partner shall use all reasonable efforts to cause to be
filed such other certificates or documents as may be reasonable and necessary or
appropriate for the formation, continuation, qualification and operation of a
limited partnership (or a partnership in which the limited partners have limited
liability) in the State of Delaware and any other state, or the District of
Columbia, in which the Partnership may elect to do business or own property. To
the extent that such action is determined by the General Partner to be
reasonable and necessary or appropriate, the General
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Partner shall file amendments to and restatements of the Certificate of Limited
Partnership and do all of the things to maintain the Partnership as a limited
partnership (or a partnership in which the limited partners have limited
liability) under the laws of the State of Delaware and each other state, or the
District of Columbia, in which the Partnership may elect to do business or own
property. Subject to the terms of Section 8.5.A(4) hereof, the General Partner
shall not be required, before or after filing, to deliver or mail a copy of the
Certificate of Limited Partnership or any amendment thereto to any Limited
Partner.
Section 7.3 Restrictions on General Partner Authority. The General
Partner may not take any action in contravention of an express prohibition or
limitation of this Agreement without the written Consent of Limited Partners
holding a majority of the Common Units of the Limited Partners (including
Limited Partner Common Units held by the Company), or such other percentage of
the Limited Partners as may be specifically provided for under a provision of
this Agreement.
Section 7.4 Reimbursement of the General Partner and the Company; DRIP's
and Repurchase Programs
A. Except as provided in this Section 7.4 and elsewhere in this Agreement
(including the provisions of Articles 5 and 6 regarding distributions, payments,
and allocations to which it may be entitled), the General Partner shall not be
compensated for its services as general partner of the Partnership.
B. The General Partner shall be reimbursed on a monthly basis, or such
other basis as it may determine in its sole and absolute discretion, for all
expenses that it incurs relating to the ownership and operation of, or for the
benefit of, the Partnership (including, without limitation, (i) expenses
relating to the ownership of interests in and operation of the Partnership, (ii)
compensation of the Company's officers and employees including, without
limitation, payments under the General Partner's Stock Incentive Plans that
provides for stock units, or other phantom stock, pursuant to which employees of
the General Partner will receive payments based upon dividends on or the value
of REIT Shares, (iii) director fees and expenses and (iv) all costs and expenses
of being a public company, including costs of filings with the SEC, reports and
other distributions to its stockholders); provided that the amount of any such
reimbursement shall be reduced by any interest earned by the General Partner
with respect to bank accounts or other instruments or accounts held by it on
behalf of the Partnership. The Partners acknowledge that all such expenses of
the General Partner are deemed to be for the benefit of the Partnership. Such
reimbursement shall be in addition to any reimbursement made as a result of
indemnification pursuant to Section 7.7 hereof.
C. As set forth in Section 4.3, the Company shall be treated as having
made a Capital Contribution in the amount of all expenses that it incurs
relating to the Company's initial public offering REIT of Shares.
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D. In the event that the Company shall elect to purchase from its
shareholders REIT Shares for the purpose of delivering such REIT Shares to
satisfy an obligation under any dividend reinvestment program adopted by the
Company, any employee stock purchase plan adopted by the Company, or any similar
obligation or arrangement undertaken by the Company in the future or for the
purpose of retiring such REIT Shares, the purchase price paid by the Company for
such REIT Shares and any other expenses incurred by the Company in connection
with such purchase shall be considered expenses of the Partnership and shall be
advanced to the Company or reimbursed to the Company, subject to the condition
that: (i) if such REIT Shares subsequently are sold by the Company, the Company
shall pay to the Partnership any proceeds received by the Company for such REIT
Shares (which sales proceeds shall include the amount of dividends reinvested
under any dividend reinvestment or similar program provided that a transfer of
REIT Shares for Units pursuant to Section 8.6 would not be considered a sale for
such purposes); and (ii) if such REIT Shares are not retransferred by the
Company within thirty (30) days after the purchase thereof, or the Company
otherwise determines not to retransfer such REIT Shares, the Company, as General
Partner, shall cause the Partnership to redeem a number of Common Units held by
the Company, as a Limited Partner, equal to the product obtained by dividing the
number of such REIT Shares by the Conversion Factor (in which case such
advancement or reimbursement of expenses shall be treated as having been made as
a distribution in redemption of such number of Units held by the Company).
Section 7.5 Outside Activities of the General Partner
The General Partner shall not directly or indirectly enter into or conduct
any business other than in connection with the ownership, acquisition and
disposition of Partnership Interests and the management of the business of the
Partnership, and such activities as are incidental thereto. The General Partner
and any Affiliates of the General Partner may acquire Limited Partner Interests
and shall be entitled to exercise all rights of a Limited Partner relating to
such Limited Partner Interests.
Section 7.6 Contracts with Affiliates
A. The Partnership may lend or contribute funds or other assets to its
Subsidiaries or other Persons in which it has an equity investment and such
Persons may borrow funds from the Partnership, on terms and conditions
established in the sole and absolute discretion of the General Partner. The
foregoing authority shall not create any right or benefit in favor of any
Subsidiary or any other Person.
B. Except as provided in Section 7.5, the Partnership may transfer assets
to joint ventures, other partnerships, corporations or other business entities
in which it is or thereby becomes a participant upon such terms and subject to
such conditions consistent with this Agreement and applicable law as the General
Partner, in its sole and absolute discretion, believes are advisable.
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C. Except as expressly permitted by this Agreement, neither the General
Partner nor any of its Affiliates shall sell, transfer or convey any property
to, or purchase any property from, the Partnership, directly or indirectly,
except pursuant to transactions that are determined by the General Partner in
good faith to be fair and reasonable.
D. The General Partner, in its sole and absolute discretion and without
the approval of the Limited Partners, may propose and adopt, on behalf of the
Partnership, employee benefit plans, stock option plans, and similar plans
funded by the Partnership for the benefit of employees of the General Partner,
the Partnership, Subsidiaries of the Partnership or any Affiliate of any of them
in respect of services performed, directly or indirectly, for the benefit of the
Partnership, the General Partner, or any Subsidiaries of the Partnership.
E. The General Partner is expressly authorized to enter into, in the name
and on behalf of the Partnership, a right of first opportunity arrangement and
other conflict avoidance agreements with various Affiliates of the Partnership
and the General Partner, on such terms as the General Partner, in its sole and
absolute discretion, believes are advisable.
Section 7.7 Indemnification
A. To the fullest extent permitted by Delaware law, the Partnership shall
indemnify each Indemnitee from and against any and all losses, claims, damages,
liabilities, joint or several, expenses (including, without limitation,
attorneys fees and other legal fees and expenses), judgments, fines,
settlements, and other amounts arising from any and all claims, demands,
actions, suits or proceedings, civil, criminal, administrative or investigative,
that relate to the operations of the Partnership or the Company as set forth in
this Agreement, in which such Indemnitee may be involved, or is threatened to be
involved, as a party or otherwise, unless it is established that: (i) the act or
omission of the Indemnitee was material to the matter giving rise to the
proceeding and either was committed in bad faith or was the result of active and
deliberate dishonesty; (ii) the Indemnitee actually received an improper
personal benefit in money, property or services; or (iii) in the case of any
criminal proceeding, the Indemnitee had reasonable cause to believe that the act
or omission was unlawful. Without limitation, the foregoing indemnity shall
extend to any liability of any Indemnitee, pursuant to a loan guaranty (except a
guaranty by a limited partner of nonrecourse indebtedness of the Partnership or
as otherwise provided in any such loan guaranty) or otherwise for any
indebtedness of the Partnership or any Subsidiary of the Partnership (including
without limitation, any indebtedness which the Partnership or any Subsidiary of
the Partnership has assumed or taken subject to), and the General Partner is
hereby authorized and empowered, on behalf of the Partnership, to enter into one
or more indemnity agreements consistent with the provisions of this Section 7.7
in favor of any Indemnitee having or potentially having liability for any such
indebtedness. The termination of any proceeding by conviction of an Indemnitee
or upon a plea of nolo contendere or its equivalent by an Indemnitee, or an
entry of an order of probation against an Indemnitee prior to judgment, creates
a rebuttable presumption that such
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Indemnitee acted in a manner contrary to that specified in this Section 7.7.A.
Any indemnification pursuant to this Section 7.7 shall be made only out of the
assets of the Partnership, and neither the General Partner nor any Limited
Partner shall have any obligation to contribute to the capital of the
Partnership, or otherwise provide funds, to enable the Partnership to fund its
obligations under this Section 7.7.
B. Reasonable expenses incurred by an Indemnitee who is a party to a
proceeding shall be paid or reimbursed by the Partnership in advance of the
final disposition of the proceeding upon receipt by the Partnership of (i) a
written affirmation by the Indemnitee of the Indemnitee's good faith belief that
the standard of conduct necessary for indemnification by the Partnership as
authorized in Section 7.7.A. has been met, and (ii) a written undertaking by or
on behalf of the Indemnitee to repay the amount if it shall ultimately be
determined that the standard of conduct has not been met.
C. The indemnification provided by this Section 7.7 shall be in addition
to any other rights to which an Indemnitee or any other Person may be entitled
under any agreement, pursuant to any vote of the Partners, as a matter of law or
otherwise, and shall continue as to an Indemnitee who has ceased to serve in
such capacity unless otherwise provided in a written agreement pursuant to which
such Indemnitee is indemnified.
D. The Partnership may, but shall not be obligated to, purchase and
maintain insurance, on behalf of the Indemnitees and such other Persons as the
General Partner shall determine, against any liability that may be asserted
against or expenses that may be incurred by such Person in connection with the
Partnership's activities, regardless of whether the Partnership would have the
power to indemnify such Person against such liability under the provisions of
this Agreement.
E. For purposes of this Section 7.7, the Partnership shall be deemed to
have requested an Indemnitee to serve as fiduciary of an employee benefit plan
whenever the performance by it of its duties to the Partnership also imposes
duties on, or otherwise involves services by, it to the plan or participants or
beneficiaries of the plan; excise taxes assessed on an Indemnitee with respect
to an employee benefit plan pursuant to applicable law shall constitute fines
within the meaning of Section 7.7; and actions taken or omitted by the
Indemnitee with respect to an employee benefit plan in the performance of its
duties for a purpose reasonably believed by it to be in the interest of the
participants and beneficiaries of the plan shall be deemed to be for a purpose
which is not opposed to the best interests of the Partnership.
F. In no event may an Indemnitee subject any of the Partners to personal
liability by reason of the indemnification provisions set forth in this
Agreement.
G. An Indemnitee shall not be denied indemnification in whole or in part
under this Section 7.7 because the Indemnitee had an interest in the transaction
with respect to which the
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indemnification applies if the transaction was otherwise permitted by the terms
of this Agreement.
H. The provisions of this Section 7.7 are for the benefit of the
Indemnitees, their heirs, successors, assigns and administrators and shall not
be deemed to create any rights for the benefit of any other Persons. Any
amendment, modification or repeal of this Section 7.7 or any provision hereof
shall be prospective only and shall not in any way affect the Partnership's
liability to any Indemnitee under this Section 7.7, as in effect immediately
prior to such amendment, modification, or repeal with respect to claims arising
from or relating to matters occurring, in whole or in part, prior to such
amendment, modification or repeal, regardless of when such claims may arise or
be asserted.
Section 7.8 Liability of the General Partner
A. Notwithstanding anything to the contrary set forth in this Agreement,
the General Partner and its officers and directors shall not be liable for
monetary damages to the Partnership, any Partners or any Assignees for losses
sustained or liabilities incurred as a result of errors in judgment or of any
act or omission if the General Partner acted in good faith.
B. The Limited Partners expressly acknowledge that, as stated in Section
7.1.D, the General Partner is acting on behalf of the Partnership and the
shareholders of the Company collectively, that the General Partner is under no
obligation to consider the separate interests of the Limited Partners in
deciding whether to cause the Partnership to take (or decline to take) any
actions, and that the General Partner shall not be liable for monetary damages
for losses sustained, liabilities incurred, or benefits not derived by Limited
Partners in connection with such decisions, provided that the General Partner
has acted in good faith.
C. Subject to its obligations and duties as General Partner set forth in
Section 7.1.A hereof, the General Partner may exercise any of the powers granted
to it by this Agreement and perform any of the duties imposed upon it hereunder
either directly or by or through its agents. The General Partner shall not be
responsible for any misconduct or negligence on the part of any such agent
appointed by the General Partner in good faith.
D. Any amendment, modification or repeal of this Section 7.8 or any
provision hereof shall be prospective only and shall not in any way affect the
limitations on the General Partner's and its officers' and directors' liability
to the Partnership and the Limited Partners under this Section 7.8 as in effect
immediately prior to such amendment, modification or repeal with respect to
claims arising from or relating to matters occurring, in whole or in part, prior
to such amendment, modification or repeal, regardless of when such claims may
arise or be asserted.
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Section 7.9 Other Matters Concerning the General Partner
A. The General Partner may rely and shall be protected in acting, or
refraining from acting, upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, bond, debenture, or other
paper or document believed by it in good faith to be genuine and to have been
signed or presented by the proper party or parties.
B. The General Partner may consult with legal counsel, accountants,
appraisers, management consultants, investment bankers, architects, engineers,
environmental consultants and other consultants and advisers selected by it, and
any act taken or omitted to be taken in reliance upon the opinion of such
Persons as to matters which such General Partner reasonably believes to be
within such Person's professional or expert competence shall be conclusively
presumed to have been done or omitted in good faith and in accordance with such
opinion.
C. The General Partner shall have the right, in respect of any of its
powers or obligations hereunder, to act through any of its duly authorized
officers and duly appointed attorneys-in-fact. Each such attorney shall, to the
extent provided by the General Partner in the power of attorney, have full power
and authority to do and perform all and every act and duty which is permitted or
required to be done by the General Partner hereunder.
D. Notwithstanding any other provisions of this Agreement or the Act, any
action of the General Partner on behalf of the Partnership or any decision of
the General Partner to refrain from acting on behalf of the Partnership,
undertaken in the good faith belief that such action or omission is necessary or
advisable in order (i) to protect the ability of the Company to continue to
qualify as a REIT; or (ii) to avoid the Company incurring any taxes under
Section 857 or Section 4981 of the Code, is expressly authorized under this
Agreement and is deemed approved by all of the Limited Partners.
Section 7.10 Title to Partnership Assets
Title to Partnership assets, whether real, personal or mixed and whether
tangible or intangible, shall be deemed to be owned by the Partnership as an
entity, and no Partner, individually or collectively, shall have any ownership
interest in such Partnership assets or any portion thereof. Title to any or all
of the Partnership assets may be held in the name of the Partnership, the
General Partner or one or more nominees, as the General Partner may determine,
including Affiliates of the General Partner. The General Partner hereby
declares and warrants that any Partnership assets for which legal title is held
in the name of the General Partner or any nominee or Affiliate of the General
Partner shall be held by the General Partner for the use and benefit of the
Partnership in accordance with the provisions of this Agreement; provided,
however, that the General Partner shall use its best efforts to cause beneficial
and record title to such assets to be vested in the Partnership as soon as
reasonably practicable if failure to so vest such title would have a material
adverse effect on the Partnership. All
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Partnership assets shall be recorded as the property of the Partnership in its
books and records, irrespective of the name in which legal title to such
Partnership assets is held.
Section 7.11 Reliance by Third Parties
Notwithstanding anything to the contrary in this Agreement, any Person
dealing with the Partnership shall be entitled to assume that the General
Partner has full power and authority, without consent or approval of any other
Partner or Person, to encumber, sell or otherwise use in any manner any and all
assets of the Partnership and to enter into any contracts on behalf of the
Partnership, and take any and all actions on behalf of the Partnership and such
Person shall be entitled to deal with the General Partner as if the General
Partner were the Partnership's sole party in interest, both legally and
beneficially. Each Limited Partner hereby waives any and all defenses or other
remedies which may be available against such Person to contest, negate or
disaffirm any action of the General Partner in connection with any such dealing.
In no event shall any Person dealing with the General Partner or its
representatives be obligated to ascertain that the terms of this Agreement have
been complied with or to inquire into the necessity or expedience of any act or
action of the General Partner or its representatives. Each and every
certificate, document or other instrument executed on behalf of the Partnership
by the General Partner or its representatives shall be conclusive evidence in
favor of any and every Person relying thereon or claiming thereunder that (i) at
the time of the execution and delivery of such certificate, document or
instrument, this Agreement was in full force and effect; (ii) the Person
executing and delivering such certificate, document or instrument was duly
authorized and empowered to do so for and on behalf of the Partnership; and
(iii) such certificate, document or instrument was duly executed and delivered
in accordance with the terms and provisions of this Agreement and is binding
upon the Partnership.
ARTICLE 8
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
Section 8.1 Limitation of Liability
The Limited Partners shall have no liability under this Agreement except as
expressly provided in this Agreement, including Section 10.5 hereof, or under
the Act.
Section 8.2 Management of Business
No Limited Partner or Assignee (other than the General Partner, any of its
Affiliates or any officer, director, employee, agent or trustee of the General
Partner, the Partnership or any of their Affiliates, in their capacity as such)
shall take part in the operation, management or control (within the meaning of
the Act) of the Partnership's business, transact any business in the
Partnership's name or have the power to sign documents for or otherwise bind the
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Partnership. The transaction of any such business by the General Partner, any of
its Affiliates or any officer, director, employee, partner, agent or trustee of
the General Partner, the Partnership or any of their Affiliates, in their
capacity as such, shall not affect, impair or eliminate the limitations on the
liability of the Limited Partners or Assignees under this Agreement.
Section 8.3 Outside Activities of Limited Partners
Subject to any agreements entered into pursuant to Section 7.6.E hereof and
any other agreements entered into by a Limited Partner or its Affiliates with
the Partnership or any of its Subsidiaries, any Limited Partner (other than the
Company) and any officer, director, employee, agent, trustee, Affiliate or
shareholder of any Limited Partner shall be entitled to and may have business
interests and engage in business activities in addition to those relating to the
Partnership, including business interests and activities that are in direct
competition with the Partnership or that are enhanced by the activities of the
Partnership. Neither the Partnership nor any Partners shall have any rights by
virtue of this Agreement in any business ventures of any Limited Partner or
Assignee. None of the Limited Partners (other than the Company) nor any other
Person shall have any rights by virtue of this Agreement or the Partnership
relationship established hereby in any business ventures of any other Person and
such Person shall have no obligation pursuant to this Agreement to offer any
interest in any such business ventures to the Partnership, any Limited Partner
or any such other Person, even if such opportunity is of a character which, if
presented to the Partnership, any Limited Partner or such other Person, could be
taken by such Person.
Section 8.4 Return of Capital
Except pursuant to the right of redemption set forth in Section 8.6, no
Limited Partner shall be entitled to the withdrawal or return of its Capital
Contribution, except to the extent of distributions made pursuant to this
Agreement or upon termination of the Partnership as provided herein. Except to
the extent provided by Exhibit C hereof or as otherwise expressly provided in
this Agreement, no Limited Partner or Assignee shall have priority over any
other Limited Partner or Assignee, either as to the return of Capital
Contributions or as to profits, losses or distributions.
Section 8.5 Rights of Limited Partners Relating to the Partnership
A. In addition to the other rights provided by this Agreement or by the
Act, and except as limited by Section 8.5.C hereof, each Limited Partner shall
have the right, for a purpose reasonably related to such Limited Partner's
interest as a limited partner in the Partnership, upon written demand with a
statement of the purpose of such demand and at such Limited Partner's own
expense (including such copying and administrative charges as the General
Partner may establish from time to time):
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(1) to obtain a copy of the most recent annual and quarterly reports
filed with the Securities and Exchange Commission by the Company
pursuant to the Securities Exchange Act of 1934;
(2) to obtain a copy of the Partnership's federal, state and local
income tax returns for each Partnership Year;
(3) to obtain a current list of the name and last known business,
residence or mailing address of each Partner;
(4) to obtain a copy of this Agreement and the Certificate of Limited
Partnership and all amendments thereto, together with executed
copies of all powers of attorney pursuant to which this Agreement,
the Certificate of Limited Partnership and all amendments thereto
have been executed; and
(5) to obtain true and full information regarding the amount of cash
and a description and statement of any other property or services
contributed by each Partner and which each Partner has agreed to
contribute in the future, and the date on which each became a
Partner.
B. The Partnership shall notify each Limited Partner, upon request, of
the then current Conversion Factor and the REIT Shares Amount per Common Unit
and, with reasonable detail, how the same was determined.
C. Notwithstanding any other provision of this Section 8.5, the General
Partner may keep confidential from the Limited Partners, for such period of time
as the General Partner determines in its sole and absolute discretion to be
reasonable, any information that (i) the General Partner reasonably believes to
be in the nature of trade secrets or other information, the disclosure of which
the General Partner in good faith believes is not in the best interests of the
Partnership or could damage the Partnership or its business; or (ii) the
Partnership is required by law or by agreements with an unaffiliated third party
to keep confidential.
Section 8.6 Redemption Right
A. Subject to Sections 8.6.B and 8.6.C hereof, on or after that date
which is fourteen (14) months after the Effective Date, each Limited Partner
(other than the Company) shall have the right (the "Redemption Right") to
require the Partnership to redeem on a Specified Redemption Date all or a
portion of the Common Units held by such Limited Partner at a redemption price
per Common Unit equal to and in the form of the Cash Amount to be paid by the
Partnership. The Redemption Right shall be exercised pursuant to a Notice of
Redemption delivered to the Partnership (with a copy to the Company) by the
Limited Partner
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who is exercising the redemption right (the "Redeeming Partner"); provided,
however, that the Partnership shall not be obligated to satisfy such Redemption
Right if the Company elects to purchase the Common Units subject to the Notice
of Redemption pursuant to Section 8.6.B. A Limited Partner may not exercise the
Redemption Right for less than one thousand (1,000) Common Units or, if such
Limited Partner holds less than one thousand (1,000) Common Units, all of the
Common Units held by such Partner. The Redeeming Partner shall have no right,
with respect to any Common Units so redeemed, to receive any distributions paid
on or after the Specified Redemption Date. The Assignee of any Limited Partner
may exercise the rights of such Limited Partner pursuant to this Section 8.6,
and such Limited Partner shall be deemed to have assigned such rights to such
Assignee and shall be bound by the exercise of such rights by such Assignee. In
connection with any exercise of such rights by an Assignee on behalf of a
Limited Partner, the Cash Amount shall be paid by the Partnership directly to
such Assignee and not to such Limited Partner. Notwithstanding the foregoing,
with respect to those Additional Limited Partners admitted to the Partnership in
accordance with the provisions of the amendment dated as of February 1, 1998,
the Redemption Right shall be exercisable on or after that date which is 375
days after the date of their admission to the Partnership.
B. Notwithstanding the provisions of Section 8.6.A, upon an election by a
Limited Partner to exercise the Redemption Right, the Company may, in its sole
and absolute discretion (subject to the limitations on ownership and transfer of
REIT Shares set forth in the articles of incorporation of the Company), elect to
assume directly and satisfy a Redemption Right by paying to the Redeeming
Partner either the Cash Amount or the REIT Shares Amount, as the Company
determines in its sole and absolute discretion, whereupon the Company shall
acquire the Common Units offered for redemption by the Redeeming Partner and
shall be treated for all purposes of this Agreement as the owner of such Common
Units. If the Company shall elect to exercise its right to purchase Common
Units under this Section 8.6.B with respect to a Notice of Redemption, it shall
so notify the Redeeming Partner within five (5) Business Days after the receipt
by it of such Notice of Redemption. Unless the Company shall exercise its right
to purchase Common Units from the Redeeming Partner pursuant to this Section
8.6.B, the Company shall not have any obligation to the Redeeming Partner or the
Partnership with respect to the Redeeming Partner's exercise of the Redemption
Right. In the event the Company shall exercise its right to purchase Common
Units with respect to the exercise of a Redemption Right in the manner described
in the first sentence of this Section 8.6.B, the Partnership shall have no
obligation to pay any amount to the Redeeming Partner with respect to such
Redeeming Partner's exercise of such Redemption Right, and each of the Redeeming
Partner, the Partnership, and the Company shall treat the transaction between
the Company and the Redeeming Partner, for federal income tax purposes, as a
sale of the Redeeming Partner's Common Units to the Company. Each Redeeming
Partner agrees to execute such documents as the Company may reasonably require
in connection with the issuance of REIT Shares upon exercise of the Redemption
Right.
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C. Notwithstanding the provisions of Section 8.6.A and Section 8.6.B, a
Partner shall not be entitled to exercise the Redemption Right pursuant to
Section 8.6.A if the delivery of REIT Shares to such Partner on the Specified
Redemption Date by the Company pursuant to Section 8.6.B (regardless of whether
or not the Company would in fact exercise its rights under Section 8.6.B) would
be prohibited under the Certificate of Incorporation of the Company.
D. In the event that the Partnership issues additional Partnership
Interests pursuant to Section 4.2.A hereof, the General Partner shall make such
revisions to this Section 8.6 as it determines are necessary to reflect the
issuance of such additional Partnership Interests.
Section 8.7 Consent and Guarantee Rights of Certain Limited Partners
A. Each of the properties listed on Exhibit E hereto is referred to as a
"Designated Property." At any time during the 10 year period following the
Effective Date, the Partnership may not sell or otherwise dispose of a
Designated Property or a Successor Designated Property (as hereinafter defined)
in a transaction that causes gain recognition under Section 752 (or any other
section) of the Code for the Consenting Partners without the consent of each of
the Consenting Partners who contributed such Designated Property. For purposes
of this Section 8.7, the term "Successor Designated Property" means a property
acquired by the Partnership upon the disposition of a Designated Property in a
Section 1031 like kind exchange or any other exchange transaction that does not
result in gain recognition. The provisions of this Section 8.7 shall not be
applicable with respect to any Consenting Partner if at any time such Consenting
Partner beneficially owns fewer than 30% of the number of Common Units owned by
such Consenting Partner following the closing of the initial public offering of
REIT Shares on the date hereof and the related formation transactions that
occurred simultaneously therewith.
B. The General Partner agrees to cause the Partnership to use its
reasonable commercial efforts to cause its lenders to permit the Consenting
Partners or either of them individually to guarantee any indebtedness of the
Partnership (including additional indebtedness or substitute indebtedness
incurred after the Effective Date) and to thereby become the guarantor or
guarantors of last resort with respect to such additional or substitute
indebtedness. Each Partner by such Partner's execution hereof agrees that the
right of each Consenting Partner under this Section 8.7.B shall include the
right (i) to become the guarantor of last resort of any indebtedness of the
Partnership guaranteed by any other Partner of the Partnership or (ii) to
increase such Consenting Partner's Recourse Debt Amount set forth on Exhibit F
hereto, without, in either case under the preceding clauses (i) and (ii) any
further action by or notice to or approval of any other Partner, provided that
such Consenting Partner has not expressly waived his right with respect to such
indebtedness.
C. This Section 8.7 may not be amended without the written consent of
each Consenting Partner.
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ARTICLE 9
BOOKS, RECORDS, ACCOUNTING AND REPORTS
Section 9.1 Records and Accounting
The General Partner shall keep or cause to be kept at the principal office
of the Partnership those records and documents required to be maintained by the
Act and other books and records deemed by the General Partner to be appropriate
with respect to the Partnership's business, including, without limitation, all
books and records necessary to provide to the Limited Partners any information,
lists and copies of documents required to be provided pursuant to Section 9.3
hereof. Any records maintained by or on behalf of the Partnership in the
regular course of its business may be kept on, or be in the form of, punch
cards, magnetic tape, photographs, micrographics or any other information
storage device, provided that the records so maintained are convertible into
clearly legible written form within a reasonable period of time. The books of
the Partnership shall be maintained, for financial and tax reporting purposes,
on an accrual basis in accordance with generally accepted accounting principles,
or such other basis as the General Partner determines to be necessary or
appropriate.
Section 9.2 Fiscal Year
The fiscal year of the Partnership shall be the calendar year.
Section 9.3 Reports
A. As soon as practicable, but in no event later than one hundred five
(105) days after the close of each Partnership Year, the General Partner shall
cause to be mailed to each Limited Partner as of the close of the Partnership
Year, an annual report containing financial statements of the Partnership, or of
the Company if such statements are prepared solely on a consolidated basis with
the Company, for such Partnership Year, presented in accordance with generally
accepted accounting principles, such statements to be audited by a nationally
recognized firm of independent public accountants selected by the General
Partner.
B. As soon as practicable, but in no event later than one hundred five
(105) days after the close of each calendar quarter (except the last calendar
quarter of each year), the General Partner shall cause to be mailed to each
Limited Partner as of the last day of the calendar quarter, a report containing
unaudited financial statements of the Partnership, or of the Company, if such
statements are prepared solely on a consolidated basis with the Company, and
such other information as may be required by applicable law or regulation, or as
the General Partner determines to be appropriate.
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ARTICLE 10
TAX MATTERS
Section 10.1 Preparation of Tax Returns
The General Partner shall arrange for the preparation and timely filing of
all returns of Partnership income, gains, deductions, losses and other items
required of the Partnership for federal and state income tax purposes and shall
use all reasonable efforts to furnish, within ninety (90) days of the close of
each taxable year, the tax information reasonably required by Limited Partners
for federal and state income tax reporting purposes.
Section 10.2 Tax Elections
Except as otherwise provided herein, the General Partner shall, in its sole
and absolute discretion, determine whether to make any available election
pursuant to the Code. Notwithstanding the above, in making any such tax election
the General Partner shall take into account the tax consequences to the Limited
Partners resulting from any such election. The General Partner shall make such
tax elections on behalf of the Partnership as the Limited Partners holding a
majority of the Percentage Interests of the Limited Partners (excluding Limited
Partner Interests held by the Company) request, provided that the General
Partner believes that such election is not adverse to the interests of the
General Partner, including its interest in preserving its qualification as a
REIT under the Code. The General Partner intends that Section 704(c)
allocations with respect to contributed property shall be made by the election
of the so-called "traditional method" with curative allocations limited solely
to allocations of gain on sale of such contributed property to the extent
allocations of depreciation deductions with respect to such contributed property
to non-contributing Partners have been limited by the so-called "ceiling rule",
as described in Regulations Section 1.704-3(c)(3)(iii)(B). The General Partner
shall have the right to seek to revoke any tax election it makes (including,
without limitation, the election under Section 754 of the Code) upon the General
Partner's determination, in its sole and absolute discretion, that such
revocation is in the best interests of the Partners.
Section 10.3 Tax Matters Partner
A. The General Partner shall be the "tax matters partner" of the
Partnership for federal income tax purposes. Pursuant to Section 6230(e) of the
Code, upon receipt of notice from the IRS of the beginning of an administrative
proceeding with respect to the Partnership, the tax matters partner shall
furnish the IRS with the name, address, taxpayer identification number, and
profit interest of each of the Limited Partners and the Assignees; provided,
however, that such information is provided to the Partnership by the Limited
Partners and the Assignees.
B. The tax matters partner is authorized, but not required:
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(1) to enter into any settlement with the IRS with respect to any
administrative or judicial proceedings for the adjustment of
Partnership items required to be taken into account by a Partner
for income tax purposes (such administrative proceedings being
referred to as a "tax audit" and such judicial proceedings being
referred to as "judicial review"), and in the settlement agreement
the tax matters partner may expressly state that such agreement
shall bind all Partners, except that such settlement agreement
shall not bind any Partner (i) who (within the time prescribed
pursuant to the Code and Regulations) files a statement with the
IRS providing that the tax matters partner shall not have the
authority to enter into a settlement agreement on behalf of such
Partner; or (ii) who is a "notice partner" (as defined in Section
6231(a)(8) of the Code) or a member of a "notice group" (as
defined in Section 6223(b)(2) of the Code);
(2) in the event that a notice of a final administrative adjustment at
the Partnership level of any item required to be taken into
account by a Partner for tax purposes (a "final adjustment") is
mailed to the tax matters partner, to seek judicial review of such
final adjustment, including the filing of a petition for
readjustment with the Tax Court or the filing of a complaint for
refund with the United States Claims Court or the District Court
of the United States for the district in which the Partnership's
principal place of business is located;
(3) to intervene in any action brought by any other Partner for
judicial review of a final adjustment;
(4) to file a request for an administrative adjustment with the IRS
and, if any part of such request is not allowed by the IRS, to
file an appropriate pleading (petition or complaint) for judicial
review with respect to such request;
(5) to enter into an agreement with the IRS to extend the period for
assessing any tax which is attributable to any item required to be
taken account of by a Partner for tax purposes, or an item
affected by such item; and
(6) to take any other action on behalf of the Partners or the
Partnership in connection with any tax audit or judicial review
proceeding to the extent permitted by applicable law or
regulations.
The taking of any action and the incurring of any expense by the tax
matters partner in connection with any such proceeding, except to the extent
required by law, is a matter in the sole and absolute discretion of the tax
matters partner and the provisions relating to
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indemnification of the General Partner set forth in Section 7.7 of this
Agreement shall be fully applicable to the tax matters partner in its capacity
as such.
C. The tax matters partner shall receive no compensation for its
services. All third party costs and expenses incurred by the tax matters
partner in performing its duties as such (including legal and accounting fees
and expenses) shall be borne by the Partnership. Nothing herein shall be
construed to restrict the Partnership from engaging an accounting firm to assist
the tax matters partner in discharging its duties hereunder, so long as the
compensation paid by the Partnership for such services is reasonable.
Section 10.4 Organizational Expenses
The Partnership shall elect to deduct expenses, if any, incurred by it in
organizing the Partnership ratably over a sixty (60) month period as provided in
Section 709 of the Code.
Section 10.5 Withholding
Each Limited Partner hereby authorizes the Partnership to withhold from, or
pay on behalf of or with respect to, such Limited Partner any amount of federal,
state, local, or foreign taxes that the General Partner determines that the
Partnership is required to withhold or pay with respect to any amount
distributable or allocable to such Limited Partner pursuant to this Agreement,
including, without limitation, any taxes required to be withheld or paid by the
Partnership pursuant to Sections 1441, 1442, 1445, or 1446 of the Code. Any
amount paid on behalf of or with respect to a Limited Partner shall constitute a
loan by the Partnership to such Limited Partner, which loan shall be repaid by
such Limited Partner within fifteen (15) days after notice from the General
Partner that such payment must be made unless (i) the Partnership withholds such
payment from a distribution which would otherwise be made to the Limited
Partner; or (ii) the General Partner determines, in its sole and absolute
discretion, that such payment may be satisfied out of the available funds of the
Partnership which would, but for such payment, be distributed to the Limited
Partner. Any amounts withheld pursuant to the foregoing clauses (i) or (ii)
shall be treated as having been distributed to such Limited Partner. Each
Limited Partner hereby unconditionally and irrevocably grants to the Partnership
a security interest in such Limited Partner's Partnership Interest to secure
such Limited Partner's obligation to pay to the Partnership any amounts required
to be paid pursuant to this Section 10.5. In the event that a Limited Partner
fails to pay any amounts owed to the Partnership pursuant to this Section 10.5
when due, the General Partner may, in its sole and absolute discretion, elect to
make the payment to the Partnership on behalf of such defaulting Limited
Partner, and in such event shall be deemed to have loaned such amount to such
defaulting Limited Partner and shall succeed to all rights and remedies of the
Partnership as against such defaulting Limited Partner. Without limitation, in
such event the General Partner shall have the right to receive distributions
that would otherwise be distributable to such defaulting Limited Partner until
such time as such loan, together with all interest thereon, has been paid in
full, and any such distributions so received by the General Partner shall be
treated as having
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been distributed to the defaulting Limited Partner and immediately paid by the
defaulting Limited Partner to the General Partner in repayment of such loan. Any
amounts payable by a Limited Partner hereunder shall bear interest at the lesser
of (A) the base rate on corporate loans at large United States money center
commercial banks, as published from time to time in The Wall Street Journal,
plus four (4) percentage points, or (B) the maximum lawful rate of interest on
such obligation, such interest to accrue from the date such amount is due (i.e.,
fifteen (15) days after demand) until such amount is paid in full. Each Limited
Partner shall take such actions as the Partnership or the General Partner shall
request in order to perfect or enforce the security interest created hereunder.
ARTICLE 11
TRANSFERS AND WITHDRAWALS
Section 11.1 Transfer
A. The term "transfer," when used in this Article 11 with respect to a
Partnership Unit, shall be deemed to refer to a transaction by which the General
Partner purports to assign all or any part of its General Partner Interest to
another Person or by which a Limited Partner purports to assign all or any part
of its Limited Partner Interest to another Person, and includes a sale,
assignment, gift, pledge (except for a pledge in which the pledgee agrees not to
foreclose with respect to such Partnership Unit until after the first
anniversary of the initial public offering of the Company), encumbrance,
hypothecation, mortgage, exchange or any other disposition by operation of law
or otherwise. The term "transfer" when used in this Article 11 does not include
any redemption of Partnership Interests by the Partnership from a Limited
Partner or any acquisition of Partnership Units from a Limited Partner by the
Company pursuant to Section 8.6. No part of the interest of a Limited Partner
shall be subject to the claims of any creditor, any spouse for alimony or
support, or to legal process, and may not be voluntarily or involuntarily
alienated or encumbered except as may be specifically provided for in this
Agreement or consented to by the General Partner.
B. No Partnership Interest shall be transferred, in whole or in part,
except in accordance with the terms and conditions set forth in this Article 11.
Any transfer or purported transfer of a Partnership Interest not made in
accordance with this Article 11 shall be null and void.
Section 11.2 Transfer of the Company's General Partner Interest and
Limited Partner Interest; Extraordinary Transactions
A. The Company may not transfer any of its General Partner Interest or
withdraw as General Partner, or transfer any of its Limited Partner Interest, or
engage in an Extraordinary Transaction, except, in any such case, (i) if such
Extraordinary Transaction is, or such transfer or withdrawal is pursuant to an
Extraordinary Transaction that is, permitted
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under Section 11.2(B) or (ii) if Limited Partners holding at least three-fourths
of the Percentage Interests of the Limited Partners (other than Limited Partner
Interests held by the Company or its Affiliates) consent to such transfer or
withdrawal or Extraordinary Transaction, or (iii) if such transfer is to an
entity that is wholly-owned by the Company and is a Qualified REIT Subsidiary
under Section 856(i) of the Code.
B. The General Partner is permitted to engage in the following
Extraordinary Transactions without the approval or vote of the Limited Partners
except as provided in Section 11.2(C):
(i) an Extraordinary Transaction in connection with which all Limited
Partners either will receive, or will have the right to elect to
receive, for each Common Unit an amount of cash, securities, or
other property equal to the product of the REIT Shares Amount and
the greatest amount of cash, securities or other property paid to
a holder of one REIT Share in consideration of one REIT Share
pursuant to the terms of the Extraordinary Transaction; provided
that, if, in connection with the Extraordinary Transaction, a
purchase, tender or exchange offer shall have been made to and
accepted by the holders of the outstanding REIT Shares, each
holder of Common Units shall receive, or shall have the right to
elect to receive, the greatest amount of cash, securities, or
other property which such holder would have received had it
exercised its right to Redemption (as set forth in Section 8.6)
and received REIT Shares in exchange for its Common Units
immediately prior to the expiration of such purchase, tender or
exchange offer and had thereupon accepted such purchase, tender
or exchange offer and then such Extraordinary Transaction shall
have been consummated; and
(ii) a merger, or other combination of assets, with another entity if:
(w) immediately after such Extraordinary Transaction,
substantially all of the assets directly or indirectly owned by
the surviving entity, other than Common Units held by such
General Partner, are owned directly or indirectly by the
Partnership or another limited partnership or limited liability
company which is the survivor of a merger, consolidation or
combination of assets with the Partnership (in each case, the
"Surviving Partnership"); (x) the Common Unitholders own a
percentage interest of the Surviving Partnership based on the
relative fair market value of the net assets of the Partnership
(as determined pursuant to Section 11.2.E) and the other net
assets of the Surviving Partnership (as determined pursuant to
Section 11.2.E) immediately prior to the consummation of such
transaction; (y) the rights, preferences and privileges of the
Common Unitholders in the Surviving Partnership are at least as
favorable as those in effect immediately prior to the
consummation of
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such transaction and as those applicable to any other limited
partners or non-managing members of the Surviving Partnership
(who have, in either case, the rights of a "common" equity
holder); and (z) such rights of the Common Unitholders include
the right to exchange their Common Unit equivalent interests in
the Surviving Partnership for at least one of: (a) the
consideration available to such Common Unitholders pursuant to
Section 11.2.B(i) or (b) if the ultimate controlling person of
the Surviving Partnership has publicly traded common equity
securities, such common equity securities, with an exchange ratio
based on the relative fair market value of such securities (as
determined pursuant to Section 11.2.E) and the REIT Shares.
C. The General Partner shall not consummate any Extraordinary Transaction
in connection with which it conducted a vote of its common stockholders (a
"Stockholder Vote") unless the General Partner also conducts a vote of the
Common Unitholders (the "Partnership Vote") in which (i) the General Partner
provides the Common Unitholders with advance notice equal in time to the advance
notice given in the case of the Stockholder Vote, (ii) in connection with such
advance notice the General Partner provides the Common Unitholders with written
materials describing the proposed Extraordinary Transaction as well as the tax
effect of the consummation thereof on the Limited Partners, (iii) in such vote
of the Partners, the General Partner votes all Common Units (General and
Limited) held by it in proportion to the manner in which all outstanding shares
of common stock of the General Partner were voted at the Stockholder Meeting
(such votes to be "For," "Against," "Abstain" and "Not Present"), and (iv) the
total votes of the General and Limited Partners in respect of their Common Units
voted "For," "Against," "Abstain" and "Not Present" would be sufficient
(measured in percentage terms), if such vote were a vote by the Company of its
stockholders, to approve the Extraordinary Transaction. For purposes of the
Partnership Vote, each holder of a Common Unit shall be entitled to a number of
votes equal to the total votes such holder would have been entitled to at the
Stockholder Meeting had such holder presented its Common Unit for redemption and
such Common Unit had been acquired by the Company for the REIT Shares Amount of
REIT Shares prior to the record date therefor.
D. Without in any way limiting the exculpation from liability set forth
in Section 7.1.D and 7.8.B, in connection with any transaction permitted by
Section 11.2.B or Section 11.2.C hereof, the General Partner shall use its
commercially reasonable efforts to structure such Extraordinary Transaction to
avoid causing the Limited Partners to recognize gain for federal income tax
purposes by virtue of the occurrence of or their participation in such
Extraordinary Transaction.
E. In connection with any transaction permitted by Section 11.2.B or
11.2.C, the relative fair market values shall be reasonably determined by the
General Partner as of the time of such transaction and, to the extent
applicable, shall be no less favorable to the Limited Partners than the relative
values reflected in the terms of such transaction.
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Section 11.3 Limited Partners' Rights to Transfer
A. Subject to the provisions of Sections 11.3.C, 11.3.D, 11.3.E, and
11.4, a Limited Partner (other than the Company) may transfer, with or without
the consent of the General Partner, all or any portion of its Partnership
Interest, or any of such Limited Partner's economic rights as a Limited Partner.
B. If a Limited Partner is subject to Incapacity, the executor,
administrator, trustee, committee, guardian, conservator or receiver of such
Limited Partner's estate shall have all of the rights of a Limited Partner, but
not more rights than those enjoyed by other Limited Partners, for the purpose of
settling or managing the estate and such power as the Incapacitated Limited
Partner possessed to transfer all or any part of his or its interest in the
Partnership. The Incapacity of a Limited Partner, in and of itself, shall not
dissolve or terminate the Partnership.
C. The General Partner may prohibit any transfer by a Limited Partner of
its Partnership Units if, in the opinion of legal counsel to the Partnership,
such transfer would require filing of a registration statement under the
Securities Act of 1933 or would otherwise violate any federal or state
securities laws or regulations applicable to the Partnership or the Partnership
Units.
D. No transfer by a Limited Partner of its Partnership Units may be made
to any Person if (i) in the opinion of legal counsel for the Partnership, it
would result in the Partnership being treated as an association taxable as a
corporation; (ii) it is made within one year after the consummation of the
initial public offering of the Company; (iii) such transfer is effectuated
through an "established securities market" or a "secondary market (or the
substantial equivalent thereof)" with the meaning of Section 7704 of the Code;
(iv) such transfer would cause the Partnership to become, with respect to any
employee benefit plan subject to Title I of ERISA, a "party-in-interest" (as
defined in Section 3(14) of ERISA) or a "disqualified person" (as defined in
Section 4975(c) of the Code); (v) such transfer would, in the opinion of legal
counsel for the Partnership, cause any portion of the assets of the Partnership
to constitute assets of any employee benefit plan pursuant to Department of
Labor Regulations Section 2510.2-101; or (vi) such transfer would subject the
Partnership to be regulated under the Investment Company Act of 1940, the
Investment Advisors Act of 1940 or the Employee Retirement Income Security Act
of 1974, each as amended.
E. No transfer of any Partnership Units may be made to a lender to the
Partnership or any Person who is related (within the meaning of Section 1.752-
4(b) of the Regulations) to any lender to the Partnership whose loan constitutes
a Nonrecourse Liability, without the consent of the General Partner, in its sole
and absolute discretion; provided that as a condition to such consent the lender
will be required to enter into an arrangement with the Partnership and the
General Partner to redeem for the Cash Amount any Partnership Units in which a
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security interest is held simultaneously with the time at which such lender
would be deemed to be a partner in the Partnership for purposes of allocating
liabilities to such lender under Section 752 of the Code.
Section 11.4 Substituted Limited Partners
A. No Limited Partner shall have the right to substitute a transferee as
a Limited Partner in his place. The General Partner shall, however, have the
right to consent to the admission of a transferee of the interest of a Limited
Partner pursuant to this Section 11.4 as a Substituted Limited Partner, which
consent may be given or withheld by the General Partner in its sole and absolute
discretion. The General Partner's failure or refusal to permit a transferee of
any such interests to become a Substituted Limited Partner shall not give rise
to any cause of action against the Partnership or any Partner.
B. A transferee who has been admitted as a Substituted Limited Partner in
accordance with this Article 11 shall have all the rights and powers and be
subject to all the restrictions and liabilities of a Limited Partner under this
Agreement.
C. Upon the admission of a Substituted Limited Partner, the General
Partner shall amend Exhibit A to reflect the name, address, number of
Partnership Units, and Percentage Interest of such Substituted Limited Partner
and to eliminate or adjust, if necessary, the name, address and interest of the
predecessor of such Substituted Limited Partner.
Section 11.5 Assignees
If the General Partner, in its sole and absolute discretion, does not
consent to the admission of any permitted transferee as a Substituted Limited
Partner, as described in Section 11.4, such transferee shall be considered an
Assignee for purposes of this Agreement. An Assignee shall be deemed to have had
assigned to it, and shall be entitled to receive distributions from the
Partnership and the share of Net Income, Net Losses, Recapture Income, and any
other items, gain, loss deduction and credit of the Partnership attributable to
the Partnership Units assigned to such transferee, but except as otherwise
provided in Section 8.6.A hereof shall not be deemed to be a holder of
Partnership Units for any other purpose under this Agreement, and shall not be
entitled to vote such Partnership Units in any matter presented to the Limited
Partners for a vote (such Partnership Units being deemed to have been voted on
such matter in the same proportion as all other Partnership Units held by
Limited Partners are voted). In the event any such transferee desires to make a
further assignment of any such Partnership Units, such transferee shall be
subject to all of the provisions of this Article 11 to the same extent and in
the same manner as any Limited Partner desiring to make an assignment of
Partnership Units.
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Section 11.6 General Provisions
A. No Limited Partner may withdraw from the Partnership other than as a
result of a permitted transfer of all of such Limited Partner's Partnership
Units in accordance with this Article 11 or pursuant to redemption of all of its
Partnership Units under Section 8.6.
B. Any Limited Partner who shall transfer all of its Partnership Units in
a transfer permitted pursuant to this Article 11 shall cease to be a Limited
Partner upon the admission of all Assignees of such Partnership Units as
Substitute Limited Partners. Similarly, any Limited Partner who shall transfer
all of its Partnership Units pursuant to a redemption of all of its Partnership
Units under Section 8.6 shall cease to be a Limited Partner.
C. Transfers pursuant to this Article 11 may only be made on the first
day of a fiscal quarter of the Partnership, unless the General Partner otherwise
agrees.
D. If any Partnership Interest is transferred or assigned during any
quarterly segment of the Partnership's fiscal year in compliance with the
provisions of this Article 11 or redeemed or transferred pursuant to Section 8.6
on any day other than the first day of a Partnership Year, then Net Income, Net
Losses, each item thereof and all other items attributable to such interest for
such Partnership Year shall be divided and allocated between the transferor
Partner and the transferee Partner by taking into account their varying
interests during the Partnership Year in accordance with Section 706(d) of the
Code, using the interim closing of the books method. Solely for purposes of
making such allocations, each of such items for the calendar month in which the
transfer or assignment occurs shall be allocated to the transferee Partner, and
none of such items for the calendar month in which a redemption occurs shall be
allocated to the Redeeming Partner; provided, however, that the General Partner
may adopt such other conventions relating to allocations in connection with
transfers, assignments or redemptions as it determines are necessary or
appropriate. All distributions of Available Cash attributable to such
Partnership Unit with respect to which the Partnership Record Date is before the
date of such transfer, assignment, or redemption shall be made to the transferor
Partner or the Redeeming Partner, as the case may be, and in the case of a
transfer or assignment other than a redemption, all distributions of Available
Cash thereafter attributable to such Partnership Unit shall be made to the
transferee Partner.
ARTICLE 12
ADMISSION OF PARTNERS
Section 12.1 Admission of Successor General Partner
A successor to all of the General Partner Interest pursuant to Section 11.2
hereof who is proposed to be admitted as a successor General Partner shall be
admitted to the Partnership as the General Partner, effective upon such
transfer. Any such transferee shall carry on the
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business of the Partnership without dissolution. In each case, the admission
shall be subject to the successor General Partner executing and delivering to
the Partnership an acceptance of all of the terms and conditions of this
Agreement and such other documents or instruments as may be required to effect
the admission. In the case of such admission on any day other than the first day
of a Partnership Year, all items attributable to the General Partner Interest
for such Partnership Year shall be allocated between the transferring General
Partner and such successor as provided in Section 11.6.D hereof.
Section 12.2 Admission of Additional Limited Partners
A. After the admission to the Partnership of the initial Limited Partners
on the date hereof, a Person who makes a Capital Contribution to the Partnership
in accordance with this Agreement shall be admitted to the Partnership as an
Additional Limited Partner only upon furnishing to the General Partner (i)
evidence of acceptance in form satisfactory to the General Partner of all of the
terms and conditions of this Agreement, including, without limitation, the power
of attorney granted in Section 2.4 hereof and (ii) such other documents or
instruments as may be required in the discretion of the General Partner in order
to effect such Person's admission as an Additional Limited Partner.
B. Notwithstanding anything to the contrary in this Section 12.2, no
Person shall be admitted as an Additional Limited Partner without the consent of
the General Partner, which consent may be given or withheld in the General
Partner's sole and absolute discretion. The admission of any Person as an
Additional Limited Partner shall become effective on the date upon which the
name of such Person is recorded on the books and records of the Partnership,
following the consent of the General Partner to such admission.
C. If any Additional Limited Partner is admitted to the Partnership on
any day other than the first day of a Partnership Year, then Net Income, Net
Losses, each item thereof and all other items allocable among Partners and
Assignees for such Partnership Year shall be allocated among such Additional
Limited Partner and all other Partners and Assignees by taking into account
their varying interests during the Partnership Year in accordance with Section
706(d) of the Code, using any convention permitted by law and selected by the
General Partner. Solely for purposes of making such allocations, each such item
for the calendar month in which an admission of any Additional Limited Partner
occurs shall be allocated among all of the Partners and Assignees, including
such Additional Limited Partner; provided, however, that the General Partner may
adopt such other conventions relating to allocations to Additional Limited
Partners as it determines are necessary or appropriate. All distributions of
Available Cash with respect to which the Partnership Record Date is before the
date of such admission shall be made solely to Partners and Assignees, other
than the Additional Limited Partner, and all distributions of Available Cash
thereafter shall be made to all of the Partners and Assignees, including such
Additional Limited Partner.
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Section 12.3 Amendment of Agreement and Certificate of Limited
Partnership
For the admission to the Partnership of any Partner, the General Partner
shall take all steps necessary and appropriate under the Act to amend the
records of the Partnership and, if necessary, to prepare as soon as practical an
amendment of this Agreement (including an amendment of Exhibit A) and, if
required by law, shall prepare and file an amendment to the Certificate of
Limited Partnership and may for this purpose exercise the power of attorney
granted pursuant to Section 2.4 hereof.
ARTICLE 13
DISSOLUTION, LIQUIDATION AND TERMINATION
Section 13.1 Dissolution
The Partnership shall not be dissolved by the admission of Substituted
Limited Partners or Additional Limited Partners or by the admission of a
successor General Partner in accordance with the terms of this Agreement. Upon
the withdrawal of the General Partner, any successor General Partner shall
continue the business of the Partnership. The Partnership shall dissolve, and
its affairs shall be wound up, only upon the first to occur of any of the
following ("Liquidating Events"):
A. the expiration of its term as provided in Section 2.5 hereof;
B. an event of withdrawal of the General Partner, as defined in the Act
(other than an event of bankruptcy), unless, within ninety (90) days after such
event of withdrawal a majority in interest of the remaining Partners agree in
writing to continue the business of the Partnership and to the appointment,
effective as of the date of withdrawal, of a successor General Partner;
C. from and after the date of this Agreement through December 31, 2055,
an election to dissolve the Partnership made by the General Partner with the
Consent of Partners holding eighty-five percent (85%) of the Percentage
Interests of the Limited Partners (including Limited Partner Interests held by
the Company);
D. on or after January 1, 2056, an election to dissolve the Partnership
made by the General Partner, in its sole and absolute discretion;
E. entry of a decree of judicial dissolution of the Partnership pursuant
to the provisions of the Act;
F. the sale of all or substantially all of the assets and properties of
the Partnership; or
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G. a final and non-appealable judgment is entered by a court of competent
jurisdiction ruling that the General Partner is bankrupt or insolvent, or a
final and non-appealable order for relief is entered by a court with appropriate
jurisdiction against the General Partner, in each case under any federal or
state bankruptcy or insolvency laws as now or hereafter in effect, unless prior
to the entry of such order or judgment all of the remaining Partners agree in
writing to continue the business of the Partnership and to the appointment,
effective as of a date prior to the date of such order or judgment, of a
substitute General Partner.
Section 13.2 Winding Up
A. Upon the occurrence of a Liquidating Event, the Partnership shall
continue solely for the purposes of winding up its affairs in an orderly manner,
liquidating its assets, and satisfying the claims of its creditors and Partners.
No Partner shall take any action that is inconsistent with, or not necessary to
or appropriate for, the winding up of the Partnership's business and affairs.
The General Partner, or, in the event there is no remaining General Partner, any
Person elected by a majority in interest of the Limited Partners (the General
Partner or such other Person being referred to herein as the "Liquidator"),
shall be responsible for overseeing the winding up and dissolution of the
Partnership and shall take full account of the Partnership's liabilities and
property and the Partnership property shall be liquidated as promptly as is
consistent with obtaining the fair value thereof, and the proceeds therefrom
(which may, to the extent determined by the General Partner, include shares of
common stock in the Company) shall be applied and distributed in the following
order:
(1) First, to the payment and discharge of all of the Partnership's
debts and liabilities to creditors other than the Partners;
(2) Second, to the payment and discharge of all of the Partnership's
debts and liabilities to the General Partner;
(3) Third, to the payment and discharge of all of the Partnership's
debts and liabilities to the other Partners; and
(4) The balance, if any, to the General Partner and Limited Partners
in accordance with their Capital Accounts, after giving effect to
all contributions, distributions, and allocations for all
periods.
The General Partner shall not receive any additional compensation for any
services performed pursuant to this Article 13.
B. Notwithstanding the provisions of Section 13.2.A hereof which require
liquidation of the assets of the Partnership, but subject to the order of
priorities set forth therein, if prior to or upon dissolution of the Partnership
the Liquidator determines that an
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immediate sale of part or all of the Partnership's assets would be impractical
or would cause undue loss to the Partners, the Liquidator may, in its sole and
absolute discretion, defer for a reasonable time the liquidation of any assets
except those necessary to satisfy liabilities of the Partnership (including to
those Partners as creditors) and/or distribute to the Partners, in lieu of cash,
as tenants in common and in accordance with the provisions of Section 13.2.A
hereof, undivided interests in such Partnership assets as the Liquidator deems
not suitable for liquidation. Any such distributions in kind shall be made only
if, in the good faith judgment of the Liquidator, such distributions in kind are
in the best interest of the Partners, and shall be subject to such conditions
relating to the disposition and management of such properties as the Liquidator
deems reasonable and equitable and to any agreements governing the operation of
such properties at such time. The Liquidator shall determine the fair market
value of any property distributed in kind using such reasonable method of
valuation as it may adopt.
C. In the discretion of the Liquidator, a pro rata portion of the
distributions that would otherwise be made to the General Partner and Limited
Partners pursuant to this Article 13 may be:
(1) distributed to a trust established for the benefit of the General
Partner and Limited Partners for the purposes of liquidating
Partnership assets, collecting amounts owed to the Partnership,
and paying any contingent or unforeseen liabilities or
obligations of the Partnership or the General Partner arising out
of or in connection with the Partnership. The assets of any such
trust shall be distributed to the General Partner and Limited
Partners from time to time, in the reasonable discretion of the
Liquidator, in the same proportions as the amount distributed to
such trust by the Partnership would otherwise have been
distributed to the General Partner and Limited Partners pursuant
to this Agreement; or
(2) withheld or escrowed to provide a reasonable reserve for
Partnership liabilities (contingent or otherwise) and to reflect
the unrealized portion of any installment obligations owed to the
Partnership, provided that such withheld or escrowed amounts
shall be distributed to the General Partner and Limited Partners
in the manner and order of priority set forth in Section 13.2.A
as soon as practicable.
Section 13.3 Compliance with Timing Requirements of Regulations
In the event the Partnership is "liquidated" within the meaning of
Regulations Section 1.704-1(b)(2)(ii)(g), distributions shall be made pursuant
to this Article 13 to the General Partner and Limited Partners who have positive
Capital Accounts in compliance with Regulations Section 1.704-1(b)(2)(ii)(b)(2).
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If at such time as the Partnership (or the General Partner's interest
therein) is "liquidated" within the meaning of Treasury Regulations Section
1.704-1(b)(2)(ii)(g), the General Partner has a deficit balance in his Capital
Account (after giving effect to all contributions, distributions and allocations
for all Fiscal Years or portions thereof, including the year during which such
liquidation occurs, the General Partner shall contribute to the capital of the
Partnership the amount necessary to restore such deficit balance to zero in
compliance with Treasury Regulations Section 1.704-1(b)(2)(ii)(b)(3)). If at
such time as the Partnership (or any Limited Partner's interest therein) is
"liquidated" within the meaning of Treasury Regulations Section 1.704-
1(b)(2)(ii)(g) any Limited Partner has a deficit balance in its Capital Account
(after giving effect to all contributions, distributions and allocations for all
Fiscal Years or portions thereof, including the year during which such
liquidation occurs), each such Limited Partner shall be obligated to contribute
cash to the capital of the Partnership in an amount equal to the lesser of (i)
the amount required to increase its Capital Account as of such date to zero
determined after applying the provisions of Treasury Regulations Section 1.704-
1(b)(2)(iv)(f) so as to adjust (for this purpose) each such Partner's Capital
Account balance for the full amount of such Partner's unrealized gains and
losses on a fair market value basis (provided however, such adjustment shall be
made without regard to any value that may be deemed to exist with respect to any
redemption rights under Section 8.6) or (ii) such Limited Partner's Limited
Partner Recourse Debt Percentage multiplied by the Recourse Debt Amount. Any
such contribution required of a Partner hereunder shall be made on or before the
later of (i) the end of the Partnership Year in which the interest of such
Partner is liquidated or (ii) the ninetieth (90th) day following the date of
such liquidation. Notwithstanding any provision hereof to the contrary, all
amounts so contributed by a Limited Partner to the capital of the Partnership
shall, upon the liquidation of the Partnership under Article XIII, be paid only
to any then creditors of the Partnership, including Partners that are
Partnership creditors (in the order provided in Section 13.2 hereof), and shall
not be distributed to the other Partners then having positive balances in their
respective Capital Accounts.
After the death of a Limited Partner, the executor of the estate of such
Limited Partner may elect to reduce (or eliminate) the deficit Capital Account
restoration obligation of such Limited Partner pursuant to this Section 13.3.
Such election may be made by such executor by delivering to the General Partner
within two hundred seventy (270) days of the death of such Limited Partner a
written notice setting forth the maximum deficit balance in his Capital Account
that such executor agrees to restore under Section 13.3, if any. If such
executor does not make a timely election pursuant to this Section 13.3 (whether
or not the balance in his Capital Account is negative at such time), then such
Limited Partner's estate (and the beneficiaries thereof who receive distribution
of Partnership Interests therefrom) shall be deemed to have a deficit Capital
Account restoration obligation as set forth pursuant to the terms of Section
13.3. Any Limited Partner which is itself a partnership may likewise elect,
after the death of its respective partner, to reduce (or eliminate) its deficit
Capital Account restoration obligation pursuant to Section 13.3 by delivering a
similar written notice to the General Partner within the time period specified
herein. Any such partnership that does not
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make any such timely election shall similarly be deemed to have a deficit
Capital Account restoration obligation as set forth pursuant to the terms of
Section 13.3.
Section 13.4 Deemed Termination
Notwithstanding any other provision of this Article 13, in the event the
Partnership is considered "liquidated" within the meaning of Regulations Section
1.704-1(b)(2)(ii)(g), but no Liquidating Event has occurred, the Partnership's
property shall not be liquidated, the Partnership's liabilities shall not be
paid or discharged, and the Partnership's affairs shall not be wound up.
Instead, for federal income tax purposes and for purposes of maintaining Capital
Accounts pursuant to Exhibit B hereto, the Partnership shall be deemed to have
(i) contributed the Partnership property in kind to a new partnership (the "New
Partnership"), which shall be deemed to have assumed and taken such property
subject to all Partnership liabilities in exchange for all of the interests in
such New Partnership, and (ii) distributed such interests to the Partners
pursuant to the provisions of this Agreement in liquidation of the Partnership,
subsequent to which the New Partnership shall be referred to as the Partnership
for all purposes of this Agreement.
Section 13.5 Rights of Limited Partners
Except as otherwise provided in this Agreement, each Limited Partner shall
look solely to the assets of the Partnership for the return of its Capital
Contributions and shall have no right or power to demand or receive property
other than cash from the Partnership. Except as otherwise provided in this
Agreement, no Limited Partner shall have priority over any other Partner as to
the return of its Capital Contributions, distributions, or allocations.
Section 13.6 Notice of Dissolution
In the event a Liquidating Event occurs or an event occurs that would, but
for the provisions of an election or objection by one or more Partners pursuant
to Section 13.1, result in a dissolution of the Partnership, the General Partner
shall, within thirty (30) days thereafter, provide written notice thereof to
each of the Partners.
Section 13.7 Termination of Partnership and Cancellation of Certificate
of Limited Partnership
Upon the completion of the liquidation of the Partnership's assets, as
provided in Section 13.2 hereof, the Partnership shall be terminated, a
certificate of cancellation shall be filed, and all qualifications of the
Partnership as a foreign limited partnership in jurisdictions other than the
State of Delaware shall be canceled and such other actions as may be necessary
to terminate the Partnership shall be taken.
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Section 13.8 Reasonable Time for Winding-Up
A reasonable time shall be allowed for the orderly winding-up of the
business and affairs of the Partnership and the liquidation of its assets
pursuant to Section 13.2 hereof, in order to minimize any losses otherwise
attendant upon such winding-up, and the provisions of this Agreement shall
remain in effect between the Partners during the period of liquidation.
Section 13.9 Waiver of Partition
Each Partner hereby waives any right to partition of the Partnership
property.
ARTICLE 14
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS
Section 14.1 Amendments
A. Amendments to this Agreement may be proposed by the General Partner or
by any Limited Partners (other than the Company) holding twenty percent (20%) or
more of the Common Units. Following such proposal, the General Partner shall
submit any proposed amendment to the Limited Partners. The General Partner shall
seek the written vote of the Partners on the proposed amendment or shall call a
meeting to vote thereon and to transact any other business that it may deem
appropriate. For purposes of obtaining a written vote, the General Partner may
require a response within a reasonable specified time, but not less than fifteen
(15) days, and failure to respond in such time period shall constitute a vote
which is consistent with the General Partner's recommendation with respect to
the proposal. Except as provided in Section 13.1.C, 14.1.B, 14.1.C or 14.1.D, a
proposed amendment shall be adopted and be effective as an amendment hereto if
it is approved by the General Partner and it receives the Consent of Limited
Partners holding a majority of the Common Units held by Limited Partners
(including Limited Partner Common Units held by the Company); provided, that, an
action shall become effective at such time as the requisite consents are
received even if prior to such specified time.
B. Notwithstanding Section 14.1.A, the General Partner shall have the
power, without the consent of the Limited Partners, to amend this Agreement as
may be required to facilitate or implement any of the following purposes:
(1) to add to the obligations of the General Partner or surrender any
right or power granted to the General Partner or any Affiliate of
the General Partner for the benefit of the Limited Partners;
(2) to reflect the admission, substitution, termination, or
withdrawal of Partners in accordance with this Agreement;
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(3) to set forth and reflect in the Agreement the designations,
rights, powers, duties, and preferences of the holders of any
additional Partnership Interests issued pursuant to Section 4.2.A
hereof;
(4) to reflect a change that is of an inconsequential nature and does
not adversely affect the Limited Partners in any material
respect, or to cure any ambiguity, correct or supplement any
provision in this Agreement not inconsistent with law or with
other provisions, or make other changes with respect to matters
arising under this Agreement that will not be inconsistent with
law or with the provisions of this Agreement; and
(5) to satisfy any requirements, conditions, or guidelines contained
in any order, directive, opinion, ruling or regulation of a
federal or state agency or contained in federal or state law.
The General Partner shall provide notice to the Limited Partners when any action
under this Section 14.1.B is taken.
C. Notwithstanding Section 14.1.A and 14.1.B hereof, this Agreement shall
not be amended without the Consent of each Partner adversely affected if such
amendment would (i) convert a Limited Partner's interest in the Partnership into
a General Partner Interest; (ii) modify the limited liability of a Limited
Partner in a manner adverse to such Limited Partner; (iii) alter rights of the
Partner (other than as a result of the issuance of Partnership Interests) to
receive distributions pursuant to Article 5 or Article 13 or the allocations
specified in Article 6 (except as permitted pursuant to Section 4.2 and Section
14.1.B(3) hereof); (iv) alter or modify the Redemption Right and REIT Shares
Amount as set forth in Sections 8.6 and 11.2.B, and the related definitions, in
a manner adverse to such Partner; (v) cause the termination of the Partnership
prior to the time set forth in Sections 2.5 or 13.1; or (vi) amend this Section
14.1.C. Further, no amendment may alter the restrictions on the General
Partner's authority set forth in Section 7.3.B without the Consent specified in
that section. In addition, Section 8.7 may only be amended as provided therein.
D. Notwithstanding Section 14.1.A or Section 14.1.B hereof, the General
Partner shall not (except in connection with amendments made to reflect the
issuance of additional Partnership Interests and the relative rights, powers and
duties incident thereto) amend Sections 4.2.A, 7.5, 7.6, 11.2 or 14.2 without
the Consent of Limited Partners holding a majority of the Common Units held by
Limited Partners, excluding Limited Partner Common Units held by the General
Partner or its Affiliates.
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Section 14.2 Meetings of the Partners
A. Meetings of the Partners may be called by the General Partner and
shall be called upon the receipt by the General Partner of a written request by
Limited Partners (other than the Company) holding twenty percent (20%) or more
of the Common Units. The request shall state the nature of the business to be
transacted. Notice of any such meeting shall be given to all Partners not less
than seven (7) days nor more than thirty (30) days prior to the date of such
meeting. Partners may vote in person or by proxy at such meeting. Whenever the
vote or Consent of the Partners is permitted or required under this Agreement,
such vote or Consent may be given at a meeting of the Partners or may be given
in accordance with the procedure prescribed in Section 14.1.A hereof. Except as
otherwise expressly provided in this Agreement, the Consent of holders of a
majority of the Common Units held by Limited Partners (including Limited
Partnership Common Units held by the Company) shall control.
B. Any action required or permitted to be taken at a meeting of the
Partners may be taken without a meeting if a written consent setting forth the
action so taken is signed by a majority of the Common Units of the Partners (or
such other percentage as is expressly required by this Agreement). Such consent
may be in one instrument or in several instruments, and shall have the same
force and effect as a vote of a majority of the Common Units of the Partners (or
such other percentage as is expressly required by this Agreement). Such consent
shall be filed with the General Partner. An action so taken shall be deemed to
have been taken at a meeting held on the effective date so certified.
C. Each Limited Partner may authorize any Person or Persons to act for
him by proxy on all matters in which a Limited Partner is entitled to
participate, including waiving notice of any meeting, or voting or participating
at a meeting. Every proxy must be signed by the Limited Partner or his attorney-
in-fact. No proxy shall be valid after the expiration of twelve (12) months from
the date thereof unless otherwise provided in the proxy. Every proxy shall be
revocable at the pleasure of the Limited Partner executing it, such revocation
to be effective upon the Partnership's receipt of written notice of such
revocation from the Limited Partner executing such proxy.
D. Each meeting of the Partners shall be conducted by the General Partner
or such other Person as the General Partner may appoint pursuant to such rules
for the conduct of the meeting as the General Partner or such other Person deems
appropriate. Without limitation, meetings of Partners may be conducted in the
same manner as meetings of the shareholders of the Company and may be held at
the same time, and as part of, meetings of the shareholders of the Company.
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ARTICLE 15
GENERAL PROVISIONS
Section 15.1 Addresses and Notice
Any notice, demand, request or report required or permitted to be given or
made to a Partner or Assignee under this Agreement shall be in writing and shall
be deemed given or made when delivered in person or when sent by first class
United States mail or by other means of written communication to the Partner or
Assignee at the address set forth in Exhibit A or such other address of which
the Partner shall notify the General Partner in writing.
Section 15.2 Titles and Captions
All article or section titles or captions in this Agreement are for
convenience only. They shall not be deemed part of this Agreement and in no way
define, limit, extend or describe the scope or intent of any provisions hereof.
Except as specifically provided otherwise, references to "Articles" and
"Sections" are to Articles and Sections of this Agreement.
Section 15.3 Pronouns and Plurals
Whenever the context may require, any pronoun used in this Agreement shall
include the corresponding masculine, feminine or neuter forms, and the singular
form of nouns, pronouns and verbs shall include the plural and vice versa.
Section 15.4 Further Action
The parties shall execute and deliver all documents, provide all
information and take or refrain from taking action as may be necessary or
appropriate to achieve the purposes of this Agreement.
Section 15.5 Binding Effect
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their heirs, executors, administrators, successors, legal
representatives and permitted assigns.
Section 15.6 Creditors
Other than as expressly set forth herein with respect to the Indemnities,
none of the provisions of this Agreement shall be for the benefit of, or shall
be enforceable by, any creditor of the Partnership.
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Section 15.7 Waiver
No failure by any party to insist upon the strict performance of any
covenant, duty, agreement or condition of this Agreement or to exercise any
right or remedy consequent upon a breach thereof shall constitute waiver of any
such breach or any other covenant, duty, agreement or condition.
Section 15.8 Counterparts
This Agreement may be executed in counterparts, all of which together shall
constitute one agreement binding on all of the parties hereto, notwithstanding
that all such parties are not signatories to the original or the same
counterpart. Each party shall become bound by this Agreement immediately upon
affixing its signature hereto.
Section 15.9 Applicable Law
This Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of Delaware, without regard to the principles
of conflicts of law.
Section 15.10 Invalidity of Provisions
If any provision of this Agreement shall to any extent be held void or
unenforceable (as to duration, scope, activity, subject or otherwise) by a court
of competent jurisdiction, such provision shall be deemed to be modified so as
to constitute a provision conforming as nearly as possible to the original
provision while still remaining valid and enforceable. In such event, the
remainder of this Agreement (or the application of such provision to persons or
circumstances other than those in respect of which it is deemed to be void or
unenforceable) shall not be affected thereby. Each other provision of this
Agreement, unless specifically conditioned upon the voided aspect of such
provision, shall remain valid and enforceable to the fullest extent permitted by
law; any other provisions of this Agreement that are specifically conditioned on
the voided aspect of such invalid provision shall also be deemed to be modified
so as to constitute a provision conforming as nearly as possible to the original
provision while still remaining valid and enforceable to the fullest extent
permitted by law.
Section 15.11 Entire Agreement
This Agreement contains the entire understanding and agreement among the
Partners with respect to the subject matter hereof and supersedes the Prior
Agreement, any other prior written or oral understandings or agreements among
them with respect thereto.
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IN WITNESS WHEREOF, the parties hereto have executed this Second Amended
and Restated Agreement of Limited Partnership as of the date first written
above.
GENERAL PARTNER:
BOSTON PROPERTIES, INC.
By: /s/ William J. Wedge
____________________________________
William J. Wedge
Senior Vice President
LIMITED PARTNERS:
BOSTON PROPERTIES, INC.,
as attorney-in-fact for the Limited Partners
By: /s/ William J. Wedge
____________________________________
William J. Wedge
Senior Vice President
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FORM OF LIMITED PARTNER SIGNATURE PAGE
FOR PARTNERS ADMITTED AFTER JUNE 29, 1998
The undersigned, desiring to become one of the within named Limited
Partners of Boston Properties Limited Partnership, hereby becomes a party to the
Second Amended and Restated Agreement of Limited Partnership of Boston
Properties Limited Partnership by and among Boston Properties, Inc. and such
Limited Partners, dated as of June 29, 1997, as amended. The undersigned agrees
that this signature page may be attached to any counterpart of said Agreement of
Limited Partnership.
Signature Line for Limited Partner:
[Name]
By:
Name:
Title:
Date:
Address of Limited Partner:
-------------------------------
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Exhibit 99.2
BOSTON PROPERTIES LIMITED PARTNERSHIP
CERTIFICATE OF DESIGNATIONS
ESTABLISHING AND FIXING THE RIGHTS, LIMITATIONS AND
PREFERENCES OF A SERIES OF PREFERRED UNITS
Reference is made to the Second Amended and Restated Agreement of Limited
Partnership (the "Partnership Agreement") of Boston Properties Limited
Partnership, a Delaware limited partnership (the "Partnership"), of which this
Certificate of Designations (this "Certificate") shall become a part.
Capitalized terms used herein and not defined herein have the meanings ascribed
thereto in the main part of the Partnership Agreement. Section references are
(unless otherwise specified) references to sections in this Certificate.
WHEREAS, Section 14.1.B(3) of the main part of the Partnership Agreement
permits the General Partner, without the consent of the Limited Partners, to
amend the Partnership Agreement for the purpose of setting forth and reflecting
in the Partnership Agreement the designations, rights, powers, duties, and
preferences of holders of any additional Partnership Interests issued pursuant
to Section 4.2.A of the main part of the Partnership Agreement; and
WHEREAS, the General Partner desires by this Certificate to so amend the
Partnership Agreement as of this 30th day of June, 1998.
NOW, THEREFORE, the General Partner has set forth in this Certificate the
following description of the preferences and other rights, voting powers,
restrictions, limitations as to distributions, qualifications and terms and
conditions of conversion and redemption of a class and series of Partnership
Interest to be represented by Partnership Units which shall be referred to as
"Series One Preferred Units":
1. Designation and Number. A series of Preferred Units, designated the
"Series One Preferred Units," is hereby established.
2. Definitions. For purposes of this Certificate of Designations, the
following terms shall have the meanings indicated:
"Constituent Person" shall have the meaning set forth in paragraph (e) of
Section 6 hereof.
"Contribution Agreement" means that certain Contribution and Conveyance
Agreement dated as of June 30, 1998 by and among the Landis Parties, as named
therein, on the one hand, and the Company and the Partnership, on the other hand
(as may be amended, modified or supplemented from time to time).
<PAGE>
"Conversion Price" shall mean the conversion price per Common Unit for
which the Series One Preferred Units are convertible, as such Conversion Price
may be adjusted pursuant to Section 6 hereof. The initial conversion price shall
be $38.25 (equivalent to a conversion rate of 0.88889 Common Units for each
Series One Preferred Unit).
"Conversion Date" shall have the meaning set forth in Section 6(b) hereof.
"Current Market Price" of a REIT Share or of a publicly traded security of
any other issuer for any day shall mean the last reported sales price, regular
way, on such day, or, if no sale takes place on such day, the average of the
reported closing bid and asked prices on such day, regular way, in either case
as reported on the New York Stock Exchange ("NYSE") or, if such security is not
listed or admitted for trading on the NYSE, on the principal national securities
exchange on which such security is listed or admitted for trading or, if not
listed or admitted for trading on any national securities exchange, on the
Nasdaq National Market or, if such security is not quoted on such Nasdaq
National Market, the average of the closing bid and asked prices on such day in
the over-the-counter market as reported by Nasdaq or, if bid and asked prices
for such security on such day shall not have been reported through Nasdaq, the
average of the bid and asked prices on such day as furnished by any NYSE member
firm regularly making a market in such security selected for such purpose by the
Chief Executive Officer of the Partnership or the General Partner. "Current
Market Price" of a Common Unit as of any day means the Current Market Price of a
REIT Share multiplied by the Conversion Factor.
"Default Event" means that there is in existence a material, uncured breach
by the Company or the Partnership with respect to its obligations under this
Certificate of Designations, under the Contribution Agreement, or under the
related Registration Rights and Lock-Up Agreement, and the Company has received
written notice of such breach.
"Distribution Payment Date" shall mean the fifteenth day of February, May,
August and November, in each year, commencing on November 16, 1998; provided,
however, that if any Distribution Payment Date falls on any day other than a
Business Day, the distribution payment due on such Distribution Payment Date
shall be paid on the first Business Day immediately following such Distribution
Payment Date.
"Distribution Periods" shall mean quarterly distribution periods from and
after a Distribution Payment Date and to and excluding the next succeeding
Distribution Payment Date (other than the initial Distribution Period, which
shall commence on July 1, 1998 and end on and exclude November 16, 1998).
"Fair Market Value" shall mean the average of the daily Current Market
Prices per Common Unit during the five (5) consecutive Trading Days selected by
the Partnership commencing not more than 20 Trading Days before, and ending not
later than, the earlier of the day in question and the day before the "ex" date
with respect to the issuance or distribution requiring such computation. The
term "'ex' date," when used with respect to any issuance or
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distribution, means the first day on which REIT Shares trade regular way,
without the right to receive such issuance or distribution, on the exchange or
in the market, as the case may be, used to determine that day's Current Market
Price.
"Issue Date" shall mean, with respect to a Series One Preferred Unit, the
first date on which such Series One Preferred Unit was issued and sold.
"Junior Units" shall mean the Common Units and any other class or series of
Partnership Units constituting junior units within the meaning set forth in
paragraph (c) of Section 8 hereof.
"Liquidation Preference" shall have the meaning set forth in paragraph (a)
of Section 4 hereof.
"Non-Electing Share" shall have the meaning set forth in paragraph (e) of
Section 6 hereof.
"Parity Units" shall have the meaning set forth in paragraph (b) of Section
8 hereof.
"Redemption Date" shall have the meaning set forth in paragraph (b) of
Section 5 hereof.
"Redemption Notice" shall have the meaning set forth in Section 5(b).
"Securities" shall have the meaning set forth in paragraph (d)(iii) of
Section 6 hereof.
"set apart for payment" shall be deemed to include, without any action
other than the following, the recording by the Partnership in its accounting
ledgers of any accounting or bookkeeping entry which indicates, pursuant to a
declaration of a distribution by the General Partner, the allocation of funds to
be so paid on any series or class of Partnership Units; provided, however, that
if any funds for any class or series of Junior Units or Parity Units are placed
in a separate account of the Partnership or delivered to a disbursing, paying or
other similar agent, then "set apart for payment" with respect to the Series One
Preferred Units shall mean placing such funds in a separate account or
delivering such funds to a disbursing, paying or other similar agent.
"Source Agreements" shall mean (i) the Contribution Agreement, (ii) the
Contribution Agreement by and among 206 Associates Limited Partnership, a New
Jersey limited partnership, and Carnegie 510 Associates, L.L.C., a Delaware
limited liability company, on the one hand, and the Company and the Partnership,
on the other hand (as may be amended, modified or supplemented from time to
time), (iii) any agreement related thereto or contemplated therein and (iv) any
agreement entered into with one or more Landis Parties (as defined therein) or
their successors-in-interest contemporaneously therewith or as an amendment or
modification (or which has such effect) to any of the foregoing.
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"Trading Day" shall mean any day on which the securities in question are
traded on the New York Stock Exchange ("NYSE"), or if such securities are not
listed or admitted for trading on the NYSE, on the principal national securities
exchange on which such securities are listed or admitted, or if not listed or
admitted for trading on any national securities exchange, on the Nasdaq National
Market, or if such securities are not quoted on such Nasdaq National Market, in
the applicable securities market in which the securities are traded.
"Transaction" shall have the meaning set forth in paragraph (e) of Section
6 hereof.
"20-Day Value" means, as of any date, the Value as of such date (with such
date serving as the "Valuation Date"), except that in determining the 20-Day
Value a period of twenty (20) consecutive Trading Days immediately preceding the
date on which such 20-Day Value is determined shall be used (rather than a
period of ten (10) consecutive Trading Days immediately preceding the Valuation
Date).
3. Distributions.
(a) The holders of Series One Preferred Units shall be entitled to
receive, when, as and if authorized and declared by the General Partner out of
assets legally available for that purpose, distributions payable in cash at the
rate per annum of $2.465 per Series One Preferred Unit (the "Annual Distribution
Rate") (equal to a distribution rate of 7.25% per annum on the Liquidation
Preference per Series One Preferred Unit of $34.00). Such distributions shall,
with respect to each Series One Preferred Unit, be cumulative from and including
its Issue Date, whether or not in any Distribution Period or Periods there shall
be assets of the Partnership legally available for the payment of such
distributions, and shall be payable quarterly, when, as and if authorized and
declared by the General Partner, in arrears on Distribution Payment Dates,
commencing on the first Distribution Payment Date after the Issue Date of such
Series One Preferred Unit. Distributions are cumulative from the most recent
Distribution Payment Date to which distributions have been paid, whether or not
in any Distribution Period or Periods there shall be assets legally available
therefor. Each such distribution shall be payable in arrears to the holders of
record of the Series One Preferred Units, as they appear on the records of the
Partnership at the close of business on such record dates, not more than 30 days
preceding the applicable Distribution Payment Date (the "Distribution Payment
Record Date") (or, in the case of a Distribution Payment Record Date that
coincides with a record date for payment of distributions on Common Units, not
more than 60 days preceding the applicable Distribution Payment Date), as shall
be fixed by the General Partner. Accrued and unpaid distributions for any past
Distribution Periods may be authorized and declared and paid at any time,
without reference to any regular Distribution Payment Date, to holders of record
on such date, not exceeding 45 days preceding the payment date thereof (or, in
the case of a record date that coincides with a record date for payment of
distributions on Common Units, not more than 60 days preceding the applicable
payment date thereof), as may be fixed by the General Partner.
(b) The amount of distributions payable for each full Distribution Period
for the Series One Preferred Units shall be $0.61625, which is equal to the
Annual Distribution Rate
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divided by four. Notwithstanding any other provision hereof, the amount of
distributions payable on a Distribution Payment Date with respect to a Series
One Preferred Unit which is issued in the middle of the related Distribution
Period and therefore was outstanding for less than a full Distribution Period
shall be, with respect to that Distribution Period, prorated by multiplying the
amount otherwise payable for that Distribution Period by a fraction, the
numerator of which equals the number of days such Series One Preferred Unit was
outstanding during such Distribution Period and the denominator of which equals
the total number of days in such Distribution Period. Holders of Series One
Preferred Units shall not be entitled to any distributions, whether payable in
cash, property or stock, in excess of cumulative distributions, as herein
provided, on the Series One Preferred Units. No interest, or sum of money in
lieu of interest, shall be payable in respect of any distribution payment or
payments on the Series One Preferred Units that may be in arrears. The first
Distribution Period with respect to the first Series One Preferred Units issued
shall be for the extended period from July 1, 1998 to the first Distribution
Payment Date of (and excluding) November 16, 1998, and the distribution payable
in respect of such Distribution Period shall equal the annual Distribution Rate
of $2.465 multiplied by a fraction, the numerator of which equals the number of
days in such Distribution Period and the denominator of which equals 365.
(c) So long as any Series One Preferred Units are outstanding, no
distributions, except as described in the immediately following sentence, shall
be authorized and declared or paid or set apart for payment on any series or
class or classes of Parity Units for any period nor shall any Parity Units be
redeemed, purchased or otherwise acquired for any consideration or any monies to
be paid to or made available for a sinking fund for the redemption of any Parity
Units, directly or indirectly (except by conversion into or exchange for Parity
Units or Junior Units), unless full cumulative distributions have been or
contemporaneously are authorized and declared and paid or authorized and
declared and a sum sufficient for the payment thereof set apart for such payment
on the Series One Preferred Units for all Distribution Periods terminating on or
prior to the distribution payment date on (or date of purchase, redemption or
other acquisition of) such class or series of Parity Units. When distributions
are not paid in full or a sum sufficient for such payment is not set apart, as
aforesaid, all distributions authorized and declared upon Series One Preferred
Units and all distributions authorized and declared upon any other series or
class or classes of Parity Units shall be authorized and declared ratably in
proportion to the respective amounts of distributions accumulated and unpaid on
the Series One Preferred Units and such Parity Units.
(d) So long as any Series One Preferred Units are outstanding, no
distributions (other than distributions paid solely in Junior Units, or options,
warrants or rights to subscribe for or purchase Junior Units) shall be
authorized and declared or paid or set apart for payment or other distribution
authorized and declared or made upon Junior Units for any period, nor shall any
Junior Units be redeemed, purchased or otherwise acquired (other than a
redemption, purchase or other acquisition of Common Units made for purposes of
and in compliance with requirements of employee incentive or employee benefit
plans of the Partnership or the Company or any of their subsidiaries), for any
consideration (or any moneys to be paid to or made available for a sinking fund
for the redemption of any Junior Units) by the Partnership, directly or
indirectly
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(except by conversion into or exchange for Junior Units), unless in each case
(i) the full cumulative distributions on all outstanding Series One Preferred
Units and any other Parity Units of the Partnership shall have been paid or set
apart for payment for all past Distribution Periods with respect to the Series
One Preferred Units and all past distribution periods with respect to such
Parity Units and (ii) sufficient funds shall have ben paid or set apart for the
payment of the distribution for the current Distribution Period with respect to
the Series One Preferred Units.
(e) Without limiting the other provisions hereof, no distributions on
Series One Preferred Units (other than liquidating distributions made in
accordance with Section 13.2 of the main part of the Partnership Agreement and
Section 4 hereof) shall be paid or set apart for payment by the Partnership at
such time as the terms and provisions of any agreement of the Partnership or its
affiliates or subsidiaries, relating to bona fide indebtedness for borrowed
money, prohibits such declaration, payment or setting apart for payment or
provides that such declaration, payment or setting apart for payment would
constitute a breach thereof or a default thereunder, or if such declaration or
payment shall be restricted or prohibited by law (and such failure to pay or set
apart for payment distributions on the Series One Preferred Units shall prohibit
other distributions by the Partnership as described in Sections 3(c) and (d)).
(f) Notwithstanding the foregoing, distributions on the Series One
Preferred Units shall accrue whether or not the terms and provisions set forth
in Section 3(e) hereof at any time prohibit the current payment of
distributions, whether or not the Partnership has earnings, whether or not there
are funds legally available for the payment of such distributions and whether or
not such distributions are declared. Accrued but unpaid distributions on the
Series One Preferred Units will accumulate as of the Distribution Payment Date
on which they first become payable.
(g) Any distribution made on Series One Preferred Units shall first be
credited against the earliest accumulated but unpaid distribution due with
respect to such Units which remains payable. Holders of the Series One
Preferred Units shall not be entitled to any distribution (other than in
connection with the payment of the liquidation preference in the event of
liquidation), whether payable in cash, property or securities, in excess of full
cumulative distributions on the Series One Preferred Units as described above.
4. Liquidation Preference.
(a) In the event of any liquidation, dissolution or winding up of the
Partnership, whether voluntary or involuntary, before any payment or
distribution of the assets of the Partnership (whether capital or surplus) shall
be made to or set apart for the holders of Junior Units, the holders of Series
One Preferred Units shall be entitled to receive Thirty-four Dollars ($34.00)
per Series One Preferred Unit (the "Liquidation Preference") plus an amount
equal to all distributions (whether or not earned or declared) accrued and
unpaid thereon to the date of final distribution to such holder; but such
holders of Series One Preferred Units shall not be entitled to any further
payment. If, upon any such liquidation, dissolution or winding up of the
Partnership, the assets of the Partnership, or proceeds thereof, distributable
among the holders of Series One
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Preferred Units shall be insufficient to pay in full the preferential amount
aforesaid and liquidating payments on any other Parity Units, then such assets,
or the proceeds thereof, shall be distributed among the holders of such Series
One Preferred Units and any such other Parity Units ratably in accordance with
the respective amounts that would be payable on such Series One Preferred Units
and any such other Parity Units if all amounts payable thereon were paid in
full.
(b) Subject to the rights of the holders of Units of any series or
class or classes of Units ranking on a parity with or senior to the Series One
Preferred Units upon liquidation, dissolution or winding up, upon any
liquidation, dissolution or winding up of the Partnership, after payment shall
have been made in full to the holders of the Series One Preferred Units and
Parity Units, as provided in this Section 4, any series or class or classes of
Junior Units shall, subject to any respective terms and provisions applying
thereto, be entitled to receive any and all assets remaining to be paid or
distributed.
(c) After payment of the full amount of the liquidating distributions
to which they are entitled pursuant to Sections 4(a) and (b), the holders of
Series One Preferred Units will have no right or claim to any of the remaining
assets of the Partnership.
(d) The consolidation or merger of the Partnership with or into any
other corporation, partnership or entity or of any other corporation,
partnership or entity with or into the Partnership, or an exchange of Units or
partnership interests, or the sale, lease or conveyance of all or substantially
all of the property or business of the Partnership, shall not be deemed to
constitute a liquidation, dissolution or winding up of the Partnership.
5. Redemption at the Option of the Partnership.
(a) On and after June 30, 2003, the Partnership, at its option, may
cause the Series One Preferred Units, in whole or in part, to be redeemed and
converted from time to time into Common Units, subject to the provisions
described below.
(b) The Series One Preferred Units may be redeemed, in whole or in
part, at the option of the Partnership, from time to time after June 30, 2003,
provided, that, (i) the 20-Day Value of a REIT Share on the date of commencement
of delivery of a Redemption Notice equals or exceeds $42.08 (appropriately
adjusted in the case of any stock split, stock dividend, or reverse stock split
or combination with respect to REIT Shares, and appropriately adjusted in the
case of any other event applicable to REIT Shares that is analogous to the
events described in Section 6(d), in each case applying the principles set forth
in Section 6(d) to determine such adjustment as reasonably determined in good
faith by the General Partner, such determination to be conclusive) and (ii) a
Default Event is not in existence. In order to exercise its redemption option,
the Partnership shall deliver a notice (a "Redemption Notice"), containing the
information provided in Section 5(e), to each holder of record of Series One
Preferred Units. The date on which the Series One Preferred Units to be
converted into Common Units shall occur (the "Redemption Date") (which may not
be before June 30, 2003) shall be selected by the Partnership, shall be
specified in the Redemption Notice and shall be
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not less than fifteen (15) days or more than sixty (60) days after notice is
given under Section 9.
(c) Upon redemption of Series One Preferred Units by the Partnership
on the Redemption Date, each Series One Preferred Unit so redeemed shall be
converted into a number of Common Units equal to the Liquidation Preference of a
Series One Preferred Unit divided by the Conversion Price as of the opening of
business on the Redemption Date. A conversion of Series One Preferred Units
shall occur automatically after the close of business on the applicable
Redemption Date without any action on the part of the holders of Series One
Preferred Units, and immediately after the close of business on the Redemption
Date the holders of Series One Preferred Units who had all or a portion of their
Series One Preferred Units converted shall be credited on the books and records
of the Partnership with the issuance as of the opening of business on the next
day of the Common Units issuable upon such conversion.
Upon any redemption of Series One Preferred Units, the Partnership shall
pay any accumulated and unpaid distributions in cash in arrears for any
Distribution Period ending on or prior to the Redemption Date. If the Redemption
Date falls after a Distribution Payment Record Date and prior to the
corresponding Distribution Payment Date, then each holder of Series One
Preferred Units at the close of business on such Distribution Payment Record
Date shall be entitled to the distribution payable on such Series One Preferred
Units on the corresponding Distribution Payment Date notwithstanding the
redemption of such Series One Preferred Units before such Distribution Payment
Date. Except as set forth in the prior sentence, (i) no accrued but
unaccumulated distribution on the Series One Preferred Units shall be paid on
converted Units, including in respect of the Distribution Period in which such
conversion occurs and (ii) a Series One Preferred Unitholder shall have no
right, with respect to any Series One Preferred Units converted, to receive any
distributions paid in respect of such Series One Preferred Units after the
Redemption Date. Distributions on Common Units issued upon such redemption and
conversion of Series One Preferred Units shall only be paid with respect to
record dates occurring after the date on which the conversion of the related
Series One Preferred Units occurred.
(d) If full cumulative distributions on the Series One Preferred Units
and any other series or class or classes of Parity Units of the Partnership have
not been paid or declared and set apart for payment, the Series One Preferred
Units may not be redeemed in part and the Partnership may only purchase, redeem
or otherwise acquire Series One Preferred Units (if the holder thereof consents
thereto) or any Parity Units, in either case in exchange for Junior Units.
(e) A Redemption Notice shall be provided in the manner provided in
Section 9. Any defect in a Redemption Notice or in the mailing thereof, to any
particular holder, shall not affect the sufficiency of the notice or the
validity of the proceedings for redemption with respect to the other holders.
Any notice that was mailed in the manner herein provided shall be conclusively
presumed to have been duly given on the date of deemed
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delivery provided in Section 9, whether or not the holder receives the notice.
Each such mailed notice shall state, as appropriate: (1) the Redemption Date;
(2) the number of Series One Preferred Units to be redeemed in the aggregate
and, if fewer than all the Series One Preferred Units held by such holder are to
be redeemed, the number of such Series One Preferred Units to be redeemed from
such holder; (3) the number of Common Units to be issued with respect to each
Series One Preferred Unit; (4) the then-current Conversion Price; and (5) that
distributions on the Series One Preferred Units to be redeemed shall cease to
accrue on such Redemption Date except as otherwise provided herein. Notice
having been delivered as aforesaid, from and after the Redemption Date (unless
the Partnership shall fail to issue the appropriate number of Common Units), (i)
except as otherwise provided herein, distributions on the Series One Preferred
Units so called for redemption shall cease to accrue, (ii) said Units shall no
longer be deemed to be outstanding, and all rights of the holders thereof as
holders of Series One Preferred Units of the Partnership shall cease (except the
rights to receive the Common Units, the accumulated and unpaid distribution in
cash under Section 5(c), cash in lieu of fractional Units upon such redemption,
and the right to receive, if applicable in accordance with Section 5(c), a
distribution in respect of a Distribution Payment Record Date that occurred
prior to the Redemption Date and for which the Distribution Payment Date is
after the Redemption Date, in each case without interest thereon).
(f) If fewer than all of the outstanding Series One Preferred Units
are to be redeemed, the Series One Preferred Units to be redeemed shall be
selected by the Partnership from the outstanding Series One Preferred Units not
previously called for redemption by lot or pro rata (as nearly as may be) or by
any other method determined by the Partnership in its sole discretion to be
equitable.
(g) No fractional Common Units shall be issued upon redemption of a
Series One Preferred Unit. Instead of any fractional interest in a Common Unit
that would otherwise be deliverable upon the redemption of a Series One
Preferred Unit, the Partnership shall pay to the holder of such Series One
Preferred Unit an amount in cash (computed to the nearest cent) based upon the
Current Market Price of a Common Unit on the Trading Day immediately preceding
the Redemption Date. If more than one Series One Preferred Unit shall be
redeemed at one time from the same holder, the number of full Common Units
issuable upon redemption thereof shall be computed on the basis of the aggregate
number of Series One Preferred Units so redeemed.
(h) The Partnership covenants that any Common Units issued upon
redemption of the Series One Preferred Units shall be validly issued, fully paid
and non-assessable.
(i) After the redemption of Series One Preferred Units as aforesaid,
the Partnership shall deliver to such holder, upon his written request, a
certificate of the General Partner certifying the number of Common Units and
Preferred Units held by such person immediately after such conversion.
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6. Conversion.
Holders of Series One Preferred Units shall have the right to convert all
or a portion of such units into Common Units, as follows:
(a) Subject to and upon compliance with the provisions of this Section 6,
a holder of Series One Preferred Units shall have the right, at his or her
option, at any time to convert such units into the number of fully paid and non-
assessable Common Units obtained by dividing the aggregate Liquidation
Preference of such Series One Preferred Units by the Conversion Price (as in
effect at the time and on the date provided for in the last paragraph of
paragraph (b) of this Section 6) by delivering an irrevocable Conversion Notice
in the form attached hereto as Exhibit A and in the manner provided in Section
9; provided, however, that the right to convert Series One Preferred Units
called for redemption pursuant to Section 5 hereof shall terminate at the close
of business on the Redemption Date fixed for such redemption, unless the
Partnership shall default in issuing the Common Units and making any cash
payment required upon such redemption under Section 5 hereof. A conversion of
Series One Preferred Units shall occur automatically after the close of business
on the applicable Conversion Date without any action on the part of the holders
of Series One Preferred Units, and immediately after the close of business on
the Conversion Date the holders of Series One Preferred Units who had all or a
portion of their Series One Preferred Units converted shall be credited on the
books and records of the Partnership with the issuance as of the opening of
business on the next day of the Common Units issuable upon such conversion.
(b) Holders of Series One Preferred Units at the close of business on a
Distribution Payment Record Date shall be entitled to receive the distribution
payable on such Series One Preferred Units on the corresponding Distribution
Payment Date notwithstanding the conversion thereof following such Distribution
Payment Record Date and prior to such Distribution Payment Date. Except as set
forth in the prior sentence and in Section 5, (i) no accrued but unaccumulated
distribution on the Series One Preferred Units shall be paid on converted Units,
including in respect of the Distribution Period in which such conversion occurs
and (ii) a Series One Preferred Unitholder shall have no right, with respect to
any Series One Preferred Units converted, to receive any distributions paid in
respect of such Series One Preferred Units after the Conversion Date.
Distributions on Common Units issued upon conversion of Series One Preferred
Units shall only be paid with respect to record dates occurring after the date
on which the conversion of the related Series One Preferred Units occurred.
After the conversion of Series One Preferred Units as aforesaid, the
Partnership shall deliver to such holder, upon his written request, a
certificate of the General Partner certifying the number of Common Units and
Preferred Units held by such person immediately after such conversion.
Each conversion shall be deemed to have been effected immediately prior to
the close of business on the date (the "Conversion Date") specified in the
Conversion Notice (which
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shall not be earlier than 15 days after mailing of the Conversion Notice to the
Partnership nor later than sixty (60) days after such date) and the Series One
Preferred Units so presented for conversion shall be deemed converted into
Common Units at the close of business on such date, and such conversion shall be
at the Conversion Price in effect on such date (unless such day is not a
Business Day, in which event such conversion shall be deemed to have become
effective at the close of business on the next succeeding Business Day).
(c) No fractions of Common Units shall be issued upon conversion of the
Series One Preferred Units. Instead of any fractional interest in a Common Unit
that would otherwise be deliverable upon the conversion of a Series One
Preferred Unit, the Partnership shall pay to the holder of such Series One
Preferred Unit an amount in cash based upon the Current Market Price of Common
Units on the Trading Day immediately preceding the date of conversion. If more
than one Series One Preferred Unit shall be surrendered for conversion at one
time by the same holder, the number of full Common Units issuable upon
conversion thereof shall be computed on the basis of the aggregate number of
Series One Preferred Units so surrendered.
(d) The Conversion Price shall be adjusted from time to time as follows:
(i) If the Partnership shall after June 30, 1998 (A) make a
distribution on its Common Units in Common Units, (B) subdivide its outstanding
Common Units into a greater number of units, (C) combine its outstanding Common
Units into a smaller number of units or (D) issue any Units by reclassification
of its Common Units, the Conversion Price in effect at the opening of business
on the day following the date fixed for the determination of unitholders
entitled to receive such distribution or at the opening of business on the day
following the day on which such subdivision, combination or reclassification
becomes effective, as the case may be, shall be adjusted so that the holder of
any Series One Preferred Unit thereafter surrendered for conversion shall be
entitled to receive the number of Common Units that such holder would have owned
or have been entitled to receive after the happening of any of the events
described above had such Series One Preferred Units been converted immediately
prior to the record date in the case of a distribution or the effective date in
the case of a subdivision, combination or reclassification. An adjustment made
pursuant to this subparagraph (i) shall become effective immediately upon the
opening of business on the day next following the record date (subject to
paragraph (h) below) in the case of a distribution and shall become effective
immediately upon the opening of business on the day next following the effective
date in the case of a subdivision, combination or reclassification.
(ii) If the Partnership shall issue after June 30, 1998 rights,
options or warrants to all holders of Common Units entitling them (for a period
expiring within 45 days after the record date mentioned below) to subscribe for
or purchase Common Units at a price per Unit less than the Fair Market Value per
Common Unit on the record date for the determination of Unitholders entitled to
receive such rights, options or warrants, then the Conversion Price in effect at
the opening of business on the day next following such record date shall be
adjusted to equal the price determined by multiplying (I) the Conversion Price
in
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effect immediately prior to the opening of business on the day following the
record date fixed for such determination by (II) a fraction, the numerator of
which shall be the sum of (A) the number of Common Units outstanding on the
close of business on the record date fixed for such determination and (B) the
number of Units that the aggregate proceeds to the Partnership from the issuance
and exercise of such rights, options or warrants for Common Units would purchase
at such Fair Market Value, and the denominator of which shall be the sum of (A)
the number of Common Units outstanding on the close of business on the record
date fixed for such determination and (B) the number of additional Common Units
offered for subscription or purchase pursuant to such rights, options or
warrants. Such adjustment shall become effective immediately upon the opening of
business on the day next following such record date (subject to paragraph (h)
below). In determining whether any rights, options or warrants entitle the
holders of Common Units to subscribe for or purchase Common Units at less than
such Fair Market Value, there shall be taken into account any consideration
received by the Partnership upon issuance and upon exercise of such rights,
options or warrants, the value of such consideration, if other than cash, to be
determined in good faith by the General Partner, such determination to be
conclusive.
(iii) If the Partnership shall distribute to all holders of its
Common Units any Partnership Units (other than Common Units) or evidence of its
indebtedness or assets (excluding cash distributions to the extent that after
giving effect to such distributions the fair market value of the assets of the
Partnership exceed the sum of the liabilities of the Partnership, as determined
in good faith by the General Partner, such determination to be conclusive) or
rights or warrants to subscribe for or purchase any of its securities (excluding
those rights and warrants issued to all holders of Common Units entitling them
for a period expiring within 45 days after the record date referred to in
subparagraph (ii) above to subscribe for or purchase Common Units, which rights
and warrants are referred to in and treated under subparagraph (ii) above) (any
of the foregoing being hereinafter in this subparagraph (iii) called the
"Securities"), then in each case the Conversion Price shall be adjusted so that
it shall equal the price determined by multiplying (I) the Conversion Price in
effect immediately prior to the close of business on the date fixed for the
determination of Unitholders entitled to receive such distribution by (II) a
fraction, the numerator of which shall be the Fair Market Value per Unit of the
Common Units on the record date mentioned below less the then fair market value
(as determined by the General Partner in good faith, such determination to be
conclusive) of the portion of the Units or assets or evidences of indebtedness
so distributed or of such rights or warrants applicable to one Common Unit, and
the denominator of which shall be the Fair Market Value per Unit of the Common
Units on the record date mentioned below. Such adjustment shall become effective
immediately upon the opening of business on the day next following (subject to
paragraph (h) below) the record date for the determination of Unitholders
entitled to receive such distribution. For the purposes of this subparagraph
(iii), the distribution of a Security, which is distributed not only to the
holders of the Common Units on the date fixed for the determination of
Unitholders entitled to such distribution of such Security, but also is required
to be distributed with each Common Unit delivered to a Person converting a
Series One Preferred Unit after such determination date, shall not require an
adjustment of the Conversion Price pursuant to this subparagraph (iii); provided
that on the
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<PAGE>
date, if any, on which a person converting a Series One Preferred Unit would no
longer be entitled to receive such Security with a Common Unit (other than as a
result of the termination of all such Securities), a distribution of such
Securities shall be deemed to have occurred, and the Conversion Price shall be
adjusted as provided in this subparagraph (iii) (and such day shall be deemed to
be "the date fixed for the determination of the Unitholders entitled to receive
such distribution" and "the record date" within the meaning of the two preceding
sentences).
(iv) No adjustment in the Conversion Price shall be required unless
such adjustment would require a cumulative increase or decrease of at least 1%
in such price; provided, however, that any adjustments that by reason of this
subparagraph (iv) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment until made; and provided, further,
that any adjustment shall be required and made in accordance with the provisions
of this Section 6 (other than this subparagraph (iv)) not later than such time
as may be required in order to preserve the tax-free nature of a distribution to
the holders of Common Units. Notwithstanding any other provisions of this
Section 6, the Partnership shall not be required to make any adjustment of the
Conversion Price for the issuance of any Common Units pursuant to any employee
benefit or compensation plan or other plan providing for the reinvestment of
distributions or interest payable on securities of the Partnership and the
investment of additional optional amounts in Common Units under such plan (or
the issuance of any Common Units to the Company in respect of a capital
contribution by it resulting from an analogous sale of its securities). All
calculations under this Section 6 shall be made to the nearest cent with $.005
being rounded upward) or to the nearest one-tenth of a Unit (with .05 of a Unit
being rounded upward), as the case may be. Anything in this paragraph (d) to the
contrary notwithstanding, the Partnership shall be entitled, to the extent
permitted by law, to make such reductions in the Conversion Price, in addition
to those required by this paragraph (d), as it in its discretion shall determine
to be advisable in order that any Unit distributions, subdivision of Units,
reclassification or combination of Units, distribution of rights, options or
warrants to purchase stock or securities, or a distribution of other assets
(other than cash distributions) hereafter made by the Partnership to its
Unitholders shall not be taxable.
(e) If the Partnership shall be a party to any transaction (including
without limitation a merger, consolidation, unit exchange, self tender offer for
all or substantially all Common Units, sale of all or substantially all of the
Partnership's assets or recapitalization of the Common Units and excluding any
transaction as to which subparagraph (d)(i) of this Section 6 applies) (each of
the foregoing being referred to herein as a "Transaction"), in each case as a
result of which Common Units shall be converted into the right to receive
securities or other property (including cash or any combination thereof), each
Series One Preferred Unit that is not converted into the right to receive
securities or other property in connection with such Transaction shall
thereafter be convertible into the kind and amount of Units or securities and
other property (including cash or any combination thereof) receivable upon the
consummation of such Transaction by a holder of that number of Common Units into
which one Series One Preferred Unit was convertible immediately prior to such
Transaction,
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assuming such holder of Common Units (i) is not a Person with which the
Partnership consolidated or into which the Partnership merged or which merged
into the Partnership or to which such sale or transfer was made, as the case may
be (a "Constituent Person"), or an affiliate of a Constituent Person and (ii)
failed to exercise his or her rights of the election, if any, as to the kind or
amount of securities and other property (including cash) receivable upon such
Transaction (provided that if the kind or amount of stock, securities and other
property (including cash) receivable upon such Transaction is not the same for
each Common Unit of the Partnership held immediately prior to such Transaction
by other than a Constituent Person or an affiliate thereof and in respect of
which such rights of election by such person shall not have been exercised
("Non-Electing Share"), then for the purpose of this paragraph (e) the kind and
amount of stock, securities and other property (including cash) receivable upon
such Transaction by each Non-Electing Share shall be deemed to be the kind and
amount so receivable per Unit by a plurality of the Non-Electing Shares). The
Partnership shall not be a party to any Transaction unless the terms of such
Transaction are consistent with the provisions of this paragraph (e), and it
shall not consent or agree to the occurrence of any Transaction until the
Partnership has entered into an agreement with the successor or purchasing
entity, as the case may be, for the benefit of the holders of the Series One
Preferred Units that will contain provisions enabling the holders of the Series
One Preferred Units that remain outstanding after such Transaction to convert
their Series One Preferred Units into the consideration provided for herein. The
provisions of this paragraph (e) shall similarly apply to successive
Transactions.
(f) If:
(i) the Partnership shall declare a distribution on the Common Units
(excluding cash distributions to the extent that after giving effect to such
distributions the fair market value of the assets of the Partnership exceed the
sum of the liabilities of the Partnership, as determined in good faith by the
General Partner, such determination to be conclusive); or
(ii) the Partnership shall authorize the granting to the holders of
the Common Units of rights or warrants to subscribe for or purchase any Units of
any class or any other rights or warrants; or
(iii) there shall be any reclassification of the Common Units (other
than an event to which subparagraph (d) (i) of this Section 6 applies) or any
consolidation or merger to which the Partnership is a party and for which
approval of any Unitholders of the Partnership is required, or a unit exchange
involving the conversion or exchange of Common Units into securities or other
property, or a self tender offer by the Partnership for all or substantially all
of its outstanding Common Units, or the sale or transfer of all or substantially
all of the assets of the Partnership as an entirety and for which approval of
any Unitholders of the Partnership is required; or
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(iv) if there shall occur the voluntary or involuntary liquidation,
dissolution or winding up of the Partnership;
then the Partnership shall cause to be mailed to the holders of the Series One
Preferred Units at their addresses as shown on the records of the Partnership,
as promptly as possible, but at least 15 days prior to the applicable date
hereinafter specified, a notice stating (A) the date on which a record is to be
taken for the purpose of such distribution or granting of rights or warrants,
or, if a record is not to be taken, the date as of which the holders of Common
Units of record to be entitled to such distribution or granting of rights or
warrants are to be determined or (B) the date on which such reclassification,
consolidation, merger, unit exchange, sale, transfer, liquidation, dissolution
or winding up is expected to become effective, and the date as of which it is
expected that holders of Common Units of record shall be entitled to exchange
their Common Units for securities or other property, if any, deliverable upon
such reclassification, consolidation, merger, unit exchange, sale, transfer,
liquidation, dissolution or winding up. Failure to give or receive such notice
or any defect therein shall not affect the legality or validity of the
proceedings described in this Section 6.
(g) Whenever the Conversion Price is adjusted as herein provided, the
Partnership shall promptly file in the books and records of the Partnership an
officer's certificate setting forth the Conversion Price after such adjustment
as required by the terms hereof and setting forth a brief statement of the facts
requiring such adjustment, which certificate shall be conclusive evidence of the
correctness of such adjustment absent manifest error. Promptly after filing of
such certificate, the Partnership shall prepare a notice of such adjustment of
the Conversion Price setting forth the adjusted Conversion Price and the
effective date such adjustment becomes effective and shall mail such notice of
such adjustment of the Conversion Price to the holders of each Series One
Preferred Unit at such holder's last address as shown on the records of the
Partnership.
(h) In any case in which paragraph (d) of this Section 6 provides that an
adjustment shall become effective on the day next following the record date for
an event, the Partnership may defer until the occurrence of such event (A)
issuing to the holder of any Series One Preferred Unit converted after such
record date and before the occurrence of such event the additional Common Units
issuable upon such conversion by reason of the adjustment required by such event
over and above the Common Units issuable upon such conversion before giving
effect to such adjustment and (B) paying to such holder any amount of cash in
lieu of any fractional Common Unit.
(i) There shall be no adjustment of the Conversion Price in case of the
issuance of any Units in a reorganization, acquisition or other similar
transaction except as specifically set forth in this Section 6. If any action
would require adjustment of the Conversion Price pursuant to more than one
paragraph of this Section 6, only one adjustment shall be made, and such
adjustment shall be the amount of adjustment that has the highest absolute
value.
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(j) If the Partnership shall take any action affecting the Common Units,
other than action described in this Section 6, that in the opinion of the
General Partner would materially adversely affect the conversion rights of the
holders of the Series One Preferred Units, the Conversion Price for the Series
One Preferred Units may be adjusted, to the extent permitted by law, in such
manner, if any, and at such time, as the General Partner, in its sole
discretion, may determine to be equitable in the circumstances.
The Partnership further covenants that any Common Units issued upon
conversion of the Series One Preferred Units shall be validly issued, fully paid
and non-assessable.
7. Voting Rights.
(a) Holders of the Series One Preferred Units will not have any voting
rights, except as set forth below or as otherwise from time to time required by
law.
(b) So long as any Series One Preferred Units remain outstanding, the
Partnership shall not, without the affirmative vote of the holders of at least a
majority of the Series One Preferred Units outstanding at the time, given in
person or by proxy, either in writing or at a meeting (voting separately as a
class), amend, alter or repeal the provisions of the Partnership Agreement,
whether by merger, consolidation or otherwise, so as to materially and adversely
affect any right, preference, privilege or voting power of the Series One
Preferred Units or the holders thereof in their capacity as holders of Series
One Preferred Units; but subject, in any event, to the following provisions:
(i) With respect to the occurrence of any merger, consolidation or
other business combination or reorganization, so long as the
Series One Preferred Units remain outstanding with the terms
thereof materially unchanged or, if the Partnership is not the
surviving entity in such transaction, are exchanged for a
security of the surviving entity with terms that are materially
the same with respect to rights to distributions, voting,
redemption and conversion as the Series One Preferred Units (and
with the terms of the Common Units or such other securities for
which the Series One Preferred Units (or the substitute security
therefor) are convertible materially the same with respect to
rights to distributions, voting, redemption and conversion
(including the right to receive the REIT Shares Amount or a
similar amount with respect to a successor of the Company)), the
occurrence of any such event shall not be deemed to materially
and adversely affect such rights, preferences, privileges or
voting powers of the holders of the Series One Preferred Units.
(ii) Any creation or issuance of any Common Units or of any class or
series of Preferred Units, in each case ranking junior to the
Series One Preferred Units with respect to payment of
distributions, redemption rights and the distribution of assets
upon liquidation, dissolution or
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winding up, shall not be deemed to materially and adversely
affect such rights, preferences, privileges or voting powers of
the holders of the Series One Preferred Units.
(iii) Any creation or issuance of any series of Preferred Units (other
than an issuance of additional Series One Preferred Units, as to
which a class vote shall be required; provided, that no class
vote shall be required for any issuance of Series One Preferred
Units in connection with or as contemplated by the Source
Agreements), or any increase in the amount of authorized Units
of such series, in each case ranking on a parity with the Series
One Preferred Units with respect to payment of distributions,
voting, redemption or the distribution of assets upon
liquidation, dissolution or winding up, shall not be deemed to
materially and adversely affect such rights, preferences,
privileges or voting powers of the holders of the Series One
Preferred Units if such issuance is done (x) in connection with
an issuance of Partnership Units in exchange for non-cash assets
(including, without limitation, (i) securities, partnership
interests, membership interests or other interests in an entity
and (ii) real estate, personal property and intangibles), or to
the Company following the issuance of securities by it for such
non-cash assets and the contribution of such non-cash assets to
the Partnership or (y) in connection with a bona fide capital
raising transaction or to the Company in consideration of a cash
contribution to the Partnership following a sale of preferred
stock by the Company in a bona fide capital raising transaction.
(iv) Any creation or issuance of any series of Preferred Units, or
any increase in the amount of authorized Units of such series,
in each case ranking senior to the Series One Preferred Units
with respect to payment of distributions, voting, redemption or
the distribution of assets upon liquidation, dissolution or
winding up, shall not be deemed to materially and adversely
affect such rights, preferences, privileges or voting powers of
the holders of the Series One Preferred Units if the issuance of
such senior Preferred Units is in connection with a bona fide
capital raising transaction or to the Company in consideration
of a cash contribution to the Partnership following a sale of
preferred stock by the Company in a bona fide capital raising
transaction.
(c) The foregoing voting provisions will not apply if, at or prior to the
time when the act, with respect to which such vote would otherwise be required,
will be effected, all outstanding Series One Preferred Units shall have been
converted and/or redeemed.
8. Ranking.
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Any class or series of Units of the Partnership shall be deemed to rank:
(a) Senior to the Series One Preferred Units, as to the payment of
distributions and as to distribution of assets upon liquidation, dissolution or
winding up, if the holders of such class or series shall be entitled (expressly
in accordance with their terms) to the receipt of distributions or of amounts
distributable upon liquidation, dissolution or winding up, as the case may be,
in preference or priority to the holders of Series One Preferred Units;
(b) on a parity with the Series One Preferred Units, as to the payment of
distributions and as to the distribution of assets upon liquidation, dissolution
or winding up, whether or not the distribution rates, distribution payment dates
or redemption or liquidation prices per Unit thereof be different from those of
the Series One Preferred Units, if the holders of such class or series of Unit
and the Series One Preferred Units shall be entitled to the receipt of
distributions and of amounts distributable upon liquidation, dissolution or
winding up in proportion to their respective amounts of accrued and unpaid
distributions per Unit or liquidation preferences, without preference or
priority one over the other ("Parity Units"); and
(c) junior to the Series One Preferred Units, as to the payment of
distributions or as to the distribution of assets upon liquidation, dissolution
or winding up, if such class or series shall be Common Units or if the holders
of Series One Preferred Units shall be entitled to receipt of distributions or
of amounts distributable upon liquidation, dissolution or winding up, as the
case may be, in preference or priority to the holders of Units of such class or
series ("Junior Units").
9. Notices. All notices, demand, requests or other communications which
may be or are required to be given, served or sent hereunder will be in writing
and delivered by certified U.S. mail, return receipt required, with postage
prepaid, or by nationally recognized overnight courier service that provides
tracking and proof of receipt. Notices shall be deemed delivered upon the
earlier of (i) delivery, (ii) refusal of delivery by addressee, (iii) two
Business Days after deposit in the U.S. Mails in the case of certified U.S.
mail, or (iv) one Business Day after deposit with a nationally recognized
overnight courier. Notices to Series One Preferred Unitholders shall be sent to
their address of record with the Partnership. Any Series One Preferred
Unitholder may change its address of record by written notice as given as
aforesaid. Notices delivered to the Partnership shall be addressed to Boston
Properties Limited Partnership, Attn.: Chief Financial Officer, 8 Arlington
Street, Boston, MA 02116 or to such other address as the Partnership may have
notified holders in the manner provided in this Section 9.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
18
<PAGE>
IN WITNESS WHEREOF, Boston Properties, Inc., as General Partner of the
Partnership, has caused this Certificate of Designations to become effective,
and the Partnership Agreement is hereby amended by giving effect to the terms
set forth herein.
BOSTON PROPERTIES, INC.
By: /s/ William J. Wedge
-------------------------------
Name: William J. Wedge
Title: Senior Vice President
Date: June 30, 1998
19
<PAGE>
Exhibit A to the Certificate of Designations for the Series One Preferred Units
Notice of Election by Partner to Convert
Series One Preferred Units into Common Units
The undersigned Series One Preferred Unitholder hereby irrevocably (i)
elects to convert the number of Series One Preferred Units in Boston Properties
Limited Partnership (the "Partnership") set forth below into Common Units in
accordance with the terms of the Second Amended and Restated Agreement of
Limited Partnership of the Partnership and the Certificate of Designations
relating to the Series One Preferred Units that is a part thereof; and (ii)
directs that any cash in lieu of fractional Common Units that may be deliverable
upon such conversion be delivered to the address specified below. The
undersigned hereby represents, warrants, and certifies that the undersigned (a)
has title to such Series One Preferred Units, free and clear of the rights or
interests of any other person or entity other than the Partnership; (b) has the
full right, power, and authority to cause the conversion of such Series One
Preferred Units as provided herein; and (c) has obtained the consent or approval
of all persons or entities, if any, having the right to consent or approve such
conversion.
Name of Series One Preferred Unitholder:________________________________________
(Please Print: Exact Name as Registered with
Partnership)
Date of this Notice:_________________________
Date the Series One Preferred Units are to be converted:________________/1/
Number of Series One Preferred Units to be Converted:_________________
_____________________________________________
(Signature of Limited Partner: Sign Exact
Name as Registered with Partnership)
_____________________________________________
(Street Address)
_____________________________________________
(City) (State) (ZipCode)
Signature Guaranteed by:
_____________________________________________
________________________
/1/ Not earlier than 15 days nor later than 60 days after the date this
Notice is deposited in the U.S. mails (certified mail, postage prepaid, return
receipt requested) or deposited with a nationally recognized overnight courier
guaranteeing next business day delivery.
20
<PAGE>
Exhibit 99.3
CONTRIBUTION AND CONVEYANCE AGREEMENT
CONCERNING
THE CARNEGIE PORTFOLIO
by and between
The Parties Identified on Schedules A and B
collectively as
the Landis Parties,
and
Boston Properties, Inc.
Boston Properties Limited Partnership
together
as the Transferee
Dated: June 30, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
DEFINITIONS................................................................................................... 2
ARTICLE 1 - CONTRIBUTION AND CONVEYANCE....................................................................... 13
1.1 Contributions and Conveyance...................................................................... 13
1.2 [RESERVED]........................................................................................ 21
1.3 [RESERVED]........................................................................................ 21
1.4 Allocation of Contribution Price and Form of Consideration........................................ 21
1.5 Closing Date...................................................................................... 22
1.6 Blue Sky Cooperation.............................................................................. 22
1.7 Initial Unit Distributions........................................................................ 22
1.8 Post-Closing Agreements; Tax Matters.............................................................. 22
1.9 Repayment/Assumption of Mortgage Debt............................................................. 22
ARTICLE 2 - CONDITIONS TO CLOSING............................................................................. 23
2.1 Conditions to Transferee's Obligations. ......................................................... 23
2.2 Conditions to the Obligations of the Landis Parties............................................... 29
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES.................................................................... 32
3.1 Representations and Warranties of the Landis Parties.............................................. 32
3.2 Representations and Warranties of Transferee...................................................... 38
ARTICLE 4 - CERTAIN COVENANTS................................................................................. 41
4.1 Maintenance and Operation......................................................................... 41
4.2 Insurance......................................................................................... 42
4.3 Personal Property................................................................................. 42
4.4 Leasing/Estoppels................................................................................. 42
4.5 Operating Agreements.............................................................................. 43
4.6 Damage or Destruction; Condemnation............................................................... 43
4.7 Tests and Inspections............................................................................. 44
4.8 Mortgage Debt..................................................................................... 45
4.9 Availability of Records........................................................................... 45
4.10 Title and Survey Defects.......................................................................... 47
4.11 Employee Matters.................................................................................. 47
4.12 Cooperation with Transferee....................................................................... 48
4.13 Covenants of all Existing Partners................................................................ 48
4.14 Tax Appeals....................................................................................... 48
4.16 Identified Breaches............................................................................... 48
ARTICLE 5 - CLOSING ADJUSTMENTS............................................................................... 48
5.1 Taxes, Assessments and Utilities.................................................................. 48
5.2 Rent.............................................................................................. 49
5.3 Payments on Permitted Exceptions.................................................................. 53
5.4 Operating Agreement Payments and Other Expenses................................................... 53
5.5 Partners' Elections............................................................................... 53
5.6 Assessments/Condominium Charges................................................................... 53
5.7 Reimbursement for Deposits........................................................................ 53
5.8 Post-Closing Audit................................................................................ 54
ARTICLE 6 - DEFAULTS, TERMINATIONS AND REMEDIES............................................................... 54
6.1 Defaults and Termination Rights................................................................... 54
6.2 Remedies of Transferee............................................................................ 55
</TABLE>
<PAGE>
<TABLE>
<S> <C>
6.3 Deposit........................................................................................... 55
6.4 LIQUIDATED DAMAGES................................................................................ 55
6.5 Post-Closing Remedies............................................................................. 55
ARTICLE 7 - INDEMNIFICATION................................................................................... 56
7.1 Survival.......................................................................................... 56
7.2 Indemnification By the Landis Parties............................................................. 57
7.3 Limitations on Certain Indemnification Obligations of the Landis Parties.......................... 57
7.4 Indemnification By the Transferee................................................................. 58
7.5 Limitations on Certain Indemnification Obligations of the Transferee.............................. 58
7.6 Indemnification Procedure......................................................................... 59
7.7 Cooperation....................................................................................... 60
7.8 Pledge of Units................................................................................... 60
ARTICLE 8 - INTENTIONALLY OMITTED............................................................................. 62
ARTICLE 9 - MISCELLANEOUS..................................................................................... 62
9.1 Brokers........................................................................................... 62
9.2 Marketing......................................................................................... 62
9.3 Entire Agreement.................................................................................. 62
9.4 Certain Expenses.................................................................................. 63
9.5 Arbitration....................................................................................... 63
9.6 Notices........................................................................................... 63
9.7 No Assignment..................................................................................... 64
9.8 Governing Law..................................................................................... 65
9.9 Multiple Counterparts............................................................................. 65
9.10 Further Assurances................................................................................ 65
9.11 Miscellaneous..................................................................................... 65
9.12 Invalid Provisions................................................................................ 65
9.13 Confidentiality; Publicity........................................................................ 65
9.14 Time of Essence................................................................................... 66
9.15 RESERVED.......................................................................................... 66
9.16 Landis Parties' Representative.................................................................... 66
</TABLE>
<PAGE>
SCHEDULES AND EXHIBITS
SCHEDULE A - The Property Owners, their Existing Partners and
the Developed Properties owned by each
Property Owner
SCHEDULE A-1 - List of Existing Partners and Partnership Interests to
be Conveyed by each Existing Partner
SCHEDULE A-2 - Organizational Charts of the Property Owners, the
Existing Partners and the Assignors
SCHEDULE B-1 - The Assignors, the Assets and the Excluded Assets
SCHEDULE B-2 - Assumed Liabilities and Excluded Liabilities
SCHEDULE C - Assigned Value (Developed Properties and Assignors's
Assets)
SCHEDULE D - Schedule of Existing Partners and Assignors--
Consideration Form and Amount (cash, Common Units,
Preferred Units)
SCHEDULE E - Deferred Contribution Price
SCHEDULE F-1 - Developed Properties
SCHEDULE F-2 - Properties Under Development
SCHEDULE F-3 - Development Properties
SCHEDULE G - Management Contracts
SCHEDULE H - Mortgage Debt
SCHEDULE H-1 - Northwestern Mutual Commitment Documents
SCHEDULE I - Personal Property
SCHEDULE I-1 - Excluded Personal Property
SCHEDULE J - Preliminary Title Reports/Schedule of Endorsements
SCHEDULE K - Real Property
SCHEDULE L - Reserved
SCHEDULE M - Assumed Bonds and Assessments
SCHEDULE N - Tax Protection Schedule
SCHEDULE O - Schedule of As-Built Surveys
SCHEDULE P - Rent Rolls for Properties/Miscellaneous Information
Regarding Leases
SCHEDULE Q - Schedule of Agreements, including Assigned Contracts
SCHEDULE R - Reserved
SCHEDULE S - Other Required Consents
SCHEDULE T - Diligence Deliveries
SCHEDULE U - Schedule of Restrictions and Proffers
SCHEDULE V - Schedule of Lease Commissions/Tenant Allowances, Etc.
SCHEDULE W - Outstanding Construction Matters
SCHEDULE X - Warranties
SCHEDULE Y - Schedule of Environmental Reports
SCHEDULE Z - Schedule of Operating Statements
SCHEDULE AA - Insurance
SCHEDULE BB - Schedule of Actions
SCHEDULE CC - Assignor's Subsidiaries
SCHEDULE DD - Reimbursable Deposits
SCHEDULE EE - NML Closing Costs
EXHIBITS
EXHIBIT 1 - Form of Development Agreement
EXHIBIT 2 - Certificate of Designations of Series One Preferred
Units
EXHIBIT 3 - Form of Properties Under Development Contribution
Agreement
EXHIBIT 4 - Form of Representation Letter
<PAGE>
EXHIBIT 5 - Form of Tax Protection Agreement
EXHIBIT 6A - Mortgage Debt Credit/NML Mortgage Credit/CIGNA Mortgage
Credit/Gatehall Credit
EXHIBIT 6B - Formula for Third-Party Incentive Fee Participation
EXHIBIT 6C - Formula for Tower 1 Earn-Out
EXHIBIT 6D - Formula for Tower 1 Additional Earn-Out
EXHIBIT 7 - Form of Assignment and Assumption of Partnership
Interest(s)
EXHIBIT 8 - Form of Registration Rights Agreement
EXHIBIT 9 - Form of Limited Partner Signature Page
EXHIBIT 10 - Form of Estoppel Certificate
EXHIBIT 11 - Form of Agreement Regarding Directorship
EXHIBIT 11A - Form of Non-Competition Agreement
EXHIBIT 12 - Form of Pledge and Security Agreement
EXHIBIT 13 - Forms of Opinion
EXHIBIT 14 - Benefits Summary for Certain Employees
EXHIBIT 15 - Title Affidavits and Certificates
EXHIBIT 16 - Form of Notice of Purchase Right with Respect to
Prohibited Fee Properties
EXHIBIT 17 - Form of Management Agreement Regarding Prohibited
Fee Properties
<PAGE>
CONTRIBUTION AND CONVEYANCE AGREEMENT
THIS CONTRIBUTION AND CONVEYANCE AGREEMENT (this "AGREEMENT") is entered
into as of this 30th day of June, 1998 by and between (A) (i) Alan B. Landis,
(ii) each of the 14 parties identified on Schedule A attached hereto as a
Property Owner (individually, a "PROPERTY OWNER" and collectively, the "PROPERTY
OWNERS"), (iii) each of the 26 parties identified on such Schedule A as an
EXISTING PARTNER (individually, an "EXISTING PARTNER" and collectively, the
"EXISTING PARTNERS") and (iv) each of the 4 parties identified on Schedule B-1
attached hereto as an ASSIGNOR (individually an "ASSIGNOR" and collectively, the
"ASSIGNORS," and together with Alan B. Landis, the Property Owners and the
Existing Partners, the "LANDIS PARTIES"), on the one hand; and (B) Boston
Properties, Inc., a Delaware corporation ("BOSTON PROPERTIES") and Boston
Properties Limited Partnership, a Delaware limited partnership ("BPLP") (Boston
Properties and BPLP are sometimes referred to herein, jointly and severally, as
"TRANSFEREE"), on the other hand.
WHEREAS, each Property Owner owns one or more office properties located in
the State of New Jersey, as identified opposite such Property Owner's name on
Schedule A attached hereto, each of which office properties is referred to
herein as a "DEVELOPED PROPERTY";
WHEREAS, each Existing Partner is a partner in one or more Property Owners,
as set forth opposite each Property Owner's name on Schedule A attached hereto
and as specified opposite each Existing Partner's name on Schedule A-1 attached
hereto, and the Existing Partners own, in the aggregate, all of the outstanding
partnership interests in the Property Owners (each such interest, a "PARTNERSHIP
INTEREST" and collectively, the "PARTNERSHIP INTERESTS");
WHEREAS, BPLP desires to issue certain Units (as defined herein)
representing limited partnership interests in BPLP to some or all of the
Existing Partners;
WHEREAS, each Existing Partner desires to transfer all of its right, title
and interest in its Partnership Interests to BPLP or its designee as a
contribution in exchange for such limited partnership interests or as a sale for
cash, and BPLP desires to acquire (either directly or through a designee) all of
the Partnership Interests in the Property Owners;
WHEREAS, the Assignors conduct a variety of leasing, management,
development, construction and other business, including, inter alia, businesses
related to the Properties;
WHEREAS, the Assignors desire to transfer, convey, contribute and assign to
BPLP or its designee substantially all of the assets of the Assignors (subject
to the Assumed Assignor Liabilities), and BPLP desires to acquire (either
directly or through a designee) the same from the Assignors, each in accordance
with the terms and subject to the conditions of this Agreement;
NOW THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound hereby, do hereby agree as follows:
DEFINITIONS
The following capitalized terms as used in this Agreement have the meanings
assigned to them below. The terms set forth below do not constitute all defined
terms set forth in this
<PAGE>
Agreement. Such other defined terms shall have the meanings assigned to them
elsewhere in this Agreement.
"ACCOUNTANTS" has the meaning set forth in Section 4.9.
"ACCREDITED INVESTOR" shall mean a person who qualifies as an "accredited
investor" under Rule 501 of the Securities Act.
"ACTION" shall mean any claim, suit, litigation, labor dispute,
arbitration, investigation or other action or proceeding.
"ADDITIONAL RENT" has the meaning set forth in Section 5.2(b).
"AFFILIATE" shall mean any entity in which the person in question owns
directly or indirectly more than fifty percent (50%) of the voting stock or
similar interests issued by such entity or any entity controlling, controlled by
or under common control with the person in question.
"ASSETS" shall mean all of the assets of any Assignor identified as
"Assets" on the attached Schedule B-1 (including, without limitation, goodwill),
but excluding the Excluded Assets (including without limitation, the Gatehall
Contract).
"ASSIGNED CONTRACTS" shall mean (i) those Terminable Contracts which are
identified on Schedule Q as "Assigned Contracts", (ii) the Non-terminable
Contracts and (iii) the Warranties.
"ASSIGNED VALUE" shall mean, with respect to each Developed Property and
each Assignor's Assets the portion of the Contribution Price allocable to such
Developed Property and/or Assignor's Assets as set forth on Schedule C attached
hereto.
"ASSIGNORS" has the meaning set forth in the Introductory Paragraphs
hereto.
"ASSOCIATION ESTOPPEL" shall have the meaning set forth in Section 2.1(j).
"ASSUMED ASSIGNOR LIABILITIES" shall mean those liabilities of each
Assignor identified (and to the maximum extent reasonably possible, quantified)
as "Assumed Assignor Liabilities" on the attached Schedule B-2.
"ASSUMED LIABILITIES" shall mean those liabilities of any Property Owner,
any Existing Partner and/or any Assignor identified (and to the maximum extent
reasonably possible, quantified) as "Assumed Liabilities" on the attached
Schedule B-2, which liabilities are identified on such Schedule by Property
Owner, Existing Partner and Assignor. Notwithstanding the foregoing, in no
event shall Assumed Liabilities include any liabilities which arise under the
Northwestern Mutual Commitment and which are Excluded Liabilities hereunder.
"AT&T OBLIGATIONS" shall mean all liabilities of any kind or nature owed to
AT&T Corp., successor by merger to AT&T Resource Management Corporation ("AT&T")
pursuant to its lease and occupancy at the Tower One Property and relating to or
arising during the period prior to the date of this Agreement, including,
without limitation, all amounts due (or estimated or expected to become due), as
a refund or otherwise, to AT&T which relate to the period prior
<PAGE>
to the date of this Agreement, as contemplated or otherwise set forth in that
certain Tenant Estoppel Certificate of AT&T dated as of June 30, 1998.
"AUTHORITY" shall mean a governmental body or agency having or asserting
jurisdiction over Transferee, the Property Owners, any Existing Partner or any
Property.
"BOSTON PROPERTIES" has the meaning set forth in the Introductory
Paragraphs of this Agreement.
"BPLP" has the meaning set forth in the Introductory Paragraphs of this
Agreement.
"BPLP'S KNOWLEDGE" or words of similar import, shall mean the actual (and
not constructive or imputed) knowledge of Edward H. Linde, Douglas T. Linde,
William J. Wedge and/or Frederick J. DeAngelis, without any separate obligation
on their part to make any independent investigation of the matters being
represented, warranted or certified.
"BPLP INDEMNIFIED PARTIES" or "TRANSFEREE INDEMNIFIED PARTIES" shall mean
BPLP, Boston Properties and their respective officers, directors, employees,
agents, consultants, representatives, subsidiaries, Affiliates, stockholders,
partners and attorneys.
"BUSINESS DAY" means any weekday that is not an official holiday in the
Commonwealth of Massachusetts or the State of New Jersey.
"CIGNA MORTGAGE CREDIT" shall equal the amount set forth as the CIGNA
Mortgage Credit on Exhibit 6A attached hereto.
"CLOSING" and "CLOSING DATE" have the meaning set forth in Section 1.5.
"CLOSING PRICE" shall mean, on each applicable date of determination, the
last reported sale price regular way of Boston Properties' Common Shares on the
New York Stock Exchange Composite tape.
"CODE" shall mean the Internal Revenue Code of 1986, as in effect from time
to time, and applicable rules and regulations thereunder. Any reference herein
to a specific section or sections of the Code shall be deemed to include a
reference to any corresponding provision of future law.
"COMMISSION" shall mean the Securities and Exchange Commission.
"COMMON SHARES" shall mean the shares of the common stock of Boston
Properties issuable upon exchange of the Units.
"COMMON UNITS" shall mean those certain partnership units in BPLP which are
designated in the Limited Partnership Agreement of BPLP as "Common Units."
"CONDEMNED PROPERTY" shall mean any Property which is the subject of a
Major Condemnation.
"CONFIRMATION CERTIFICATE" shall have the meaning set forth in Section
2.1(d).
"CONSENTS" has the meaning set forth in Section 2.1(b).
<PAGE>
"CONTINUING MORTGAGE DEBT" shall mean the Mortgage Debt identified as the
"Continuing Mortgage Debt" on the attached Schedule H, encumbering the Developed
Properties located at Carnegie Center which are commonly known as Building 101,
Building 202, Building 212, Building 214, Building 504, Building 506, Building
508 (as such Mortgage Debt encumbering Building 504, Building 506 and Building
508 shall be refinanced pursuant to and in accordance with the 500 Series NML
Commitment) and the Child Care Center.
"CONTRACTS" shall mean, subject to the terms of this definition below, all
contracts, undertakings, commitments, agreements, obligations, guarantees and
warranties which are in effect as of the date hereof (i) relating to any
Property and/or (ii) to which any Property Owner or Assignor is a party or by
which any Property Owner, Assignor or any Property is bound, other than
Contracts not involving liabilities exceeding $10,000 per year individually or
$100,000 per year in the aggregate (such contracts, individually and
collectively, "IMMATERIAL CONTRACTS"). "Contracts" includes, without limitation,
management contracts, construction contracts, maintenance and service contracts,
parking contracts, employment contracts, equipment leases and brokerage and
leasing agreements, but excludes the Leases (as defined below) and Immaterial
Contracts.
"CONTRIBUTION PRICE" means the amount of the cash and/or Units (after
adjustment as provided in this Agreement unless otherwise noted), to be
delivered by Transferee in consideration of Partnership Interests or the Assets
of an Assignor, or all Partnership Interests and Assets in the aggregate, as the
context requires.
"CONVEYANCING DOCUMENTS" has the meaning set forth in Section 2.1(h)(v).
"CURE PERIOD" has the meaning set forth in Section 1.1(d)(iii)(C)(1).
"DAMAGED PROPERTY" shall mean any Property which is the subject of a Major
Casualty.
"DEFERRED CONTRIBUTION PRICE" of a Property means the dollar amount set
forth opposite such Property's name on Schedule E.
"DEVELOPED PROPERTIES" shall mean, individually and collectively, the
developed Properties identified on Schedule F-1 attached hereto.
"DEVELOPMENT AGREEMENT" shall mean the Development Agreement entered into
at the Closing by Princeton Land Partners, L.L.C., ABL Capital Corp. and the
Transferee (or its nominee), in the form attached hereto as Exhibit 1.
"DEVELOPMENT PROPERTIES" shall mean, individually and collectively, the
Properties which are the subject of the Development Agreement and which are
generally described on the attached Schedule F-3.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as in effect
from time to time, and applicable rules and regulations thereunder. Any
reference herein to specific section or sections of the Exchange Act shall be
deemed to include a reference to any corresponding provision of future law.
"EXCLUDED ASSETS" shall mean those assets of any Assignor identified as
"Excluded Assets" on the attached Schedule B-1.
<PAGE>
"EXCLUDED ASSIGNOR LIABILITIES" shall mean those liabilities of each
Assignor which are not Assumed Assignor Liabilities, including without
limitation, those liabilities identified as "Excluded Assignor Liabilities" on
the attached Schedule B-2, which liabilities are identified on such Schedule by
Property Owner, Existing Partner and Assignor.
"EXCLUDED LIABILITIES" shall mean those liabilities of any Property Owner,
any Existing Partner and/or any Assignor which are not Assumed Liabilities,
including without limitation, those liabilities identified as "Excluded
Liabilities" on the attached Schedule B-2. Notwithstanding anything to the
contrary contained in this Agreement, Excluded Liabilities shall in all events
include all costs and expenses of any kind or nature incurred in connection with
the Northwestern Mutual Commitment which relate to the period ending immediately
after the closing of the loan contemplated by such Northwestern Mutual
Commitment (except only NML Closing Costs), including, without limitation, any
and all costs, losses or damages (including all such amounts which are or may be
payable to NML or any other lender under the Northwestern Mutual Commitment) of
any kind or nature which may be incurred by Transferee in the event of a breach
under the Northwestern Mutual Commitment, or in the event the loan contemplated
thereby does not close, for any reason other than the willful breach by
Transferee, on or before the termination date of such commitment.
"EXISTING EMPLOYEES" has the meaning set forth in Section 4.11(a).
"EXISTING PARTNERS" has the meaning set forth in the Introductory
Paragraphs hereto.
"EXTENDED CURE PERIOD" has the meaning set forth in Section
1.1(d)(iii)(C)(1).
"EXTENSION NOTICE" has the meaning set forth in Section 1.1(d)(iii)(C)(1).
"FEE PROPERTY" has the meaning set forth in Section 1.1(d)(iii).
"FINAL FISCAL YEAR" has the meaning set forth in Section 4.9(h).
"500 SERIES NML COMMITMENT" shall have the meaning set forth in the
definition of Northwestern Mutual Commitment.
"500 SERIES PROPERTIES" shall mean the Developed Properties commonly known
as Carnegie Center Buildings 504, 506 and 508.
"GATEHALL CONTRACT" shall mean that certain Management Agreement dated
April 18, 1995 between TriNet Essential Facilities XIV, Inc., as owner, and
Diversified Management Services, L.P., as manager, with respect to the
management of that certain property commonly referred to as Gatehall Corporate
Center II, located in Parsippany, New Jersey.
"GATEHALL CREDIT" shall equal the amount set forth as the Gatehall Credit
on Exhibit 6A attached hereto.
"GPH" shall mean Goodwin, Procter & Hoar LLP.
"HAZARDOUS SUBSTANCES" and "HAZARDOUS WASTES" have the meanings set forth
in Section 3.1(j).
<PAGE>
"IDENTIFIED BREACHES" shall have the meaning set forth in Section 2.1(d).
"INDEMNITEE" has the meaning set forth in Section 7.6(a).
"INDEMNITOR" has the meaning set forth in Section 7.6(a).
"INTANGIBLES" shall mean (i) to the extent transferable, all right, title
and interest, if any, of the Landis Parties, or any of them, to use the names
"Carnegie Center", "Tower One", "Tower Center", or any other trademark, trade
names or symbols, if any, under which the Property (or any part thereof) or any
of the Assignors is operated or operates, (ii) to the extent transferable, any
Landis Parties' rights in, to and under the Assigned Contracts, (iii) any
Property Owner's rights in, to and under the Leases, all guaranties of the
Leases, all security deposits under the Leases (unless BPLP elects instead to
have them credited to BPLP), all other security, if any, under the Leases and
any rent prepaid under the Leases (with respect to periods after the Closing)
and (iv) to the extent transferable, any Landis Parties' rights in, to and under
all Licenses and any warranties and guaranties relating to the ownership, use,
operation or development of the Property (or any part thereof) or the business
and operations of the Assignors, including, without limitation, all Warranties.
"INVESTMENT COMPANY ACT" shall mean the Investment Company Act of 1940, as
in effect from time to time, and applicable rules and regulations thereunder.
Any reference herein to a specific section or sections of the Investment Company
Act shall be deemed to include a reference to any corresponding provision of
future law.
"LAND" shall have the meaning set forth in the definition of Real Property.
"LANDIS INDEMNIFIED PARTIES" shall mean Alan B. Landis, Linda Landis, each
Existing Partner, each Property Owner (to the extent its Developed Properties
were transferred to Transferee) and each Assignor and their respective officers,
directors, employees, agents, consultants, representatives, subsidiaries,
Affiliates, stockholders, partners, members and attorneys.
"LANDIS INDEMNITORS" has the meaning set forth in Section 7.3(c).
"LANDIS PARTIES" has the meaning set forth in the Introductory Paragraph
hereto.
"LANDIS PARTIES' KNOWLEDGE" shall mean the actual (and not constructive or
imputed) knowledge of Alan B. Landis, Mitchell Landis and/or Gary O. Turndorf,
without any separate obligation on their part to make any independent
investigation of the matters being represented, warranted or certified.
"LAW" shall mean any law, rule, regulation, order or decree of any federal,
state, local or foreign government.
"LEASE DEFAULTS" has the meaning set forth in Section 3.1(a).
"LEASES" has the meaning set forth in Section 3.1(c).
"LIABILITIES" shall mean liabilities, indebtedness, obligations,
commitments, expenses, claims or guarantees of any nature (whether absolute,
accrued, contingent or otherwise).
<PAGE>
"LICENSES" has the meaning set forth in Section 3.1(e).
"LIMITED SURVIVAL INDEMNITY INCREASE" has the meaning set forth in Section
7.3(c).
"LIMITED SURVIVAL REPRESENTATIONS" has the meaning set forth in Section
7.1(a).
"LIMITED SURVIVAL TRANSFEREE REPRESENTATIONS" has the meaning set forth in
Section 7.1(b).
"LOSS" or "LOSSES" shall mean any and all claims, losses, damages, costs,
liabilities and expenses, including, without limitation, reasonable attorney's
fees and disbursements, but excluding in all events, lost profits, consequential
or expectation damages.
"MAJOR CASUALTY" has the meaning set forth in Section 4.6.
"MAJOR CONDEMNATION" has the meaning set forth in Section 4.6.
"MANAGEMENT CONTRACTS" means, collectively, (i) the Third Party Management
Contracts and (ii) the property management contracts for each of the Developed
Properties and the Properties Under Development, as more specifically described
on Schedule G attached hereto.
"MATERIAL ADVERSE EFFECT" shall mean a material adverse effect on the
financial condition, business, operations, assets or liabilities, including
without limitation, the Partnership Interests and the Assets, of any Property,
any Property Owner, any Existing Partner or any Assignor, individually or in the
aggregate (as the context may require).
"MINIMUM UNIT VALUE" has the meaning set forth in Section 1.1(d)(v).
"MORTGAGE DEBT" shall mean the existing mortgage financing encumbering a
Developed Property and/or a Property Under Development, or any Partnership
Interests in any Property Owner as of the date of this Agreement as described in
Schedule H hereto and as reduced by payments of principal actually paid from and
after the date hereof through the Closing Date.
"MORTGAGE DEBT ASSUMPTION DOCUMENTS" shall have the meaning set forth in
Section 2.1(c).
"MORTGAGE DEBT CREDIT" shall equal the amount set forth as the Mortgage
Debt Credit on Exhibit 6A attached hereto.
"MORTGAGE DEBT PREPAYMENT DOCUMENTS" shall have the meaning set forth in
Section 2.1(c).
"NON CONTINUING EMPLOYEES" has the meaning set forth in Section 4.11(a).
"NON-TERMINABLE CONTRACT" shall mean those Contracts which are not
terminable by a Landis Party upon less than thirty-one (31) days notice without
cost or penalty.
"NORTHWESTERN MUTUAL COMMITMENT" shall mean that certain Application for
Mortgage Loan for Carnegie 504 Associates, Carnegie 506 Associates and Carnegie
508 Associates dated
<PAGE>
October 22, 1997, (as modified by that certain letter agreement dated June 30,
1998 which, among other matters, eliminated the cross-default and cross-
collateralization requirements contained therein, the "500 SERIES NML
COMMITMENT") and that certain Application for Mortgage Loan for Carnegie 510
Associates, LLC dated October 22, 1997, (as modified by that certain letter
agreement dated June 30, 1998 which, among other matters, eliminated the cross-
default and cross-collateralization requirements contained therein, the "510 NML
COMMITMENT"); all from The Northwestern Mutual Life Insurance Company to provide
mortgage financing to the applicable Landis Parties, to be secured by the 500
Series Properties and the Property Under Development commonly known as Carnegie
Center Building 510, respectively, and in the maximum aggregate principal amount
of $50,000,000 and $28,500,000, respectively. All documents relating to the
Northwestern Mutual Commitment as of the date of this Agreement are attached
hereto as Schedule H-1.
"NML" shall mean The Northwestern Mutual Life Insurance Company.
"NML CLOSING COSTS" shall mean (i) reasonable attorneys fees and expenses
incurred on behalf of the borrower (in the aggregate amount not to exceed
$25,000.00 minus all amounts actually paid by BPLP, from time to time, with
respect to such attorneys fees and expenses as NML Closing Costs hereunder
and/or pursuant to the Properties Under Development Agreement), (ii) reasonable
attorneys fees and expenses incurred by the lender; in each case in documenting
and closing the loan evidenced by the 504/506/508 Commitment, and (iii) other
third party out-of pocket costs and expenses of the kind identified on Schedule
EE incurred in connection with documenting and closing such loan; provided
however, that the Landis Parties shall propose an anticipated budget (the "NML
CLOSING COST BUDGET"), specifying by item and amount, all costs which are
expected to be included as NML Closing Costs, and the Landis Parties shall use
reasonable efforts to keep all such costs, fees and expenses as low as possible,
and in line with other similar mortgage loan transactions, to the extent
practicable.
"NML MORTGAGE CREDIT" shall equal the amount set forth as the NML Mortgage
Credit on Exhibit 6A attached hereto.
"NOTICE OF CLAIM" has the meaning provided in Section 7.1(c).
"NOTICE OF PURCHASE RIGHT" has the meaning provided in Section 1.1(d)(iii).
"PARTNERSHIP AGREEMENT" or "LIMITED PARTNERSHIP AGREEMENT" has the meaning
set forth in Section 3.2(c).
"PARTNERSHIP CLAIM" shall mean any actual or threatened claim or other
action of any Person (including without limitation any direct or indirect owners
of any Partnership Interest and/or Existing Partner) (i) that any Landis Party
and/or any direct or indirect owner of any Landis Party has (or may have)
breached its fiduciary obligations or other obligations (including without
limitation obligations arising under any applicable organizational documents or
other contractual agreements or obligations of full and fair disclosure) and
whether arising out of the transactions contemplated by this Agreement or
otherwise, or (ii) that (A) the consideration payable to any Landis Party and/or
any direct or indirect owner of any Landis Party in connection with the
transactions contemplated by this Agreement and/or (B) the allocation of any
consideration paid by Transferee under this Agreement or related agreements is
contrary to agreements or improper, or (iii) with respect to or under the terms
of any organizational documents of any Landis Party and/or any direct or
indirect owner of any Landis Party.
<PAGE>
"PARTNERSHIP INTERESTS" has the meaning set forth in the Introductory
Paragraphs hereto.
"PAYABLES" has the meaning set forth in Section 1.1(d)(iv).
"PERMITTED EXCEPTIONS" means, with respect to any Property, those
exceptions to title to such Property and those encumbrances on Personal Property
as are identified in the applicable Preliminary Report (other than the documents
evidencing the Mortgage Debt to the extent such Mortgage Debt is to be repaid in
full and discharged in connection with the Closing) in the form in which it may
have been modified to exist as of the date of this Agreement and those matters
first appearing on the applicable Preliminary Report following the date of this
Agreement as are approved in writing by BPLP.
"Person" or "person" shall mean any individual, corporation, partnership,
joint venture, association, joint-stock company, business trust, limited
liability company, trust, unincorporated organization or government or a
political subdivision, agency or instrumentality thereof or other entity or
organization of any kind.
"PERSONAL PROPERTY" shall mean all of any Property Owner's or Assignor's
right, title and interest in and to any personal property, including
Intangibles, if any, in and to: (i) all signs, supplies, maintenance equipment,
appliances, security systems, tools, decorations, furniture, fixtures,
furnishings, equipment, machinery, mechanical systems, landscaping and other
tangible and intangible personal property located at and/or used in connection
with the leasing, management, operations, maintenance and repair of the
Developed Property (excluding any personal property belonging to any tenant or
licensee, if any, and including without limitation, the items listed on Schedule
I attached hereto; (ii) all site plans, surveys, plans and specifications,
marketing materials and floor plans relating to the Developed Property and
Properties Under Development; (iii) all warranties and guarantees relating to
the Developed Properties; (iv) all permits, licenses, certificates of occupancy,
and other governmental approvals, including without limitation Licenses, which
relate to the Developed Properties. Notwithstanding anything to the contrary
contained herein, Personal Property shall exclude the personal property
specifically identified on the attached Schedule I-1 (such excluded property,
the "EXCLUDED PERSONAL PROPERTY").
"POST-CLOSING AUDIT" has the meaning set forth in Section 5.8.
"PREFERRED UNITS" shall mean preferred limited partnership units in BPLP
which, generally, will upon issuance bear a cumulative, preferred, quarterly
distribution right of 7.25% per annum and will be convertible into Common Units,
all as more particularly set forth in the Certificate of Designations of Series
One Preferred Units attached hereto as Exhibit 2.
"PREFERRED UNIT VALUE" has the meaning set forth in Section 1.1(d)(v).
"PRELIMINARY REPORT" shall mean a final form, current extended coverage
commitment to issue a title policy with respect to each Property, including
endorsements thereto, in form and substance as contemplated in this Agreement
and attached hereto as Schedule J, issued by the Title Company.
"PROHIBITED FEE PROPERTY" has the meaning set forth in Section 1.1(d)(iii).
<PAGE>
"PROHIBITED FEE PROPERTY MANAGEMENT AGREEMENTS" has the meaning set forth
in Section 1.1(d)(iii).
"PROPERTIES UNDER DEVELOPMENT" shall mean, individually and collectively,
the Properties identified on Schedule F-2 attached hereto.
"PROPERTIES UNDER DEVELOPMENT CONTRIBUTION AGREEMENT" shall mean the
Properties Under Development Contribution Agreement entered into at the Closing
by the applicable Landis Parties and the Transferee (or its nominee), in the
form attached hereto as Exhibit 3.
"PROPERTY" shall mean, individually and collectively, all Real Property,
Personal Property and Intangibles. All references in this Agreement to the
Property shall be deemed to refer to all or any portion of the Property.
"PROPERTY OWNER" and "PROPERTY OWNERS" have the meaning set forth in the
Introductory Paragraph of this Agreement.
"REAL PROPERTY" shall mean the land more particularly described in Schedule
K hereto (the "LAND"), together with all rights, privileges, interests in
condominium common areas and other rights related thereto, and easements
appurtenant thereto, and the air rights, water, water rights, riparian rights
and water stock relating to the Land, if any, used in connection with the
beneficial use and enjoyment of the Land and all of the Property Owners' right,
title and interest in and to all roads, easements, rights of way, strips or
gores, alleys and other appurtenances adjoining or servicing the Land
(collectively, the "APPURTENANCES") and all improvements and fixtures located on
the Land, including, without limitation, the building(s) located on the Land,
and all apparatus, equipment and appliances owned by Property Owners and/or
Assignors and used in connection with the operation or occupancy of the Land,
such improvements or the Appurtenances, including, without limitation, heating
and air conditioning systems and facilities used to provide any utility,
refrigeration, ventilation, garbage disposal, recreation or other services on
the Land or the Appurtenances or for the improvements, and all parking
(collectively, the "IMPROVEMENTS"). All references in this Agreement to the
Real Property shall be deemed to refer to all or any portion of the Real
Property and shall include the Properties Under Development and the Development
Properties.
"REGISTRATION RIGHTS AGREEMENT" has the meaning set forth in Section
2.1(i).
"RELATED AGREEMENTS" means, collectively, all documents to be executed and
delivered pursuant to this Agreement, including, without limitation, the
Registration Rights Agreement and all other documents referred to in Section
2.1.
"RENT ROLL" has the meaning set forth in Section 3.1(g).
"REPAID MORTGAGE DEBT" shall mean all Mortgage Debt other than the
Continuing Mortgage Debt.
"REPRESENTATION LETTER" means a letter delivered by an Existing Partner or
Assignor that has elected to receive Units hereunder and in the form of the
letter attached hereto as Exhibit 4.
"SCHEDULE OF ACTIONS" has the meaning set forth in Section 3.1(q).
<PAGE>
"SCHEDULE OF AGREEMENTS" has the meaning set forth in Section 3.1(h).
"SCHEDULE OF PARTNERS" has the meaning set forth in Section 1.4.
"SECURITIES ACT" shall mean the Securities Act of 1933, as in effect from
time to time, and applicable rules and regulations thereunder. Any reference
herein to a specific section or sections of the Securities Act shall be deemed
to include a reference to any corresponding provision of future law.
"SECURITIES LAWS" shall mean the Securities Act, the Exchange Act, the
Investment Company Act or any applicable state or other federal securities Law
or any rule or regulation promulgated thereunder, including without limitation,
any so-called roll-up laws, rules or regulations.
"SPECIFIED REPRESENTATIONS" has the meaning set forth in Section 7.1(a).
"SPECIFIED TRANSFEREE REPRESENTATIONS" has the meaning set forth in Section
7.1(b).
"TAX PROTECTION AGREEMENT" shall mean the Tax Protection Agreement entered
into at the Closing by the applicable Property Owners and/or Existing Partners
and BPLP pursuant to Section 1.8 hereof, in substantially the form attached
hereto as Exhibit 5.
"TAX PROTECTION SCHEDULE" has the meaning set forth in Section 1.8.
"TERMINABLE CONTRACT" shall mean those Contracts which are terminable by
the Landis Parties upon not more than thirty (30) days notice without cost or
penalty.
"THIRD-PARTY INCENTIVE FEE PARTICIPATION" has the meaning set forth in
Section 1.1(e)(iii) and shall be calculated in accordance with the formula set
forth on Exhibit 6B attached hereto.
"THIRD PARTY MANAGEMENT CONTRACTS" shall mean, individually and
collectively, as applicable, all of the third party property management
contracts by and between any Assignor (or an Affiliate of any Assignor) and the
owner of the fee or leasehold interest in any property which is not a Property,
excluding, however, the Gatehall Contract.
"TITLE COMPANY" shall mean First American Title Insurance Company or such
other national title insurance company as is reasonably satisfactory to BPLP and
the Landis Parties.
"TOWER ONE" shall mean that certain 23-story office Property commonly known
as Tower One and located in the East Brunswick, New Jersey development commonly
known as "Tower Center," which property consists of approximately 420,006 square
feet of net rentable office space and approximately 1,252 parking spaces.
"TOWER 1 ADDITIONAL EARN-OUT" has the meaning set forth in Section
1.1(e)(ii) and shall be calculated in accordance with the formula set forth on
Exhibit 6D attached hereto.
"TOWER 1 EARN-OUT" has the meaning set forth in Section 1.1(e)(i) and shall
be calculated in accordance with the formula set forth on Exhibit 6C attached
hereto.
"TOWER TWO" shall mean that certain 23-story office property commonly known
as Tower
<PAGE>
Two and located in the development commonly known as "Tower Center", which
property is, as of the date of this Agreement, multi-tenanted and serves as the
regional headquarters for PNC Bank. Assignor is the property manager of Tower
Two pursuant to a Third Party Management Agreement.
"TRANSFEREE" has the meaning set forth in the Introductory Paragraphs
hereto.
"TRANSFEREE PREPAYMENT PREMIUM OBLIGATION" shall mean, prepayment premiums
or penalties (and not any charges or costs of any other kind or nature) actually
paid at the Closing to the holders of the Repaid Mortgage Debt in an amount not
to exceed, in the aggregate, $2,550,000, in accordance with the prior written
instruction of the Landis Parties (as to which of the prepayment premiums which
are identified in the Mortgage Debt Prepayment Documents are to be included as
Transferee Prepayment Premium Obligations) and otherwise in accordance with the
Mortgage Debt Prepayment Documents.
"UNIT" means a unit of limited partnership interest in BPLP (whether a
Common Unit or a Preferred Unit).
"UNIT HOLDER" means any Existing Partner or Assignor which receives or may
receive Units hereunder.
"UNIT VALUE" has the meaning set forth in Section 1.1(d)(v).
"WARRANTIES" shall mean all presently effective warranties or guaranties
inuring to any Property Owner's benefit from any contractors, subcontractors,
suppliers, servicemen or materialmen in connection with the Property, including,
without limitation, any construction, renovation, repairs or alterations of any
Improvements, any Personal Property or any tenant improvements.
ARTICLE 1
CONTRIBUTION AND CONVEYANCE
1.1 CONTRIBUTIONS AND CONVEYANCE.
(a) Agreement of Existing Partners to Convey Partnership Interests in
the Property Owners. Each Existing Partner agrees, subject to the terms and
conditions of this Agreement, to assign, transfer and otherwise convey on the
Closing Date all of its Partnership Interests in the Property Owners to the
Transferee pursuant to an Assignment and Assumption of Partnership Interest(s)
in the form attached hereto as Exhibit 7. Each Existing Partner has elected to
receive for each such Partnership Interest either cash, Common Units or
Preferred Units, as set forth opposite such Existing Partner's name on Schedule
D. In the case of any Existing Partner that has elected to receive Common Units
or Preferred Units, such Existing Partner is delivering contemporaneously with
its execution of this Agreement a Representation Letter.
(b) Agreement of Assignors to Convey Assets. Each Assignor agrees,
subject to the terms and conditions of this Agreement, to transfer, assign and
otherwise convey on the Closing Date all of such Assignor's Assets to the
Transferee pursuant to an assignment and assumption agreement, bill of sale and
other conveyance documents as contemplated in Article 2
<PAGE>
below. Subject to the terms and conditions of this Agreement, BPLP agrees to
accept such transfer, assignment and conveyance pursuant to such conveyance
documents and to assume the Assumed Assignor Liabilities pursuant to an
assignment and assumption agreement as contemplated in Article 2 below. Each
Assignor has elected to receive for its assets either cash, Common Units or
Preferred Units, as set forth opposite such Assignor's name on Schedule D. In
the case of an Assignor that has elected to receive Common Units or Preferred
Units, such Assignor is delivering contemporaneously with its execution of this
Agreement a Representation Letter. The parties hereto have agreed that it is of
material importance to each such party that (x) the conveyance of the Assets be
affected in a manner which will not materially or adversely impact any of the
Assets or any of the Excluded Assignor Liabilities or the Assumed Assignor
Liabilities and (y) the Transferee shall not, with respect to the Assets, assume
or take subject to any liabilities or obligations of any kind or nature except
only the Assumed Assignor Liabilities.
(c) Payment of Consideration. Subject to the terms and conditions of
this Agreement (including the terms relating to the adjustments and prorations
of such amounts), BPLP shall accept conveyance of the Partnership Interests and
the Assets and shall (x) pay by wire transfer of immediately available funds
the cash consideration payable to each Existing Partner pursuant to instructions
to be provided by each such Existing Partner prior to the Closing and (y) issue
the Units to the Landis Parties entitled to receive Units hereunder, such Units
to be issued free and clear of any claims, liens, voting agreements, options,
charges or encumbrances or restrictions of any kind, nature or description
(other than as may be created pursuant to this Agreement or by any Landis
Party). Notwithstanding anything to the contrary contained in this Agreement,
in no event shall Transferee have any obligation to issue Preferred Units after
the date which is sixty (60) days after the first Closing Date under this
Agreement (provided, however, such sixty (60) day period shall be extended to
ninety (90) days in the event that the Landis Parties deliver a Conveyance
Notice (as defined in Section 1.1(d)(iii)(C)(3) below) to Transferee on or
before the date which is sixty (60) days after the first Closing Date hereunder,
and a Closing Date with respect to the 500 Series Properties occurs on or before
the date which is ninety (90) days after the first Closing Date under this
Agreement, unless the failure to close such acquisition by such date is solely
the result of any action or inaction of Transferee, in which event such ninety
(90) shall be extended until the actual Closing Date for such 500 Series
Properties), and in lieu of any Preferred Units that would otherwise be issued
hereunder, there shall be issued an amount of cash or Common Units (at the
Landis Parties' election) sufficient to satisfy each such obligation.
(d) Certain Provisions Regarding the Consideration to be Delivered
for the Partnership Interests and the Assets.
(i) Value of Units. For purposes of determining the value of a
Unit to be delivered at on the first Closing Date (or at any time within the
sixty (60) day period thereafter (or within the ninety (90) day period, as the
same may be extended, as provided for in the last sentence of Section 1.1(c)
above)) in accordance with the terms of this Agreement, all Units (Common and
Preferred) shall have a value of $34.00 per Unit. All Common Units which are
issued pursuant to this Agreement after the date which is sixty (60) days after
the first Closing Date (or after the ninety (90) day period, as the same may be
extended, as provided for in the last sentence of Section 1.1(c) above) shall
have a value per Common Unit equal to the then current market value of each
share of Common Shares at the time of delivery of such Common Units, based upon
the volume-weighted average of the daily Closing Price for each of the ten (10)
consecutive trading days commencing twelve (12) trading days before any date of
determination.
<PAGE>
(ii) Assigned Values. Each Developed Property and the Assets of
each Assignor has an Assigned Value as set forth on Schedule C. The aggregate
amount of the cash and Units that each Existing Partner in a particular Property
Owner has elected to receive, as set forth on Schedule D, is equal to the
Assigned Value for that Property Owner's Developed Property, and the aggregate
amount of the cash and Units that each Assignor has elected to receive for its
Assets, as set forth on Schedule D, is equal to the Assigned Value of those
Assets. Each Existing Partner and the Assignors acknowledge and agree that the
Assigned Value for each Developed Property and the Assets is subject to
adjustment, proration and other limitations to the extent provided in this
Agreement (for example, pursuant to clause (iv) below, on account of outstanding
Mortgage Debt). In the event of any reduction in the aggregate consideration to
be paid for all of the Partnership Interests in a Property Owner, such reduction
shall be applied pro rata to all of the Existing Partners of such Property
Owners based on the aggregate value of cash and Units that each has elected to
receive prior to such reduction as set forth on Schedule D, by reducing the cash
and Units (pro rata as between cash and Units) to be received by such Existing
Partner at Closing, unless the Landis Parties elect for such reduction to be
applied to the Existing Partners of such Property Owners otherwise by giving
written notice to Transferee not less than five (5) business days prior to the
Closing. Notwithstanding anything to the contrary contained in this Agreement,
in the event that any Prohibited Fee Property is not acquired by BPLP on the
first Closing Date under this Agreement, the Contribution Price payable under
this Agreement on the first Closing Date shall be reduced on the first Closing
Date by an amount equal to the Deferred Contribution Price of such Property. In
the event of any reduction in the aggregate consideration to be paid for the
Assets of an Assignor, such reduction shall be made by reducing the cash and
Units (pro rata as between cash and Units) received by that Assignor at Closing.
(iii) Excluded Properties/Excluded Partnership Interests.
(A) The parties hereto have agreed that it is a material term
of this Agreement that the Developed Properties be acquired by BPLP through
the conveyance and assignment to BPLP by each Existing Partner of 100% of
each Existing Partner's Partnership Interests in each applicable Property
Owner such that 100% of the partnership interests in each applicable
Property Owner is conveyed to BPLP, rather than through the Property
Owners' transfer of their respective Developed Property to BPLP.
(B) In the event any Existing Partner fails to or is unable to
transfer 100% of such Existing Partner's Partnership Interests to BPLP
pursuant to Section 1.1, but subject to the satisfaction of all other
conditions precedent under this Agreement, the applicable Property Owner in
which such Existing Partner owns the Partnership Interests which are not
then being transferred, shall convey the affected Developed Property
directly to BPLP (any such Property, a "FEE PROPERTY") for the applicable
portion of the Contribution Price allocable thereto. In connection with the
conveyance of a Fee Property to BPLP, the applicable Property Owner shall
deliver a Representation Letter and an amount equal to all real estate
transfer taxes and other similar amounts payable with respect to such
direct transfer shall be deducted from the portion of the Contribution
Price allocable to such property (or the Deferred Contribution Price
allocable thereto, if applicable) to be delivered to the applicable
Property Owner (and/or its constituent Existing Partners) at Closing and
BPLP shall assume the Assumed Liabilities which are attributable to such
Fee Property.
(C) (1) Notwithstanding the foregoing, each applicable
Property Owner of a 500 Series Property shall have the right, upon not less
than five (5) days
<PAGE>
written notice to BPLP (any such notice, an "EXTENSION NOTICE"), to extend
the Closing Date with respect to all (but not less than all) of the 500
Series Properties (in such event, each such property, a "PROHIBITED FEE
PROPERTY" and collectively, the "PROHIBITED FEE PROPERTIES") for a period
not to exceed one (1) year (such period, the "CURE PERIOD") in the event
that and only for so long as, the applicable Property Owner is prohibited
from conveying or is otherwise unable or unwilling to convey the Prohibited
Fee Properties by reason of (x) an existing court order of any Federal or
State court having or claiming jurisdiction over such conveyance, and only
for so long as such court order remains in existence or (y) any other legal
impediment to such conveyance (including without limitation, upon the
advice of legal counsel, in writing, in the event of any pending or
threatened dispute as to whether or not the applicable Existing Partners or
the Property Owner in which they hold Partnership Interests has the legal
right and authority at such time to convey such Partnership Interests or
the applicable Prohibited Fee Property) or (z) a continuing dispute by and
among the Existing Partners of the applicable Property Owners (or the
constituent owners of such Existing Partners) with respect to the material
terms of the proposed conveyance of the applicable 500 Series Property or
the appropriate allocation of the proceeds from any such conveyance. An
amount equal to the Deferred Contribution Price allocable to the 500 Series
Properties, if and to the extent that such 500 Series Properties are not
conveyed to BPLP on first Closing Date under this Agreement, shall not be
paid at the first Closing Date, but rather shall be paid upon the
conveyance, if any, of such 500 Series Properties to BPLP in accordance
with the terms and conditions of this Agreement. Subject to subsection (2)
below, in the event that the applicable Landis Parties are unable or
unwilling to cause all of the Existing Partners of the Property Owners
which own the 500 Series Properties to convey the applicable Partnership
Interests to BPLP by no later than the last day of the Cure Period, the
applicable Property Owners shall convey such 500 Series Properties to BPLP
in accordance with (B) above. Notwithstanding the foregoing, BPLP shall
have no obligation to acquire the 500 Series Properties after the first
Closing Date under this Agreement unless (x) the Landis Parties are able to
convey to BPLP all of the 500 Series Properties or all of the Partnership
Interests in the Property Owners which own the 500 Series Properties
simultaneously, (y) (i) no material adverse physical change (including
without limitation, any Major Casualty or Major Condemnation)
(collectively, a "MATERIAL ADVERSE PHYSICAL CHANGE") has occurred at any of
the 500 Series Properties and has not been cured to Transferee's reasonable
satisfaction, and (ii) no material adverse change in the financial
condition of any of the 500 Series Properties as a result of changes in
lease terms or conditions from those terms and conditions which exist on
the first Closing Date hereunder shall have occurred (e.g., and by way of
example only, a material lease is terminated and is not replaced with a
lease with a similar quality tenant and requiring at least the same rental
payment terms as pursuant to the terminated lease). Notwithstanding the
foregoing, in the event of a dispute between Transferee and the Landis
Parties as to whether or not a Material Adverse Physical Change or a
material adverse change in financial condition has occurred under (y)
above, the parties agree to negotiate in good faith and for a period of not
less than fifteen (15) days to resolve any such dispute and if not resolved
within such fifteen (15) day period, such dispute shall be resolved by
arbitration in accordance with Section 9.5. Notwithstanding the foregoing,
in no event shall an Extension Notice hereunder be valid or effective
unless such Extension Notice is accompanied by (i) an executed and
acknowledged Notice of Purchase Right (the "NOTICE OF PURCHASE RIGHT"), in
the form attached hereto as Exhibit 16 and otherwise in recordable form,
evidencing the ongoing acquisition right of BPLP of the 500 Series
Properties pursuant to this Section 1.1(d)(iii), and (ii) an executed
Prohibited Fee Property Management Agreement (the "PROHIBITED FEE PROPERTY
<PAGE>
MANAGEMENT AGREEMENT"), in the form attached hereto as Exhibit 17, pursuant
to which BPLP shall have the right to manage, lease and market each such
Prohibited Fee Property. BPLP acknowledges that it has received an
Extension Notice and the requirements of the immediately preceding sentence
have been satisfied.
(2) Notwithstanding the foregoing subsection (1), each
applicable Property Owner of a 500 Series Property shall have the further
right, upon not less than five (5) days written notice to BPLP, to further
extend the Closing Date with respect to all (but not less than all) of the
500 Series Properties, from time to time, to a date not later than the
tenth (10th) anniversary of the first Closing Date under this Agreement
(such period, the "EXTENDED CURE PERIOD") in the event that and only for so
long as such 500 Series Properties continue to constitute Prohibited Fee
Properties as specified in (1) above. Notwithstanding anything to the
contrary contained in this Agreement, and notwithstanding the Property
Owners' (and their constituent Existing Partners) continuing obligation,
for the ten (10) year period noted herein, to convey the 500 Series
Properties to BPLP, BPLP shall have the right (such right, the "BPLP
PURCHASE RIGHT"), but not the obligation, which right may be exercised in
BPLP's sole discretion, to acquire all of the 500 Series Properties for the
Deferred Contribution Price allocable to such Properties as and when a
Conveyance Notice is delivered hereunder, such right to be exercised
pursuant to subsection (3) below. Notwithstanding the foregoing, in the
event any Property Owner of a 500 Series Property incurs capital expenses
with respect to such 500 Series Property after the first anniversary of the
first Closing Date hereunder, which capital expenses have been specifically
approved in writing by BPLP in its sole and absolute discretion, the
Deferred Contribution Price with respect to such 500 Series Property shall
be increased by the amount of such approved capital expenses.
(3) Immediately upon the termination of the prohibition against
or inability or unwillingness to convey all (but not less than all) of the
Prohibited Fee Properties, the Landis Parties shall give written notice
(such notice, the "CONVEYANCE NOTICE") of their ability to cause (i) all of
the applicable Partnership Interests concerning such Prohibited Fee
Properties to be conveyed to BPLP or (ii) all of the Prohibited Fee
Properties to be conveyed directly to BPLP. In the event that the
Conveyance Notice is given prior to the first anniversary of the first
Closing Date hereunder (but subject to the terms of this subsection (3) and
the last sentence of subsection (1) above), the 500 Series Properties shall
be conveyed to BPLP as set forth herein. No Conveyance Notice given
hereunder shall be valid unless the first page of each such Conveyance
Notice contains the phrase: "TIME SENSITIVE APPROVAL RIGHTS WHICH MUST BE
EXERCISED WITHIN FIFTEEN (15) DAYS" in bold and capital letters. In the
event that the Conveyance Notice is given on or after the first anniversary
of the first Closing Date hereunder, but subject to the terms of this
subsection (3), BPLP shall have the right, but not the obligation, to
elect, by written notice (the "BPLP NOTICE") given to the Landis Parties
not more than fifteen (15) days after BPLP's receipt of such Conveyance
Notice from the Landis Parties, to acquire the 500 Series Properties as set
forth herein. If (i) a BPLP Notice is not given within such fifteen (15)
day period after receipt of a valid Conveyance Notice or (ii) the 500
Series Properties have not been acquired by BPLP on or before the tenth
(10th) anniversary of the first Closing Date under this Agreement (provided
that no Conveyance Notice or BPLP Notice is then outstanding), the 500
Series Properties shall no longer be the subject of the BPLP Purchase Right
hereunder and BPLP shall promptly thereafter deliver to the Landis Parties
an executed termination notice of the
<PAGE>
Notice of Purchase Right, in form and substance reasonably satisfactory to
the Landis Partners and in form appropriate for recording.
(D) In the event that the 500 Series Properties are to be
conveyed hereunder, a closing date for the acquisition of such Prohibited
Fee Properties shall be scheduled as soon as is reasonably practicable
after delivery of the Conveyance Notice or the BPLP Notice, as applicable,
but in any event not later than thirty (30) days after delivery of such
notice, and subject to the continued compliance with the other terms and
conditions (including without limitation, the conditions precedent set
forth in Section 2.1 below, it being agreed that, for purposes of the
delivery of all materials at the Closing Date, including without
limitation, updated Rent Rolls, estoppels, documents related to the
applicable mortgage debt, and other affidavits and certificates
contemplated under this Agreement, all such documents and other materials
shall be dated as of the actual Closing Date with respect to such
Prohibited Fee Properties, except that the estoppels to be delivered in
connection with such Closing may be dated not more than thirty (30) days
prior to such Closing Date) and authorizations which are to be dated within
a certain number of days prior to the first Closing Date are to be dated
the same number of days prior to the Closing Date for the 500 Series
Properties, whereupon BPLP shall acquire such Prohibited Fee Properties for
the Deferred Contribution Price allocable to such Prohibited Fee
Properties, after all adjustments, prorations and limitations to the extent
provided herein.
(E) In the event that there is a failure of a condition
precedent to BPLP's obligation to effect a Closing with respect to the
Prohibited Fee Properties which has been voluntarily created or permitted
to exist by the Landis Parties or which is otherwise susceptible to cure
and which has not been waived, in writing by BPLP, BPLP may notify the
Landis Parties that it must cure the failed condition within ninety (90)
days of the delivery of such notice, subject to the following terms:
(1) If the failure of such condition has occurred because
of the existence of a mortgage, mechanics lien, judgment lien, tax lien or
other encumbrance or lien in violation of this Agreement which can be cured
by payment of money, the Landis Parties or the applicable Property Owner
shall pay such money and cause such encumbrance or lien to be removed;
provided, that the applicable Property Owner or the Landis Parties shall
not be required to remediate or cure any Environmental Matter.
(2) If the failure of such condition requires action by the
Landis Parties or the applicable Property Owner in order to cure, the
Landis Parties and the applicable Property Owners shall use commercially
reasonable efforts (not to exceed $500,000 in the aggregate) to cure such
failed condition unless such failure was caused in willful breach of this
Agreement; provided that the applicable Property Owner and the Landis
Parties shall not be required to remediate or cure any Environmental
Condition, and provided, further that if such failure of condition is not
cured and the Property Owners thereafter intend to sell, transfer or
otherwise convey any or all of the 500 Series Properties (or any interest
therein) to any person other than BPLP for consideration having value equal
to or less than the Deferred Contribution Price for such Prohibited Fee
Properties proposed to be so sold, transferred or conveyed, BPLP shall be
entitled to a right of first offer on the sale, transfer or other
conveyance of each or all of such 500 Series Properties, as follows:
<PAGE>
(v) The Property Owners may not sell, transfer or otherwise
dispose of any or all of the 500 Series Properties unless the Property
Owners first give notice of their intention to so transfer to BPLP and
an offer to so transfer the subject property to BPLP on the terms
(including price for (for cash)) set forth in such notice.
(w) BPLP shall have the right for a period of thirty (30)
days after receipt of such notice to accept such offer to purchase the
subject property from the Property Owners. Acceptance of the offer
may be made in such period by giving an irrevocable written notice
thereof to the Property Owners.
(x) If the offer by the Property Owners is not accepted by
BPLP within such thirty (30) day period, the Property Owners may, for
a period of one hundred eighty (180) days after the date they
delivered notice under clause (v) above, contract to sell, transfer or
otherwise dispose of the subject property to an unaffiliated third
party on terms which are substantially similar (or which are more
favorable to the Property Owners) than the terms offered to BPLP,
provided that the price may be as low as ninety-five percent (95%) of
the price offered to BPLP and, if applicable, to close under such
contract within ninety (90) days after such 180 day period.
(y) Upon acceptance of any such offer by a third party, the
Property Owners shall provide notice thereof to BPLP, with reasonable
detail as to the basic terms and the identity of the third party. Any
such third party shall acquire the subject property free and clear of
this right of first offer if such right has been complied with.
(z) The right of first offer described herein shall
terminate on the tenth (10th) anniversary of this Agreement.
(aa) BPLP shall execute and deliver a document, in
recordable form, acknowledging the termination of the right of first
offer hereunder as and when such right terminates.
(F) In the event any Property becomes a Prohibited Fee Property,
Schedule H shall be deemed to be revised to delete the loan associated with
such Prohibited Fee Property from the definition of Mortgage Debt until
such time as the Prohibited Fee Property or the Partnership Interests in
the Property Owner of such Fee Prohibited Property is actually conveyed to
BPLP.
(G) The Landis Parties shall, at all times from and after the
first Closing Date hereunder, (x) in good faith, attempt to cause each of
the Prohibited Fee Properties to be conveyed to BPLP by causing each
applicable Existing Partner to convey its Partnership Interest in the
applicable Property Owner in accordance with Section 1.1 above as soon as
is reasonably practicable, and (y) diligently and continuously defend
and/or prosecute, as applicable, all reasonably necessary or appropriate
legal actions (including without limitation, litigation and/or arbitration)
in order to endeavor to cause each Prohibited Fee Property to be conveyed
to BPLP as soon as is reasonably practicable after first Closing Date
hereunder, provided, however, that the Landis Parties shall have no
<PAGE>
obligation to settle any dispute under Section 1.1(d)(iii)(C)(1)(z) above
on terms which are not satisfactory to such Landis Parties.
(H) Notwithstanding anything to the contrary contained in this
Agreement, and by way of supplementation and clarification, all Developed
Properties, except only the Prohibited Fee Properties, if applicable
pursuant to this Section 1.1(d)(iii), shall be conveyed to BPLP on the
first Closing Date under this Agreement.
(iv) Certain Adjustments to the Contribution Price for the Partnership
Interests or Assets. The Contribution Price payable to the Existing Partners
for the Partnership Interests of a Property Owner (or to a Property Owner in the
event of a direct conveyance pursuant to Section 1.1(d)(iii) above) shall be
reduced by (A) all unpaid principal of and accrued and unpaid interest
(including any participating or shared appreciation interest) on the Mortgage
Debt of such Property Owner as of the Closing Date (the Property Owners
acknowledging that the Mortgage Debt of each Property Owner has the respective
principal and interest balances set forth on Schedule H as of June 30, 1998
(assuming that all applicable debt service payments are made prior to such
date)), (B) in the case of Partnership Interests in the Property Owners which
own Carnegie Center Building 101 and Carnegie Center Building 214, the Mortgage
Debt Credit, (C) in the case of Partnership Interests in the Property Owners
which own the 500 Series Properties, the NML Mortgage Credit, (D) as and to the
extent set forth on Schedule B-2 attached hereto, on a Property Owner by
Property Owner basis, the accrued and unpaid payables reflected on the balance
sheet of the Property Owners in accordance with Generally Accepted Accounting
Principles (the "Payables") and (E) in the case of the Partnership Interests in
the Property Owners (or the Property Owner, as applicable) which own Carnegie
Center Building 202 and Carnegie Center Building 212, the CIGNA Mortgage Credit.
The Contribution Price payable to the Assignors in consideration of the
conveyance of the Assets shall be reduced by an amount equal to the sum of (y)
$750,000.00 plus (z) the Gatehall Credit. The Contribution Price payable for
the Partnership Interests of a Property Owner or an Assignor's Assets shall be
reduced or increased, as applicable, by the amount of any prorations applicable
to such Property Owner or Assignor described in Article 5 and other closing
adjustments or costs which are the responsibility of or to be credited to such
Property Owner and/or Assignor, as applicable.
(v) Minimum Dollar Value of Units Delivered. Notwithstanding anything
to the contrary contained in this Agreement, in no event shall the aggregate
value, based on the assumed value of $34.00 per Unit (such aggregate value, the
"UNIT VALUE"), of the Common Units and Preferred Units to be delivered at the
first Closing Date to the Existing Partners and Assignors, if applicable, who
have elected pursuant to Schedule D to receive Units be less than the excess of
(x) (i) One Hundred Million Dollars ($100,000,000) or (ii) Eighty Five Million
Dollars ($85,000,000) in the event the Prohibited Fee Properties are not
conveyed to BPLP at the first Closing Date, over (y) the aggregate value of the
Units which Alan B. Landis certifies to BPLP as of the Closing Date are, as of
such date, expected (reasonably and in good faith) to be delivered by BPLP at
the closing of the acquisition of the Properties Under Development (the "MINIMUM
UNIT VALUE"), and to the extent that, due to prorations or reductions, the Unit
Value will be less than the Minimum Unit Value, then the parties hereto agree to
negotiate in good faith a reallocation of the form of aggregate Contribution
Price so that the portion of the Contribution Price which will be paid in cash
will be reduced and the portion which will be paid in Units will be increased.
Notwithstanding anything to the contrary contained in this Agreement, in
no event shall the aggregate value (such aggregate value, the "PREFERRED UNIT
VALUE"), of the Preferred Units
<PAGE>
to be delivered at the Closing to the Existing Partners and Assignors, if
applicable, who have elected pursuant to Schedule D to receive Preferred Units
be less than $40,000,000 (or $34,000,000 in the event the Prohibited Fee
Properties are not conveyed to BPLP at the first Closing Date hereunder), and
if, due to prorations or reductions, the Preferred Unit Value would be less than
$40,000,000 (or $34,000,000 in the event the Prohibited Fee Properties are not
conveyed to BPLP at the first Closing Date hereunder), then the parties hereto
agree to negotiate in good faith a reallocation of the form of aggregate
Contribution Price so that either (A) no Preferred Units will be issued and in
lieu thereof either cash or Common Units will be issued (but the condition set
forth in the preceding paragraph regarding the Minimum Unit Value must be
satisfied after such adjustment) or (B) the portion of the Contribution Price
which will be paid in Preferred Units will be increased to $40,000,000 (or
$34,000,000, as applicable) and the portion of the Contribution Price which will
be paid in cash or Common Units will be reduced.
(e) Additional Consideration; Post-Closing.
(i) Tower 1 Earn-Out. In addition to the Contribution Price
payable to the applicable Landis Parties under this Agreement, the Existing
Partners which are partners in the Property Owner which owns fee title to Tower
One shall receive from BPLP as additional consideration for the conveyance of
Tower One to BPLP, an amount, if any, equal to the Tower 1 Earn-Out calculated
in accordance with the formula set forth on Exhibit 6C attached hereto. All such
additional consideration shall be paid in the manner and in proportion to the
allocation of the Assigned Value to such Existing Partners of the Property Owner
that owns Tower One (as set forth on Schedule D), such that each such Existing
Partner of the Property Owner shall receive its proportionate share of the Tower
1 Earn-Out in cash and Units, as applicable based on the form of consideration
it received at Closing. Notwithstanding the foregoing, in lieu of any Preferred
Units that would otherwise be issued to such an Existing Partner pursuant to
this clause (i) there shall be issued an amount of Common Units sufficient to
satisfy the obligation based upon the then current market value of such Units at
the time delivered (based upon the volume-weighted average of the daily Closing
Price for each of the twenty (20) consecutive trading days commencing twenty-two
(22) trading days before any date of determination).
(ii) Tower 1 Additional Earn-Out. In addition to the
Contribution Price payable to the applicable Landis Parties under this
Agreement, in the event that on or before the date which is the third
anniversary of the Closing Date, (x) Tower Two is acquired by BPLP or (y) BPLP
enters into a binding agreement to acquire Tower Two and thereafter acquires
Tower Two pursuant to such binding agreement; (as any such acquisition may or
may not be made in the sole discretion of BPLP, and on terms and conditions
satisfactory to BPLP in its sole discretion) the Existing Partners which are
partners in the Property Owner which owns fee title to Tower One shall receive
from BPLP on the date of such acquisition and as additional consideration for
the conveyance of Tower One to the BPLP, an amount, if any, equal to the Tower 1
Additional Earn-Out calculated in accordance with the formula set forth on
Exhibit 6D attached hereto. All such additional consideration shall be paid in
the manner and in proportion to the allocation of the Assigned Value to the
Existing Partners of the Property Owner that owns Tower One (as set forth on
Schedule D), such that each such Existing Partner of the Property Owner shall
receive its proportionate share of the Tower 1 Earn-Out in cash and Units, as
applicable based on the form of consideration it received at Closing.
Notwithstanding the foregoing, in lieu of any Preferred Units that would
otherwise be issued to such an Existing Partner pursuant to this clause (i)
there shall be issued an amount of Common Units sufficient to satisfy the
obligation based upon the then current market value of such Units at the time
delivered (based upon the volume-weighted average
<PAGE>
of the daily Closing Price for each of the twenty (20) consecutive trading days
commencing twenty-two (22) trading days before any date of determination).
(iii) Third-Party Incentive Fee Participation. In addition to the
Contribution Price payable to the applicable Landis Parties under this
Agreement, each applicable Assignor shall receive, in cash, from BPLP, as
additional consideration for the conveyance of its Assets to BPLP, an amount, if
any, equal to the Third-Party Incentive Fee Participation calculated in
accordance with the formula set forth on Exhibit 6B attached hereto, provided,
however, that in no event shall (x) the aggregate amount of the Third-Party
Incentive Fee Participation payable hereunder exceed $5,000,000 and (y) any
amount be payable with respect to any period from and after the third
anniversary of the Closing Date.
1.2 [RESERVED]
1.3 [RESERVED]
1.4 ALLOCATION OF CONTRIBUTION PRICE AND FORM OF CONSIDERATION. Attached
hereto as Schedule D is a schedule (the "SCHEDULE OF PARTNERS") containing (i)
an identification of all Existing Partners and Assignors, (ii) an allocation of
Assigned Value to the Existing Partners of each Property Owner and (iii) an
identification of which Existing Partners and which Assignors have elected to
receive cash, Common Units or Preferred Units upon the conveyance of their
respective Partnership Interests or Assets. Neither BPLP nor Boston Properties
shall have any liability or responsibility in any way with respect to the
preparation of the Schedule of Partners or the determination of the allocations
described above and on such Schedule, and BPLP and Boston Properties shall be
entitled to rely on the Schedule of Partners in full and without inquiry. Each
Existing Partner and Assignor who has elected to receive Units shall receive
such Units (subject to adjustment and limitation as set forth herein) and shall
be admitted as a limited partner in BPLP in accordance with the terms of the
Limited Partnership Agreement upon Closing only if such Existing Partner or
Assignor (i) agrees to be bound by and comply with the terms of the Limited
Partnership Agreement by executing and delivering to BPLP at Closing a Limited
Partner Signature Page in the form attached hereto as Exhibit 9, (ii) delivers
an executed Representation Letter and (iii) executes the Registration Rights
Agreement.
1.5 Closing Date. Unless this Agreement is sooner terminated pursuant to
its terms, the closing of the transaction contemplated by this Agreement (the
"CLOSING") shall take place on June 30, 1998 (as it shall be extended to provide
any full cure period due under Section 1.1(d)(iii) or Article 6, including
without limitation, the Cure Period, the "CLOSING DATE"). The Closing shall
occur in the offices of Goodwin, Procter & Hoar LLP, 599 Lexington Avenue, New
York, New York on the Closing Date, unless otherwise agreed in writing by the
Landis Parties and BPLP. Notwithstanding anything to the contrary contained in
this Agreement, the references to Closing and Closing Date shall refer to the
actual closing dates with respect to the Properties hereunder, it being
acknowledged that the Closing Date with respect to the Prohibited Fee Properties
may be later than the Closing Date for the other Properties (provided, however,
that all representations, warranties and covenants hereunder which refer to the
Closing Date, to the extent such representations, warranties and covenants do
not relate to a Property, shall be deemed to mean the first Closing Date under
this Agreement). The Assets shall be conveyed on the first Closing Date
hereunder. Each Closing shall occur pursuant to closing arrangements reasonably
satisfactory to BPLP and the Landis Parties.
<PAGE>
1.6 BLUE SKY COOPERATION. The Property Owners and each Assignor and
Existing Partner who is to receive Units shall cooperate and do all acts as may
be reasonably required or requested by Transferee to enable Transferee to
fulfill any requirement under state Securities Law to qualify the Units for
issuance to such Assignor or Existing Partners.
1.7 INITIAL UNIT DISTRIBUTIONS. The Landis Parties acknowledge and agree
that the first quarterly distribution paid by BPLP on any Units which may be
issued pursuant to this Agreement (whether at Closing or thereafter) (i) shall
be with respect to the quarter in which such Units are issued and (ii) shall be
prorated based on the number of days during such quarter for which such Units
are outstanding.
1.8 POST-CLOSING AGREEMENTS; TAX MATTERS. At the Closing, BPLP shall
execute and deliver to each Unit Holder who so elects, a Tax Protection
Agreement in substantially the form attached hereto as Exhibit 5, with only such
modifications thereto as may be appropriate in order to provide each applicable
Unit Holder with its allocable amount of such protection. Attached hereto as
Schedule N is a schedule (the "TAX PROTECTION SCHEDULE") setting forth the
aggregate amount of the Built-in Gain and the Non-Recourse Built-in Gain (each
as defined in the Tax Protection Agreement) attributable to all Unit Holders,
including an allocation of such amounts to each Unit Holder.
1.9 REPAYMENT/ASSUMPTION OF MORTGAGE DEBT. All payments of principal and
interest, and all other amounts of any kind or nature, on the Mortgage Debt
(except only the Transferee Prepayment Premium Obligation) shall be the sole
cost and expense of the Landis Parties (and the applicable Existing Partners).
Upon Closing, BPLP, at the Landis Parties sole cost and expense, shall cause
each of the Repaid Mortgage Debt loans to be prepaid in full. In addition, upon
Closing the Landis Parties (and each applicable Existing Partner) shall be
responsible for and shall pay (i) any and all accrued and unpaid interest
(including, without limitation, all participation and shared appreciation
interest, if any) as of the Closing Date with respect to the Mortgage Debt, (ii)
all prepayment premiums or penalties in excess of the Transferee Prepayment
Premium Obligation actually paid to holders of the Repaid Mortgage Debt which is
being prepaid in connection with the Closing, (iii) all prepayment premiums or
penalties actually paid to NML (or any subsequent holder) of the Continuing
Mortgage Debt loans encumbering Buildings 504, 506 and 508 as of the date of
this Agreement, each located at Carnegie Center, irrespective of when such
mortgage debt is actually repaid (which the parties hereto acknowledge is
expected to be repaid after the first Closing Date, but on or prior to the
Closing Date with respect to the 500 Series Properties), (iv) all other costs or
expenses of any kind or nature due in connection with the prepayment of the
Repaid Mortgage Debt and/or the assumption or other continuation of the
Continuing Mortgage Debt (including, without limitation, any fees, charges or
other amounts payable in connection with such Continuing Mortgage Debt and any
costs and expenses , except for expenses of BPLP's counsel and any title
insurance which may be purchased by BPLP, incurred in documenting the Mortgage
Debt Assumption Documents and the Mortgage Debt Prepayment Documents) and (v)
all costs and expenses of any kind or nature incurred in connection with the
Northwestern Mutual Commitment which relate to the period ending immediately
after the closing of the loan contemplated by such Northwestern Mutual
Commitment (except only NML Closing Costs with respect to the 500 Series NML
Commitment), including, without limitation, any and all costs, losses or damages
(including all such amounts which are or may be payable to NML or any other
lender under the Northwestern Mutual Commitment) of any kind or nature which may
be incurred by Transferee in the event of a breach under the Northwestern Mutual
Commitment, or in the event the loan contemplated thereby does not close, for
any reason other than the willful breach by Transferee. In addition to the
foregoing
<PAGE>
(and in addition to the reduction of the Contribution Price on account of the
Mortgage Debt as set forth elsewhere in this Agreement, but without double-
counting such amount), BPLP shall receive an additional credit against the
Contribution Price in an amount equal to the Mortgage Debt Credit with respect
to the Manufacturers Life Insurance Company mortgage loan encumbering Building
101 and the State Mutual Life Assurance Company mortgage loan encumbering
Building 214, each located at Carnegie Center. The Landis Parties and BPLP
acknowledge and agree that the Partnership Interests shall be transferred to
BPLP while the Developed Properties remain subject to the Mortgage Debt,
including without limitation the Repaid Mortgage Debt which is to be prepaid in
connection with the Closing, and that the Repaid Mortgage Debt shall be repaid
immediately after such transfer. Notwithstanding anything to the contrary
contained in this Agreement, BPLP shall be responsible for and shall pay the
Transferee Prepayment Premium Obligation, if any, at the Closing.
ARTICLE 2 - CONDITIONS TO CLOSING
2.1 CONDITIONS TO TRANSFEREE'S OBLIGATIONS. The obligation of Transferee
to consummate the transactions contemplated hereunder shall be subject to the
satisfaction or waiver by Transferee of each of the conditions set forth below
on or before the Closing Date. The Transferee may waive any condition specified
in this Section 2.1 if it executes a writing so stating at or prior to the
Closing or if it elects to close notwithstanding non-fulfillment.
(a) Title. On the Closing Date, the Title Company shall irrevocably
commit, subject only to the payment of all applicable title insurance premiums
related thereto, to issue its title insurance policy for the Developed
Properties and the Properties Under Development in form customary in New Jersey
and containing the endorsements and affirmative insurance listed on Schedule J
or as identified on the Preliminary Report, and subject only to the exceptions
and other matters contained in the Preliminary Report or otherwise agreed to by
BPLP. The applicable Landis Parties, on or before the Closing Date, shall have
executed and delivered to the Title Company the certifications and affidavits
which are attached hereto as Exhibit 15. On or before the date of this
Agreement, the Property Owners have provided to BPLP the "as-built" surveys of
the Real Property identified on Schedule O attached hereto. It shall be a
condition to BPLP's obligation to close under this Agreement that any update of
each such survey on the Closing Date would show no change to each such survey
which change relates to a matter which first arose after the date of this
Agreement and which would have a material adverse effect on the use of the Real
Property in question.
(b) Consents. It shall be a condition to BPLP's obligation to close
that, on or before the Closing Date, the Property Owners, the Assignors and the
Existing Partners shall obtain and deliver to BPLP all authorizations, consents,
approvals and waivers from all applicable partners and all material
authorizations, consents, approvals and waivers from all other Persons (as
approved by BPLP pursuant to the terms of this Section, collectively, the
"CONSENTS", provided that Consents shall not include any such authorization,
consent or approval required to be obtained by BPLP or Boston Properties),
including, without limitation, Consents from each of the Existing Partners, the
Assignors and all applicable Authorities, necessary (i) to enable the Property
Owners to convey the Developed Properties to BPLP directly or through the sale
or other conveyance of 100% of the Partnership Interests in each Property Owner,
and to enable the Existing Partners to convey their interests in Property Owners
to BPLP, all in accordance with the terms of this Agreement and all other
agreements by which the Property Owners or the Property is bound or to which the
Property Owners or the Property is subject, (ii) to enable the Property
<PAGE>
Owners, the Assignors and the Existing Partners to perform all of their
respective obligations under this Agreement and the Related Agreements,
including without limitation, the right to enter into and perform their
respective obligations under the Development and Acquisition Agreement and the
Properties Under Development Contribution Agreement, and to affect the
conveyance of the Assets (without material default by any party under any
material agreement which is a part of such Assets and otherwise as provided in
this Agreement) and (iii) to permit issuance of the Units and the payment of
cash, if applicable, to the Existing Partners in accordance with all applicable
Securities Laws and the organizational documents of each Property Owner, each
Existing Partner and each Assignor (and to approve any necessary amendments to
such organizational documents in order to enable the contemplated transactions
to occur). The form and substance of the Consents shall be reasonably
satisfactory to BPLP and duly authorized, executed and delivered copies thereof,
from each Existing Partner, Assignor and other Person in form and substance
reasonably satisfactory to BPLP shall have been delivered to BPLP on or before
the Closing Date.
(c) Mortgage Lender's Pay-Off Letters/Assumption Documents/500 Series
NML Commitment. The Property Owners shall have obtained and delivered to BPLP on
or before the date of this Agreement, a binding pay-off letter from each holder
of any Repaid Mortgage Debt, permitting a full payoff of such Repaid Mortgage
Debt held by it on or after the Closing Date for a sum certain, together with
any other documents required to evidence the release or discharge of such
indebtedness (as approved by BPLP pursuant to the terms of this Section below,
collectively, the "MORTGAGE DEBT PREPAYMENT DOCUMENTS"). In addition, with
respect to the 500 Series Properties, the Mortgage Debt encumbering such 500
Series Properties shall be refinanced on or before the Closing Date with respect
to the acquisition by BPLP of such 500 Series Properties in accordance with and
pursuant to the 500 Series NML Commitment. The loan documents evidencing such
refinanced mortgage loan shall be substantially similar to the mortgage
documents (the "NML Comparison Documents") evidencing the loan from NML to an
affiliate of BPLP secured by certain real property located in Reston, Virginia,
as such documents exist on the first Closing Date hereunder, with only such
changes as are necessary to reflect the terms and conditions of the 500 Series
NML Commitment which differ from the terms of such loan (such changes, in both
form and substance, to be reasonably acceptable to BPLP) and such other changes
as may be reasonably acceptable to both the Landis Parties and BPLP (including
without limitation such changes as may be necessary in order to reflect New
Jersey specific remedies customarily included in mortgage loan documents
comparable to the NML Comparison Documents). The loan documents evidencing the
refinanced mortgage loan from NML pursuant to the 500 Series NML Commitment
shall be subject to the prior written approval of BPLP, such approval not to be
unreasonably withheld or delayed; and deemed granted if such loan documents are
not disapproved by BPLP within five (5) Business Days after receipt by BPLP of
the loan documents in the form to be executed by all parties thereto (and
subsequently thereafter executed in such form). Notwithstanding the foregoing,
BPLP shall not disapprove any such loan documents based solely upon provisions
which are included in the NML Comparison Documents, to the extent that such
matters are not required to be modified in accordance with this provision and
are otherwise consistent with the 500 Series NML Commitment. In addition, the
Property Owners shall have obtained and delivered to Transferee on or before the
date of this Agreement, all applicable approvals, consents, acknowledgments,
agreements and authorizations from the holders of the Continuing Mortgage Debt
in order to permit such Continuing Mortgage Debt to be assumed by BPLP or taken
subject to (all documents in connection therewith, the "MORTGAGE DEBT ASSUMPTION
DOCUMENTS"). The Mortgage Debt Assumption Documents shall contain such
amendments or modifications to the existing documents evidencing the Continuing
Mortgage Debt as BPLP may reasonably request, with such modifications and as the
Lenders may reasonably
<PAGE>
request and as are reasonably satisfactory to BPLP. It shall be a condition to
BPLP's obligations under this Agreement that the Mortgage Debt Prepayment
Documents and the Mortgage Debt Assumption Documents, as applicable, shall be in
form and substance reasonably satisfactory to BPLP, provided, however, that the
Mortgage Debt Assumption Documents with respect to the mortgage loan from NML
with respect to the 500 Series Properties shall be acceptable to BPLP if such
documents are in substantially similar form to those delivered to BPLP with
respect to the Continuing Mortgage Debt on the first Closing Date hereunder.
(d) Accuracy of Representations and Warranties. The representations
and warranties of Alan B. Landis, the Assignors and the Existing Partners
contained herein shall be true and correct as and to the extent made as of the
date of this Agreement and as of the Closing Date (except with respect to any
representations or warranties made as of a specific date, which representations
and warranties shall continue to be true and correct as of such specified date
and except further for any breaches of representations and warranties identified
on the Confirmation Certificate), and a certificate to such effect shall have
been executed and delivered by Alan B. Landis, the Assignors and the Existing
Partners as of the Closing Date (such certificate, the "CONFIRMATION
CERTIFICATE"); provided, however, that the Confirmation Certificate may identify
breaches of or other changes in the representations and warranties ("IDENTIFIED
BREACHES"), and shall include a description of each such breach in reasonable
detail, together with such person's good faith estimate of the Losses
attributable to or expected to be incurred in connection with such breaches and
the basis for the amount of the Losses attributable to or expected to be
incurred in connection with each such breach.
(e) Opinion of Counsel. The Property Owners shall have delivered to
BPLP an opinion of Motola Klar & Dinowitz, LLP in form attached hereto as
Exhibit 13, dated as of the Closing Date.
(f) Absence of Litigation. No Action shall be pending or overtly
(whether orally or in writing) threatened against the Property Owners, the
Assignors, the Existing Partners, BPLP, Boston Properties or the Property, which
(i) questions the validity or legality of the transaction contemplated under
this Agreement or the Related Agreements or (ii) would have a Material Adverse
Effect. At the Closing, the Property Owners and the Assignors shall certify as
to the foregoing items (i) and (ii) to the extent they (A) regard the Property
Owners, the Assignors, the Existing Partners or the Property or (B) regard BPLP
or Boston Properties, which certification pursuant to item (B) shall be to the
Landis Parties' Knowledge and shall relate solely to Actions which are pending
or overtly (whether orally or in writing) threatened by the Existing Partners
and/or the direct or indirect owners of the Existing Partners.
(g) Estoppel Certificates. BPLP shall have received an estoppel
certificate, in the form attached hereto as Exhibit 10 or as may be attached to
the subject lease, or as otherwise agreed upon by BPLP and the Landis Parties,
without changes or additional notations (other than as may be reasonably
acceptable to BPLP, provided that such changes or additional notations do not
affect a change in the substance of the applicable estoppel certificate), dated
not earlier than thirty (30) days prior to the Closing Date (or sixty (60) days
prior to the Closing Date, if the Closing Date is extended as provided for in
this Agreement), from each Tenant who leases in excess of 15,000 square feet of
space pursuant to the Leases (which estoppels shall relate to leases that in the
aggregate constitute not less than 85% of the total leased rentable square
footage of the Developed Properties). In the case of the tenant improvement
work or allowances described on the Rent Roll, each such Tenant shall have
provided an estoppel or certification at Closing certifying that such work has
been completed to the satisfaction of such Tenant or certifying as to
<PAGE>
the status of any incomplete work, as well as a statement as to the status of
funding for such work or such allowances, including any landlord liability for
payment or reimbursement for such work.
(h) Delivery of the Property Owner/Assignor Documents. At the
Closing, the applicable Landis Parties shall have delivered to BPLP the
following:
(i) Original Documents and Files. A certificate of the general
partner of each Property Owner and a certificate executed on behalf of the
Assignors which certifies that originals or copies of Assigned Contracts or
Leases and Licenses have been previously delivered to the BPLP or are located at
the offices of the Property Owners and/or the Assignors;
(ii) Rent Roll. An updated Rent Roll for the Property dated no
earlier than ten (10) days prior to Closing, which updated Rent Roll will be
used to identify all Leases of space at the Property for purposes of this
Agreement as of the Closing Date and shall be identical in form and substance in
all material respects to the Rent Roll attached hereto as Schedule P (e.g.,
changes which relate to matters specifically contained in the applicable lease,
such as step-ups in rent, shall not be deemed to be material). The applicable
Property Owners shall deliver a certificate dated as of Closing Date certifying
that such updated Rent Roll is true and complete in all material respects
(including, without limitation, as to the amount of security deposits and that
all material uncured tenant defaults and delinquencies known to the Property
Owner are listed thereon or on Schedule P);
(iii) Payoff/Assumption of Mortgage Debt. The Mortgage Debt
Prepayment Documents and or the Mortgage Debt Assumption Documents, as
applicable, including, with respect to the 500 Series Properties, the
refinancing of the existing Mortgage Debt pursuant to the 500 Series NML
Commitment and this Agreement, and the subsequent execution of Mortgage Debt
Assumption Documents in connection therewith;
(iv) Management Agreement. Evidence of (x) termination or
assignment, as applicable in accordance with the terms and conditions of this
Agreement, of all management agreement(s) in effect for the Developed Properties
and the Properties Under Development and (y) assignment of the management
agreement in effect for Tower Two; in each case, prior to the Closing,
including, without limitation, confirmation from all applicable parties of the
continuing existence, in good standing and without default of such management
agreement with respect to Tower Two;
(v) Fee Property and/or Partnership Interests Conveyancing
Documents. If and to the extent applicable (x) in connection with each Fee
Property, a deed for such Fee Property, a bill of sale, an assignment and
assumption of Leases, an assignment of Intangibles and an assignment and
assumption of the Assigned Contracts and the Assumed Liabilities and/or (y) in
connection with all other Developed Properties, such Assignment and Assumption
of Partnership Interests in form attached hereto as Exhibit 7 and other
conveyancing documents, in form and substance reasonably satisfactory to BPLP,
as are necessary or appropriate to transfer the applicable Property to BPLP free
and clear of all liens, claims and encumbrances, except for the Permitted
Exceptions (collectively, the "CONVEYANCING DOCUMENTS"); the Property Owners,
the Existing Partners and the Assignors shall have also delivered true and
complete copies of all organizational documents relating to the Property Owners,
the Existing Partners and the Assignors, certified as true and complete by a
general partner or executive officer of each such Person;
<PAGE>
(vi) Assignor Conveyance Documents. Such documents of assignment
and assumption, or other conveyance documents, as are necessary or appropriate
to affect the transfer or other conveyance by the Assignors of the Assets in
accordance with this Agreement;
(vii) Entity Transfer Certificates. Entity transfer
certifications confirming that the Property Owners, the Existing Partners and
the Assignors are not "foreign persons" as defined in Section 1445(f)(3) of the
Code; and
(viii) Other. Such other documents, instruments, consents,
authorizations or approvals as may be reasonably requested by BPLP, its counsel
or the Title Company and that may be reasonably necessary to consummate the
transaction that is the subject of this Agreement and the Related Agreements and
to otherwise effect the agreements of the parties hereto, including, without
limitation, as required under this Section, except that the Landis Parties shall
have no obligation to deliver any document, instrument, certificate, consent,
authorization or approval which is not otherwise contemplated under this
Agreement or the Related Agreements which increase the liabilities of the Landis
Parties hereunder or under the Related Agreements, other than de minimis
amounts.
(i) Proceedings. All corporate and other proceedings regarding the
Landis Parties in connection with the transactions contemplated by this
Agreement and any other agreement, instrument or document required to be
executed and delivered by the Landis Parties hereunder, and all documents
incident thereto, shall be in form and substance reasonably satisfactory to BPLP
and its counsel, and BPLP shall have received all such originals or certified or
other copies of such documents as BPLP or its counsel may reasonably request.
(j) Delivery of the Unit Holder Documents. At Closing, each of the
Unit Holders who is to receive Units shall have delivered to BPLP (i) a
signature page to the Limited Partnership Agreement and an executed copy of the
Registration Rights Agreement and Lock-Up Agreement in the form attached hereto
as Exhibit 8 (the "REGISTRATION RIGHTS AGREEMENT"), each dated as of the Closing
Date, duly executed and delivered and (ii) to the extent not previously
delivered to BPLP or dated more than thirty (30) days prior to Closing, a
Representation Letter.
(k) Non-competition Agreement/Agreement Regarding Directorship. In
the event Alan B. Landis accepts appointment as a member of the Boston
Properties Board of Directors, Mr. Landis shall execute and deliver an Agreement
Regarding Directorship in the form attached hereto as Exhibit 11 and all of the
agreements attached thereto, including, without limitation, the Noncompetition
Agreement in the form attached hereto as Exhibit 11A.
(l) Development Agreement. On or before the Closing Date, each party
(other than BPLP) shall have executed and delivered to Transferee the
Development Agreement together with evidence reasonably satisfactory to
Transferee that such Development Agreement has been duly executed and delivered
and that all consents, approvals and authorizations from all Persons (including
without limitation, all applicable third parties, Existing Partners and
Authorities, except only authorizations such as building permits and
certificates of occupancy, which have not yet been issued by the applicable
Authorities due to the non-satisfaction of certain conditions precedent to such
issuance (or the applicable Landis Parties' decision not to request such
authorizations), provided, however, that the Landis Parties shall certify that
they have not received written notice that would reasonably be expected to call
into question the timely issuance of all such authorizations) have been obtained
in order to allow the performance by the Landis Parties of their
<PAGE>
respective obligations under such agreement and Alan B. Landis, or an entity
owned and controlled by Alan B. Landis shall have acquired all of BCP
Associates, L.P.'s right, title, and interest in and to Princeton Land Partners,
L.L.C.
(m) Properties Under Development Contribution Agreement. On or before
the Closing Date, each applicable Landis Party shall have executed and delivered
to Transferee the Properties Under Development Contribution Agreement together
with evidence reasonably satisfactory to Transferee that such Properties Under
Development Contribution Agreement has been duly executed and delivered and that
all consents, approval and authorizations from all Persons (including, without
limitation, all applicable third parties, Existing Partners and Authorities,
except only authorizations such as certificates of occupancy, which have not yet
been issued by the applicable Authorities due to the non-satisfaction of certain
conditions precedent to such issuance, provided, however, that the Landis
Parties shall certify that they have not received written notice that would
reasonably be expected to call into question the timely issuance of all such
authorizations) have been obtained in order to allow the performance by the
Landis Parties of their respective obligations under such agreement.
(n) Contracts. The Property Owners shall have terminated, prior to
Closing and at their own cost and expense, all Contracts which BPLP has notified
the Property Owners on or before the date of this Agreement that it elects to
have terminated.
(o) Material Adverse Effect. BPLP shall have the right to terminate
this Agreement in its entirety if, as of the Closing Date, there exist breaches
of representations and warranties of the applicable Landis Parties (whether or
not such breaches are Identified Breaches) which are reasonably expected, by
Transferee, to result in Losses which have a Material Adverse Effect on the
Partnership Interests, the Properties or the Assignors, in each case taken as a
whole. Notwithstanding the foregoing, a failure of a precondition (including
without limitation, a breach of a representation and warranty under this
Agreement) which relates solely to one or more 500 Series Properties as of the
first Closing Date hereunder, but only if and to the extent that such 500 Series
Properties are not conveyed to BPLP on such first Closing Date hereunder, shall
not be deemed to have a Material Adverse Effect for purposes of this Section
2.1(o) as of such first Closing Date, provided, however, that if such failure of
precondition (or breach of a representation or warranty) continues to exist on
the Closing Date for such 500 Series Properties, such failure or breach shall,
if and to the extent applicable hereunder, constitute a Material Adverse Effect
for purposes of this Section 2.1(o).
(p) Notice of Purchase Right/Prohibited Fee Property Management
Agreement. At or before the Closing, each Property Owner which owns a Prohibited
Fee Property shall execute, acknowledge and deliver to BPLP a Notice of Purchase
Right and each Property Owner which owns a Prohibited Fee Property shall execute
and deliver to BPLP a Prohibited Fee Property Management Agreement.
(q) Association/Condominium Estoppels. The applicable Property Owners
shall have delivered to BPLP estoppel certificates from all parties under any
condominium documents and/or other associations as shall be identified by
Transferee in the exercise of its reasonable business judgment affecting the
Property, dated no earlier than fifteen (15) days prior to the Closing Date,
each in form and substance reasonably satisfactory to Transferee (each, an
"ASSOCIATION ESTOPPEL").
<PAGE>
(r) Minimum Number of Developed Properties. On the Closing Date, it
shall be the case that all of the Developed Properties (or in lieu of a
Developed Property, all of the Partnership Interests in the applicable Property
Owner) shall be conveyed to BPLP, except that the 500 Series Properties (or, in
lieu thereof, all of the Partnership Interests in the applicable Property
Owners) may fail to be conveyed to BPLP for any of the reasons contemplated by
this Agreement and the condition set forth in this clause (r) shall be deemed to
be satisfied nevertheless.
(s) A fully completed Schedule A-1 shall have been delivered to
Transferee, such Schedule A-1 shall have been certified by each Existing Partner
as being true and correct in all respects with respect to such Existing Partner
only, and Transferee shall have received copies of documentation that enable it
to reasonably verify the information set forth in such Schedule A-1.
2.2 CONDITIONS TO THE OBLIGATIONS OF THE LANDIS PARTIES. The obligation
of the Landis Parties to consummate the transactions contemplated hereunder
shall be subject to the satisfaction or waiver by the Landis Parties of each of
the conditions set forth below on or before the Closing Date. The Landis Parties
agree that Alan B. Landis may waive (on behalf of all Landis Parties) any
condition specified in this Section 2.2 if he executes a writing so stating at
or prior to the Closing or such condition will be waived if the Landis Parties
elect to close notwithstanding non-fulfillment.
(a) Accuracy of Representations and Warranties. All representations
and warranties of BPLP and Boston Properties hereunder shall be true and correct
as and to the extent made as of the Closing Date, as if made as of the Closing
Date (except with respect to any representations or warranties made as of a
specific date, which representations and warrants shall continue to be true and
correct as of such specified date), and a certificate to such effect shall have
been executed and delivered by BPLP and Boston Properties as of the Closing
Date.
(b) Execution of Limited Partnership Agreement. BPLP shall have
executed and delivered to the Unit Holders an executed copy of an amendment to
the Partnership Agreement admitting such persons as limited partners thereto
with the applicable number of Common Units or Preferred Units together with a
certificate of Boston Properties, as general partner of BPLP, certifying the
issuance of the applicable number and type of Units to such persons and further
certifying that the Certificate of Designations of Series One Preferred Units
shall then be effective.
(c) Registration Rights Agreement. BPLP shall have executed and
delivered to the Unit Holders the Registration Rights Agreement.
(d) Opinion of Counsel. Transferee shall have delivered to the Landis
Parties an opinion of GPH, dated as of the Closing Date, in form attached hereto
as Exhibit 13, together with a reliance letter of GPH permitting the Landis
Parties to rely upon the most recently delivered opinion (which opinion shall
not have been delivered earlier than January, 1998) regarding the qualification
of Boston Properties as a real estate investment trust pursuant to Section 856
of the Code as if delivered to the Landis Parties on the date of that opinion.
In addition, Transferee shall agree to cause GPH to deliver a reliance letter to
the Landis Parties in connection with the first opinion delivered by GPH after
the Closing Date regarding the qualification of Boston Properties as a real
estate investment trust pursuant to Section 856 of the Code, together with a
copy of such opinion.
<PAGE>
(e) Assumption of Contracts/Mortgage Debt. BPLP shall have executed
and delivered to the Landis Parties executed copies of such Conveyancing
Documents and other applicable documents as are necessary to affect the
assignment of the Assets by the Assignors and the assumption by BPLP of the
Assumed Assignor Liabilities. BPLP shall, to the extent applicable, have
executed and delivered the Mortgage Debt Assumption Documents.
(f) Delivery of Consideration. BPLP shall have paid the consideration
for the contribution, conveyance, assignment or other transfer of the
Partnership Interests (or the fee interest in and to the Developed Properties,
as applicable) and the Assets in accordance with this Agreement.
(g) Board Representation. On or before the Closing Date the Boston
Properties Board of Directors shall have taken all corporate action necessary to
elect Alan B. Landis to serve on the Boston Properties Board of Directors upon
the completion of the Closing and his execution and delivery to Boston
Properties of an Agreement Regarding Directorship in the form attached hereto as
Exhibit 11, and Boston Properties shall promptly thereafter deliver to him a
fully executed copy of such agreement.
(h) Tax Protection Agreement. On or before the Closing Date BPLP
shall have executed and delivered to each Unit Holder who has previously
executed and delivered the same to BPLP, a Tax Protection Agreement in
accordance with the terms of this Agreement.
(i) Development Agreement. On or before the Closing Date, the
Transferee shall have executed and delivered the Development Agreement to the
Landis Parties who are parties thereto.
(j) Properties Under Development Contribution Agreement. On or before
the Closing Date, the Transferee shall have executed and delivered the
Properties Under Development Contribution Agreement to the Landis Parties who
are parties thereto.
(k) Proceedings. All corporate and other proceedings regarding the
Transferee in connection with the transactions contemplated by this Agreement
and any other agreement, instrument or document required to be executed and
delivered by the Transferee hereunder and all documents incident thereto, shall
be in form and substance reasonably satisfactory to the Landis Parties and its
counsel, and the Landis Parties shall have received all such originals or
certified or other copies of such documents as the Landis Parties or its counsel
may reasonably request.
(l) Absence of Litigation. No Action shall be pending or overtly
(whether orally or in writing) threatened against BPLP or Boston Properties,
which (i) questions the validity or legality of the transaction contemplated
under this Agreement or the Related Agreements as it relates to BPLP or Boston
Properties or (ii) would have a material adverse effect on BPLP or Boston
Properties. At the Closing, the Transferee shall certify as to the foregoing
and shall further certify that, except as may have been previously disclosed in
writing to the Landis Parties (or otherwise disclosed by the Landis Parties to
BPLP), to BPLP's Knowledge, there are no Actions which are pending or overtly
(whether orally or in writing) threatened by the Existing Partners and/or the
direct or indirect owners of the Existing Partners in connection with the
transactions contemplated by this Agreement.
(m) Other. Such other documents, instruments, consents,
authorizations or approvals as may be reasonably requested by the Landis
Parties, its counsel or the Title Company
<PAGE>
and that may be reasonably necessary to consummate the transaction that is the
subject of this Agreement and the Related Agreements and to otherwise effect the
agreements of the parties hereto, including, without limitation, as required
under this Section, except that the Transferee shall have no obligation to
deliver any document, instrument, certificate, consent, authorization or
approval which is not otherwise contemplated under this Agreement or the Related
Agreements which increase the liabilities of the Transferee hereunder or under
the Related Agreements, other than de minimis amounts.
(n) Minimum Number of Developed Properties. On the Closing Date, it
shall be the case that all of the Developed Properties (or in lieu of a
Developed Property, all of the Partnership Interests in the applicable Property
Owner) shall be conveyed to BPLP, except that the 500 Series Properties (or, in
lieu thereof, all of the Partnership Interests in the applicable Property
Owners) may fail to be conveyed to BPLP for any of the reasons contemplated by
this Agreement and the condition set forth in this clause (n) shall be deemed to
be satisfied nevertheless.
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF THE LANDIS PARTIES. Alan B. Landis,
the Assignors and the Existing Partners hereby represent and warrant to
Transferee as of the date of this Agreement and as of the Closing Date except
with respect to any representations and warranties made as of a specific date,
which shall be remade on the Closing Date as of such specific date (but, in all
such events (i) with respect to each Assignor only, severally (and not jointly)
with respect to matters relating to itself and to its assets and liabilities and
(ii) with respect to each Existing Partner only, severally (and not jointly)
with respect to matters relating to itself, to its Partnership Interests and the
Property Owners of which it is a partner and such Property Owners' Property), in
each case as follows:
(a) Existence and Power. The Property Owners, Princeton Land
Partners, L.L.C., the Assignors and Existing Partners (other than the Existing
Partners which are individuals) have been duly formed and each is a validly
existing general partnership, limited partnership or limited liability company
under the laws of the state of its organization. The Property Owners, Princeton
Land Partners, L.L.C., the Assignors and Existing Partners have all power and
authority under their respective organizational documents to enter into and
deliver this Agreement and all other documents to be executed and delivered in
connection with the transaction that is the subject of this Agreement,
including, without limitation, all Related Agreements, to the extent they are to
be executed by the Property Owners, Princeton Land Partners, L.L.C., the
Assignors and/or Existing Partners, and to perform their respective obligations
under this Agreement and the Related Agreements executed by the Property Owners,
Princeton Land Partners, L.L.C., the Assignors and/or Existing Partners. The
Property Owners, Princeton Land Partners, L.L.C., the Assignors and the Existing
Partners have delivered to Transferee a true and complete copy of their
respective organizational documents and qualification to do business in the
State of New Jersey. The Existing Partners in the aggregate hold 100% of the
partnership interests in the Property Owners; Schedule A-1 as attached hereto is
true and correct in all respects except for the omission of percentages
identifying each Existing Partners' partnership interest in each Property Owner;
and Schedule A-1, as completed and delivered to Transferee pursuant to Section
2.1(s), shall accurately identify each Existing Partner's percentage partnership
interest in each Property Owner. As of the Closing Date, Princeton Carnegie
Associates, V is the sole manager-member holding a fifty percent (50%)
membership interest of Princeton Land Partners,
<PAGE>
L.L.C., and Alan B. Landis, (or an entity owned and controlled, directly or
indirectly, by Alan B. Landis) is the only other member of Princeton Land
Partners, L.L.C. Princeton Carnegie Associates V, is a New Jersey limited
partnership, the sole general partner of which is ABL Capital Corp., a Delaware
corporation the sole shareholder of which is Alan B. Landis.
(b) Authorization; No Contravention. The execution and delivery of
this Agreement and the Related Agreements executed by the Property Owners,
Princeton Land Partners, L.L.C., the Assignors and/or Existing Partners and the
performance of their respective obligations under all of the foregoing have been
duly authorized by all requisite organizational action on the part of the
Property Owners, Princeton Land Partners, L.L.C., the Assignors and Existing
Partners. This Agreement constitutes and, upon execution thereof, the Related
Agreements executed by the Property Owners, Princeton Land Partners, L.L.C., the
Assignors and/or the Existing Partners will constitute the valid, legal and
binding obligations of the Property Owners, Princeton Land Partners, L.L.C., the
Assignors and/or Existing Partners, as applicable. None of this Agreement or the
Related Agreements executed by the Property Owners, Princeton Land Partners,
L.L.C., the Assignors and/or the Existing Partners will violate, in any material
manner, any term of any material agreement, order or decree to which any
Property Owner, Princeton Land Partners, L.L.C., any Assignor and/or any
Existing Partner, as applicable, is a party or by which any Property Owner,
Princeton Land Partners, L.L.C., any Assignor and/or any Existing Partner, as
applicable, is bound. Except for the consents and other approvals which have
been obtained on or before the date of this Agreement, including without
limitation, the consents of the Existing Partners of the Property Owners, the
holders of the Mortgage Debt, the third-parties for whom Assignor provides
services (other than in connection with the Gatehall Contract) and the other
consents set forth on the attached Schedule S, no consent of any lender,
partner, shareholder, beneficiary, tenant, creditor, investor, Authority or
other person is required in order for the Landis Parties to enter into this
Agreement or the Related Agreements or for the consummation of the transactions
contemplated by this Agreement and all Assets will, to the extent applicable,
remain in full force and effect and be in good standing (and not in default)
following the consummation of the transactions contemplated herein; other than
such consents where the failure to obtain would not have a Material Adverse
Effect or a material adverse effect on any Landis Parties' ability to consummate
the transactions contemplated hereby.
(c) Descriptive Information; Diligence. True, correct and complete
copies of all documents identified on Schedule T attached hereto, including,
without limitation, all leases of the Real Property identified on the Rent Roll
(collectively, the "LEASES") and all contracts and other material agreements by
which the applicable Property Owner and/or Assignor is bound (other than
Immaterial Contracts) have been delivered by or on behalf of the Property Owners
and/or Assignors to Transferee, or made available to Transferee for review in
connection with the transaction contemplated by this Agreement and the Related
Agreements. To the Landis Parties' Knowledge, there are no other material
agreements relating to the subject matter thereof in any Property Owner's
possession or under its control.
(d) Mortgage Debt. Schedule H attached hereto contains a list of all
material documents relating to the Mortgage Debt, including without limitation,
all material documents evidencing, securing or otherwise executed in connection
with the Mortgage Debt. Except as set forth on Schedule H, there are no
material or binding agreements with any Person to provide or obtain any mortgage
or other debt relating to the Properties. The Landis Parties have delivered to
Transferee true, complete and accurate copies of all of the documents identified
on Schedule H. Except only as and to the extent set forth on the attached
Schedule H and in the Northwestern Mutual Commitment, no Landis Party has any
obligation of any kind or nature, to NML or any
<PAGE>
affiliate thereof, whether current, accrued or contingent and whether in
connection with any prior commitment or other agreement to provide financing or
otherwise. Notwithstanding anything to the contrary contained in this Agreement,
to the extent Transferee receives a binding estoppel certificate from a holder
of any Mortgage Debt which estoppel certificate specifically confirms
information set forth on Schedule H with respect to such Mortgage Debt, the
applicable Landis Parties shall be released from all liability hereunder with
respect to such confirmed information (including without limitation, any
indemnification obligation under Article 7 hereof with respect to such confirmed
information), but shall not be released with respect to any other or any
unconfirmed information set forth on Schedule H.
(e) Compliance with Law. To the Landis Parties' Knowledge, the
Property Owners have not received (x) any written notice alleging that the
Property violates any Law, including without limitation, Laws relating to
zoning, subdivision and land-use matters and the Americans with Disabilities
Act, or (y) any written notice from any insurer or board of fire underwriters
that the Real Property violates, in any material respect, any requirement under
any insurance policy issued by such a person; except, in either such event, for
violations which have previously been cured. To the Landis Parties' Knowledge,
the Property Owners and/or Princeton Land Partners, L.L.C. have not received any
written notice of any special assessment proceedings affecting the Property, in
any material respect, and, to the Landis Parties' Knowledge, there is no such
special assessment, other than immaterial assessments. To the Landis Parties'
Knowledge, all licenses, permits, approvals, variances, easements and rights of
way (collectively, the "LICENSES") required for the ownership, use or operation
of the Property as presently used and operated have been validly issued and are
in full force and effect. To the Landis Parties' Knowledge, the Property Owners
have not received any written notice of proceedings relating to the revocation
or modification of any License. As of the Closing Date, except as set forth on
Schedule U, the Landis Parties and/or Princeton Land Partners, L.L.C., as
applicable, shall have paid all applicable so-called TID (Transportation
Improvement District Ordinance) and COAH (Counsel on Affordable Housing) fees,
charges and costs and all other fees, charges or costs of any similar nature in
connection with the development and/or construction of the Properties, including
all off-site road and other improvement costs. Except as set forth on Schedule
U attached hereto, to the Landis Parties' Knowledge, there are no agreements to
which any Property Owner or Princeton Land Partners, L.L.C. is a party or is
otherwise subject, relating to land-use restrictions or other conditions
limiting or otherwise affecting, in any material respect, the development,
construction or operation of the Real Properties.
(f) Leases. The Leases are in full force and effect. All brokerage
commissions or compensation in respect of any of the Leases have been, or prior
to Closing will be, paid by the Property Owners except as set forth on Schedule
V. True, complete and correct copies of all Leases in effect on the date of
this Agreement (including all amendments, side letters, option exercise letters
and any other documents, certificates or instruments which may create future
material obligations under any of the Leases) have been delivered or made
available to Transferee. True, complete and correct copies of all Leases in
effect on the Closing Date shall be delivered (to the extent not previously
delivered) to Transferee on such date. True, correct and complete copies of all
agreements relating to brokerage commissions or other compensation in respect of
any of the Leases affecting the Developed Properties and the Properties Under
Development have been delivered or made available to Transferee prior to the
date of this Agreement. To Landis' Knowledge, no person or entity has any
option or right of first refusal or first opportunity to acquire any interest in
the Developed Property or the Properties Under Development or any portion
thereof. The Leases identified on the Rent Roll are the only leases or other
rights or
<PAGE>
grants of occupancy by Property Owners of all or any part of the Developed
Properties and the Properties Under Development.
(g) Rent Roll. Attached hereto as Schedule P is the Rent Roll (the
"RENT ROLL"), which is a true, complete and correct statement of the information
contained therein as of the date of this Agreement. Except for the defaults set
forth on Schedule P (collectively, the "LEASE DEFAULTS"), there are no monetary,
or to the Landis Parties' Knowledge, other material defaults under any of the
Leases which have not been cured. The Rent Roll attached as Schedule P shall be
updated as of the date that is ten (10) days prior to Closing, and as of such
date, such updated Rent Roll shall be true, complete and correct in all material
respects and shall be identical in form and substance in all material respects
to the Rent Roll attached as Schedule P (e.g., changes which relate to matters
specifically contained in the applicable lease, such as step-ups in rent, shall
not be deemed to be material). Except as set forth on the Rent Roll or
otherwise set forth on the attached Schedule P there are no "free" or "reduced"
rent periods (other than, with respect to "reduced" rent periods, increases in
the base rent payable under the applicable lease based solely on the passage of
time, and regardless of whether such increases are in a fixed amount or are
based upon a calculation (e.g., consumer price index based increases)),
concessions or rebates (whether oral or written) of any kind whatsoever under
any of the Leases which would have an effect on or after the Closing Date.
Except as set forth in the Rent Roll or otherwise set forth on the attached
Schedule P (but excluding tenant improvement or refurbishment allowances which
are set forth in the Leases), no tenant under any lease is entitled to any
rebate, concession, deduction or (if based on landlord's actions on or prior to
the Closing Date) offset under its lease, except for the obligation, if any, to
refund any excess estimated payments made by a tenant on account of operating
expenses or real estate taxes. Except for security deposits placed with
Property Owners, a true and correct list of which is identified on the Rent Roll
or otherwise set forth on the attached Schedule P, none of the Tenants has paid
to Property Owners any rent or other charge of any nature under its Lease or
otherwise relating to any Property for a period of more than thirty (30) days in
advance. Except as set forth on the Rent Roll and Schedule V (with respect to
tenant improvements), the landlord under each Lease has performed or paid all
obligations (including, without limitation performance of all work and payment
of all work and other tenant allowances, other than tenant improvement or
refurbishment allowances which may be applicable to any unexercised renewal term
of any Lease) required to be performed or paid by it under each of the Leases
and is not in default of any of its material obligations under any of the
Leases. Notwithstanding the foregoing, the parties hereto acknowledge that
certain construction work on the Developed Property has been commenced and has
not yet been completed with respect to certain of the Leases as set forth on
Schedule W attached hereto. True, correct and complete copies of all agreements
relating to tenant construction affecting the Developed Properties (other than
tenant construction work which has been completed and paid for in full) have
been delivered or made available to Transferee prior to the date of this
Agreement. Notwithstanding anything to the contrary contained in this
Agreement, to the extent Transferee receives an Estoppel Certificate from a
Tenant under a Lease which Estoppel Certificate specifically confirms
information contained in the Rent Roll with respect to such Lease, the
applicable Landis Parties shall be released from all liability hereunder with
respect to such confirmed information (including without limitation, any
indemnification obligation under Article 7 hereof with respect to such confirmed
information), but shall not be released with respect to any other or any
unconfirmed information contained in the Rent Roll.
(h) Contracts. Attached hereto as Schedule Q is a schedule (the
"SCHEDULE OF AGREEMENTS") setting forth a list of all of the Contracts (on a
Property by Property basis (including all Developed Properties, all Properties
Under Development and all Development
<PAGE>
Properties) with respect to Contracts which relate to the Properties and by
Assignor with respect to Contracts which relate to the Assignors) other than
Immaterial Contracts including in all events, the names of the contracting
party, the dates of the Contracts and a listing of all amendments to such
Contracts, and identifying each such Contract as a Terminable Contract or a Non-
terminable Contract (and, with respect to each Non-terminable Contract, whether
or not such Non-terminable Contract is with an Affiliate of any Landis Party).
True, complete and correct copies of all Contracts have been provided to
Transferee. To the Landis Parties' Knowledge, the Contracts are in full force
and effect, and the Terminable Contracts are terminable on not more than thirty
(30) days' prior written notice and without payment or penalty of any kind. To
the Landis Parties' Knowledge, all Warranties with respect to the Developed
Property are listed on Schedule X.
(i) Utilities. To the Landis Parties' Knowledge, the Property Owners
have received no written notice from a tenant, a utility or an Authority that
any of the facilities or utilities located at the Property are inadequate to
service the Property or do not meet the requirements of applicable Law.
(j) Hazardous Substances. To the Landis Parties' Knowledge, the
Property Owners have not generated, stored, released, discharged or disposed of,
used or handled Hazardous Substances or Hazardous Wastes (as those terms are
defined below) at, upon or from the Property in material violation of any Law
or in connection with which remedial action would be required under any Law. As
used in this Agreement, the terms "HAZARDOUS SUBSTANCES" and "HAZARDOUS WASTES"
shall have the meanings set forth in the Comprehensive Environmental Response,
Compensation and Liability Act, as amended, and the regulations thereunder, the
Resource Conservation and Recovery Act, as amended, and the regulations
thereunder, and the Federal Clean Water Act, as amended, and the regulations
thereunder, and such terms shall also include asbestos, petroleum products
(except in a naturally occurring state), radon, radioactive materials, lead
paint, Urea Formaldehyde Foam Insulation and any other regulated substances
under any Law relating to the protection of the environment. To the Landis
Parties' Knowledge, except as contained in the environmental reports listed on
Schedule Y attached hereto, no Hazardous Substances or Hazardous Wastes are
located on any Property in material violation of any Law. To the Landis
Parties' Knowledge, except as contained in the environmental reports listed on
Schedule Y attached hereto, no underground storage tanks are located at any
Property.
(k) Financial Statements; Absence of Undisclosed Liabilities. Between
the date of the operating statements listed on the attached Schedule Z, true,
complete and correct copies of which have been delivered to Transferee prior to
the date of this Agreement (which are the most recently prepared operating
statements prior to the date of this Agreement) and the date of this Agreement,
no events or circumstances have occurred or arisen which, individually or taken
together, would have a Material Adverse Effect, or would result in any material
increase in the indebtedness or other liabilities of the Property Owners, or the
Assignors or the Developed Properties. To the Landis Parties' Knowledge, there
are no Liabilities, including material contingent liabilities, of the Assignors
or the Property Owners which are not shown or provided for in the operating
statements listed on the attached Schedule Z, other than (i) liabilities
incurred in the ordinary course of business and in accordance with established
operating policies and procedures and past practice of the applicable Landis
Parties, (ii) liabilities specifically disclosed in this Agreement or the
Schedules hereto, including without limitation liabilities under Assigned
Contracts and Leases, (iii) liabilities identified on the attached Schedule BB
which are covered by insurance, (iv) liabilities arising under Immaterial
Contracts and (v) liabilities which are the specific subject of any other
representation or warranty in this Section 3.1, which other representations and
warranties shall be the sole and exclusive representations with respect to such
<PAGE>
subject matter (e.g., liabilities relating to non-material violations of Law
relating to Hazardous Substances, the existence of which would not be a breach
of the applicable representation and warranty under Section 3.1(j) above).
(l) Taxes. All tax returns required to be filed on or before the date
hereof by, on behalf of or with respect to the liabilities of the Property
Owners or Princeton Land Partners, L.L.C. (or the properties or assets thereof),
and Assignors have been filed through the date hereof or will be filed on or
before the date when due in accordance with all applicable Laws, and there is no
Action pending against or with respect to any Property Owner, Princeton Land
Partners, L.L.C., any Assignor or the Property in respect of any tax (or against
any Existing Partner with respect to any of the tax liabilities of or assessed
against the Properties or the Property Owners), nor is any claim for additional
tax asserted by any Authority against any Property Owner, Princeton Land
Partners, L.L.C., any Assignor or the Property (or against any Existing Partner
with respect to any of the tax liabilities of or assessed against the Properties
or the Property Owners). All taxes of or assessed against the Properties, the
Property Owners or Princeton Land Partners, L.L.C., have been timely paid when
due in accordance with applicable laws. All real estate taxes and assessments
relating to the Property that are due and payable have been paid and copies of
most recent tax bills have been delivered to Transferee.
(m) Insurance. The Property Owners, Princeton Land Partners, L.L.C.
and the Assignors currently have in place the public liability, casualty,
workers compensation, builders' risk and other insurance coverage with respect
to the Property and the Assignors as set forth in Schedule AA, and, to the
Landis Parties' Knowledge, each of such insurance policies is in full force and
effect and all premiums due and payable thereunder have been fully paid when
due.
(n) Capital Structure. All of the partnership interests of each
Property Owner have been duly and validly issued. Except as set forth on
Schedule A-1 (as completed pursuant to Section 2.1(s)), there are no equity
interests of any Property Owner outstanding or issuable upon conversion or
exchange of any security of any Property Owner or any other Person. Except as
specifically set forth on Schedule A-2, no holder of any equity interest of any
Property Owner nor any other Person is entitled (i) to any preemptive or other
right to subscribe for any equity interests of any Property Owner or (ii) to any
right of first refusal or similar right with respect to or as a result of any of
the transactions contemplated hereby. The organizational charts attached hereto
as Schedule A-2 are true, complete and correct in all respects and set forth all
of the Existing Partners and all of the partners, members, shareholders and
other beneficial owners of such Existing Partners, and as of the Closing Date,
the organizational charts attached hereto as Schedule A-2 shall be revised to
identify the percentage interest of each such Existing Partner in the Property
Owners.
(o) Condemnation. To Landis Parties' Knowledge, none of the Property
Owners has received any written notice of any pending or contemplated
condemnation proceedings affecting all or any part of any Property.
(p) Permitted Exceptions. No Property Owner is in monetary default
and, to the Landis Parties' Knowledge, each Property Owner has performed all
material obligations under and is not in material non-monetary default in
complying with the terms and provisions of any of the covenants, conditions,
restrictions, rights-of-way or easements constituting one or more of the
Permitted Exceptions for each Property.
<PAGE>
(q) Actions. Attached hereto as Schedule BB is a schedule (the
"SCHEDULE OF ACTIONS") setting forth all Actions pending or, to Landis Parties'
Knowledge, overtly (whether orally or in writing) threatened against any
Property Owner, Princeton Land Partners, L.L.C., any Existing Partner or any
Assignor, or the Property or Assets, which (y) question the validity of, or the
ability of the Landis Parties to consummate, the transactions contemplated
hereunder, or (z) affect the Property, the Property Owners, the Existing
Partners or any interests therein, in a materially adverse way, or have a
Material Adverse Effect.
(r) Assignors. The Assignors are the only entities through which the
Landis Parties, or any Affiliate of any of them, operates any of the Properties
or any of its businesses (other than businesses which do not involve the
ownership, management, development, construction, leasing and/or marketing of
real property) or otherwise has any interest in any of the Properties or any of
its businesses (other than the Property Owners and the Existing Partners).
Except as set forth on Schedule CC attached hereto, none of the Assignors has
any subsidiaries or investments in, or loans to, any other Person involving
amounts in excess of $50,000 in the aggregate for all such investments and
loans. There are no material contracts, agreements, rights and other assets of
any kind or nature owned or held by any Assignor or any Subsidiary of Assignor
except as set forth on Schedule B attached hereto. No Assignor is in monetary
or, to the Landis Parties' Knowledge, material non-monetary default under any
material documents, contract, agreement or other instrument by which any
Assignor is bound including without limitation, the Assets and the Licenses.
Specifically, no Assignor is entitled to receive any payment, fee, commission,
compensation or other consideration of any kind or nature which has not been (or
will not be) assigned to BPLP at the first Closing Date hereunder, except only
as and to the extent specifically identified on Schedule B-2.
(s) Title to Partnership Interests. Each Existing Partner owns
beneficially and on the records of the applicable Property Owner, and is
transferring free and clear of any liability claim, lien, pledge, voting
agreement, option, charge, security interest, mortgage, deed of trust,
encumbrance, right of assignment, purchase right or other restriction of any
kind, nature or description (other than as may be created in writing by Boston
Properties or BPLP), its Partnership Interests. Such Existing Partner's
Partnership Interests were validly issued. There is no agreement, instrument or
understanding with respect to such Existing Partner's Partnership Interests,
except the partnership agreement of the applicable Property Owner, to which
BPLP, as successor, will be bound.
(t) Hart-Scott-Rodino Antitrust Improvements Act. The "ultimate
parent" of Diversified Management Services L.P., Alpha Realty Services, Metric
Construction and Development L.P. and Princeton Realty Advisors L.P. is not a
"$10 million person" within the meaning of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended ("HSR ACT") and its implementing rules and,
accordingly, compliance with the HSR Act's pre-merger notification and waiting
period provisions is not required.
(u) Tax Treatment. To the extent that Units are delivered hereunder
in consideration for the transfer of partnership interests in the Property
Owners or any other assets (i) the Existing Partners and the Assignors, as
applicable, will treat the transfer as a contribution subject to Section 721 of
the Code and (ii) the Existing Partners and the Assignors, as applicable, will
treat the Units for all tax and other financial reporting purposes as equity
interests in BPLP, except in each case as otherwise required by applicable Law
(not including any tax Law except to the extent required by any adjustment
proposed by the Internal Revenue Service in a 90-day letter) or contractual
obligations (such as loan agreements) of BPLP.
<PAGE>
(v) AT&T Obligations. The Existing Partners of the Property Owner
which owns the Tower One Property shall pay all AT&T Obligations (including all
interest and/or penalties related thereto) and shall indemnify and hold harmless
the Property Owner and the BPLP Indemnified Parties from and against the AT&T
Obligations and any Losses resulting from the nonpayment of the AT&T
Obligations, and shall in all events pay or otherwise satisfy such AT&T
Obligations prior to the date (taking into account any notice or cure period)
that such nonpayment would entitle AT&T to terminate its lease at the Tower One
Property.
3.2 REPRESENTATIONS AND WARRANTIES OF TRANSFEREE. Each of Boston
Properties and BPLP, jointly and severally, hereby represents and warrants to
the Landis Parties as of the date of this Agreement and as of the Closing Date
as follows:
(a) Existence and Power. Boston Properties and BPLP have been duly
formed, are validly existing as a Delaware corporation and a Delaware limited
partnership, respectively, are duly qualified to do business in all
jurisdictions where such qualification is necessary to carry on their business
as now conducted and, at the Closing, will be duly qualified in the jurisdiction
in which the Property is located. Each of Boston Properties and BPLP has all
power and authority under their respective organizational documents to carry on
its business as presently conducted and to execute, deliver and perform its
obligations under this Agreement and the Related Agreements executed by such
party.
(b) Authorization; No Contravention. The execution and delivery of
this Agreement have been duly authorized by all requisite organizational action
on the part of Transferee. This Agreement has been and each Related Agreement
to which Transferee is a party will on the Closing Date have been, duly executed
and delivered by Transferee. None of the foregoing will require any action by
or in respect of, or filing with, any Authority or contravene or constitute a
default under any provision of applicable Law, any organizational document of
Transferee or any agreement, judgment, injunction, order, decree or other
instrument binding upon Transferee. This Agreement constitutes and, upon the
execution thereof the Registration Rights Agreement and the other Related
Agreements executed by Boston Properties or BPLP, as applicable, will
constitute, the valid, legal and binding obligations of Boston Properties or
BPLP, as applicable, enforceable in accordance with their respective terms,
subject to bankruptcy and similar laws affecting the remedies or resources of
creditors generally and principles of equity. Except for the consents and other
approvals which have been obtained on or before the date of this Agreement, no
consent of any lender, partner, shareholder, beneficiary, tenant, creditor,
investor, Authority or other person is required in order for Boston Properties
and BPLP to enter into this Agreement or for the consummation of the
transactions contemplated by this Agreement, other than such consents where the
failure to obtain would not have a material adverse effect on Boston Properties
or BPLP or on their ability to consummate the transactions contemplated hereby.
(c) Partnership Agreement. BPLP has provided the Landis Parties with
correct and complete copies of the limited partnership agreement of BPLP (the
"PARTNERSHIP AGREEMENT") as in effect on the date of this Agreement. Between
the date of this Agreement and the Closing Date there have been no amendments or
modifications to, supplements to, or waivers with respect to, the Partnership
Agreement other than (x) as contemplated by this Agreement, including without
limitation, by the Certificate of Designation establishing the terms of the
Series One Preferred Units and as set forth on the attached Exhibit 2 and (y)
amendments, modifications, supplements and waivers in the ordinary course of
business and which do not have a material adverse effect on the Landis Parties'
interest in BPLP (including, without limitation, amendments
<PAGE>
for the purpose of issuing Common Units and/or admitting limited partners to
BPLP). As of the Closing Date, the Certificate of Designation establishing the
terms of the Series One Preferred Units has been duly adopted and will be
effective as an amendment to the Partnership Agreement. As of the date of this
Agreement there are no outstanding Preferred Units and as of the Closing Date
there are no options, warrants, rights or other agreements to issue Series One
Preferred Units to any person other than pursuant to this Agreement and the
Related Agreements. BPLP qualifies as a partnership for Federal income tax
purposes.
(d) Units and Common Shares. The Units to be issued hereunder have
been duly authorized for issuance and, upon such issuance, will be validly
issued, fully paid and non-assessable and will not be subject to any preemptive
rights or rights of first refusal upon their issuance. The Common Shares to be
issued upon exchange of the Units, and the Common Units to be issued upon
exchange of the Preferred Units have been duly authorized for issuance and, upon
such issuance will be validly issued, fully paid and non-assessable and will not
be subject to any preemptive rights or rights of first refusal upon their
issuance. At the Closing each Landis Party receiving Units will receive such
Units free and clear of any claims, liens, voting agreements, options, charges,
or encumbrances or restrictions of any kind, nature or description (other than
as may be created pursuant to this Agreement (including under the Registration
Rights Agreement), the Partnership Agreement and other organizational documents
of BPLP, or by any Landis Party, and other than restrictions on transfer that
may be applicable under Securities Laws). Boston Properties has reserved for
issuance out of its authorized common stock, a number of Common Shares
sufficient to provide for the exchange of Units into Common Shares. If
applicable, BPLP is authorized to issue Common Units sufficient for the exchange
of Preferred Units into Common Units.
(e) Pending Actions. There is no existing or, to the best of
Transferee's knowledge, threatened Action involving Boston Properties or BPLP,
any of their respective assets or the operation of any of the foregoing, which,
if determined adversely to either Boston Properties or BPLP or their respective
assets, would have a material adverse effect on the consolidated financial
position, stockholders' equity, results of operations or business of either
Boston Properties or BPLP or their respective assets or which would interfere
with the ability of either Boston Properties or BPLP to execute or deliver, or
perform their respective obligations under this Agreement or any of the Related
Agreements executed by it.
(f) Taxes. Boston Properties and BPLP have filed all federal, state
and local income and franchise tax returns required to be filed through the date
hereof and have paid all taxes due thereon, and no tax deficiency has been
determined adversely to Boston Properties or BPLP which has had (nor does Boston
Properties of BPLP have any knowledge of any tax deficiency which, if determined
adversely to Boston Properties or BPLP might have) a material adverse effect on
the consolidated financial position, stockholders' equity, results of operations
or business of Boston Properties or BPLP. There is no material tax controversy
pending with respect to Boston Properties or BPLP for which Boston Properties or
BPLP, as applicable, has not made reasonable provision.
(g) No Assignment. Neither Boston Properties nor BPLP nor any of
their subsidiaries has (i) made a general assignment for the benefit of the
creditors, (ii) filed any voluntary petition in bankruptcy or suffered the
filing of an involuntary petition by BPLP's or Boston Properties' creditors,
(iii) suffered the appointment of a receiver to take possession of all or
substantially all of BPLP's or Boston Properties' assets, (iv) suffered the
attachment, or other judicial seizure of all, or substantially all, of BPLP's or
Boston Properties' assets, (v) admitted
<PAGE>
in writing its inability to pay its debts as they come due, or (vi) made an
offer of settlement, extension or compromise to its creditors generally.
(h) Private Placement. Assuming the accuracy of, and in reliance
upon, the representations and warranties of the Landis Parties set forth in
Section 3.1 hereof and in the Representation Letters delivered by each
applicable Landis Party, (x) neither BPLP nor Boston Properties nor any agent or
other person acting on its behalf, directly or indirectly, has done or caused to
be done (or has omitted to do or to cause to be done) any act which act (or
which omission) would result in bringing the issuance or sale of the Common
Shares or Units within the provisions of Section 5 of the Securities Act and (y)
the granting and the sale of the Units hereunder and the issuance and delivery
of the Common Shares upon the exchange of the Units by any person that has
delivered a Representation Letter, are exempt from registration under the
Securities Act and under applicable state securities and "blue sky" laws.
(i) Investment Company Act. Neither Boston Properties nor BPLP is an
"investment company" or an entity "controlled" by an "investment company" as
such terms are defined under the Investment Company Act.
(j) Boston Properties' Qualification. Boston Properties is organized
and operates, and intends to continue to operate, in a manner so as to qualify
as a "real estate investment trust" under Sections 856 through 860 of the Code.
To BPLP's Knowledge, Boston Properties has not received any written notice from
the Internal Revenue Service which specifically calls into question Boston
Properties' qualification as a "real estate investment trust" under Sections 856
through 860 of the Code and Boston Properties has taken no action that would
reasonably be expected to cause Boston Properties to cease to so qualify.
(k) Filings. Boston Properties has made all filings required by the
Securities Act and the Exchange Act (excepting only those filings the failure to
make of which will not render Boston Properties ineligible to file a
registration statement on Form S-11). All such filings made by Boston
Properties fairly present the financial condition of Boston Properties as of the
date of any balance sheet or similar financial statement contained therein and
the results of Boston Properties's operations for the period covered by any
income statement or similar financial statement contained therein, and none of
such filings contains, as of the date of such filing, any untrue statement of a
material fact or omits any information necessary to make the statements
contained therein not materially misleading, and since the date of the last such
filing, there has not occurred any material adverse change in the financial
condition, business, operations, assets or liabilities of Boston Properties or
BPLP.
(l) Tax Treatment. To the extent that Units are delivered hereunder
in consideration for the transfer of partnership interests in the Property
Owners or any other assets (i) BPLP will treat the transfer as a contribution
subject to Section 721 of the Code and (ii) BPLP will treat the Units for all
tax and other financial reporting purposes as equity interests in BPLP, except
in each case as otherwise required by applicable Law (not including any tax Law
except to the extent required by any adjustment proposed by the Internal Revenue
Service in a 90-day letter, provided, however, that BPLP shall have no
obligation to spend more than de minimis amounts of time or money in connection
therewith) or contractual obligations (such as loan agreements) of BPLP.
<PAGE>
ARTICLE 4 - CERTAIN COVENANTS
4.1 MAINTENANCE AND OPERATION. Through the Closing, the Property Owners
agree to maintain and operate the Developed Property in the ordinary course of
business and in accordance with its established operating policies and
procedures and in the manner maintained and operated prior to the date of this
Agreement, subject to any limitations or restrictions as set forth herein. Each
Property Owner agrees that from the date of this Agreement to the Closing Date,
it will: (i) use its reasonable efforts to preserve its relations with tenants
and others having business dealings with it; (ii) not mortgage or encumber any
part of the Property or take or suffer any other action affecting title to the
Property without the prior written consent of Transferee such consent not to be
unreasonably withheld or delayed (it being agreed that if Transferee fails to
deny such consent or approval with respect to any non-material, non-monetary
encumbrance within five (5) business days after written request therefore,
Transferee shall be deemed to have granted such consent or approval hereunder);
(iii) not become a party to any new licenses, equipment leases, contracts or
agreements of any kind relating to the Property, except such contracts or
agreements as will be terminated at or prior to Closing without cost or expense
to Transferee or contracts which Transferee agrees to assume at Closing, such
agreement not to be unreasonably withheld or delayed (it being agreed that if
Transferee fails to deny such consent or approval with respect to any such
contract or agreement within five (5) business days after written request
therefore, Transferee shall be deemed to have granted such consent or approval
hereunder); and (iv) not intentionally take any action that would reasonably be
likely to result in a material adverse change to the "as-built" surveys of the
Developed Property identified on the attached Schedule O.
4.2 INSURANCE. Through the Closing Date, the Property Owners shall
maintain at their sole cost and expense (subject to Article 5 below) all
insurance set forth on Schedule AA or similar replacement coverage.
4.3 PERSONAL PROPERTY. BPLP acknowledges that the Property Owners shall
have the right, from and after the date of this Agreement through the Closing
with respect to the Property, to remove or replace items of its Personal
Property from time to time in the normal course of operation of the Property and
any items of Personal Property that are damaged or destroyed by fire or other
casualty. BPLP agrees that the Property Owners may remove items of Personal
Property from the Property (i) if such items are immaterial or are no longer
necessary or appropriate for the use and operation of the applicable Property,
(ii) if such items are obsolete and replaced by Personal Property of equal or
greater utility or value or (iii) which are identified as excluded Personal
Property on Schedule I-1. Any such Personal Property removed shall cease to
constitute "Personal Property" for all purposes under this Agreement.
4.4 LEASING/ESTOPPELS. Each Property Owner agrees that from and after the
date of this Agreement to the Closing Date, it will (i) not cancel, terminate,
modify or amend any of the Leases, or accept the early surrender thereof, enter
into any new leases, or consent to the assignment, subletting or mortgaging of
any lease or space except to the extent required to do so pursuant to the terms
of any applicable Lease, without having obtained in each case the prior written
consent of Transferee, such consent not to be unreasonably withheld or delayed
and to be based upon then prevailing market terms and conditions; (ii) execute
and deliver in the ordinary course of business all new Leases and modifications
or amendments of Leases approved by Transferee in accordance with clause (i), it
being agreed that if Closing occurs hereunder, Transferee shall pay for and
perform all tenant work and tenant allowances required under Leases and
modifications or amendments of Leases approved by Transferee in writing (and
specifically including any Leases which are deemed approved as set forth below)
in accordance with clause
<PAGE>
(i) and other Leases which are set forth on the attached Schedule V (but only to
the extent that the tenant work, tenant allowances and leasing commissions with
respect to the Leases identified on Schedule V are specifically noted on such
Schedule V as being Transferee's obligation), and pay any leasing commissions in
connection with all new Leases and modifications and amendments to Leases
approved (or deemed approved hereunder) by Transferee in accordance with clause
(i) (all other tenant work, tenant allowances and leasing commissions to be paid
for and/or performed by the applicable Property Owners prior to Closing); (iii)
diligently endeavor to comply with and perform all material provisions and
obligations to be complied with and/or performed by Property Owners under the
Leases prior to the Closing Date in accordance with past practice; (iv) promptly
upon receipt, provide Transferee with copies of all written notices delivered or
received under the Leases and correspondence received from tenants, neighboring
property owners, any insurance company which carries insurance on its Property,
from any Authorities or from any other person or entity with respect to its
Property or any portion thereof. Notwithstanding anything to the contrary
contained herein, Transferee shall grant or deny all consents or approvals
requested by the Property Owners under this Section 4.4 within five (5) business
days after request therefore (it being agreed that if Transferee fails to deny
such consent or approval within such five (5) business day period, Transferee
shall be deemed to have granted such consent or approval hereunder). The
Property Owners shall send to each tenant a letter (in form reasonably
acceptable to BPLP and the Landis Parties) and an estoppel certificate in the
form attached hereto as Exhibit 10 or, if applicable, in the form attached to
the subject Lease. Prior to sending out such estoppel certificates, Property
Owners shall consult with Transferee regarding the form of such certificates.
The Property Owners shall, promptly upon receipt, deliver to BPLP copies of all
correspondence or other matters received by the Property Owners in connection
with such estoppel certificates. Property Owners shall use good faith efforts
(without the obligation to expend any amounts in connection therewith, other
than de minimis amounts) to obtain all such certificates.
4.5 OPERATING AGREEMENTS. Except as set forth in Section 44, the Property
Owners shall not enter into any Contract affecting the Property, or any
amendment of any Contract, that will be binding on the Property or BPLP without
having obtained in each case the prior written consent of Transferee, such
consent not to be unreasonably withheld or delayed and to be based upon then
prevailing market terms and conditions. Notwithstanding the foregoing, the
Property Owners may enter into a Contract which by its own terms shall terminate
prior to the Closing Date or is terminable by the Property Owners prior to the
Closing Date (which shall be terminated by such Property Owner unless such
Contract has been designated as an Assigned Contract by BPLP) and which shall
not create any liability for or be binding on the Property or BPLP on or after
the Closing Date. The Property Owners shall not waive, compromise or settle any
rights of the Property Owners under any Assigned Contract, without in each case
obtaining BPLP's prior written consent thereto, such consent not to be
unreasonably withheld or delayed and to be based upon then prevailing market
terms and conditions. Notwithstanding anything to the contrary contained herein,
BPLP shall grant or deny all consents requested by the Property Owners under
this Section 4.5 within five (5) business days after request therefore (it being
agreed that if BPLP fails to deny such consent or approval within such five (5)
business day period, BPLP shall be deemed to have granted such consent or
approval hereunder).
4.6 DAMAGE OR DESTRUCTION; CONDEMNATION. The Property Owners shall
deliver to BPLP written notice of any casualty involving in excess of $50,000 to
repair or any taking involving the Property promptly upon learning of such
casualty or taking. If, prior to the Closing, any Property (each such Property,
a "DAMAGED PROPERTY") is damaged or destroyed by casualty such that the cost to
repair and/or restore such damage and/or destruction (which cost, for purposes
of this Section, shall be deemed to include reasonably anticipated post-Closing
rental loss
<PAGE>
not covered by rental loss insurance through completion of such repair and/or
restoration) would exceed Five Million Dollars ($5,000,000) with respect to any
individual Property, or Twenty-Five Million Dollars ($25,000,000) in the
aggregate with respect to all Properties, and the Damaged Property cannot be
repaired and/or restored to substantially the same condition as immediately
prior to such casualty, without termination, amendment or modification of any
Leases or other material agreements relating to such Damaged Property, within
twelve (12) months after the Closing Date (any such event, a "MAJOR CASUALTY"),
then BPLP shall have the right to terminate its obligation to complete the
transaction contemplated under this Agreement in its entirety by delivery of
written notice thereof to the Property Owners within ten (10) Business Days
after BPLP's first learning of the occurrence of such casualty and the Property
Owner's good faith estimate of the cost of such repair and/or restoration,
timing for completion of such repair and/or restoration and confirmation that no
Leases or other material agreements will be terminated, amended or modified as a
result of such casualty. If all or any part of the Property is damaged and/or
destroyed by fire or other casualty prior to the Closing but (i) the event is
not a Major Casualty or (ii) the event is a Major Casualty but BPLP does not
terminate its obligation to complete the transaction contemplated under this
Agreement in its entirety pursuant to this Section 4.6 as a result thereof, then
the Closing Date shall occur as scheduled with respect to such Property
notwithstanding such damage or destruction, and the Property Owner's interest in
all proceeds of insurance payable by reason of such casualty, including, without
limitation, for rental loss to the extent allocable to the period after the
Closing Date, shall be assigned to BPLP as of the Closing Date or credited to
BPLP if previously received by the Property Owner, and the Property Owner shall
also be responsible for the amount of any deductible under such insurance (and
such amount shall be credited to BPLP at the Closing). If, prior to Closing, an
Authority commences any eminent domain or condemnation proceeding to take any
portion of the Property or the Property Owner enters into an agreement in lieu
thereof, and the portion of the Property lost thereby would have a material
adverse effect on the operations of the Property (a "MAJOR CONDEMNATION", and
the effected Developed Property, a "CONDEMNED PROPERTY"), then, except as set
forth below, BPLP shall have the option to terminate its obligation to complete
the transaction contemplated under this Agreement in its entirety by delivery of
written notice thereof to the Property Owners within ten (10) Business Days
after BPLP first learns of such commencement or entry. If, prior to the Closing
Date, an Authority commences any eminent domain or condemnation proceeding to
take any portion of the Property or the Property Owner enters into an agreement
in lieu thereof but (i) such event does not constitute a Major Condemnation or
(ii) the event is a Major Condemnation, but BPLP does not terminate its
obligation to complete the transaction contemplated under this Agreement in its
entirety pursuant to this Section 4.6 as a result thereof, then the Closing Date
shall occur as scheduled notwithstanding such proceeding or entry, and the
Property Owner's interest in all awards or payments arising out of such
proceedings or agreement shall be assigned to BPLP as of the Closing Date or
credited to BPLP if previously received by the Property Owner. The Property
Owner's obligations under this Section shall survive the Closing.
4.7 TESTS AND INSPECTIONS.
(a) The Property Owner hereby authorizes BPLP, its authorized
representatives, agents and employees to enter upon the Property on reasonable
prior notice and in coordination with the applicable Property Owners so that the
timing thereof does not materially interfere with operations at the Property,
from time to time to perform such tests and inspections as BPLP deems necessary
or appropriate in its reasonable discretion, including, without limitation, such
soil boring and compacting tests, test well and water table, soil porosity and
liquid absorption tests, other environmental inspections and tests and
engineering tests. Any entry by BPLP onto the
<PAGE>
Property in connection with its due diligence shall not unreasonably interfere
with the rights of tenants under Leases. BPLP hereby agrees to repair any damage
to the Property resulting from the conduct of any test or inspection performed
by BPLP and to indemnify and hold the Landis Indemnified Partners harmless from
and against any and all Losses arising on account of any test or inspection
performed by BPLP, including, without limitation, for mechanic's liens to the
extent attributable to any test or inspection performed by BPLP. This provision
shall survive a termination of the obligations to complete the transaction
contemplated under this Agreement or Closing.
(b) BPLP, its authorized representatives, its agents and its
employees shall have the right to conduct, from and after the date hereof until
the Closing Date (including for such purpose any later closing date with respect
to each Developed Property which is not acquired on the Closing Date), any and
all due diligence relative to the Property as may be deemed necessary or
appropriate by BPLP in its sole discretion, provided, however, that BPLP shall
not unreasonably interfere with the operations of the Developed Properties,
including the rights of tenants under Leases. Without limiting the foregoing,
the Property Owner shall make available to BPLP for review and copying at BPLP's
election, in a manner which does not unreasonably interfere with the operations
of the Developed Properties, all of its materials, files, books, records,
information and documents relating to the Property, including, without
limitation, all Leases, management agreements, maintenance files, tenant
correspondence, certificates of occupancy, plans and other construction records
for the Improvements, service and other contracts, financial reports, Rent Roll,
existing surveys, permits and other similar or dissimilar materials, to the
extent not previously delivered to BPLP. BPLP shall have the right to talk with
third-parties selected by BPLP in the performance of its due diligence on the
Property.
4.8 MORTGAGE DEBT. Prior to the Closing, the Property Owners will keep
all debt service payments and other payments owed in connection with the
Mortgage Debt current on the Property and will endeavor not to permit or suffer
to exist any monetary or material non-monetary default under any document
evidencing the Mortgage Debt. All costs, fees and charges required to be paid
to a holder of Mortgage Debt or on behalf of such holder in connection with the
repayment or assumption (or other continued existence) and amendment of the
Mortgage Debt shall be paid by the Property Owners at or prior to the Closing
(except only as and to the extent set forth in Section 1.9 with respect to
certain prepayment premiums and charges, and as applicable, the NML Closing
Costs). Prior to the Closing Date with respect to the 500 Series Properties,
the Property Owners of such 500 Series Properties shall diligently and in good
faith undertake to completion the refinancing of the Mortgage Debt encumbering
such 500 Series Properties in accordance with the 500 Series NML Commitment and
the terms and conditions of this Agreement.
4.9 AVAILABILITY OF RECORDS. Each Existing Partner and Assignor agrees to
cooperate with Transferee to permit Transferee to obtain any information needed
from any Assignors or the Existing Partners to enable Transferee to file any
necessary tax returns. Upon written request of Transferee, for a period of two
(2) years after the Closing, the Existing Partners and Assignors shall (i) make
their respective records relating to the Properties, the Property Owners, the
Partnership Interests, the Assignors and the Assets available to Transferee for
inspection, copying and audit by Transferee's designated accountants at
Transferee's sole cost and expense, and (ii) cooperate with Transferee to the
extent reasonably necessary to obtain any applicable Licenses not in existence
on the Closing Date and necessary for the operation of the Property. Without
limiting the foregoing and in addition thereto, for the period of time
commencing on the date of this Agreement and continuing through the second (2nd)
anniversary of the Closing Date, the Existing
<PAGE>
Partners and Assignors shall, from time to time, upon reasonable advance notice
from Transferee, provide Transferee and its representatives, agents and
employees with access to all financial and other information in its possession
relating to the Developed Properties, the Property Owners, the Assignors, the
Partnership Interests and the Assets pertaining to the period of the Property
Owner's ownership in and operation of, as the case may be, the Developed
Property, which information is relevant and reasonably necessary, in the opinion
of Transferee's outside, third party accountants (the "ACCOUNTANTS"), to enable
Transferee and its Accountants to prepare financial statements in compliance
with any or all requirements of (a) Rule 3-14 of Regulation S-X of the
Commission; (b) any other rule issued by the Commission and applicable to
Transferee; and (c) any registration statement, report or disclosure statement
filed with the Commission by, or on behalf of, Transferee. The Existing Partners
and Assignors acknowledge and agree that the following is a representative
description of the information and documentation that Transferee and the
Accountants may require in order to comply with (a), (b) and (c) above. The
Existing Partners and Assignors shall provide such information, and
documentation in existence as of the date of this Agreement. The Existing
Partners' and Assignors' obligations under this Section 4.9 shall survive the
Closing.
(a) Applicable Rent Roll for the calendar month in which the Closing
occurs and the eleven (11) calendar months immediately preceding the calendar
month in which the Closing occurs;
(b) The Property Owners' and Assignors' internally-prepared operating
statements;
(c) Access to applicable Leases;
(d) The Property Owners' and Assignors' budgeted annual and monthly
income and expenses, and actual annual and monthly income and expenses;
(e) Access to the Property Owners' and Assignors' cash receipt
journal(s) and bank statements for the Property;
(f) The Property Owners' general ledger with respect to the Property;
(g) The Property Owners' schedule of expense reimbursements required
under Leases in effect on the Closing Date, if one exists;
(h) Schedule, if one exists, of those items of repairs and
maintenance performed by, or at the direction of the Property Owners, during the
Property Owners' final fiscal year in which the Property Owners owned and
operated the Property (the "FINAL FISCAL YEAR").
(i) Schedule, if one exists, of those capital improvements and fixed
asset additions made by, or at the direction of, the Property Owners during the
Final Fiscal Year;
(j) Access to the Property Owners' invoices with respect to
expenditures made during the Final Fiscal Year;
(k) Access (during normal and customary business hours) to
responsible personnel to answer accounting questions; and
<PAGE>
(l) a representation letter, signed by the individual(s) responsible
for the Property Owners' and Assignors' financial reporting, as prescribed by
generally accepted auditing standards promulgated by the Auditing Standards
Division of the American Institute of Certified Public Accountants, which
representation letter may be reasonably required to assist the Accountants in
rendering an opinion on such financial statements.
4.10 TITLE AND SURVEY DEFECTS. The Property Owners shall not knowingly and
voluntarily encumber or create any exception to title to the Developed Property
that is not removed on or before Closing.
4.11 EMPLOYEE MATTERS.
(a) Employment. On or before June 1, 1998, the Landis Parties will
present to Transferee a list of employees of the Assignors (the "EXISTING
EMPLOYEES"). Transferee and the Landis Parties will thereafter meet to review
and consider such list in good faith and in the context of the stated goal of
Transferee and the Landis Parties to achieve economies of scale in connection
with the contemplated transactions, including through overhead efficiencies and
cost savings and the consolidation and elimination of duplicative operations.
The parties hereto acknowledge that any offer of employment by Transferee shall
be made on an individual basis following Transferee's evaluation, in its sole
discretion, of Transferee's staffing requirements, which consideration may
include interviewing Existing Employees, consideration of such Existing
Employees salaries and other compensation and benefits and current or prior
reviews. Any offer of employment by Transferee shall be on terms satisfactory
to Transferee in its sole discretion. Notwithstanding the foregoing, and without
having conducted any such evaluation, it is the Transferee's present intent (as
of the date of this Agreement) that Transferee, or its affiliates, will offer
employment opportunities to many or substantially all of the Existing Employees.
Attached hereto as Exhibit 14 is a summary statement of the Boston Properties
policies, as of the date of this Agreement, regarding benefits anticipated to be
offered to Existing Employees who are offered employment by Boston Properties,
provided, however, that Boston Properties reserves the right to make variations
to such policies, either in general or with respect to any particular matter,
and in so doing, may take into account such matters as Boston Properties may
deem applicable, including without limitation, job descriptions,
responsibilities, cost of living and prevailing market terms and conditions.
All Existing Employees not employed by Transferee, or its affiliates, as of the
Closing Date pursuant to this Section (collectively, "NON-CONTINUING EMPLOYEES")
shall not be employed by, or deemed employed by, Transferee or its affiliates.
(b) Severance. Transferee shall not have any responsibility for
payment of any severance or other benefits to Non-Continuing Employees, it being
acknowledged and agreed that the Landis Parties shall be solely responsible for
paying any such benefits, pursuant to the existing policies and legal
obligations, if any, of the Assignors or otherwise. Transferee and the Landis
Parties further agree that the Landis Parties shall also be responsible for any
liabilities, damages or other payments paid or payable to, or claimed by, any
Non-Continuing Employees, including without limitation, all employees of the
Assignors who are terminated in connection with the transactions contemplated by
this Agreement, including without limitation, the cost of investigating and
defending any such claims.
(c) Vacation, Sick Leave, Etc. The Landis Parties shall be
responsible for all vacation, sick leave, and all other pension and welfare
benefits (i) accruing to and including the day immediately preceding the Closing
Date with respect to the Existing Employees and (ii) with respect to the Non-
Continuing Employees. In no event shall Transferee assume or continue any
<PAGE>
benefit plans maintained by the Landis Parties for the Existing Employees
(including without limitation, the Non-Continuing Employees).
4.12 COOPERATION WITH TRANSFEREE. The Property Owners and Transferee shall
cooperate with each other and do all acts as may be reasonably required or
requested by the other with regard to the fulfillment of any condition to the
Property Owners' or Transferee's, as the case may be, obligations hereunder,
provided, however, in no event shall the obligations of Property Owners and
Transferee which arise exclusively as a result of this Section 4.12 increase the
liability on the part of each such person under this Agreement other than de
minimis amounts.
4.13 COVENANTS OF ALL EXISTING PARTNERS. Each Existing Partner agrees that
from the date of this Agreement to the Closing Date, it will not voluntarily
encumber, assign, transfer or convey any of the Partnership Interests which are
the subject of this Agreement (except only to another Landis Party and only
after written notice of such transfer or other action has been given to
Transferee). Each Existing Partner shall cooperate and do all acts (including
executing and delivering a copy of the completed Schedule A-1 as contemplated by
Section 2.1(s)) as may be reasonably required or requested by Transferee or the
Properties Owners to fulfill any condition to Transferee's obligations
hereunder.
4.14 TAX APPEALS. Property Owners agree that they will not, without the
prior written consent of BPLP such consent not to be unreasonably withheld or
delayed (it being agreed that if BPLP fails to deny such consent within ten (10)
business days after request therefore, BPLP shall be deemed to have granted such
consent hereunder), settle prior to the Closing Date, any proceeding or
application for a reduction in the real estate tax assessment of the Property
for the current tax year unless required by a tenant pursuant to such tenant's
Lease.
4.15 TAX TREATMENT NOTIFICATION. If, to BPLP's Knowledge, BPLP receives
written notice of any challenge or examination by the Internal Revenue Service
with respect to the treatment of the Units as equity interests in BPLP for
federal income tax purposes, BPLP shall promptly thereafter notify Alan B.
Landis of the existence of any such challenge or examination.
4.16 IDENTIFIED BREACHES. If, to the Landis Parties' Knowledge, it is
probable that there will be an Identified Breach on the Confirmation Certificate
to be delivered at Closing, then Alan B. Landis shall notify the Transferee in
writing of such fact a reasonable period of time prior to the scheduled Closing
Date or, if earlier, as soon as practicable after such determination by the
Landis Parties. If there is or will be an Identified Breach, the Landis
Parties' will cooperate in providing such information as Transferee reasonably
requests with respect thereto.
ARTICLE 5 - CLOSING ADJUSTMENTS
All apportionments with respect to each Property shall be made in
accordance with customary practice in the county in which the Property is
located, except as expressly provided herein.
5.1 TAXES, ASSESSMENTS AND UTILITIES. All real estate taxes, charges and
assessments affecting the Property and to the extent not paid by tenants, all
charges for water, sewer, electricity, gas, telephone and all other utilities
with respect to the Property, shall be apportioned on a per diem basis as
provided below. General real estate taxes payable for the fiscal year in which
the Closing occurs shall be prorated by the Property Owners and BPLP as of the
Closing
<PAGE>
Date. The Property Owners shall pay on or before Closing the full amount of any
bonds or assessments against the Property, including, without limitation,
interest payable therewith, except only those bonds or assessments set forth on
the attached Schedule M, but including, without limitation, any bonds or
assessments which are not set forth on such Schedule M that may be payable after
the Closing Date as a result of or in relation to the construction or operation
of any improvements on the Land or any public improvements that took place or
for which any assessment was levied prior to the Closing Date. If any prorations
under this Section cannot be calculated finally on the Closing Date, then they
shall be estimated at the Closing and calculated finally as soon after the
Closing Date as feasible. The parties' obligations under this Section 5.1 shall
survive the Closing.
5.2 RENT.
(a) To the extent that any tenant is entitled to any rebate, concession,
deduction or offset under its Lease, such entitlement shall be included as a
closing adjustment, except that free rent under any Leases shall not be adjusted
(but rather shall be incurred by the applicable Property Owner with respect to
the period prior to Closing and shall be incurred by BPLP with respect to the
period from and after Closing). Further, except as otherwise set forth in this
Agreement or on Schedule V attached hereto and as to Leases entered into after
the date of this Agreement with the prior written consent (or deemed consent) of
Transferee in accordance with Section 4.4 above, to the extent that any tenant
is entitled to future tenant improvements work under existing Leases (and
without regard to subsequent amendments, extensions or other agreements) to be
paid for by the landlord or tenant is entitled to future tenant improvements
work to be paid for by the landlord, or tenant improvement allowances to be
funded in the future by the landlord under such tenant's Lease, the amount of
landlord's liability and the amount of such allowance for such work shall be
included as a closing adjustment by reducing the portion of the Assigned Value
allocable to the Partnership Interests of the Property Owner which owns the
Developed Property which is subject to such Lease. Monthly rent payable by
tenants shall be adjusted as of 11:59 p.m. on the day immediately preceding the
Closing Date, and any such rent for the month in which the Closing occurs) shall
be paid to Transferee by adjustment to the Contribution Price. Estimated
adjustments will be made on the Closing Date on a reasonable basis for estimated
operating expenses paid by tenants as additional rent. Notwithstanding anything
to the contrary contained in Section 5.1 above or in this Section 5.2, it is the
intent of the Landis Parties and the Transferee that prorations of all operating
expenses with respect to the full year 1998 shall be made as follows:
(i) All Additional Rent (as hereinafter defined) collected by the Landis
Parties with respect to the period from January 1, 1998 through June 30, 1998
shall be credited to BPLP. In addition, to the extent that the base rent
collected from any tenant includes a base year component (the "Base Year
Amount"), the Base Year Amount collected by the Landis Parties with respect to
the period from January 1, 1998 through June 30, 1998 shall be credited to BPLP.
(ii) Any base rent and Additional Rent remitted to the Landis Parties from
and after the Closing Date shall be remitted to BPLP.
(iii) The Landis Parties shall be credited with all operating expenses
paid by them with respect to the period from January 1, 1998 through June
30,1998.
(iv) No separate adjustment shall be made with respect to the real estate
taxes or utilities. BPLP shall pay all unpaid bills and invoices (whether
received prior to or subsequent to the Closing
<PAGE>
Date, but only if the same are included as operating expenses for purposes of
calculating escalations under tenant leases) and shall pay all real estate taxes
for the Properties.
Notwithstanding anything contained herein to the contrary, neither party
shall profit or be penalized by any material change in the occupancy of the
Properties and that neither the Landis Parties nor BPLP will benefit from the
pro-ration of operating expenses during calendar year 1998.
(b) Any of the following charges and/or rents provided for by any Lease
(but without duplication): (A) the payment of additional rent based upon a
percentage of the tenant's business during a specified annual or other period
(sometimes referred to as "percentage rent"), (B) common area maintenance or
"CAM" charges, (C) "escalation rent" or additional rent based upon real estate
taxes, insurance, operating expenses, labor costs, cost of living, or other
index including the consumer price index or otherwise, or (D) any other items of
additional rent, however determined, e.g., charges for electricity, water,
utilities, cleaning, overtime services, sundries and/or miscellaneous charges
and building expenses, shall be adjusted and prorated on an if, as and when
collected basis (such percentage rent, CAM charges, escalation rent and other
additional rent being collectively called "ADDITIONAL RENT").
(c) Rent and such tenant charges (excluding Additional Rent) which are due
but uncollected as of the Closing Date shall not be adjusted, but, with respect
to tenants whose rent is no more than 120 days in arrears, provided the Property
Owners (or, if after the Closing, the applicable Existing Partners) provide in a
timely manner all back-up materials, reconciliations and other information
requested by tenants with respect thereto, Transferee shall remit promptly to or
on behalf of the applicable Existing Partners any such amounts actually paid by
such tenants to Transferee (provided that such amounts shall be in excess of the
then current rent and other charges due (including Additional Rent), including
for such purpose, all past due amounts which relate to the period from and after
the Closing Date) within twelve (12) months after the Closing Date. Transferee's
obligations with respect to such delinquent rent and other charges shall be
limited to billing the applicable tenant therefor, monthly for the six (6) month
period commencing on the Closing Date (and remitting to the applicable Existing
Partners amounts actually received on account of such delinquent rent as
provided above). Notwithstanding anything to the contrary in the foregoing, the
applicable Existing Partners retain all rights against former tenants whose
Leases have expired or have been terminated and possession discontinued prior to
the date of this Agreement (or, the Closing Date with respect to Leases
terminated after the date of this Agreement with the prior written approval of
Transferee) and, with respect to tenants who do not pay all past due rent within
six (6) months after the Closing Date, the applicable Existing Partners shall
have the right, upon prior written notice to BPLP, to pursue tenants to collect
such delinquencies (including, without limitation, the prosecution of one or
more lawsuits), provided, however, that BPLP shall have no obligation to join in
such lawsuits or other pursuits, and provided further, however, that the
Existing Partners shall not be entitled to evict (by summary proceedings or
otherwise) any such tenants or otherwise effect BPLP's or such tenant's rights
under the applicable Lease. Except as otherwise adjusted at Closing, but subject
to the terms and conditions of this Section 5.2, Transferee shall be obligated
to pay to the applicable Existing Partners any payments of rent made to
Transferee by any tenants applicable to the period prior to the Closing Date.
The parties agree that in the event that any tax appeals relating to any
Property, whether now existing or hereafter filed, results in any rebate of real
property or other taxes paid for such Property, such rebate (after deducting
therefrom all costs and expenses of procuring the same, and amounts owing to the
tenants of such Property for the period of such rebate) shall be prorated as of
the Closing Date between the respective applicable Existing Partners and
Transferee based on respective
<PAGE>
periods of ownership. All prepaid rentals, tenant security deposits, whether
cash or non-cash (including security deposits for tenants who owe rent or other
charges on the Closing Date), together with all interest required to be paid
thereon which has accrued through the Closing Date, shall be delivered to
Transferee on the Closing Date. Promptly following the Closing Date, the
applicable Existing Partners shall request any tenants who have posted letters
of credit as security deposits to have such security deposits amended or re-
issued, if necessary, so that they run to the benefit of BPLP, if applicable, as
landlord under the Leases. If any prorations under this Section cannot be
calculated finally on the Closing Date, then they shall be estimated at the
Closing and calculated finally as soon after the Closing Date as feasible. This
Section 5.2 shall survive the Closing.
5.3 PAYMENTS ON PERMITTED EXCEPTIONS. Payments owing under any Permitted
Exceptions shall be apportioned on a per diem basis as of 11:59 p.m. on the date
immediately preceding the Closing.
5.4 CERTAIN PAYABLES. All of the Mortgage Debt and the Payables which
are credited against the Contribution Price under Section 1.1(d)(iv), constitute
qualified liabilities within the meaning of Section 1.707-5(a)(6) of the Code.
All such Payables shall thereafter be expenses of BPLP and shall be paid by
BPLP. This Section 5.4 shall survive the Closing.
5.5 PARTNERS' ELECTIONS. All costs and expenses associated with
preparing, printing, distributing and collecting the Consents, including,
without limitation, all federal and state securities filings associated
therewith (excluding, however state and federal "blue sky" filings), shall be
the responsibility of the Existing Partners.
5.6 ASSESSMENTS/CONDOMINIUM CHARGES. Association assessments (including
condominium charges of any kind or nature) which are attributable to the period
on or before the Closing Date or which are due and payable as of the Closing
Date shall be paid by the Property Owners or allowance therefor made at Closing
by a decrease in the portion of the Contribution Price payable to the applicable
Existing Partners.
5.7 REIMBURSEMENT FOR DEPOSITS. At the Closing, (a) all cash balances
maintained by the Property Owners in unrestricted bank accounts may be withdrawn
and retained by the Existing Partners, (b) all receivables of the Property
Owners set forth on Schedule DD shall be treated as a credit to the Existing
Partners for the purposes of adjustments made pursuant to this Article 5 and (c)
BPLP shall replace all letters of credit, bond deposits, sinking funds, escrows,
similar funds and other amounts relating to the Properties as set forth on
Schedule DD. All of the foregoing payments shall be made in cash at the Closing
and none of the foregoing shall have any effect on the calculation of the
Contribution Price under this Agreement.
5.8 POST-CLOSING AUDIT. On or before March 31, 1999, BPLP shall cause a
post-Closing audit to be conducted by Coopers & Lybrand, LLP (or such other
accounting firms as may be selected by BPLP and reasonably satisfactory to the
Landis Parties) to determine the accuracy of all prorations made under this
Article (the "POST-CLOSING AUDIT"). The Landis Parties shall have the right to
review and reasonably approve the results of such Post-Closing Audit. In the
event the Landis Parties do not so approve the results of such Post-Closing
Audit, BPLP and the Landis Parties shall jointly retain another accounting firm
(which accounting firm shall be reasonably satisfactory to BPLP and the Landis
Partners) to review such Post-Closing Audit. Any decision of such other
accounting firm with respect to such Post-Closing Audit shall be binding upon
BPLP and the Landis Parties. Any party owing another party a sum of money based
on post-
<PAGE>
Closing prorations required under this Article or the Post-Closing Audit, as
reasonably approved by BPLP and the Property Owners, shall promptly pay such sum
to theother party, together with interest thereon at the Reference Rate (as
hereinafter defined) from the Closing Date to the date of payment if payment is
not made within ten (10) days after delivery of a bill therefor. This Section
5.8 shall survive Closing.
ARTICLE 6 - DEFAULTS, TERMINATIONS AND REMEDIES
6.1 DEFAULTS AND TERMINATION RIGHTS. In the event (i) any conditions
precedent, as set forth in Article 2 above, to the obligations of a party have
not been satisfied (or waived in writing by the other party) on or before the
Closing Date (as the same may be extended pursuant to this Agreement or by
agreement of the parties), and any such conditions precedent remains unsatisfied
for more than fifteen (15) days following receipt of notice thereof from the
other party or (ii) of a failure by a party to perform any of its obligations
hereunder in any material respect, which failure continues for more than fifteen
(15) days following receipt of notice thereof from the other party, then the
other party shall have the right to terminate its obligation to complete the
transaction contemplated under this Agreement by delivery of notice thereof to
the other party. In the event of a failure of a condition to a party's
obligations under this Agreement, such party shall, as its sole and exclusive
remedy (except as set forth in this Article below), subject to Transferee's
right to return of the Deposit (as defined below), either elect to terminate its
obligation to complete the transaction contemplated under this Agreement or to
waive satisfaction of such condition, each by delivery of notice thereof to the
other party. Subject to the terms of this Article below, upon any such
termination or any termination otherwise permitted under this Agreement, all
rights and obligations of the parties under this Agreement, other than those
that by their terms survive termination, shall terminate without recourse, and
this Agreement shall be of no further force or effect.
Notwithstanding anything to the contrary contained in this Agreement,
unless caused by fraud or willful breach by a Property Owner and/or any Existing
Partner, the Landis Parties shall not be deemed to be in breach of its
obligations under this Agreement with respect to any Prohibited Fee Properties
if and for so long as the applicable Landis Parties (i) diligently and
continuously comply with their respective obligations with respect to such
Properties as set forth in Sections 1.1 and 1.3, including, without limitation,
the obligation to use good faith efforts to cure any such breach or
noncompliance (and to diligently and continuously pursue any applicable
litigation, arbitration or other actions in connection with any Prohibited Fee
Property) and upon such cure to cause the applicable Property (or the applicable
Partnership Interests) to be conveyed to BPLP and (ii) enter into a Notice of
Purchase Right and a Prohibited Fee Property Management Agreement with respect
to each such Property.
6.2 REMEDIES OF TRANSFEREE. In addition to its right to terminate this
Agreement, as provided elsewhere in this Agreement, upon the occurrence on or
before Closing of a willful breach by a Property Owner, any Existing Partner
and/or any Assignor in the performance of any of their respective obligations
under this Agreement, which willful breach continues for more than fifteen (15)
days following receipt of notice thereof (but subject to the terms and
conditions and additional cure periods set forth in Section 1.1(d)(iii), if
applicable), Transferee shall also have the right, as its sole and exclusive
remedy other than termination, to seek and obtain specific performance of the
terms of this Agreement, including without limitation the right to seek and
obtain specific performance of the conveyance to BPLP (in accordance with the
terms and
<PAGE>
procedures contained in this Agreement) of the Partnership Interests and/or Fee
Properties (including Prohibited Fee Properties).
6.3 LIQUIDATED DAMAGES. THE PARTIES HERETO ACKNOWLEDGE THAT THIS AGREEMENT
HAS BEEN EXECUTED AT THE FIRST CLOSING HEREUNDER. THE PROPERTY OWNERS HEREBY
AGREE THAT THEY SHALL NOT BE ENTITLED TO ACTUAL DAMAGES UPON A TERMINATION OF
THIS AGREEMENT AND THAT IF THE PROPERTY OWNERS TERMINATE THIS AGREEMENT WHEN
PERMITTED HEREUNDER PURSUANT TO SECTION 6.1, THE APPLICABLE PROPERTY OWNERS
SHALL ONLY BE ENTITLED TO THE AMOUNT OF $1,500,000 (THE "LIQUIDATED AMOUNT")
UPON DEMAND THEREFOR FOLLOWING SUCH TERMINATION. THE PROPERTY OWNERS AGREE THAT
IT IS IMPOSSIBLE TO CALCULATE WHAT THEIR ACTUAL DAMAGES WOULD BE IN THE EVENT OF
SUCH A TERMINATION, AND THE PROPERTY OWNERS AGREE THAT THE LIQUIDATED AMOUNT IS
A REASONABLE ESTIMATION THEREOF. THEREFORE, THE APPLICABLE PROPERTY OWNERS
ACKNOWLEDGE THAT THEIR RIGHT TO THE LIQUIDATED AMOUNT SHALL CONSTITUTE
LIQUIDATED DAMAGES AND THEIR SOLE RIGHT AND REMEDY UPON A TERMINATION BY THEM OF
THIS AGREEMENT PURSUANT TO SECTION 6.1. NOTWITHSTANDING ANYTHING TO THE CONTRARY
CONTAINED IN THIS SECTION, NOTHING CONTAINED IN THIS SECTION SHALL BE DEEMED TO
LIMIT TRANSFEREE'S LIABILITY UNDER ITS INDEMNITY CONTAINED IN SECTION 7.4.
6.4 POST-CLOSING REMEDIES. The parties hereto acknowledge and agree that
the limitations on remedies contained in this Article only apply in the event
that the transactions contemplated under this Agreement do not occur and do not,
subject to the terms of Article 7, apply post-Closing. As to Developed
Properties and Assets which have been acquired by BPLP, the sole remedies from
and after the Closing Date for such Developed Properties and Assets shall be as
set forth in Article 7.
ARTICLE 7- INDEMNIFICATION
7.1 SURVIVAL.
(a) All representations and warranties of Alan B. Landis, the
Existing Partners and the Assignors contained in this Agreement or in the
Representation Letter shall survive the Closing regardless of any investigation
made as follows: (x) the representations and warranties set forth in Section
3.1(a), the first sentence of Section 3.1(b), Section 3.1(n), Section 3.1(s) and
Section 9.1 of this Agreement and in the Representation Letter, shall survive
the Closing indefinitely (the "SPECIFIED REPRESENTATIONS") and (y) (i) the
representations and warranties set forth in Section 3.1(k) shall survive only
until (but excluding) the date which is the second anniversary of the Closing,
(ii) the representations and warranties set forth in Section 3.1(u) shall
survive only until (but including) the expiration of the statute of limitations
with respect to the contribution of Partnership Interests at the first Closing
Date as contemplated by this Agreement, and (iii) the representations and
warranties set forth in Section 3.1(v) shall survive until (and including) the
date that the AT&T Obligations are paid or otherwise satisfied in full, and (z)
all other representations and warranties shall survive only until (but
excluding) the date which is the first anniversary of the Closing (such
representations and warranties in clauses (y) and (z), the "LIMITED SURVIVAL
REPRESENTATIONS") provided that, if a Notice of Claim asserting a claim for
<PAGE>
breach of any such Limited Survival Representations or a claim for
indemnification under this Article 7 with respect to any such Limited Survival
Representations shall have been given prior to the expiration of such Limited
Survival Representations, such Limited Survival Representations shall survive,
to the extent of the claim only, until such claim is resolved.
(b) All representations and warranties of BPLP and of Boston
Properties contained in this Agreement shall survive the Closing regardless of
any investigation made as follows: (x) the representations and warranties set
forth in Section 3.2(a), the first sentence of Section 3.2(b), Section 3.2(d),
the first sentence of Section 3.2(j) and Section 9.1 of this Agreement shall
survive the Closing indefinitely (the "SPECIFIED TRANSFEREE REPRESENTATIONS"),
(y) the representations and warranties set forth in Section 3.2(l) shall survive
only until (but including) the expiration of the statute of limitations with
respect to the contribution of Partnership Interests at the first Closing Date
as contemplated by this Agreement and (z) all other representations and
warranties shall survive only until (but excluding) the date which is the first
anniversary of the Closing (such representations and warranties in clauses (y)
and (z), the "LIMITED SURVIVAL TRANSFEREE REPRESENTATIONS") provided that, if a
Notice of Claim asserting a claim for breach of any such Limited Survival
Transferee Representations or a claim for indemnification under this Article 7
with respect to any such Limited Survival Transferee Representations shall have
been given prior to the expiration of such Limited Survival Transferee
Representations, such Limited Survival Transferee Representations shall survive,
to the extent of the claim only, until such claim is resolved.
(c) With respect to any claim by a party hereto for indemnification
for a Loss resulting from the breach of the representations or warranties
contained in this Agreement (or, with respect to the applicable Landis Parties,
the Representation Letters), notice of such claim ("NOTICE OF CLAIM") must be
given to the relevant other party within the survival period for the relevant
representation or warranty. Notwithstanding the foregoing, claims brought by (i)
any Transferee Indemnified Party in connection with any Limited Survival
Representation which is untrue as a result of fraud by the party making it or
(ii) any Landis Indemnified Party in connection with any Limited Survival
Transferee Representation which is untrue as a result of fraud by the party
making it, may be brought at any time, without regard to the limitations on
survival set forth in this Section 7.1 above.
7.2 INDEMNIFICATION BY THE LANDIS PARTIES. Subject to the limitations on
the indemnification obligations set forth in this Article 7, if the Closing
occurs, from and after the Closing Date, (i) Alan B. Landis agrees to indemnify,
defend and hold harmless the BPLP Indemnified Parties from and against all
Losses which are incurred or suffered by any one or more of them based upon,
arising out of, in connection with or by reason of (A) the breach by Alan B.
Landis of the representations and warranties in his Representation Letter or the
breach by any Landis Party of the Limited Survival Representations and/or the
Specified Representations under this Agreement (except that, with respect to the
Limited Survival Representations only, Alan B. Landis' liability under this
Article 7 shall be limited to the Units pledged or other collateral provided to
Transferee pursuant to Section 7.8 below) or (B) any Excluded Liability or (C)
any Partnership Claim and (ii) each Existing Partner and each Assignor
(severally and not jointly) agrees to indemnify, defend and hold harmless the
BPLP Indemnified Parties from and against all Losses which are incurred or
suffered by any one or more of them based upon or arising out of (A) any breach
of representation or warranty made by such person in this Agreement or in such
person's Representation Letter or (B) any Excluded Liability which is or was a
liability of such Existing Partner of Assignor.
<PAGE>
7.3 LIMITATIONS ON CERTAIN INDEMNIFICATION OBLIGATIONS OF THE LANDIS
PARTIES. With respect to the indemnification obligations under Section 7.2, the
following provisions, if and to the extent applicable, shall apply:
(a) Time Limit Regarding Limited Survival Representations. The
indemnity obligations shall not apply to any Loss based upon a breach of the
Limited Survival Representations as to which the Transferee Indemnified Party
did not give a timely Notice of Claim in accordance with Section 7.1(c).
(b) Minimum Threshold for Claims for Losses: Credit. Alan B. Landis,
the Existing Partners and the Assignors shall have no liability to the
Transferee Indemnified Parties for the first $500,000 of Losses incurred by the
Transferee Indemnified Parties under this Agreement and the Properties Under
Development Contribution Agreement (other than with respect to (i) Excluded
Liabilities which relate to the Northwestern Mutual Commitment and (ii) the AT&T
Obligations, for which Alan B. Landis and the Existing Partners shall have
liability for all Losses incurred by the Transferee Indemnified Parties). In
addition, the Transferee Indemnified Parties shall, upon the first Closing
hereunder (or any subsequent Closing hereunder with respect to the 500 Series
Properties only), be deemed to have waived (i) any right to indemnification with
respect to Losses which relate solely to an Identified Breach if such Identified
Breach was a Material Adverse Effect, and BPLP nevertheless elected to
consummate the transactions contemplated by this Agreement on the first Closing
Date hereunder (if the Identified Breach which was a Material Adverse Effect
does not relate to the 500 Series Properties and the 500 Series Properties are
not acquired on the first Closing Date hereunder), notwithstanding the existence
of such Material Adverse Effect and (ii) any right to indemnification with
respect to Losses which relate solely to an Identified Breach if such Identified
Breach was a Material Adverse Effect with respect to one or more of the 500
Series Properties, and BPLP nevertheless elected to consummate the acquisition
of such 500 Series Properties on the applicable Closing Date with respect to
such properties, notwithstanding the existence of such Material Adverse Effect.
(c) Maximum Liability for Breaches of Limited Survival
Representations: Cap. Except in the case of fraudulent conduct, the aggregate
liability of Alan B. Landis, the Existing Partners and the Assignors
(collectively, the "LANDIS INDEMNITORS") for Losses incurred with respect to
Limited Survival Representations and the "Limited Survival Representations"
under the Properties Under Development Contribution Agreement shall not exceed
$15,000,000; provided, however, that in the event that the 500 Series Properties
are acquired by BPLP prior to the satisfaction in full or other discharge of the
AT&T Obligations, the aggregate liability of the Landis Indemnitors for Losses
incurred with respect to Limited Survival Representations shall increase by the
difference between (i) $2,000,000.00 minus (ii) amounts actually paid by the
Landis Indemnitors in reduction of the AT&T Obligations identified on that
certain Tenant Estoppel Certificate of AT&T dated as of June 30, 1998 (such
amount, the "LIMITED SURVIVAL INDEMNITY INCREASE").
(d) Third Party Recoveries. There shall be netted from any payment
for a Loss required under Section 7.2: (i) the amount of any indemnification
received by the indemnified party from an unrelated party with respect to such
Loss and (ii) the amount of any insurance proceeds or other cash receipts paid
to the indemnified party against any such Loss provided, however, that any such
recoveries from unrelated parties and/or insurers shall not reduce the maximum
aggregate liability of the applicable Landis Parties under Section 7.3(c) above.
<PAGE>
(e) Pledged Units. The indemnity obligations of the Landis Parties
under this Article 7 shall be satisfied by any BPLP Indemnified Party in all
cases first against Units pledged or other collateral provided under Section 7.8
below. In the event that notwithstanding such requirement, for any reason an
indemnification claim is paid by any Landis Party Indemnitor under Section 7.2
hereof (whether by judgment, arbitration award, settlement or otherwise) to any
BPLP Indemnified Party then Transferee shall release Units or other collateral,
if applicable, from the pledge under Section 7.8 having a value equal to the
amount so paid.
7.4 INDEMNIFICATION BY THE TRANSFEREE. Subject to the limitations on the
indemnification obligations set forth in this Article 7, if the Closing occurs,
from and after the Closing Date, each of Boston Properties and BPLP agrees to
indemnify, defend and hold harmless the Landis Indemnified Parties from and
against all Losses which are incurred or suffered by any one or more of them (A)
based upon, arising out of, in connection with or by reason of the breach of any
of the representations or warranties of Transferee in this Agreement, (B) based
upon, arising out of, in connection with or by reason of any Assumed Liability,
(C) based upon, arising out of, in connection with or by reason of any claim for
personal liability brought by any holder of the Continuing Mortgage Debt against
any Landis Indemnified Party pursuant to guaranty or other provisions contained
in the documents evidencing such Continuing Mortgage Debt as of the Closing
Date, but only if and to the extent such liability arises and relates solely to
the period from and after the Closing Date or (D) based upon or arising out of
BPLP's operation or ownership of the Property Owners (or their successors and
assigns) or their respective assets after the Closing Date, but only if and to
the extent such liability arises and relates solely to the period from and after
the Closing Date (and further, only to the extent that the BPLP Indemnified
Parties are not entitled to indemnification for such matter by any Landis Party
under this Article 7).
7.5 LIMITATIONS ON CERTAIN INDEMNIFICATION OBLIGATIONS OF THE TRANSFEREE.
With respect to the indemnification obligations under Section 7.4, the following
provisions, if and to the extent applicable, shall apply:
(a) Time Limit. The indemnity obligations shall not apply to any Loss
based upon a breach of the Limited Survival Transferee Representations as to
which the Landis Indemnified Parties did not give a timely Notice of Claim in
accordance with Section 7.1(c).
(b) Third Party Recoveries. There shall be netted from any payment
for a Loss required under Section 7.4: (i) the amount of any indemnification
received by the indemnified party from an unrelated party with respect to such
Loss and (ii) the amount of any insurance proceeds or other cash receipts paid
to the indemnified party against any such Loss.
(c) Tax Consequences. Notwithstanding anything to the contrary
contained in this Agreement, the Landis Parties acknowledge that neither Boston
Properties nor BPLP nor any Affiliate of either of them shall assume any
responsibility for the tax consequences of the transaction contemplated by this
Agreement and the Related Agreements to any Landis Party except only to the
extent provided in any applicable Tax Protection Agreement.
7.6 INDEMNIFICATION PROCEDURE.
(a) Notice of Claim: In the event that any party shall incur or
suffer any Losses in respect of which indemnification may be sought by such
party pursuant to the provisions of this Article 7, the party seeking to be
indemnified hereunder (the "INDEMNITEE") shall promptly provide a Notice of
Claim to the party from whom indemnification is sought (the "INDEMNITOR")
<PAGE>
stating the nature and basis of such claim, and the estimated amount of the
claim, to the extent specified of otherwise known or reasonably estimated. In
the case of Losses arising by reason of any third party claim, the Notice of
Claim shall be given promptly after the filing of any such claim against the
Indemnitee or the determination by Indemnitee that a claim will ripen into a
claim for which indemnification will be sought, but the failure of the
Indemnitee to give the Notice of Claim within such time period shall not relieve
the Indemnitor of any liability that the Indemnitor may have to the Indemnitee
except to the extent that the Indemnitor is prejudiced thereby and then only to
the extent of such prejudice.
(b) Information: The Indemnitee shall provide to the Indemnitor on
request all information and documentation in the possession or under the control
of the Indemnitee reasonably necessary to support and verify any Losses which
the Indemnitee believes give rise to a claim for indemnification hereunder and
shall give the Indemnitor reasonable access to all books, records and personnel
in the possession or under the control of the Indemnitee which would have
bearing on such claim.
(c) Third Party Claims/Other: In the case of third party claims for
which indemnification is sought, the Indemnitor shall have the option (x) to
conduct any proceedings or negotiations in connection therewith, (y) to take all
other steps to settle or defend any such claim (provided that the Indemnitor
shall not, without the consent of the Indemnitee, settle any such claim on terms
which provide for (A) a criminal sanction or fine, (B) injunctive relief or (C)
monetary damages in excess of the amount that the Indemnitor is required to pay
hereunder) and (z) to employ counsel, which counsel shall be reasonably
acceptable to the Indemnitee, to contest any such claim or liability in the name
of the Indemnitee or otherwise. In any event, the Indemnitee shall be entitled
to participate at its own expense and by its own counsel in any proceedings
relating to any third party claim; provided, however, that if the defendants in
any such action or claim include both the Indemnitee and the Indemnitor and the
Indemnitee shall have reasonably concluded that there would be a conflict of
interest under DR 5-105 of the Code of Professional Responsibility or other
applicable federal or state law were the same counsel to represent the
Indemnitee and the Indemnitor, the Indemnitee shall be entitled to be
represented by separate counsel at the Indemnitor's expense (provided, however,
that Indemnitor shall only be obligated to pay for one (1) additional counsel
with respect to all Indemnitees). So long as the Indemnitor has assumed defense
of an action or claim, such action or claim shall not be settled without the
Indemnitor's consent, which shall not unreasonably be withheld. The Indemnitor
shall, within thirty (30) days of receipt of the Notice of Claim, notify the
Indemnitee of its intention to assume the defense of such claim. Until the
Indemnitee has received notice of the Indemnitor's election whether to defend
any claim, the Indemnitee shall take reasonable steps to defend (but may not
settle) such claim. If the Indemnitor shall decline to assume the defense of
any such claim, or shall fail to notify the Indemnitee within thirty (30) days
after receipt of the Notice of Claim of the Indemnitor's election to defend such
claim, the Indemnitee may defend against and/or settle such claim. The expenses
of all proceedings, contests or lawsuits in respect of the claims described in
the preceding sentence shall be borne by the Indemnitor but only if the
Indemnitor is responsible pursuant hereto to indemnify the Indemnitee in respect
of the third party claim and, if applicable, only as required within the
limitations set forth in Sections 7.2 or 7.4 as the case may be. Regardless of
which party shall assume the defense of the claim, the parties agree to
cooperate fully with one another in connection therewith.
(d) Payment of Losses: In the case of a claim for indemnification
made under Section 7.2 or 7.4, (i) if (and to the extent) the Indemnitor is
responsible pursuant hereto to indemnify the Indemnitee in respect of the third
party claim, then within five (5) Business Days after the
<PAGE>
occurrence of a final non-appealable determination with respect to such third
party claim (or sooner if required by such determination) and delivery of notice
from the Indemnitee to the Indemnitor thereof, the Indemnitor shall pay the
Indemnitee (or sooner if required by such determination), in immediately
available funds, the amount of any Losses (or such portion thereof as the
Indemnitor shall be responsible for pursuant to the provisions hereof) and (ii)
in the event that any Losses incurred by the Indemnitee do not involve payment
by the Indemnitee of a third party claim, then, if (and to the extent) the
Indemnitor is responsible pursuant hereto to indemnify the Indemnitee against
such Losses, the Indemnitor shall within five (5) Business Days after agreement
on the amount of Losses or the occurrence of a final non-appealable
determination of such amount pay to the Indemnitee and delivery of notice from
the Indemnitee to the Indemnitor thereof, in immediately available funds, the
amount of such Losses (or such portion thereof as the Indemnitor shall be
responsible for pursuant to the provisions hereof) such notices under clauses
(i) or (ii), a "DEMAND FOR PAYMENT."
7.7 COOPERATION. Each party indemnified under any indemnity contained in
this Agreement shall cooperate in all reasonable respects in the defense of the
third-party claim pursuant to which the indemnifying party is alleged to have
liability. BPLP agrees to cooperate in all reasonable respects in the defense
or prosecution of any claim which must be made by the applicable Property Owner
against AT&T in connection with the resolution of the dispute concerning the
AT&T Obligations, provided, however, that (i) all costs and expenses associated
with any such cooperation shall be paid, in advance, by the applicable Landis
Parties, (ii) BPLP shall have no obligation to join in any such action or claim,
or to take any action with respect to or under the AT&T lease at the Tower One
Property, and (iii) the Landis Parties shall indemnify BPLP from and against any
and all loss, cost and expense incurred in connection with such cooperation.
7.8 PLEDGE OF UNITS.
(a) In connection with the closing of the transaction contemplated by
this Agreement, upon the Closing, a portion of the Units issued to Alan B.
Landis and Linda Landis having a value equal to $15,000,000 as of the first
Closing Date hereunder shall be pledged pursuant to a Pledge and Security
Agreement in the form attached hereto as Exhibit 12 as security for the
indemnification obligations of the Landis Parties under this Article 7.
Notwithstanding anything to the contrary contained in this Agreement, in the
event that the 500 Series Properties are acquired by BPLP prior to the
satisfaction in full or other discharge of the AT&T Obligations, Alan B. Landis
and/or Linda Landis shall deliver, as additional collateral under such Pledge
and Security Agreement, additional Units having a then current market value
equal to the Limited Survival Indemnity Increase.
(b) Such pledge shall be released on the first anniversary of the
first Closing Date (or such later date as is provided in the Pledge and Security
Agreement) unless prior to any such first anniversary (i) a Notice of Claim has
been made in accordance with this Article 7 or (ii) the AT&T Obligations have
not been satisfied in full and a tenant estoppel from AT&T acknowledging such
satisfaction has been received by BPLP, in which event Transferee shall release
such portion of such pledged Units as it reasonably determines will not be
required to satisfy any such asserted claim or claims and the AT&T Obligations,
as applicable (and such other amounts as are set forth in the Pledge and
Security Agreement). Notwithstanding anything to the contrary contained
herein, it is agreed and acknowledged that pledged Units having a value of
$3,000,000 minus an amount equal to the amount of the AT&T Obligations which
have then been satisfied or otherwise discharged, as certified in writing to
BPLP by AT&T (or by any final court
<PAGE>
order from a court having jurisdiction, or by an arbitrator's binding
determination in accordance with the AT&T lease at the Tower One Property) (such
amount, the "AT&T PLEDGE AMOUNT") shall at all times be maintained under the
Pledge and Security Agreement with respect to the AT&T Obligations until such
AT&T Obligations are satisfied in full, as evidenced by a tenant estoppel from
AT&T acknowledging such satisfaction. Promptly upon final determination of any
such claim or claims (or portion thereof) Transferee shall release such portion
of such pledged Units as it reasonably determines are no longer required to
satisfy any then remaining claim or claims. At all times prior to the
termination of the pledge, if the then current market value of the Units shall
be in excess of $18,000,000 (plus the Limited Survival Indemnity Increase, if
applicable) or, if after such first anniversary the Units so pledged (if any)
have a then current market value in excess of 120% of the dollar amount of
claims then outstanding (as reasonably determined by Transferee) plus the AT&T
Pledge Amount (and such other amounts as are set forth in the Pledge and
Security Agreement), the Transferee shall promptly release Units from such
pledge having a then current market value in excess of $18,000,000 (plus the
Limited Survival Indemnity Increase, if applicable) or, if after such first
anniversary, the amount in excess of the sum of such 120% threshold plus the
AT&T Pledge Amount (and such other amounts as are set forth in the Pledge and
Security Agreement), as the case may be. All dividends or other distributions
payable on account of such pledged Units shall be currently payable to the
Landis Parties, notwithstanding the existence of the pledge or any outstanding
claim. Notwithstanding the foregoing, in the event that the 500 Series
Properties are acquired after the release of the Pledge and Security Agreement
or after a reduction in the amount of the collateral under the Pledge and
Security Agreement, a new Pledge and Security Agreement and/or additional
collateral (which may be Units issued in connection with such acquisition), as
applicable, shall be executed and/or delivered as provided in the Pledge and
Security Agreement.
(c) Notwithstanding the foregoing, upon the written request therefore
by Alan B. Landis given at any time prior to the date when any Notice of Claim
has been made, the Landis Parties may obtain the release of such Pledge and
Security Agreement upon the simultaneous delivery by the Landis Parties of
substitute collateral in the amount of $18,750,000 (plus the Limited Survival
Indemnity Increase, if applicable) and in form and substance reasonably
acceptable to Transferee, in lieu thereof (which substitute collateral may, if
reasonably acceptable to Transferee (taking into account the form of such
guaranty, the net worth and liquid assets of Alan B. Landis, and covenants
regarding maintenance of such net worth and liquidity) be in the form of an
unconditional guaranty from Alan B. Landis); such substitute collateral to be
subject to release and further substitution provisions as are reasonably
acceptable to Transferee and reasonably equivalent to the foregoing release and
substitution provisions relating to the pledged Units hereunder (including,
without limitation, the 120% threshold plus the AT&T Pledge Amount prior to the
release and reduction of any portion of the collateral).
ARTICLE 8 - INTENTIONALLY OMITTED
ARTICLE 9 - MISCELLANEOUS
9.1 BROKERS. Each party to this Agreement represents and warrants that
neither it nor any of its Affiliates has had any contact or dealings regarding
the Property, or any communication in connection with the subject matter of the
transaction contemplated by this Agreement, through any real estate broker or
other person who can claim a right to a commission or finder's fee in
<PAGE>
connection therewith (other than Eastdil Realty Company, L.L.C. and Bear,
Stearns & Co., Inc., who shall be paid by Property Owners on or prior to
Closing). In the event that any broker or finder claims a commission or finder's
fee based upon any contact, dealings or communication, the party through whom or
through whose Affiliate such broker or finder makes its claim shall be
responsible for the commission or fee and all costs and expenses (including,
without limitation, reasonable attorneys' fees and disbursements) incurred by
the other party and its Affiliates in defending against the same. The party
through whom or through whose Affiliate such broker or finder makes a claim
shall hold harmless, indemnify and defend the other party hereto and its
Affiliates and their respective, agents, employees, officers and directors, and
the Property from and against any and all Losses, arising out of, based on, or
incurred as a result of such claim. The provisions of this Section shall survive
the Closing or termination of the parties' obligations to complete the
transaction contemplated by this Agreement.
9.2 MARKETING. During the term of this Agreement, the Landis Parties
agree not to market the Property and/or the Assets for sale or entertain or
discuss any offer to purchase or acquire the Property and/or the Assets with any
Person other than Transferee and its Affiliates.
9.3 ENTIRE AGREEMENT; NO AMENDMENT. This Agreement (together with the
Related Agreements) represents the entire agreement among each of the parties
hereto with respect to the subject matter hereof. It is expressly understood
that no representations, warranties, guarantees or other statements with respect
to the subject matter hereof shall be valid or binding upon a party unless
expressly set forth in this Agreement. It is further understood that any prior
agreements or understandings between the parties with respect to the subject
matter hereof have merged in this Agreement, which alone fully expresses all
agreements of the parties hereto as to the subject matter hereof and supersedes
all such prior agreements and understandings. This Agreement may not be
amended, modified or otherwise altered except by a written agreement signed by
the party hereto against whom enforcement is sought. It is agreed that no
obligation under this Agreement which by its terms is to be performed or
continue to be performed after Closing and no provision of this Agreement which
is expressly to survive Closing shall merge upon Closing, but shall survive
Closing.
9.4 CERTAIN EXPENSES. Each party hereto will pay all of its own expenses
incurred in connection with this Agreement and the transaction contemplated
hereby (whether or not the Closing shall take place), including, without
limitation, all costs and expenses herein stated to be borne by such party and
all of its respective accounting, legal, investigatory and appraisal fees. The
Property Owners shall be responsible for paying (i) all amounts required to be
paid to the holder of the applicable Mortgage Debt in connection with the
assumption of the Mortgage Debt (except only as set forth in Section 1.9 above)
and (ii) all applicable State, County and City transfer taxes and/or transfer
fees due in connection with transfer of the Property and the Assets to BPLP in
accordance with this Agreement (provided that the Existing Partners shall not be
liable for any transfer taxes or transfer fees incurred in connection with any
subsequent transfer of each (or any) Developed Property which occurs after the
acquisition by BPLP of the Partnership Interests in the applicable Property
Owner or the fee interest in any such Developed Property in accordance with the
terms of this Agreement). Any escrow fees incurred in connection with the
transfer of title to the Property as contemplated by this Agreement shall be
split evenly between Transferee and the Property Owner. All other costs and
charges in connection with the conveyance of the Property contemplated by this
Agreement not otherwise provided for in this Agreement shall be allocated by
standard accounting and conveyancing practices in the relevant jurisdiction
where the Property is located. The cost of recording any deeds or other
documents of conveyance (but excluding any transfer taxes and/or transfer fees
or other similar taxes, fees
<PAGE>
or charges) shall be paid by Transferee. All sales taxes incurred in connection
with the sale of personal property hereunder shall be paid by the Transferee.
This provision shall survive Closing.
9.5 ARBITRATION. In the event that the parties have agreed to submit
disputes to arbitration in accordance with the specific requirements of this
Agreement, the following shall apply:
The arbitrators shall be (i) located in New York, New York, (ii)
independent and unaffiliated with the parties, (iii) shall be "experts" in
real estate development legal and business issues (such as well-known
retired judges, law professors or lawyers in prominent private practice
firms, etc.). Each of BPLP and Landis shall be entitled to select one (1)
of the members of the three (3) person arbitration panel; the third
arbitrator shall be selected by such two (2) arbitrators. Any such dispute
or controversy shall be settled exclusively by arbitration in New York, New
York, in accordance with the rules of the American Arbitration Association
then in effect. The award of arbitrators shall be final and binding and
non-appealable and may if necessary be enforced by any court of competent
jurisdiction. Notwithstanding the foregoing, either party may apply to any
court located in New York, New York or Boston, Massachusetts, with
competent jurisdiction, and seek interim provisional injunctive or
equitable relief until the arbitration award is rendered or the controversy
is otherwise resolved.
9.6 NOTICES. Any notice or communication required under or otherwise
delivered in connection with this Agreement to any of the parties hereto shall
be written and shall be delivered to such party at the following address:
If to any Landis Party:
The Landis Group
101 Carnegie Center
Princeton, New Jersey 08540
Attn: Alan B. Landis and
Mitchell Landis
Fax: (609) 452-1453
with copies to:
Fried, Frank, Harris, Shriver & Jacobson
1 New York Plaza
New York, New York 10004
Attn: Jonathan L. Mechanic, Esq.
Fax: (212) 859-8582
And
Motola Klar & Dinowitz, LLP
185 Madison Avenue
New York, New York 10016
Attn: Jeffrey D. Stanger, Esq.
Fax: (212) 683-5555
<PAGE>
If to Transferee to:
Boston Properties Limited Partnership
c/o Boston Properties, Inc.
8 Arlington Street
Boston, Massachusetts 02116
Attn: Douglas T. Linde, Vice President and
Frederick J. DeAngelis, Esq., General Counsel
Fax: (617) 536-4562
with a copy to:
Goodwin, Procter & Hoar LLP
599 Lexington Avenue
New York, New York 10022
Attn: Ross D. Gillman, Esq.
Fax: (617) 227-8591 and
(212) 355-3333
Each notice shall be in writing and shall be sent to the party to receive it,
postage prepaid by certified mail, return receipt requested, or by a nationally
recognized overnight courier service that provides tracking and proof of
receipt. Inclusion of fax numbers is for conveniences only, and notice by fax
shall neither be sufficient nor required. Notices shall be deemed delivered
upon receipt. Each party may change its address for notice by giving notice to
all other parties in the manner required under this Section 9.6.
9.7 NO ASSIGNMENT. Except as provided in this Section below, neither this
Agreement nor any of the rights or obligations hereunder may be assigned by any
party hereto without the prior written consent of the other parties. Transferee
may, without such consent, assign all or any portion of its rights and
obligations hereunder to an Affiliate provided such Affiliate assumes all
obligations and liabilities of Transferee hereunder effective as of the date of
any such assignment. An assignment by Transferee shall not release Transferee
from responsibility for performance of its obligations hereunder. Each Existing
Partner (other than Alan B. Landis) may, without such consent, transfer all or
any portion of its Partnership Interests to any other Landis Party provided such
Landis Party assumes all obligations and liabilities of such Existing Partner
with respect to such transferred Partnership Interests hereunder effective as of
the date of any such transfer. A transfer by an Existing Partner shall not
release such Existing Partner from responsibility for performance of its
obligations hereunder.
9.8 GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York (without regard, to the
fullest extent permitted by law, to any conflict of laws rules which might
result in the application of the laws of any other jurisdiction).
9.9 MULTIPLE COUNTERPARTS. This Agreement may be executed in multiple
counterparts. If so executed, all of such counterparts shall constitute but one
agreement, and, in proving this Agreement, it shall not be necessary to produce
or account for more than one such counterpart.
9.10 FURTHER ASSURANCES. From and after the date of this Agreement and
after the Closing, the parties hereto shall take such further actions and
execute and deliver such further
<PAGE>
documents and instruments as may be reasonably requested by the other party and
are necessary to provide to the respective parties hereto the benefits intended
to be afforded hereby.
9.11 MISCELLANEOUS. Whenever herein the singular number is used, the same
shall include the plural, and the plural shall include the singular where
appropriate, and words of any gender shall include the other gender when
appropriate. The headings of the Articles and the Sections contained in this
Agreement are for convenience only and shall not be taken into account in
determining the meaning of any provision of this Agreement. The words "hereof"
and "herein" refer to this entire Agreement and not merely the Section in which
such words appear. If the last day for performance of any obligation hereunder
is not a Business Day, then the deadline for such performance or the expiration
of the applicable period or date shall be extended to the next Business Day.
9.12 INVALID PROVISIONS. If any provision of this Agreement (except the
provisions relating to the Property Owners' and Assignors' obligations to
contribute or cause the contribution of the Property and the transfer of the
Assets or BPLP's obligation to issue the Units, the invalidity of which shall
cause this Agreement to be null and void) is held to be illegal, invalid or
unenforceable under present or future laws, such provision shall be fully
severable, this Agreement shall be construed and enforced as if such illegal,
invalid or unenforceable provision had never comprised a part of this Agreement,
and the remaining provisions of this Agreement shall remain in full force and
effect and shall not be affected by the illegal, invalid or unenforceable
provision or by its severance from this Agreement.
9.13 CONFIDENTIALITY; PUBLICITY. The Property Owners agree that this
Agreement shall not be recorded in any public real estate registry. Transferee
agrees to maintain in confidence through Closing, unless otherwise required by
applicable Law, reporting requirements or accounting or auditing standards to
disclose, all material and information received from the Property Owners or
otherwise regarding the Property. In the event the parties' obligations to
complete the transaction contemplated by this Agreement are terminated, upon
Property Owners' written request, Transferee shall promptly return to the
Property Owners, or destroy, all materials delivered to Transferee by the
Property Owners and all copies thereof. The Property Owners and Transferee
agree that, prior to the Closing Date, none of them, without the prior written
consent of the other, shall publicly or privately reveal any information
relating to the existence or terms and conditions of the transaction
contemplated hereby, except as permitted below in this Section or in any other
Confidentiality Agreement entered into by of the parties hereto. The parties
agree that nothing in this Section shall prevent a party from disclosing any
information otherwise deemed confidential under this Section (i) in connection
with its enforcement of its rights hereunder, or (ii) pursuant to any legal
requirement, including, without limitation, any Securities Laws, any reporting
requirement or any accounting or auditing standard or any court order. The
Property Owners and Transferee further agree that nothing in this Section shall
prevent any of them from disclosing any information otherwise deemed
confidential under this Section to its respective agents, employees, counsel and
other third parties to the extent reasonably necessary to perform due diligence
and complete the transaction contemplated hereby. Notwithstanding anything to
the contrary contained herein, all publicity concerning the transaction
contemplated by this Agreement shall be subject to the reasonable approval of
Transferee and the Property Owners. This provision shall survive termination of
this Agreement.
9.14 TIME OF ESSENCE. Time is of the essence with respect to this
Agreement.
9.15 RESERVED
<PAGE>
9.16 LANDIS PARTIES' REPRESENTATIVE. Notwithstanding anything to the
contrary contained in this Agreement, the Landis Parties hereby agree that Alan
B. Landis shall have the power and authority to act on behalf of the Landis
Parties, including without limitation to grant any consent, waiver or approval
or make any decision or take any action, including receiving or giving notices
hereunder or terminating this Agreement in accordance with Section 6.1 above, on
behalf of and as the duly authorized agent and representative of the Landis
Parties. The Existing Partners and the Assignors, acknowledging that the
Transferee will rely on such appointment, hereby irrevocably and unconditionally
appoint Alan B. Landis as their authorized agent and representative to act in
connection with and to settle and otherwise agree to any adjustment, proration
or other reduction in the aggregate consideration to be paid to each such
Existing Partner and Assignor in accordance with this Agreement.
[The remainder of this page has been left blank intentionally]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Contribution
Agreement as an instrument under seal as of the date and year first above
written.
TRANSFEREES:
BOSTON PROPERTIES, INC.
By: /s/ William J. Wedge
___________________________________
William J. Wedge
Senior Vice President
BOSTON PROPERTIES LIMITED PARTNERSHIP
By: Boston Properties, Inc.
By: /s/ William J. Wedge
___________________________________
William J. Wedge
Senior Vice President
Property Owners/Existing Partners/Assignors:
See Attached Signature Pages for
Property Owners, Existing Partners
and Assignors
<PAGE>
CONTRIBUTION AND CONVEYANCE AGREEMENT
CONCERNING THE CARNEGIE PORTFOLIO
EXISTING PARTNER SIGNATURE PAGE
Reference is made to that certain Contribution and Conveyance Agreement
Concerning the Carnegie Portfolio (the "CONTRIBUTION AGREEMENT") entered into as
of June 30, 1998 by and among Boston Properties, Inc., Boston Properties Limited
Partnership and the Property Owners, Existing Partners and Assignors named
therein, pursuant to which properties and assets (or indirect interests therein)
located in Mercer County, New Jersey and Middlesex County, New Jersey are to be
contributed and conveyed to Boston Properties Limited Partnership and/or its
subsidiaries. The undersigned, by its execution hereof, becomes a signatory to
and agrees to be bound by and under the Contribution Agreement as an "Existing
Partner" (therein defined) and as party thereto.
Signature Line for Individual:_______________________________________
Name (print):________________________________
State of Residence:__________________________
Signature Line for Entity:
Name of Entity (print):______________________
By:__________________________________________
Name:__________________________________
Title:_________________________________
<PAGE>
Exhibit 99.4
CONTRIBUTION AGREEMENT
by and between
The Landis Parties
and
Boston Properties Limited Partnership
Dated: June 30, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
DEFINITIONS.................................................................................................2
1.1 Contribution and Conveyance....................................................................13
1.2 Closing Date...................................................................................16
1.3 Allocation of Contribution Price and Form of Consideration.....................................17
1.4 Blue Sky Cooperation...........................................................................17
1.5 Initial Unit Distributions.....................................................................17
1.6 Repayment/Assumption of Mortgage Debt..........................................................17
ARTICLE 2 - CERTAIN COVENANTS AND CONDITIONS TO CLOSING....................................................18
2.1 Certain Covenants and Conditions to BPLP's Obligations. ......................................18
2.2 Conditions to the Obligations of the Landis Parties............................................25
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES.................................................................26
3.1 Representations and Warranties of the Landis Parties...........................................26
3.2 Representations and Warranties of BPLP. ......................................................34
ARTICLE 4 - DEVELOPMENT AND OPERATION OF THE PROPERTY......................................................38
4.1 Development and Operation......................................................................38
4.2 Insurance......................................................................................38
4.3 Leasing/Estoppels..............................................................................38
4.4 Operating Agreements...........................................................................39
4.5 Damage or Destruction; Condemnation............................................................39
4.6 Tests and Inspections..........................................................................41
4.7 Mortgage Debt..................................................................................41
4.8 Availability of Records........................................................................42
4.9 Title and Survey Defects.......................................................................43
4.10 Cooperation with BPLP..........................................................................43
4.11 Covenants of all Existing Partners.............................................................43
4.12 Tax Appeals....................................................................................44
ARTICLE 5 - CLOSING ADJUSTMENTS............................................................................44
5.1 Taxes, Assessments and Utilities...............................................................44
5.2 Rent...........................................................................................44
5.3 Payments on Permitted Exceptions...............................................................47
5.4 Construction Agreement Payments and Other Expenses.............................................47
5.5 Partners' Elections............................................................................48
5.6 Reimbursement for Deposits.....................................................................48
5.7 Post-Closing Audit.............................................................................48
ARTICLE 6 - DEFAULTS AND REMEDIES..........................................................................49
6.1 Defaults.......................................................................................49
6.2 Remedies of BPLP...............................................................................49
6.3 Option Payments................................................................................49
</TABLE>
<PAGE>
<TABLE>
<S> <C>
6.4 TERMINATION RIGHTS.............................................................................50
6.5 Post-Closing Remedies..........................................................................50
ARTICLE 7 - INDEMNIFICATION................................................................................50
7.1 Survival.......................................................................................50
7.3 Limitations on Certain Indemnification Obligations of the Landis Parties.......................52
7.4 Indemnification By BPLP........................................................................53
7.5 Limitations on Certain Indemnification Obligations of BPLP.....................................53
7.6 Indemnification Procedure......................................................................54
7.7 Cooperation in Defense.........................................................................55
7.8 Pledge of Units................................................................................55
ARTICLE 8 - INTENTIONALLY OMITTED..........................................................................56
ARTICLE 9 - MISCELLANEOUS..................................................................................56
9.1 Brokers........................................................................................56
9.2 Marketing......................................................................................56
9.3 Entire Agreement...............................................................................56
9.4 Certain Expenses...............................................................................57
9.5 Intentionally Omitted..........................................................................57
9.6 Notices........................................................................................57
9.7 No Assignment..................................................................................59
9.8 Governing Law..................................................................................59
9.9 Multiple Counterparts..........................................................................59
9.10 Further Assurances.............................................................................59
9.11 Miscellaneous..................................................................................60
9.12 Invalid Provisions.............................................................................60
9.13 Confidentiality; Publicity.....................................................................60
9.14 Time of Essence................................................................................61
9.15 Landis Parties' Representative.................................................................61
</TABLE>
SCHEDULE AND EXHIBITS
SCHEDULE A - Landis Parties (Including Schedule of Existing
Partners and Consideration Form and Amount)
SCHEDULE A-1 - List of Existing Partners and Partnership
Interests to be Conveyed by each Existing Partner
SCHEDULE B - Properties
SCHEDULE C - Assigned Value
SCHEDULE D - Assumed Liabilities and Excluded Liabilities
SCHEDULE E - Mortgage Debt
SCHEDULE E-1 - 510 NML Commitment Documents
SCHEDULE E-2 - 510 NML Loan Modifications
SCHEDULE F - NML Closing Costs
<PAGE>
SCHEDULE G - Personal Property
SCHEDULE H - Preliminary Reports//Schedule of Endorsements
SCHEDULE I - Real Property
SCHEDULE J - Schedule of Agreements
SCHEDULE K - UCC Search Jurisdictions
SCHEDULE L - Consents
SCHEDULE M - Schedule of Lease Commissions and Tenant
Construction/Allowances
SCHEDULE N - Schedule of Restrictions and Proffers
SCHEDULE O - Intentionally Omitted
SCHEDULE P - Schedule of Warranties
SCHEDULE Q - Schedule of Actions
SCHEDULE R - Disclosure Materials
EXHIBIT 1 - Form of Architect's and Engineer's Certificate
EXHIBIT 2 - Form of Estoppel
EXHIBIT 3 - Covance Lease (Building 206)
EXHIBIT 4 - Raytheon Lease (Building 510)
EXHIBIT 5 - Plans and Specifications (Building 206)
EXHIBIT 6 - Plans and Specifications (Building 510)
EXHIBIT 7 - Intentionally Omitted
EXHIBIT 8 - Form of Registration Rights Agreement
EXHIBIT 9 - Form of Assignment and Assumption of Partnership
Interests
EXHIBIT 10 - Form of Limited Partner Signature Page
EXHIBIT 11 - Forms of Title Affidavits
EXHIBIT 12 - Forms of Opinions
<PAGE>
CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT (this "AGREEMENT") is entered into as of this
30th day of June, 1998, by and between (A)(i) Alan B. Landis, (ii) 206
Associates Limited Partnership, a New Jersey limited partnership ("206
ASSOCIATES") and Carnegie 510 Associates, L.L.C., a Delaware limited liability
company ("510 ASSOCIATES") (each a "PROPERTY OWNER" and collectively, the
"PROPERTY OWNERS") and (iii) each of the 6 parties identified on Schedule A as
an Existing Partner (individually, an "EXISTING PARTNER" and collectively, the
"EXISTING PARTNERS", and together with Alan B. Landis and the Property Owners,
the "LANDIS PARTIES") on the one hand, and (B) Boston Properties Limited
Partnership, a Delaware limited partnership ("BPLP"), on the other hand.
WHEREAS, 206 Associates owns that certain property located in West Windsor,
New Jersey and commonly known as 206 Carnegie Center (the "206 PROPERTY"),
which property is currently under development and will, when completed, contain
an office building consisting of approximately 161,763 square feet of net
rentable office space and approximately 514 parking spaces, on approximately
acres of land; and 510 Associates owns that certain property located in West
Windsor, New Jersey and commonly known as 510 Carnegie Center (the "510
PROPERTY") which property is currently under development and will, when
completed, contain an office building consisting of approximately 234,000 square
feet of net rentable office space on approximately acres of land (the 206
Property and the 510 Property are sometimes referred to herein collectively as
the "PROPERTIES" and more particularly described on the attached Schedule B).
WHEREAS, the 206 Property is 100% pre-leased to Covance, Inc. ("COVANCE")
and the 510 Property is 100% pre-leased to Raytheon Engineers & Constructors,
Inc., whose obligations are guaranteed by Raytheon Company (collectively,
"RAYTHEON").
WHEREAS, each Existing Partner is a partner in one or more Property Owners,
as set forth opposite each Property Owner's name on Schedule A attached hereto
and as specified opposite each Existing Partner's name on Schedule A-1 attached
hereto, and the Existing Partners own, in the aggregate, all of the outstanding
partnership interests in the Property Owners (each such interest, a "PARTNERSHIP
INTEREST" and collectively, the "PARTNERSHIP INTERESTS");
WHEREAS, BPLP desires to issue certain Units (as defined herein)
representing limited partnership interests in BPLP to some or all of the
Existing Partners;
WHEREAS, each Existing Partner desires to transfer all of its right, title
and interest in its Partnership Interests to BPLP or its designee as a
contribution in exchange for such limited partnership interests or as a sale for
cash, and BPLP desires to acquire (either directly or through a designee) all of
the Partnership Interests in the Property Owners;
<PAGE>
NOW THEREFORE, in consideration of the mutual covenants and agreements,
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound hereby, do hereby agree as follows:
DEFINITIONS
The following capitalized terms as used in this Agreement have the meanings
assigned to them below. The terms set forth below do not constitute all defined
terms set forth in this Agreement. Such other defined terms shall have the
meanings assigned to them elsewhere in this Agreement.
"ACCOUNTANTS" has the meaning set forth in Section 4.8.
"ACCREDITED INVESTOR" shall mean a person who qualifies as an "accredited
investor" under Rule 501 of the Securities Act.
"ACTION" shall mean any claim, suit, litigation, labor dispute,
arbitration, investigation or other action or proceeding.
"AFFILIATE" shall mean any entity in which the person in question owns
directly or indirectly more than fifty percent (50%) of the voting stock or
similar interests issued by such entity or any entity controlling, controlled by
or under common control with the person in question.
"ARCHITECT'S AND ENGINEER'S CERTIFICATES" shall have the meaning set forth
in Section 2.1(a).
"ASSIGNED CONTRACTS" shall mean (i) those Terminable Contracts which are
identified on Schedule N as "Assigned Contracts," (ii) the Non-terminable
Contracts and (iii) the Warranties.
"ASSIGNED VALUE" shall mean, with respect to each Property, the portion of
the Contribution Price allocable to such Property as set forth on Schedule C
attached hereto.
"ASSOCIATION ESTOPPELS" shall have the meaning set forth in Section 2.1(l).
"ASSUMED LIABILITIES" shall mean those liabilities of any Property Owner
and/or any Existing Partner identified (and to the maximum extent reasonably
possible, quantified) as "Assumed Liabilities" on the attached Schedule D, which
liabilities are identified on such Schedule by Property Owner and Existing
Partner. Notwithstanding the foregoing, in no event shall Assumed Liabilities
include any liabilities which arise under the Northwestern Mutual Commitment and
which are Excluded Liabilities hereunder.
<PAGE>
"AUTHORITY" shall mean a governmental body or agency having or asserting
jurisdiction over BPLP, any Property Owner, any Existing Partner or any
Property.
"BOSTON PROPERTIES" shall mean Boston Properties, Inc., a Delaware
corporation and the sole general partner of BPLP.
"BPLP" has the meaning set forth in the Introductory Paragraph of this
Agreement.
"BPLP'S KNOWLEDGE" or words of similar import, shall mean the actual (and
not constructive or imputed) knowledge of Edward H. Linde, Douglas T. Linde,
William J. Wedge and/or Frederick J. DeAngelis, without any separate obligation
on their part to make any independent investigation of the matters being
represented, warranted or certified.
"BPLP INDEMNIFIED PARTIES" shall mean BPLP, Boston Properties and their
respective officers, directors, employees, agents, consultants, representatives,
subsidiaries, Affiliates, stockholders, partners and attorneys.
"BUSINESS DAY" means any weekday that is not an official holiday in the
Commonwealth of Massachusetts or the State of New Jersey.
"CLOSING" shall have the meaning set forth in Section 1.2.
"CLOSING DATE" shall mean, individually and collectively, the 206 Closing
Date and the 510 Closing Date.
"CLOSING PRICE" shall mean, on each applicable date of determination, the
last reported sale price regular way of Boston Properties Common Shares on the
New York Stock Exchange Composite tape.
"CLOSING TRIGGER EVENTS" shall mean, with respect to each Property, as
applicable, receipt by BPLP of (i) a final Certificate of Occupancy with respect
to such Property, (ii) the Architect's and Engineer's Certificates, (iii)
evidence satisfactory to BPLP of unconditional occupancy and full rent
commencement (without right of set-off or reduction) of such Property by
Covance, with respect to the 206 Property, and by Raytheon, with respect to the
510 Property, (iv) an Estoppel from each of Covance and/or Raytheon, as
applicable, in the form attached hereto as Exhibit 2, without changes or
additional notations (other than as may be reasonably acceptable to BPLP,
provided that such changes or additional notations do not affect a change in the
substance of the applicable Estoppel) and (v) with respect to the 510 Property
only, closing of the 510 NML Loan pursuant to the terms of this Agreement and
the 510 NML Commitment, and subsequent assignment to and assumption by BPLP of
the 510 NML Loan pursuant to the 510 NML Loan Assumption Documents, provided,
however, that for purposes of determining whether or not the Refundable Option
Payment has become a Nonrefundable Option Payment, as provided in Section
<PAGE>
6.3 below, "Closing Trigger Events" shall mean, with respect to each Property,
as applicable, receipt by BPLP of (A) a temporary Certificate of Occupancy with
respect to such Property, (B) the Architect's and Engineer's Certificates (with
such changes as are reasonably necessary or appropriate to reflect the temporary
certificate of occupancy as opposed to a final certificate of occupancy and such
other changes as are reasonable and customary to reflect the then current
practices of engineers and/or architects, as applicable, in central New Jersey),
(C) evidence satisfactory to BPLP of unconditional full rent commencement
(without right of set-off or reduction) of such Property by Covance, with
respect to the 206 Property, and by Raytheon, with respect to the 510 Property,
(D) an Estoppel from each of Covance and/or Raytheon, as applicable, in the form
attached hereto as Exhibit 2, without changes or additional notations (other
than (x) as may be reasonably acceptable to BPLP, provided that such changes or
additional notations do not affect a change in the substance of the applicable
Estoppel and (y) such changes as are reasonably nencessary or appropriate to
reflect the temporary certificate of occupancy as opposed to a final certificate
of occupancy, including without limitation, an identification of remaining
landlord work under the applicable lease) and (E) with respect to the 510
Property only, closing of the 510 NML Loan pursuant to the terms of this
Agreement and the 510 NML Commitment, and subsequent assignment to and
assumption by BPLP of the 510 NML Loan pursuant to the 510 NML Loan Assumption
Documents provided, however, that if the NML Loan fails to close for any reason,
or such 510 NML Loan matures and is repaid in connection therewith, such 510 NML
Loan (or the 510 NML Commitment, as applicable) may be refinanced (or replaced,
as applicable) by a comparable loan, with a comparable lender on then prevailing
market terms and conditions, and on terms and conditions otherwise substantially
similar to the 510 NML Loan (the "Replacement Financing") provided, however,
that (X) any such Replacement Financing shall be reasonably satisfactory to BPLP
and (Y) BPLP shall have no obligation to assume or otherwise acquire such 510
Property subject to such Replacement Financing.
"CODE" shall mean the Internal Revenue Code of 1986, as in effect from time
to time, and applicable rules and regulations thereunder. Any reference herein
to a specific section or sections of the Code shall be deemed to include a
reference to any corresponding provision of future law.
"COMMISSION" shall mean the Securities and Exchange Commission.
"COMMON SHARES" shall mean the shares of the common stock of Boston
Properties issuable upon exchange of the Units.
"COMMON UNITS" shall mean those certain partnership units in BPLP which are
designated in the Limited Partnership Agreement of BPLP as "Common Units."
"CONDEMNED PROPERTY" shall mean any Property which is the subject of a
Major Condemnation.
"CONSENTS" has the meaning set forth in Section 2.1(c).
<PAGE>
"CONSTRUCTION BUDGETS" has the meaning set forth in Section 3.1(t).
"CONTRACTS" shall mean, subject to the terms of this definition below, all
contracts, undertakings, commitments, agreements, obligations, guarantees and
warranties (i) relating to the Property and/or (ii) to which any Property Owner
is a party or by which any Property Owner or any Property is bound, other than
Contracts not involving liabilities exceeding $10,000 per year individually or
$25,000 per year in the aggregate (such contracts, individually and
collectively, "IMMATERIAL CONTRACTS"). "Contracts" includes, without
limitation, management contracts, construction contracts, maintenance and
service contracts, parking contracts, employment contracts,
equipment leases and brokerage and leasing agreements, but excludes the Leases
(as defined below) and Immaterial Contracts.
"CONTRIBUTION AGREEMENT" shall mean that certain Contribution and
Conveyance Agreement dated as of June 30, 1998 by and between the Landis Parties
(as defined therein) and BPLP and Boston Properties, Inc.
"CONTRIBUTION PRICE" shall mean the 510 Property Contribution Price or the
206 Property Contribution Price, as the context may require.
"COVANCE" has the meaning set forth in the Recitals.
"COVANCE LEASE" has the meaning set forth in Section 3.1(c).
"COVANCE-STUDLEY LEASE COMMISSION" shall mean, an amount equal to
$242,644.50, pursuant to that certain Commercial Broker's Commission Agreement
dated as of September 8, 1997 between Julien J. Studley, Inc. and 206
Associates, and that certain letter agreement dated September 5, 1997 from
Julien J. Studley, Inc. to and accepted by 206 Associates on September 15, 1997,
setting forth the agreement and obligation of 206 Associates to pay the amount
of $242,644.50 to Covance in satisfaction in full of lease commissions due to
Julien J. Studley, Inc. in connection with the Covance Lease, and the
reimbursement of Covance of amounts advanced by Covance in connection therewith.
"COVANCE TENANT IMPROVEMENT ALLOWANCE" shall mean a tenant improvement
allowance not to exceed $1,488,219.60 in accordance with the Covance Lease.
"DAMAGED PROPERTY" shall mean any Property which is the subject of a Major
Casualty.
"ESTOPPEL" shall have the meaning set forth in Section 2.1(j).
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as in effect
from time to time, and applicable rules and regulations thereunder. Any
reference herein to specific section
<PAGE>
or sections of the Exchange Act shall be deemed to include a reference to any
corresponding provision of future law.
"EXCLUDED LIABILITIES" shall mean those liabilities of any Property Owner
and/or any Existing Partner which are not Assumed Liabilities, including without
limitation, those liabilities identified as "Excluded Liabilities" on the
attached Schedule D. Notwithstanding anything to the contrary contained in this
Agreement, Excluded Liabilities shall in all events include all costs and
expenses of any kind or nature incurred in connection with the 510 NML
Commitment and the 510 NML Loan which relate to the period ending immediately
after the closing of the loan contemplated by such 510 NML Commitment (except
only NML Closing Costs), including, without limitation, any and all costs,
losses or damages (including all such amounts which are or may be payable to NML
or any other lender under the 510 NML Commitment) of any kind or nature which
may be incurred by BPLP in the event of a breach under the 510 NML Commitment,
or in the event the loan contemplated thereby does not close, for any reason,
other than a willful breach by BPLP.
"EXISTING PARTNERS" has the meaning set forth in the Introductory
Paragraphs hereto.
"FEE PROPERTIES" has the meaning set forth in Section 1.1(d)(iii).
"FINAL FISCAL YEAR" has the meaning set forth in Section 4.8(g).
"510 ASSOCIATES" has the meaning set forth in the Introductory Paragraphs
hereto.
"510 CLOSING DATE" has the meaning set forth in Section 1.2.
"510 CONSTRUCTION FINANCING" shall mean the existing construction loan
mortgage financing secured by the 510 Property from Summit Bank in the maximum
principal amount of $26,250,000, and having an outstanding principal amount of
$14,732,683 as of the date of this Agreement, as more particularly described in
Schedule E hereto.
"510 NML COMMITMENT" shall mean that certain Application for Mortgage Loan
for Carnegie 510 Associates, LLC dated October 22, 1997, (as modified by that
certain letter agreement dated June 30, 1998), from The Northwestern Mutual Life
Insurance Company to provide mortgage financing to the 510 Associates, to be
secured by the 510 Property, in the maximum principal amount of $28,500,000.
All documents relating to the 510 NML Commitment as of the date of this
Agreement are attached hereto as Schedule E-1.
"510 NML LOAN" shall mean that certain mortgage loan to be made by NML
pursuant to the 510 NML Commitment and the terms of this Agreement, to be
secured by the 510 Property.
"510 NML LOAN ASSUMPTION DOCUMENTS" shall have the meaning set forth in
Section 2.1(d).
<PAGE>
"510 PROPERTY" has the meaning set forth in the Recitals.
"510 PROPERTY CONTRIBUTION PRICE" shall mean $48,000,000, subject to
adjustment, increase or decrease pursuant to Section 1.1(c).
"510 PROPERTY OPTION PAYMENT" has the meaning set forth in Section 6.3.
"GPH" shall mean Goodwin, Procter & Hoar LLP.
"HAZARDOUS SUBSTANCES" and "HAZARDOUS WASTES" have the meanings set forth
in Section 3.1(i).
"INDEMNITEE" has the meaning set forth in Section 7.3(a).
"INDEMNITOR" has the meaning set forth in Section 7.3(a).
"IDENTIFIED BREACHES" has the meaning set forth in Section 2.1(e).
"INTANGIBLES" shall mean (i) to the extent transferable, all right, title
and interest, if any, of the Landis Parties, or any of them, to use the name
"Carnegie Center" or any other trademark, trade names or symbols, if any, under
which either of the Properties (or any part thereof) is to be operated, (ii) to
the extent transferable, any Landis Parties' rights in, to and under the
Assigned Contracts, (iii) any Property Owner's rights in, to and under the
Leases, all guaranties of the Leases, all security deposits under the Leases
(unless BPLP elects instead to have them credited to BPLP), all other security,
if any, under the Leases and any rent prepaid under the Leases (with respect to
periods after the Closing), and (iv) to the extent transferable, any Landis
Parties' rights in, to and under all Licenses and any warranties and guaranties
relating to the ownership, use, operation or development of the Properties (or
any part thereof) including, without limitation, all Warranties.
"INVESTMENT COMPANY ACT" shall mean the Investment Company Act of 1940, as
in effect from time to time, and applicable rules and regulations thereunder.
Any reference herein to a specific section or sections of the Investment Company
Act shall be deemed to include a reference to any corresponding provision of
future law.
"LAND" shall have the meaning set forth in the definition of Real Property.
"LANDIS INDEMNIFIED PARTIES" shall mean Alan B. Landis, each Existing
Partner and each Property Owner (to the extent its Property is transferred to
BPLP) and their respective officers, directors, employees, agents, consultants,
representatives, subsidiaries, Affiliates, stockholders, partners, members and
attorneys.
<PAGE>
"LANDIS PARTIES" has the meaning set forth in the Introductory Paragraph
hereto.
"LANDIS PARTIES' KNOWLEDGE" shall mean the actual (and not constructive or
imputed) knowledge of Alan B. Landis, Mitchell Landis and/or Gary O. Turndorf,
without any separate obligation on their part to make any independent
investigation of the matters being represented, warranted or certified.
"LAWS" shall mean any law, rule, regulation, order or decree of any
federal, state, local or foreign government.
"LEASES" has the meaning set forth in Section 3.1(c).
"LIABILITIES" shall mean liabilities, indebtedness, obligations,
commitments, expenses, claims or guarantees of any nature (whether absolute,
accrued, contingent or otherwise).
"LICENSES" has the meaning set forth in Section 3.1(d).
"LIMITED PARTNERSHIP AGREEMENT" shall mean the Second Amended and Restated
Agreement of Limited Partnership of Boston Properties Limited Partnership, as
the same has been amended through the applicable date of determination.
"LIMITED SURVIVAL REPRESENTATIONS" has the meaning set forth in Section
7.1(a).
"LIMITED SURVIVAL BPLP REPRESENTATIONS" has the meaning set forth in
Section 7.1(b).
"LOSS" or "LOSSES" shall mean any and all claims, losses, damages, costs,
liabilities and expenses, including, without limitation, reasonable attorney's
fees and disbursements, but excluding in all events, lost profits, consequential
of expectation damages.
"MAJOR CASUALTY" has the meaning set forth in Section 4.5.
"MAJOR CONDEMNATION" has the meaning set forth in Section 4.5.
"MATERIAL ADVERSE EFFECT" shall mean a material adverse effect on the
financial condition, business, operations, assets or liabilities, including
without limitation, the Partnership Interests, of any Property, any Property
Owner or any Existing Partner, individually or in the aggregate (as the context
may require).
"MINIMUM UNIT VALUE" has the meaning set forth in Section 1.1(d)(v).
"MORTGAGE DEBT" shall mean the 206 Construction Financing and the 510 NML
Loan, individually or collectively, as the context requires.
<PAGE>
"MORTGAGE DEBT PREPAYMENT DOCUMENTS" shall have the meaning set forth in
Section 2.1(d).
"NONREFUNDABLE OPTION PAYMENT" shall have the meaning set forth in Section
6.3.
"NON-TERMINABLE CONTRACT" shall mean those Contracts which are not
terminable by a Landis Party upon less than thirty-one (31) days notice without
cost or penalty.
"NML" shall mean The Northwestern Mutual Life Insurance Company.
"NML CLOSING COSTS" shall mean (i) reasonable attorneys fees and expenses
incurred on behalf of the borrower (in the aggregate amount not to exceed
$25,000.00 minus all amounts actually paid by BPLP, from time to time, with
respect to such attorneys fees and expenses as NML Closing Costs hereunder
and/or pursuant to the Properties Under Development Agreement), (ii) reasonable
attorneys fees and expenses incurred by the lender; in each case in documenting
and closing the 510 NML Loan, and (iii) other third party out-of pocket costs
and expenses of the kind identified on Schedule F incurred in connection with
documenting and closing such loan; provided however, that the Landis Parties
shall propose an anticipated budget (the "NML CLOSING COST BUDGET"), specifying
by item and amount, all costs which are expected to be included as NML Closing
Costs, and the Landis Parties shall use reasonable efforts to keep all such
costs, fees and expenses as low as possible, and in line with other similar
mortgage loan transactions, to the extent practicable.
"NML MORTGAGE CREDIT" shall mean an amount equal to $1,237,000.00.
"NOTICE OF CLAIM" has the meaning provided in Section 7.1(c).
"PARTNERSHIP AGREEMENT" has the meaning set forth in Section 3.2(c).
"PARTNERSHIP CLAIM" shall mean any actual or threatened claim or other
action of any Person (including without limitation any direct or indirect owners
of any Partnership Interest and/or Existing Partner) (i) that any Landis Party
and/or any direct or indirect owner of any Landis Party has (or may have)
breached its fiduciary obligations or other obligations (including without
limitation obligations arising under any applicable organizational documents or
other contractual agreements or obligations of full and fair disclosure) and
whether arising out of the transactions contemplated by this Agreement or
otherwise, or (ii) that (A) the consideration payable to any Landis Party and/or
any direct or indirect owner of any Landis Party in connection with the
transactions contemplated by this Agreement and/or (B) the allocation of any
consideration paid by BPLP under this Agreement or related agreements is
contrary to agreements or improper, or (iii) with respect to or under the terms
of any organizational documents of any Landis Party and/or any direct or
indirect owner of any Landis Party.
<PAGE>
"PARTNERSHIP INTERESTS" has the meaning set forth in the Introductory
Paragraphs hereto.
"PERMITTED EXCEPTIONS" means, with respect to either Property, those
exceptions to title to such Property and those encumbrances on Personal Property
as are identified in the applicable Preliminary Report (other than, with respect
to the 206 Property, the documents evidencing the 206 Mortgage Debt, which 206
Mortgage Debt is to be repaid in full and discharged in connection with the 206
Property Closing) in the form in which it may have been modified to exist as of
the date of this Agreement and those matters first appearing on the applicable
Preliminary Report following the date of this Agreement as are approved in
writing by BPLP (including without limitation, with respect to the 510 Property,
the documents evidencing the 510 NML Loan which are entered into after the date
of this Agreement in accordance with the terms of the 510 NML Commitment and
this Agreement, but excluding the documents evidencing the 510 Construction
Financing).
"Person" OR "person" shall mean any individual, corporation, partnership,
joint venture, association, joint-stock company, business trust, limited
liability company, trust, unincorporated organization or government or a
political subdivision, agency or instrumentality thereof or other entity or
organization of any kind.
"PERSONAL PROPERTY" shall mean all of either property Owner's right, title
and interest in and to any personal property, including Intangibles, if any, in
and to: (i) all signs, supplies, maintenance equipment, appliances, security
systems, tools, decorations, furniture, fixtures, furnishings, equipment,
machinery, mechanical systems, landscaping and other tangible and intangible
personal property located at and/or currently used or to be used upon completion
of development, in connection with the construction, leasing, management,
operations, maintenance and repair of the Properties, including without
limitation, the items listed on Schedule G attached hereto; (ii) all site plans,
surveys, plans and specifications, marketing materials and floor plans relating
to the Properties; (iii) all warranties and guarantees relating to the
Properties; and (iv) all permits, licenses, certificates of occupancy, and other
governmental approvals, including without limitation Licenses, which relate to
the Properties.
"PLANS AND SPECIFICATIONS" has the meaning set forth in Section 3.1(s).
"POST-CLOSING AUDIT" has the meaning set forth in Section 5.5.
"PREFERRED UNITS" shall mean preferred limited partnership units in BPLP
which, generally, will upon issuance bear a cumulative, preferred, quarterly
distribution right of 7.25% per annum and will be convertible into Common Units,
all as more particularly set forth in the Certificate of Designations of Series
One Preferred Units attached to the Contribution Agreement as Exhibit 2 thereto.
<PAGE>
"PREFERRED UNIT VALUE" has the meaning set forth in Section 1.1(d)(v).
"PRELIMINARY REPORT" shall mean a final form, current extended coverage
commitment to issue a title policy with respect to each Property, including
endorsements thereto, in form and substance as contemplated in this Agreement
and attached hereto as Schedule H, issued by the Title Company.
"PROPERTY" or "PROPERTIES" shall mean, individually and collectively, the
206 Property and the 510 Property, including all Real Property, Personal
Property and Intangibles in connection therewith. All references in this
Agreement to the Property shall be deemed to refer to all or any portion of the
Property.
"PROPERTY OWNER" and "PROPERTY OWNERS" have the meaning set forth in the
Introductory Paragraph of this Agreement.
"RAYTHEON" has the meaning set forth in the Recitals.
"RAYTHEON LEASE" has the meaning set forth in Section 3.1(c).
"REAL PROPERTY" shall mean (i) the land more particularly described in
Schedule I hereto (the "LAND"), together with all rights, Licenses, privileges,
and easements appurtenant thereto, including, without limitation, all
development rights and land use entitlements benefitting the Land, (ii) Property
Owner's right, title and interest in and to building permits and other
governmental licenses, permits and certificates, utilities commitments, air
rights, water, water rights, riparian rights and water stock relating to the
Land, used in connection with the beneficial use and enjoyment of the Land,
(iii) all of the Property Owner's right, title and interest in and to all roads,
easements, rights of way, strips or gores, alleys and other appurtenances
adjoining or servicing the Land (collectively, the "APPURTENANCES") and all
improvements and fixtures located on the Land, including, without limitation,
the building(s) currently being constructed on the Land, and (iv) all apparatus,
equipment and appliances owned by the Property Owners and to be used in
connection with the operation or occupancy of the Land, such improvements or the
Appurtenances, including, without limitation, heating and air conditioning
systems and facilities used to provide any utility, refrigeration, ventilation,
garbage disposal, recreation or other services on the Land or the Appurtenances
or for the improvements, and all parking (collectively, the "IMPROVEMENTS").
All references in this Agreement to the Real Property shall be deemed to refer
to all or any portion of the Real Property.
"REFUNDABLE OPTION PAYMENT" shall have the meaning set forth in Section
6.3.
"REGISTRATION RIGHTS AGREEMENT" has the meaning set forth in Section
2.1(l).
"RELATED AGREEMENTS" means, collectively, all documents to be executed and
delivered
<PAGE>
pursuant to this Agreement, including, without limitation, the Contribution
Agreement, the Registration Rights Agreement and all other documents referred to
in Section 2.1.
"REPRESENTATION LETTER" means a letter delivered by an Existing Partner
that has elected to receive Units hereunder and in the form of the letter
attached to the Contribution Agreement as Exhibit 4.
"SCHEDULE OF ACTIONS" has the meaning set forth in Section 3.1(r).
"SCHEDULE OF AGREEMENTS" has the meaning set forth in Section 3.1(f).
"SCHEDULE OF PARTNERS" has the meaning set forth in Section 1.3.
"SECURITIES ACT" shall mean the Securities Act of 1933, as in effect from
time to time, and applicable rules and regulations thereunder. Any reference
herein to a specific section or sections of the Securities Act shall be deemed
to include a reference to any corresponding provision of future law.
"SECURITIES LAWS" shall mean the Securities Act, the Exchange Act, the
Investment Company Act or any applicable state or other federal securities Law
or any rule or regulation promulgated thereunder, including without limitation,
any so-called roll-up laws, rules or regulations.
"SPECIFIED REPRESENTATIONS" has the meaning set forth in Section 7.1(a).
"SPECIFIED BPLP REPRESENTATIONS" has the meaning set forth in Section
7.1(b).
"TERMINABLE CONTRACTS" shall mean those Contracts which are terminable by
the Landis Parties upon not more than thirty (30) days notice without cost or
penalty.
"TITLE COMPANY" shall mean First American Title Insurance Company or such
other national title insurance company as is reasonably satisfactory to BPLP and
the Landis Parties.
"206 ASSOCIATES" has the meaning set forth in the Introductory Paragraph of
this Agreement.
"206 CLOSING DATE" has the meaning set forth in Section 1.2.
"206 CONSTRUCTION FINANCING" shall mean the existing construction loan
mortgage financing secured by the 206 Property from Summit Bank in the maximum
principal amount of $21,000,000, and having an outstanding principal amount of
$7,463,781 as of the date of this Agreement, as more particularly described in
Schedule E hereto.
<PAGE>
"206 PROPERTY" has the meaning set forth in the Recitals.
"206 PROPERTY CONTRIBUTION PRICE" shall mean $27,000,000, subject to
adjustment, increase or decrease pursuant to Section 1.1(b).
"206 PROPERTY OPTION PAYMENT" has the meaning set forth in Section 6.3.
"UNIT" means a unit of limited partnership interest in BPLP (whether a
Common Unit or a Preferred Unit).
"UNIT HOLDER" means any Existing Partner which receives or may receive
Units hereunder.
"UNIT VALUE" has the meaning set forth in Section 1.1(d)(v).
"WARRANTIES" shall mean all presently effective warranties or guaranties
and all warranties or guaranties which will be effective or are anticipated to
be effective upon completion of the construction and development of the
Properties in accordance with the Plans and Specifications, including in any
such event, all construction and building component labor and/or materials
warranties and guarantees from contractors and/or sub-contractors inuring to
either Property Owner's benefit from any contractors, subcontractors, suppliers,
servicemen or materialmen in connection with the Property, including, without
limitation, the construction, renovation, repairs or alterations of any
Improvements, any Personal Property or any tenant improvements.
"Willful Breach" shall mean with respect to the 206 Property or the 510
Property, as the case may be, an intentional breach by the applicable Property
Owners (or their affiliates) of any of their respective obligations under
Sections 4.1, 4.3, 4.4, 4.7 or the first sentence of Section 4.11, with respect
to the 206 Property or the 510 Property, as applicable, provided however, that
if the applicable Property Owner or Alan B. Landis promptly undertakes to cure
each such breach using commercially reasonable efforts and thereafter
continuously and diligently pursues such cure to completion, no such Willful
Breach shall be deemed to have occurred.
ARTICLE 1 - CONTRIBUTION AND CONVEYANCE OF PROPERTY
1.1 CONTRIBUTION AND CONVEYANCE.
(a) Agreement of Existing Partners to Convey Partnership Interests
in the Property Owners. Each Existing Partner agrees, subject to the terms and
conditions of this Agreement, to assign, transfer and otherwise convey on the
applicable Closing Date all of its Partnership Interests in the Property Owners
to BPLP pursuant to an Assignment and Assumption of Partnership Interest(s) in
the form attached hereto as Exhibit 9. Each Existing Partner has
<PAGE>
elected to receive for each such Partnership Interest either cash, Common Units
or Preferred Units, as set forth opposite such Existing Partner's name on
Schedule A. In the case of any Existing Partner that has elected to receive
Common Units or Preferred Units, such Existing Partner has previously delivered
a Representation Letter to BPLP.
(b) 206 Property Contribution Price. At the Closing of the 206
Property, subject to the terms and conditions of this Agreement, BPLP shall
accept conveyance of the Partnership Interests, and shall (x) pay by wire
transfer of immediately available funds the cash consideration payable to each
Existing Partner pursuant to instructions to be provided by each such Existing
Partner prior to the Closing, and (y) issue the Units to the Existing Partners
receiving Units hereunder, such Units to be issued free and clear of any claims,
liens, voting agreements, options, charges or encumbrances or restrictions of
any kind, nature or description (other than as may be created pursuant to this
Agreement or by any Landis Party). The amount of cash or Units paid or issued
pursuant to this Section 1.1(b) shall equal the 206 Property Contribution Price,
subject to adjustment, increase or reduction as more particularly set forth in
this Agreement (including without limitation, Section 1.1(d) below).
Notwithstanding anything to the contrary contained in this Agreement, BPLP shall
receive a credit against and in reduction of the portion of the 206 Property
Contribution Price which is payable to the Property Owner on the 206 Closing
Date in an amount equal to (i) the Covance-Studley Lease Commission (except only
to the extent that Covance certifies to BPLP on or before the 206 Closing Date
that such amount has been paid in full by 206 Associates) and (ii) the Covance
Tenant Improvement Allowance (except only to the extent of such allowance that
Covance certifies to BPLP on or before the 206 Closing Date has been paid by 206
Associates). Upon receipt of such credit, BPLP shall agree to pay such Covance-
Studley Lease Commission and the Covance Tenant Improvement Allowance up to the
amount of such credit with respect to each item. The 206 Property Contribution
Price shall be reduced or increased, as applicable, by the amount of any
prorations described in Article 5, and other closing adjustments or costs which
are the responsibility of or to be credited to the Property Owner and/or BPLP,
as applicable. Property Owner acknowledges receipt of the 206 Property Option
Payment on the date of this Agreement, which amount shall not, however, be
credited in reduction of the portion of the 206 Property Purchase Price which is
payable to Property Owner on the 206 Closing Date.
(c) 510 Property Contribution Price. At the Closing of the 510
Property, subject to the terms and conditions of this Agreement, BPLP shall
accept conveyance of the Partnership Interests, and shall (x) pay by wire
transfer of immediately available funds the cash consideration payable to each
Existing Partner pursuant to instructions to be provided by each such Existing
Partner prior to the Closing, and (y) issue the Units to the Existing Partners
receiving Units hereunder, such Units to be issued free and clear of any claims,
liens, voting agreements, options, charges or encumbrances or restrictions of
any kind, nature or description (other than as may be created pursuant to this
Agreement or by any Landis Party). The amount of cash or Units paid or issued
pursuant to this Section 1.1(c) shall equal the 510 Property Contribution Price,
subject to adjustment, increase or reduction as more particularly set forth in
this Agreement
<PAGE>
(including without limitation, Section 1.1(d) below). The 510 Property
Contribution Price shall be reduced or increased, as applicable, by the amount
of any prorations described in Article 5 and other closing adjustments or costs
which are the responsibility of or to be credited to the Property Owner and/or
BPLP, as applicable. In addition, at the 510 Closing Date, BPLP shall receive a
credit against and in reduction of the portion of the 510 Property Contribution
Price then payable, in an amount equal to the NML Mortgage Credit. Property
Owner acknowledges receipt of the 510 Property Option Payment on the date of
this Agreement, which amount shall not, however, be credited in reduction of the
portion of the 510 Property Purchase Price which is payable to Property Owner on
the 510 Closing Date.
(d) Certain Provisions Regarding the Consideration to be Delivered
for the Partnership Interests.
(i) Value of Units. For purposes of determining the value of
a Unit to be delivered at each Closing in accordance with the terms of this
Agreement, all Units (Common and Preferred) shall have a value of $34.00 per
Unit.
(ii) Assigned Values. Each Property has an Assigned Value as
set forth on Schedule C. The aggregate amount of the cash and Units that each
Existing Partner in a particular Property Owner has elected to receive, as set
forth on Schedule A, is equal to the Assigned Value for that Property Owner's
Property. Each Existing Partner acknowledges and agrees that the Assigned Value
for each Property is subject to adjustment, proration and other limitations to
the extent provided in this Agreement (for example, pursuant to clause (iv)
below, on account of outstanding Mortgage Debt). In the event of any reduction
in the aggregate consideration to be paid for all of the Partnership Interests
in a Property Owner, such reduction shall be applied pro rata to all of the
Existing Partners of such Property Owners based on the aggregate value of cash
and Units that each has elected to receive prior to such reduction as set forth
on Schedule A, by reducing the cash and Units (pro rata as between cash and
Units) to be received by such Existing Partner at Closing, unless the Landis
Parties elect for such reduction to be applied to the Existing Partners of such
Property Owners otherwise by giving written notice to BPLP not less than five
(5) business days prior to the Closing.
(iii) Failure to Convey Partnership Interests. The parties
hereto have agreed that it is a material term of this Agreement that the
Properties be acquired by BPLP through the conveyance and assignment to BPLP by
each Existing Partner of 100% of each Existing Partner's Partnership Interests
in each applicable Property Owner such that 100% of the partnership interests in
each applicable Property Owner is conveyed to BPLP, rather than through the
Property Owners' transfer of their respective Property to BPLP. In the event any
Existing Partner fails to or is unable to transfer 100% of such Existing
Partner's Partnership Interests to BPLP pursuant to Section 1.1, such failure
shall be a default under this Agreement, giving rise to BPLP's right to seek
specific performance against such Existing Partner with respect to such
conveyance. Notwithstanding anything to the contrary contained in this
Agreement, in the event
<PAGE>
any Existing Partner fails to or is unable to transfer 100% of such Existing
Partner's Partnership Interests to BPLP pursuant to Section 1.1, but subject to
the satisfaction of all other conditions precedent under this Agreement, the
applicable Property Owner in which such Existing Partner owns the Partnership
Interests which are not then being transferred, shall convey the affected
Property directly to BPLP (any such Property, a "FEE PROPERTY") for the
applicable portion of the Contribution Price allocable thereto. In connection
with the conveyance of a Fee Property to BPLP, the applicable Property Owner
shall deliver a Representation Letter and an amount equal to all real estate
transfer taxes and other similar amounts payable with respect to such direct
transfer shall be deducted from the portion of the Contribution Price allocable
to such property to be delivered to the applicable Property Owner (and/or its
constituent Existing Partners) at Closing and BPLP shall assume the Assumed
Liabilities which are attributable to such Fee Property.
(iv) Certain Adjustments to the Contribution Price for the
Partnership Interests. The applicable portion of the Contribution Price payable
to the Existing Partners for the Partnership Interests of a Property Owner (or
to a Property Owner in the event of a direct conveyance pursuant to Section
1.1(d)(iii) above) shall be reduced by (A) all unpaid principal of and accrued
and unpaid interest on the Mortgage Debt of such Property Owner as of the
Closing Date and (B) in the case of the Partnership Interests in 510 Associates,
the NML Mortgage Credit. In addition, and notwithstanding anything to the
contrary contained herein, in the event that at the 206 Closing Date, a
temporary certificate of occupancy has been issued, but a final certificate of
occupancy has not yet been issued, the 206 Property Contribution Price shall be
reduced by any amount equal to the remaining costs to 206 Associates (and
specifically excluding costs which will be paid for by Covance) necessary to
obtain a final certificate of occupancy with respect to such 206 Property, as
such costs are reasonably agreed to by Alan B. Landis and BPLP. In addition, and
notwithstanding anything to the contrary contained herein, in the event that at
the 510 Closing Date, a temporary certificate of occupancy has been issued, but
a final certificate of occupancy has not yet been issued, the 510 Property
Contribution Price shall be reduced by any amount equal to the remaining costs
to 510 Associates (and specifically excluding costs which will be paid for by
Raytheon) necessary to obtain a final certificate of occupancy with respect to
such 510 Property, as such costs are reasonably agreed to by Alan B. Landis and
BPLP.
(v) Minimum Dollar Value of Units Delivered. Notwithstanding
anything to the contrary contained in this Agreement, in no event shall the
aggregate value, based on the assumed value of $34.00 per Unit (such aggregate
value, the "UNIT VALUE"), of the Common Units and Preferred Units to be
delivered at the Closing to the Existing Partners, if applicable, who have
elected pursuant to Schedule A to receive Units be less than the excess of (x)
(i) One Hundred Million Dollars ($100,000,000) or (ii) Eighty Five Million
Dollars ($85,000,000) in the event the Prohibited Fee Properties (as defined in
the Contribution Agreement) have not then been conveyed to BPLP, over (y) the
aggregate value of the Units which the Landis Parties (for such purpose only, as
defined in the Contribution Agreement) received in consideration of the
Developed Properties and the Assets pursuant to the Contribution Agreement,
<PAGE>
(the "MINIMUM UNIT VALUE"), and to the extent that, due to prorations or
reductions at the Closing, the Unit Value will be less than the Minimum Unit
Value, then the parties hereto agree to negotiate in good faith a reallocation
of the form of aggregate Contribution Price so that the portion of the
Contribution Price which will be paid in cash will be reduced and the portion
which will be paid in Units will be increased.
Notwithstanding anything to the contrary contained in this Agreement, in
no event shall the aggregate value (such aggregate value, the "PREFERRED UNIT
VALUE"), of the Preferred Units to be delivered at the Closing to the Existing
Partners who have elected pursuant to Schedule A to receive Preferred Units be
less than the excess of (x) (i) Forty Million Dollars ($40,000,000) or (ii)
Thirty Four Million Dollars ($34,000,000) in the event the Prohibited Fee
Properties have not then been conveyed to BPLP, over (y) the aggregate value of
the Preferred Units which the Landis Parties (for such purpose only, as defined
in the Contribution Agreement) received in consideration of the Developed
Properties and the Assets pursuant to the Contribution Agreement (the "MINIMUM
PREFERRED UNIT VALUE"), and if, due to prorations or reductions at the Closing,
the Preferred Unit Value would be less than the Minimum Preferred Unit Value,
then the parties hereto agree to negotiate in good faith a reallocation of the
form of aggregate Contribution Price so that either (A) no Preferred Units will
be issued and in lieu thereof either cash or Common Units will be issued (but
the condition set forth in the preceding paragraph regarding the Minimum Unit
Value must be satisfied after such adjustment) or (B) the portion of the
Contribution Price which will be paid in Preferred Units will be increased to
the Minimum Preferred Unit Value and the portion of the Contribution Price which
will be paid in cash or Common Units will be reduced.
1.2 CLOSING DATE. Unless this Agreement is sooner terminated pursuant to
its terms, if the Closing Trigger Events occur with respect to the 206 Property
or the 510 Property (as the case may be), then either party may, by notice to
the other party, request that a Closing occur with respect to such Property
within fifteen (15) days after delivery of such notice and the closing (each, a
"CLOSING") of the acquisition of each of the 206 Property (the "206 CLOSING
DATE") and the 510 Property (the "510 CLOSING DATE"), respectively, shall take
place on the date designated in such notice by BPLP or Alan B. Landis, as the
case may be, which date shall be not more than thirty (30) days after
satisfaction (or waiver by such party in writing) of the Closing Trigger Events
with respect to such Property. Each Closing shall occur in the offices of BPLP
or its counsel in New York, New York on the applicable Closing Date, unless
otherwise agreed in writing by Alan B. Landis and BPLP. Each Closing shall
occur pursuant to closing arrangements reasonably satisfactory to Alan B. Landis
and BPLP. This Agreement shall terminate automatically if on July 1, 2010 the
Closing Trigger Events shall not have occurred.
1.3 ALLOCATION OF CONTRIBUTION PRICE AND FORM OF CONSIDERATION. Attached
hereto as Schedule A-1 is a schedule (the "SCHEDULE OF PARTNERS") containing (i)
an identification of all Existing Partners, (ii) an allocation of Assigned Value
to the Existing Partners of each Property Owner and (iii) an identification of
which Existing Partners have elected to receive cash, Common Units or Preferred
Units upon the conveyance of their respective Partnership Interests. Neither
<PAGE>
BPLP nor Boston Properties shall have any liability or responsibility in any way
with respect to the preparation of the Schedule of Partners or the determination
of the allocations described above and on such Schedule, and BPLP and Boston
Properties shall be entitled to rely on the Schedule of Partners in full and
without inquiry. Each Existing Partner who has elected to receive Units shall
receive such Units (subject to adjustment and limitation as set forth herein)
and shall be admitted as a limited partner in BPLP (if and to the extent not
already a limited partner of BPLP) in accordance with the terms of the Limited
Partnership Agreement upon Closing only if such Existing Partner (i) agrees to
be bound by and comply with the terms of the Limited Partnership Agreement by
executing and delivering to BPLP at Closing a Limited Partner Signature Page in
the form attached hereto as Exhibit 10, (ii) delivers an executed Representation
Letter and (iii) executes the Registration Rights Agreement.
1.4 BLUE SKY COOPERATION. The Property Owners and each Existing Partner
who is to receive Units shall cooperate and do all acts as may be reasonably
required or requested by BPLP to enable BPLP to fulfill any requirement under
state Securities Law to qualify the Units for issuance to such Existing
Partners.
1.5 INITIAL UNIT DISTRIBUTIONS. The Landis Parties acknowledge and agree
that the first quarterly distribution paid by BPLP on any Units which may be
issued pursuant to this Agreement (i) shall be with respect to the quarter in
which such Units are issued and (ii) shall be prorated based on the number of
days during such quarter for which such Units are outstanding.
1.6 REPAYMENT/ASSUMPTION OF MORTGAGE DEBT. All payments of principal and
interest, and all other amounts of any kind or nature, on the Mortgage Debt and
the 510 Construction Financing shall be the sole cost and expense of the Landis
Parties and the applicable Existing Partners. At the 206 Closing, BPLP, at the
Landis Parties sole cost and expense, shall cause the 206 Construction Loan to
be prepaid in full, and shall cause the holder of the 206 Construction Loan to
deliver the Mortgage Debt Prepayment Documents with respect thereto in
accordance with Section 2.1(d) below. At the 510 Closing, 510 Associates, at
its sole cost and expense, shall cause the holder of the 510 NML Loan to execute
and deliver 510 NML Loan Assumption Documents in accordance with Section 2.1(d)
below. In connection with the making of the 510 NML Loan, 510 Associates shall,
at 510 Associates sole cost and expense, cause the 510 Construction Financing to
be repaid in full and all documents evidencing such 510 Construction Financing
to be released and, to the extent applicable, otherwise discharged of record.
The Landis Parties shall bear all costs and expenses of any kind or nature
incurred in connection with the 510 NML Commitment and the 510 NML Loan which
relate to the period ending immediately after the closing of the loan
contemplated by such 510 NML Commitment and this Agreement (except only the NML
Closing Costs), which loan is anticipated to be entered into after the date
hereof, including, without limitation, any and all costs, losses or damages
(including all such amounts which are or may be payable to NML or any other
lender under the 510 NML Commitment) of any kind or nature which may be incurred
by the Landis Parties or BPLP in the event of a breach under the 510 NML
<PAGE>
Commitment, or in the event the loan contemplated thereby does not close, for
any reason, other than a willful breach by BPLP.
ARTICLE 2 - CERTAIN COVENANTS AND CONDITIONS TO CLOSING
2.1 CERTAIN COVENANTS AND CONDITIONS TO BPLP'S OBLIGATIONS. The
obligation of BPLP to consummate the transactions contemplated hereunder shall
be subject to the satisfaction or waiver by BPLP of each of the conditions set
forth below on or before the Closing Date. BPLP may waive any condition
specified in this Section 2.1 if it executes a writing so stating at or prior to
the applicable Closing with respect to each applicable Property or if it elects
to close with respect to such Property, notwithstanding non-fulfillment.
Notwithstanding anything to the contrary contained herein, all conditions to
closing and other matters under this Agreement which relate solely to either the
206 Property or the 510 Property shall not be a precondition to the closing of
the other Property.
(a) Closing Trigger Events; Architect's and Engineer's Certificate.
(i) The Closing Trigger Events shall have occurred (x) with
respect to the 206 Property, on or before July 1, 2010 or such later date as
BPLP may agree to in writing in its sole discretion and (y) with respect to the
510 Property, on or before July 1, 2010 or such later date as BPLP may agree to
in writing in its sole discretion.
(ii) BPLP shall have received a certification ("ARCHITECT'S AND
ENGINEER'S CERTIFICATE"), in the form attached hereto as Exhibit 1, from one (1)
or more of the architects and engineers responsible for overseeing the
development and construction on each Property (excluding, however, all portions
of such construction and development which are undertaken by tenants pursuant to
leases). Notwithstanding the foregoing, in the event that the applicable
Property Owner is unable, despite its good faith efforts (but without the
obligation to spend amounts in excess of de minimis amounts) to obtain
Architect's and Engineer's Certificates which include numbered items 3, 5, 6, 7
and/or 8, the applicable Property Owner shall so notify BPLP, in writing, not
less than twenty (20) days prior to the applicable Closing. In such event, the
substantive matters contained in such numbered items which are not so certified
shall become preconditions to BPLP's obligation to close hereunder, as if fully
set forth in this Section 2.1.
(b) Title/Survey. On the applicable Closing Date, the Title Company
shall irrevocably commit, subject only to the payment by BPLP of all applicable
title insurance premiums related thereto, to issue its title insurance policy in
form customary in New Jersey and containing the endorsements and affirmative
insurance listed on Schedule H or as identified on the Preliminary Report, and
subject only to the exceptions and other matters contained in the Preliminary
Report or otherwise agreed to by BPLP. The applicable Landis Parties, on or
before the Closing Date, shall have executed and delivered to the Title Company
their certifications and
<PAGE>
affidavits which are attached hereto as Exhibit 11. On or before the applicable
Closing Date, the applicable Property Owner shall provide to BPLP an "as-built"
survey of the applicable Real Property, made in accordance with standards
reasonably agreed to by the applicable Property Owner and BPLP, by one or more
surveyors reasonably satisfactory to BPLP, and certified to BPLP, the Title
Company and any lenders requested by BPLP.
(c) Consents. It shall be a condition to BPLP's obligation to close
that, on or before the date of this Agreement, Property Owners and the Existing
Partners shall have obtained and delivered to BPLP all authorizations, consents,
approvals and waivers from all partners and all material authorizations,
consents, approvals and waivers from all other Persons (as approved by BPLP
pursuant to the terms of this Section, collectively, the "CONSENTS", provided
that Consents shall not include any such authorization, consent or approval
required to be obtained by BPLP or Boston Properties), including without
limitation Consents from each of the Existing Partners and all applicable
Authorities, necessary (i) to enable each Property Owner to convey the
Properties to BPLP directly or through the sale or other conveyance of 100% of
the Partnership Interests in each Property Owner, and to enable the Existing
Partners to convey their interests in Property Owners to BPLP, all in accordance
with the terms of this Agreement and all other agreements by which the Property
Owners or the Properties are bound or to which the Property Owners or the
Properties are subject, (ii) to enable the Property Owners and the Existing
Partners to perform all of their respective obligations under this Agreement and
the Related Agreements, including without limitation, the right to enter into
and perform their respective obligations under the Contribution Agreement, and
(iii) to permit issuance of the Units and the payment of cash, if applicable, to
the Existing Partners in accordance with all applicable Securities Laws and the
organizational documents of each Property Owner and each Existing Partner (and
to approve any necessary amendments to such organizational documents in order to
enable the contemplated transactions to occur). The form and substance of the
Consents shall be reasonably satisfactory to BPLP, and duly authorized, executed
and delivered copies thereof, (x) from each Existing Partner in form and
substance reasonably satisfactory to BPLP, shall have been delivered to BPLP on
or before the date of this Agreement and (y) from each other Person in form and
substance reasonably satisfactory to BPLP, shall have been delivered to BPLP on
or before the applicable Closing Date it being agreed by the parties that such
Consents may be in substantially the same form as utilized in connection with
the conveyance of the Developed Properties pursuant to the Contribution
Agreement.
(d) Mortgage Lender's Pay-Off Letters/Assumption Documents - 510 NML
Loan. With respect to the 206 Property, 206 Associates shall have obtained and
delivered to BPLP on or before the 206 Closing Date a binding pay-off letter
from the holder of the 206 Construction Financing, permitting a full payoff of
such 206 Construction Financing held by it on or after the 206 Closing Date for
a sum certain, together with any other documents required to evidence the
release or discharge of such indebtedness (as reasonably approved by BPLP
pursuant to the terms of this Section below, collectively, the "MORTGAGE DEBT
PREPAYMENT DOCUMENTS"), which documents shall be approved if they are
substantially similar to the Mortgage Debt
<PAGE>
Prepayment Documents delivered on the date of this Agreement pursuant to the
Contribution Agreement. With respect to the 510 Property, the 510 Construction
Financing encumbering such 510 Property shall be refinanced on or before the 510
Closing Date in accordance with and pursuant to the 510 NML Commitment. The loan
documents evidencing such refinanced mortgage loan shall be substantially
similar to the mortgage documents (the "NML COMPARISON DOCUMENTS") evidencing
the loan from NML to an affiliate of BPLP secured by certain real property
located in Reston, Virginia, as such documents exist on the date of this
Agreement, with only such changes as are necessary to reflect the terms and
conditions of the 510 NML Commitment which differ from the terms of such loan
(such changes, in both form and substance, to be reasonably acceptable to BPLP)
and such other changes as may be reasonably acceptable to both 510 Associates
and BPLP (including, without limitation, such changes as may be necessary in
order to reflect New Jersey specific remedies customarily included in mortgage
loan documents comparable to the NML Comparison Documents). The loan documents
evidencing the refinanced mortgage loan from NML pursuant to the 510 NML
Commitment shall be subject to the prior written approval of BPLP, such approval
not to be unreasonably withheld or delayed; and deemed granted if such loan
documents are not disapproved by BPLP within five (5) Business Days after
receipt by BPLP of the loan documents in the form to be executed by all parties
thereto (and subsequently thereafter executed in such form. Notwithstanding the
foregoing, BPLP shall not disapprove any such loan documents based solely upon
provisions which are included in the NML Comparison Documents or in the loan
documents evidencing the mortgage loan from NML executed and delivered pursuant
to and in accordance with the 500 Series NML Commitment (as defined in the
Contribution Agreement) and the Contribution Agreement (but only if and to the
extent that the 500 Series Properties have then been acquired by BPLP), to the
extent that such matters are not required to be modified in accordance with this
provision and are otherwise consistent with the 510 NML Commitment. Each
Property Owner shall obtain and deliver to BPLP on or before the applicable
Closing Date, and BPLP shall cooperate to the extent reasonably necessary in
connection therewith, all applicable approvals, consents, acknowledgments,
agreements and authorizations from the holder of the 510 NML Loan in order (i)
to permit the 510 NML Loan to be assumed by BPLP in connection with the Closing
of the 510 Property or (ii) to permit the 510 Property to be acquired by BPLP
subject to the 510 NML Loan (all documents in connection therewith, the "510 NML
LOAN ASSUMPTION DOCUMENTS"). The parties hereto acknowledge and agree that the
documents evidencing the 510 NML Loan may, if reasonably agreed to by BPLP and
510 Associates, be entered into directly between NML and BPLP. The 510 NML Loan
Assumption Documents shall contain such amendments or modifications to the
existing documents evidencing the 510 NML Loan as BPLP may reasonably request
with such modifications and as the lenders may reasonably request and as be
reasonably satisfactory to BPLP , which documents shall be approved if they are
substantially similar to the Mortgage Debt Assumption Documents delivered on the
date of this Agreement pursuant to the Contribution Agreement. It shall be a
condition to BPLP's obligations under this Agreement that the Mortgage Debt
Prepayment Documents and the 510 NML Loan Assumption Documents shall be in form
and substance reasonably satisfactory to BPLP.
<PAGE>
(e) Accuracy of Representations and Warranties. The representations
and warranties of Alan B. Landis and the Existing Partners contained herein
shall be true and correct as and to the extent made as of the date of this
Agreement and as of the applicable Closing Date (except with respect to any
representations or warranties made as of a specific date, which representations
and warranties shall continue to be true and correct as of such specified date
and except further for any breaches of representations and warranties identified
on the Confirmation Certificate), and a certificate to such effect shall have
been executed and delivered by Alan B. Landis and the Existing Partners as of
the applicable Closing Date (such certificate, the "CONFIRMATION CERTIFICATE");
provided, however, that the Confirmation Certificate may identify breaches of or
other changes in the representations and warranties ("IDENTIFIED BREACHES"), and
shall include a description of each such breach in reasonable detail, together
with such person's good faith estimate of the Losses attributable to or expected
to be incurred in connection with such breaches and the basis for the amount of
the Losses attributable to or expected to be incurred in connection with each
such breach.
(f) Opinion of Counsel. The Property Owners shall have delivered to
BPLP an opinion of Motola Klar & Dinowitz, LLP in form attached hereto as
Exhibit 12, dated as of each applicable Closing Date.
(g) Absence of Litigation. No Action shall be pending or overtly
(whether orally or in writing) threatened against the Property Owners, the
Existing Partners, BPLP, Boston Properties, or the Property, which (i) questions
the validity or legality of the transaction contemplated under this Agreement or
the Related Agreements or (ii) would have a Material Adverse Effect. At each
Closing, the applicable Property Owner shall certify as to the foregoing items
(i) and (ii) to the extent they (A) regard such Property Owner, the Existing
Partners or the Property being conveyed by such Property Owner or (B) regard
BPLP, which certification pursuant to item (B) shall be to the Landis Parties'
Knowledge and shall relate solely to Actions which are pending or overtly
(whether orally or in writing) threatened by the Existing Partners and/or the
direct or indirect owners of the Existing Partners.
(h) Contracts. Neither Property Owner shall have entered into any
Contract with respect to the Property (other than Assigned Contracts) that will
survive the Closing Date for such Property and be binding on BPLP, except as
disclosed on the Schedule of Agreements attached hereto as Schedule J.
(i) Estoppel Certificates. BPLP shall have received an estoppel
certificate from each of Covance with respect to the 206 Property) and Raytheon
(with respect to the 510 Property) under the Leases (each, an "ESTOPPEL") in the
form attached hereto as Exhibit 2, or as otherwise agreed upon by BPLP and the
Landis Parties, without changes or additional notations (other than as may be
reasonably acceptable to BPLP, provided that such changes or additional
notations do not effect a change in the substance of the applicable Estoppel),
dated not earlier than thirty (30)
<PAGE>
days prior to the Closing Date, confirming the accuracy of the information set
forth on such Estoppel.
(j) Delivery of Sellers' Documents. At each Closing, the Property
Owner shall deliver to BPLP the following with respect to the applicable
Property, and in the case of documents, such deliveries shall be in form and
substance reasonably satisfactory to BPLP and Property Owner:
(i) Intentionally Omitted;
(ii) Intentionally Omitted;
(iii) Original Documents and Files. To the extent not previously
delivered to BPLP and in Property Owner's possession or under its control,
originals of any of the Assigned Contracts, Leases, Plans and Specifications,
Construction Budgets and Licenses, or if the originals are not in Property
Owner's possession or control, certified copies thereof, or a certificate of the
general partner of the applicable Property Owner which certifies that originals
or copies of all such documents are located at the offices of the Property
Owners;
(iv) Tax Bills. Copies of the most currently available tax
bills for the Property and materials relating to any pending real estate tax
assessment protests and proceedings;
(v) Management and Service Agreement(s). Evidence of
termination or assignment, as applicable and at BPLP's election, of all
management and other service agreement(s) in effect with respect to the
Properties, as of the applicable Closing Date;
(vi) Payoff of 206 Construction Financing/Assumption of 510 NML
Loan. As applicable, the 510 NML Loan Assumption Documents with respect to the
510 Property and the Mortgage Debt Prepayment Documents with respect to the 206
Property;
(vii) Assignment of Warranties, Etc. An assignment of all
Warranties and Plans and Specifications, if applicable;
(viii) Fee Property and/or Partnership Interest Conveyancing
Documents. If and to the extent applicable (x) in connection with each Fee
Property, a deed for such Fee Property, a bill of sale, an assignment and
assumption of Leases, an assignment of Intangibles and an assignment and
assumption of the Assigned Contracts and the Assumed Liabilities and/or (y) an
Assignment and Assumption of Partnership Interests in form attached hereto as
Exhibit 9 and other conveyancing documents, in form and substance reasonably
satisfactory to BPLP, as are necessary or appropriate to transfer the applicable
Property to BPLP free and clear of all liens, claims and encumbrances, except
for the Permitted Exceptions (collectively, the "CONVEYANCING DOCUMENTS"); the
Property Owners and the Existing Partners shall have also delivered true and
<PAGE>
complete copies of all organizational documents relating to the Property Owners
and the Existing Partners, certified as true and complete by a general partner
or executive officer of each such Person.
(ix) Entity Transfer Certificates. For each Property Owner and
each Existing Partner, an entity transfer certification confirming that such
Property Owner and Existing Partners are not "foreign persons" as defined in
Section 1445(f)(3) of the Code, provided, that if such certificate is not
delivered, BPLP shall make such withholding as is required by law;
(x) Intentionally Omitted;
(xi) UCC Searches. UCC searches from the jurisdictions listed on
Schedule K hereto showing any and all filings against Property Owners and
Existing Partners, if any, as debtor or lessor. There shall exist no filings
evidencing a lien, encumbrance, claim, security interest or other encumbrance in
the relevant real property and other UCC filing offices for the applicable State
(or county or other locality where the relevant property is located or where the
Existing Partners are domiciled) against Property Owners that pertain to the
Property, the Partnership Interests or the Property Owners as of the applicable
Closing Date, except only with respect to the 510 NML Loan; and
(xii) Other. Such other documents, instruments, consents,
authorizations or approvals as may be reasonably requested by BPLP, its counsel
or the Title Company, and that may be reasonably necessary to consummate the
transaction that is the subject of this Agreement and the Related Agreements and
to otherwise effect the agreements of the parties hereto, including, without
limitation, as required under this Section except that the Landis Parties shall
have no obligation to deliver any document, instrument, certificate, consent,
authorization or approval which is not otherwise contemplated under this
Agreement or the Related Agreements which increase the liabilities of the Landis
Parties hereunder or under the Related Agreements other than de minimis amounts.
(k) Proceedings. All corporate and other proceedings regarding the
Landis Parties in connection with the transactions contemplated by this
Agreement and any other agreement, instrument or document required to be
executed and delivered by the Landis Parties hereunder, and all documents
incident thereto, shall be in form and substance reasonably satisfactory to BPLP
and its counsel, and BPLP shall have received all such originals or certified or
other copies of such documents as BPLP or its counsel may reasonably request.
(l) Delivery of the Unit Holder Documents. At Closing, each of the
Unit Holders who is to receive Units shall have delivered to BPLP (i) a
signature page to the Limited Partnership Agreement and an executed copy of the
Registration Rights Agreement and Lock-Up Agreement in the form attached hereto
as Exhibit 8 (the "REGISTRATION RIGHTS AGREEMENT"), each dated as of the Closing
Date, duly executed and delivered and (ii) to the extent not previously
delivered to BPLP or dated more than thirty (30) days prior to Closing, a
Representation Letter.
<PAGE>
(m) Association Estoppels. The applicable Property Owners shall have
delivered to BPLP estoppel certificates from all parties under any associations,
if any, as shall be identified by BPLP in the exercise of its reasonable
business judgment affecting the Property, dated no earlier than fifteen (15)
days prior to the Closing Date, each in form and substance reasonably
satisfactory to BPLP (each, an "ASSOCIATION ESTOPPEL"), which shall be
satisfactory if and to the extent such estoppels are in substantially similar
form to those delivered to BPLP in connection with the acquisition of the
Developed Properties pursuant to the Contribution Agreement.
(n) Absence of Material Adverse Change. Since the date of this
Agreement there shall not have been any material adverse change in or to the
condition, financial or otherwise, earnings, business affairs, properties or
results of operations of Covance or Raytheon that would have a Material Adverse
Effect on the Properties, individually or taken as a whole.
(o) Material Adverse Effect. BPLP shall have the right to terminate
this Agreement in its entirety if, as of either Closing Date, there exist
breaches of representations and warranties of the applicable Landis Parties
(whether or not such breaches are Identified Breaches) which are reasonably
expected to result in Losses which have a Material Adverse Effect on the
Partnership Interests or either of the Properties, in each case taken as a
whole.
(p) Ownership. A fully completed Schedule A-1 shall have been
delivered to BPLP, such Schedule A-1 shall have been certified by each Existing
Partner as being true and correct in all respects with respect to such Existing
Partner, and Transferee shall have received copies of documentation that enable
it to reasonably verify the information set forth in such Schedule A-1.
2.2 CONDITIONS TO THE OBLIGATIONS OF THE LANDIS PARTIES. The obligation
of the Landis Parties to consummate the transactions contemplated hereunder
shall be subject to the satisfaction or waiver by the Landis Parties of each of
the conditions set forth below on or before the Closing Date. The Landis
Parties agree that Alan B. Landis may waive (on behalf of all Landis Parties)
any condition specified in this Section 2.2 if he executes a writing so stating
at or prior to Closing or such condition will be waived if the Landis Parties
elect to close notwithstanding non-fulfillment.
(a) Accuracy of Representations and Warranties. All representations
and warranties of BPLP hereunder shall be true and correct as and to the extent
made as of the date of this Agreement and as of the applicable Closing Date
(except with respect to any representations or warranties made as of a specific
date, which representations and warranties shall continue to be true and correct
as of such specified date), and a certificate to such effect shall be executed
and delivered by BPLP as of the Closing Date.
(b) Execution of Limited Partnership Agreement. BPLP shall have
executed and delivered to the Unit Holders an executed copy of an amendment to
the Partnership Agreement
<PAGE>
admitting such persons as limited partners thereto with the applicable number of
Common Units or Preferred Units together with a certificate of Boston
Properties, as general partner of BPLP, certifying the issuance of the
applicable number and type of Units to such persons and further certifying that
the Certificate of Designations of Series One Preferred Units shall then be
effective.
(c) Registration Rights Agreement. BPLP shall have executed and
delivered to the Unit Holders the Registration Rights Agreement.
(d) Opinion of Counsel. BPLP shall have delivered to the Landis
Parties an opinion of GPH, dated as of the Closing Date, in form attached hereto
as Exhibit 12.
(e) Mortgage Debt. BPLP shall have executed and delivered the 510
NML Loan Assumption Documents.
(f) Delivery of Consideration. BPLP shall have paid the consideration
(including, if applicable, the repayment of the 206 Construction Financing) for
the contribution, conveyance, assignment or other transfer of the Partnership
Interests (or the fee interest, as applicable) in accordance with Sections
1.1(b) and 1.1(c) of this Agreement.
(g) Proceedings. All corporate and other proceedings regarding BPLP
in connection with the transactions contemplated by this Agreement and any other
agreement, instrument or document required to be executed and delivered by BPLP
hereunder and all documents incident thereto, shall be in form and substance
reasonably satisfactory to the Landis Parties and its counsel, and the Landis
Parties shall have received all such originals or certified or other copies of
such documents as the Landis Parties or its counsel may reasonably request.
(h) Absence of Litigation. No Action shall be pending or overtly
(whether orally or in writing) threatened against BPLP or Boston Properties,
which (i) questions the validity or legality of the transaction contemplated
under this Agreement or the Related Agreements as it relates to BPLP or Boston
Properties or (ii) would have a material adverse effect on BPLP or Boston
Properties. At each Closing, BPLP shall certify as to the foregoing and shall
further certify that, except as may have been previously disclosed in writing to
the Landis Parties (or otherwise disclosed by the Landis Parties to BPLP), to
BPLP's Knowledge, there are no Actions which are pending or overtly (whether
orally or in writing) threatened by the Existing Partners and/or the direct or
indirect owners of the Existing Partners in connection with the transactions
contemplated by this Agreement.
(i) Other. Such other documents, instruments, consents,
authorizations or approvals as may be reasonably requested by the Landis
Parties, its counsel or the Title Company, and that may be reasonably necessary
to consummate the transaction that is the subject of this Agreement and the
Related Agreements and to otherwise effect the agreements of the parties hereto,
including, without limitation, as required under this Section except that BPLP
shall have
<PAGE>
no obligation to deliver any document, instrument, certificate, consent,
authorization or approval which is not otherwise contemplated under this
Agreement or the Related Agreements which increase the liabilities of BPLP
hereunder or under the Related Agreements other than de minimis amounts.
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF THE LANDIS PARTIES. Alan B. Landis
and the Existing Partners hereby represent and warrant to BPLP as of the date of
this Agreement and as of the applicable Closing Date except with respect to any
representations and warranties made as of a specific date, which shall be remade
on the applicable Closing Date as of such specific date (but, in all such
events, with respect to each Existing Partner only, severally (and not jointly)
with respect to matters relating to itself, to its Partnership Interests and the
Property Owners of which it is a partner and such Property Owners' Property), in
each case as follows:
(a) Existence and Power. 206 Associates has been duly formed and is a
validly existing limited partnership under the Laws of the State of New Jersey,
and 510 Associates has been duly organized and is a validly existing limited
liability company under the Laws of the State of New Jersey. Each Property
Owner and each Existing Partner has all power and authority under its respective
organizational documents to enter into and deliver this Agreement and all other
documents to be executed and delivered in connection with the transaction that
is the subject of this Agreement, including, without limitation, all Related
Agreements to the extent they are to be executed by such Property Owner or
Existing Partner, and to perform their respective obligations under this
Agreement and such Related Agreements. Each Property Owner and Existing Partner
has delivered to BPLP a true and complete copy of its limited partnership
agreement or limited liability company agreement, as applicable, its certificate
of limited partnership or certificate of formation, as applicable. The Existing
Partners in the aggregate hold 100% of the Partnership Interests in the Property
Owners; Schedule A-1 as attached hereto is true and correct in all respects
except for the omission of percentages identifying each Existing Partners'
Partnership Interest in each Property Owner. Schedule A-1, as completed and
delivered to BPLP at Closing pursuant to Section 2.1(p) shall accurately
identify each Existing Partner's Percentage Interest in each Property Owner.
(b) Authorization; No Contravention. The execution and delivery of
this Agreement and the Related Agreements by the Property Owners and the
Existing Partners and the performance of their respective obligations under all
of the foregoing have been duly authorized by all requisite organizational
action on the part of the Property Owners and the Existing Partners. This
Agreement constitutes and, upon execution thereof, the Related Agreements
executed by the Property Owners and the Existing Partners will constitute, the
valid, legal and binding obligations of the Property Owners and the Existing
Partners. None of this Agreement or the Related Agreements executed by the
Property Owners and the Existing Partners will violate, in any
<PAGE>
material manner, any term of any material agreement, order or decree to which
the Property Owners or the Existing Partners are parties or by which they are
bound. Except for the consents and other approvals which have been obtained on
or before the date of this Agreement, including without limitation, the consents
of the Existing Partners of the Property Owners, the holders of the Mortgage
Debt, and the other consents set forth on the attached Schedule L, no consent of
any lender, partner, shareholder, beneficiary, tenant, creditor, investor,
Authority or other person is required in order for the Landis Parties to enter
into this Agreement or the Related Agreements or for the consummation of the
transactions contemplated by this Agreement; other than such consents where the
failure to obtain would not have a Material Adverse Effect or a material adverse
effect on any Landis Parties' ability to consummate the transactions
contemplated hereby.
(c) Descriptive Information; Diligence. True, correct and complete
copies of all documents identified on Schedule R attached hereto, including,
without limitation, (i) the lease entered into between 206 Associates as Lessor
and Covance as Lessee (the "COVANCE LEASE"), pursuant to which Covance Inc. will
lease 100% of the rentable space in the building being constructed on the 206
Property, and (ii) the Lease entered into between 510 Associates as Lessor and
Raytheon as Lessee (the "RAYTHEON LEASE"), pursuant to which Raytheon will lease
100% of the rentable space in the building being constructed on the 510 Property
(the Covance Lease and the Raytheon Lease being referred to herein collectively
as the "LEASES"), (iii) all corporate, partnership and other or organizational
documents relating to the Property Owners and the Existing Partners, and (iv)
all other materials identified on Schedule T attached to the Contribution
Agreement; have been delivered by or on behalf of the Property Owners to BPLP,
or made available to BPLP for review in connection with the transaction
contemplated by this Agreement and the Related Documents, and, to the Landis
Parties' Knowledge, there are no other material agreements relating to the
subject matter thereof in such Property Owner's possession or under its control.
Attached hereto as Schedule M is a true, correct and complete list of all
leasing commissions and tenant construction, as well as any tenant improvement
allowances provided for under the Leases (including, without limitation all such
amounts which may be payable by or payable to any Landis Party and/or any
affiliates of the Landis Parties). Except only for the Covance-Studley Lease
Commissions, all brokerage commissions or compensation in respect of either of
the Leases have been, or prior to Closing will be, paid by the applicable
Property Owner.
(d) Mortgage Debt. Schedule E attached hereto contains a list of all
material documents relating to the Mortgage Debt and the 510 Construction
Financing, including without limitation all material documents evidencing,
securing or otherwise executed in connection with the Mortgage Debt. Except as
set forth in Schedule E, there are no material or binding agreements with any
person to provide or obtain any mortgage or other debt relating to the
Properties. The Landis Parties have delivered to Transferee true, complete and
accurate copies of all of the documents identified on Schedule E. Except only
as and to the extent set forth on the attached Schedule E and in the
Northwestern Mutual Commitment with respect to the 510 Property, no Landis Party
has any obligation of any kind or nature, to NML or any affiliate thereof,
whether current, accrued or contingent and whether in connection with any prior
<PAGE>
commitment or other agreement to provide financing or otherwise. As of the 510
Closing Date, the 510 NML Loan shall be in full force and effect and no event of
default or other default or matter which, with the passage of time or the giving
of notice or both, could become any event of default thereunder shall exist,
including, without limitation, any matters with respect to the Raytheon Lease
and the status of construction and development of the 510 Property.
Notwithstanding anything to the contrary contained in this Agreement, to the
extent Transferee receives a binding estoppel certificate from a holder of any
Mortgage Debt which estoppel certificate specifically confirms information set
forth on Schedule E with respect to such Mortgage Debt, the applicable Landis
Parties shall be released from all liability hereunder with respect to such
confirmed information (including without limitation, any indemnification
obligation under Article 7 hereof with respect to such confirmed information),
but shall not be released with respect to any other or any unconfirmed
information set forth on Schedule E.
(e) Compliance with Law. To the Landis Parties' Knowledge, the
Property Owners have not received (x) any written notice alleging that the
Property violates any law, rule, regulation, ordinance, code, or interpretation
of any Authority (collectively, "LAWS"), including without limitation, Laws
relating to zoning, subdivision and land-use matters and the Americans with
Disabilities Act or (y) any written notice from any insurer or board of fire
underwriters or similar entity that the Property violates, in any material
respect, any requirement under any insurance policy issued by such a person;
except, in either such event, for violations which have previously been cured.
To the Landis Parties' Knowledge, except as disclosed in writing to BPLP prior
to Closing, Property Owners have not received any notice from the Architect and
Engineer who will issue the Architect's and Engineer's Certificates hereunder
that the Property is not, and/or upon completion of the construction and
development of the Properties in accordance with the Plans and Specifications
will not be, in compliance with all Laws, including without limitation, Laws
relating to zoning and land-use matters, the Americans with Disabilities Act and
wetlands. To the Landis Parties' Knowledge, Property Owners have not received
notice of any special assessment proceedings affecting the Property, in any
material respect, and, to the Landis Parties' Knowledge, there is no such
assessment, other than immaterial assessments. To the Landis Parties'
Knowledge, all licenses, permits, approvals, variances, easements and rights of
way, including, without limitation, proof of dedication and authorizations
(collectively, the "LICENSES") required for the construction, development,
ownership, use or operation of the Properties as anticipated to be used and
operated have been validly issued and are in full force and effect, except with
respect to those Licenses which, in the ordinary course of business, are not
issued until the completion of construction, without the requirement of any
additional payment of other obligations or restrictions of or on the Property
Owners or the Property, and neither Property Owner has received any written
notice, nor otherwise to the Landis Parties' Knowledge, are there any
proceedings relating to the revocation or modification of any License. As of
the applicable Closing Date, the Property Owner shall have paid all applicable
so-called TID (Transportation Improvement District Ordinance) and COAH (Counsel
on Affordable Housing) fees, charges and costs and all other fees, charges or
costs of any similar nature in connection with the development and/or
construction of the Properties, including all off-site road and other
improvement costs.
<PAGE>
Except as set forth on Schedule N attached hereto, to the Landis Parties'
Knowledge, there are no agreements, proffers, and other non-public documents to
which any Landis Party or Alan B. Landis or their affiliates is a party relating
to land-use restrictions or other conditions limiting or otherwise affecting, in
any material respect, the development, construction or operation of the
Properties.
(f) (A) Leases. The Leases are in full force and effect. Attached
hereto as Exhibit 3 and Exhibit 4, respectively, are true correct and complete
copies of the Covance Lease and the Raytheon Lease (including all amendments,
side letters, option exercise letters, work letters, guarantees and any other
documents, certificates or instruments which may create or affect any current or
future obligations of any party under either of the Leases). The Leases,
including any applicable guarantees or similar agreements related thereto, have
been duly authorized, executed and delivered by all parties thereto. As of the
date hereof, occupancy of the Properties and rent commencement by Covance and
Raytheon in accordance with the Covance Lease and the Raytheon Lease,
respectively, are expected to occur, with respect to the Covance Lease, in
November, 1998, and with respect to the Raytheon Lease (as to rent commencement
only), in September, 1998. No person or entity has any option or right of first
refusal or first opportunity to acquire any interest in the Property or any
portion thereof. The Leases identified in this Agreement are the only leases or
other rights or grants of occupancy made by Property Owners with respect to all
or any part of either of the Properties. As of the 510 Closing Date, the No
Pass Through Period under the Raytheon Lease shall have been terminated. As of
the 206 Closing Date, Covance shall have unconditionally and irrevocably taken
occupancy of the 206 Property and 206 Associates shall have paid and/or
performed all obligations of landlord with respect to the Covance Lease which
relate to the period ending on the date of such occupancy and rent commencement
as provided in the 206 Lease (or, if later, the actual date of such occupancy
and rent commencement); including in any such event, without limitation, the
completion of all landlord work (on or prior to any specified substantial
completion date) and the payment of all tenant allowances and lease commissions
in connection therewith. As of the 510 Closing Date, Raytheon shall have
unconditionally and irrevocably taken occupancy of the 510 Property and 510
Associates shall have paid and/or performed all obligations of landlord with
respect to the Raytheon Lease which relate to the period ending on the date of
such occupancy and rent commencement as provided in the 510 Lease (or, if later,
the actual date of such occupancy and rent commencement); including in any such
event, without limitation, the completion of all landlord work (on or prior to
any specified substantial completion date) and the payment of all tenant
allowances and lease commissions in connection therewith.
(B) Rent Roll. On or before the applicable Closing Date, a Rent
Roll (the "RENT ROLL"), which is a true, complete and correct statement of the
information contained therein as of such date (in a manner similar to that set
forth on the Rent Roll attached to the Contribution Agreement) shall be
delivered to BPLP. As of the applicable Closing Date, there are no monetary, or
to the Landis Parties' Knowledge, other material defaults under any of the
Leases which have not been cured. Except as set forth on the Rent Roll, there
are no "free" or "reduced" rent periods (other than, with respect to "reduced"
rent periods, increases in the base
<PAGE>
rent payable under the applicable lease based solely on the passage of time, and
regardless of whether such increases are in a fixed amount or are based upon a
calculation (e.g., consumer price index based increases)), concessions or
rebates (whether oral or written) of any kind whatsoever under any of the Leases
which would have an effect on or after the Closing Date. Except as set forth in
the Rent Roll (but excluding tenant improvement or refurbishment allowances
which are set forth in the Leases), no tenant under any lease is entitled to any
rebate, concession, deduction or (if based on landlord's actions on or prior to
the Closing Date ) offset under its lease. Except for security deposits placed
with Property Owners, a true and correct list of which is identified on the Rent
Roll, none of the Tenants has paid to Property Owners any rent or other charge
of any nature under its Lease or otherwise relating to any Property for a period
of more than thirty (30) days in advance. Notwithstanding anything to the
contrary contained in this Agreement, to the extent BPLP receives an Estoppel
from Covance or Raytheon, as applicable, which Estoppel specifically confirms
information contained in the Rent Roll with respect to the applicable Lease, the
applicable Landis Parties shall be released from all liability hereunder with
respect to such confirmed information (including without limitation, any
indemnification obligation under Article 7 hereof with respect to such confirmed
information), but shall not be released with respect to any other or any
unconfirmed information contained in the Rent Roll.
(g) Contracts. Attached hereto as Schedule J is a schedule (the
"SCHEDULE OF AGREEMENTS") setting forth a list of all of the Contracts other
than Contracts which will be terminated or expire and will be fully satisfied by
Property Owner on or prior to the applicable Closing, including in all events,
the names of the contracting party, the dates of the Contracts and a listing of
all amendments to such Contracts, and identifying each such Contract as a
Terminable Contract or a Non-terminable Contract (and, with respect to each Non-
terminable Contract, whether or not such Non-terminable Contract is with an
Affiliate of any Landis Party). True, complete and correct copies of all
Contracts have been provided to BPLP. To the Landis Parties' Knowledge, the
Contracts are in full force and effect, and the Terminable Contracts are
terminable on not more than thirty (30) days' prior written notice and without
payment or penalty of any kind. To the Landis Parties' Knowledge, all Warranties
with respect to the Property are listed on Schedule P.
(h) Utilities. As of the applicable Closing Date, all water, sewer,
gas, electric, telephone and drainage facilities and all other utilities
required by Law and sufficient for the contemplated use and operation of the
Property will be installed to the property lines of the Land and will be
connected pursuant to valid Licenses and all assessments, fees and other charges
related thereto have been paid in full. To the Landis Parties' Knowledge,
neither Property Owner has received written notice or otherwise has knowledge
that any of the foregoing facilities or utilities are inadequate to service the
Property or that they do not meet the requirements of applicable Laws.
(i) Hazardous Substances. To the Landis Parties' Knowledge, the
Property Owners have not generated, stored, released, discharged or disposed of,
used or handled
<PAGE>
Hazardous Substances or Hazardous Wastes (as those terms are defined below) at,
upon or from the Properties in material violation of any Law or in connection
with which remedial action would be prudent or required under any Law. As used
in this Agreement, the terms "HAZARDOUS SUBSTANCES" and "HAZARDOUS WASTES" shall
have the meanings set forth in the Comprehensive Environmental Response,
Compensation and Liability Act, as amended, and the regulations thereunder, the
Resource Conservation and Recovery Act, as amended, and the regulations
thereunder, and the Federal Clean Water Act, as amended, and the regulations
thereunder, and such terms shall also include asbestos, petroleum products
(except in a naturally occurring state), radon, radioactive materials, lead
paint, Urea Formaldehyde Foam Insulation and any other regulated substances
under any Law relating to the protection of the environment. To the Landis
Parties' Knowledge, except as contained in the environmental reports listed on
Schedule Y to the Contribution Agreement, no Hazardous Substances or Hazardous
Wastes are located on the Property in material violation of any Law. To the
Landis Parties' Knowledge, except as contained in the environmental reports
listed on Schedule Y to the Contribution Agreement, no underground storage tanks
are located at either of the Properties.
(j) Absence of Undisclosed Liabilities. Between the date of the
financial statements listed on Schedule Z to the Contribution Agreement
pertaining to Property Owners, true, complete and correct copies of which have
been delivered to BPLP prior to the date of this Agreement (which are the most
recently prepared operating statements prior to the date of this Agreement) and
the date of this Agreement no events or circumstances have occurred or arisen
which, individually or taken together, would have a Material Adverse Effect, or
would result in any material increase in the indebtedness or other liabilities
of the Property Owners or the Properties. To the Landis Parties' Knowledge,
there are no Liabilities, including material contingent liabilities, of the
Property Owners which are not shown or provided for in the operating statements
listed on the referenced Schedule Z, other than (i) liabilities incurred in the
ordinary course of business and in accordance with established operating
policies and procedures and past practice of the applicable Landis Parties, (ii)
liabilities specifically disclosed in this Agreement or the Schedules hereto,
including without limitation liabilities under Assigned Contracts and Leases,
(iii) liabilities identified on the attached Schedule Q which are covered by
insurance, (iv) liabilities arising under Immaterial Contracts and (v)
liabilities which are the specific subject of any other representation or
warranty in this Section 3.1, which other representations and warranties shall
be the sole and exclusive representations with respect to such subject matter
(e.g., liabilities relating to non-material violations of Law relating to
Hazardous Substances, the existence of which would not be a breach of the
applicable representation and warranty under Section 3.1(i) above).
(k) Taxes. All tax returns required to be filed on or before the date
hereof by or on behalf of or with respect to the liabilities of the Property
Owners (or the properties or assets thereof) have been filed through the date
hereof or will be filed on or before the date when due in accordance with all
applicable Laws, and there is no Action pending against or with respect to
either Property Owner or the Property in respect of any tax (or against any
Existing Partner with respect to any of the tax liabilities of or assessed
against the Properties or the Property Owners),
<PAGE>
nor is any claim for additional tax asserted by any Authority against either
Property Owner or the Property (or against any Existing Partner with respect to
any of the tax liabilities of or assessed against the Properties or the Property
Owners). All taxes of or assessed against the Properties or the Property Owners
have been timely paid when due in accordance with applicable laws. All real
estate taxes and assessments relating to the Property that are due and payable
have been paid and copies of most recent tax bills have been delivered to BPLP.
(l) Insurance. Property Owners currently have in place appropriate
public liability, builder's risk and other insurance coverage with respect to
the Property and the development thereof, and each of such insurance policies is
in full force and effect and all premiums due and payable thereunder have been
fully paid when due.
(m) Capital Structure. All of the partnership interests of each
Property Owner have been duly and validly issued. Except as set forth on
Schedule A-1 (as completed pursuant to Section 2.1(p)), there are no equity
interests of any Property Owner outstanding or issuable upon conversion or
exchange of any security of any Property Owner or any other Person. No holder
of any equity interest of any Property Owner nor any other Person is entitled
(i) to any preemptive or other right to subscribe for any equity interests of
any Property Owner or (ii) to any right of first refusal or similar right with
respect to or as a result of any of the transactions contemplated hereby. The
organizational charts attached hereto as Schedule A-2 are true, complete and
correct in all respects and set forth all of the Existing Partners and all of
the partners, members, shareholders and other beneficial owners of such Existing
Partners, and as of the Closing Date, the organizational charts attached hereto
as Schedule A-2 shall be revised to identify the percentage interest of each
such Existing Partner in the Property Owners.
(n) Title to Partnership Interests. Each Existing Partner owns
beneficially and on the records of the applicable Property Owner, and is
transferring free and clear of any liability claim, lien, pledge, voting
agreement, option, charge, security interest, mortgage, deed of trust,
encumbrance, right of assignment, purchase right or other restriction of any
kind, nature or description (other than as may be created in writing by Boston
Properties or BPLP), its Partnership Interests. Such Existing Partner's
Partnership Interests were validly issued. There is no agreement, instrument or
understanding with respect to such Existing Partner's Partnership Interests,
except the partnership agreement of the applicable Property Owner, to which
BPLP, as successor, will be bound.
(o) Structural. Neither Property Owner has received any written
notice from any tenant, consultant, architect, engineer, insurance company or
Authority of any defect or inadequacy in connection with the structure or
systems on the Properties that has not heretofore been cured.
(p) Zoning/Violations. To the Landis Parties' Knowledge, neither
Property Owner has received any written notice that there is now pending,
proposed or threatened any
<PAGE>
proceeding for the rezoning of either of the Properties or any portion thereof.
To the Landis Parties' Knowledge, neither Property Owner has received any
written notice from any Authority that any zoning, subdivision, environmental,
hazardous waste, building code, health, fire, safety or other law, order,
ordinance or regulation is violated by the development, construction or use of
the Properties, including, without limitation, any Improvements located thereon
or any parking areas.
(q) Condemnation. To the Landis Parties' Knowledge, neither Property
Owner has received any written notice of any pending or contemplated
condemnation proceedings affecting all or any part of the Property.
(r) Permitted Exceptions. No Property Owner is in monetary default
and, to the Landis Parties' Knowledge, each Property Owner has performed all
material obligations under and is not in material non-monetary default, in
complying with the terms and provisions of any of the covenants, conditions,
restrictions, rights-of-way or easements constituting one or more of the
Permitted Exceptions for the Property.
(s) Actions. Attached hereto as Schedule Q is a schedule (the
"SCHEDULE OF ACTIONS") setting forth all Actions pending or, to the Landis
Parties' Knowledge, overtly (whether orally or in writing) threatened against
either Property Owner, any Existing Partner or the Property, which (y) question
the validity of, or the ability of the Landis Parties to consummate, the
transactions contemplated hereunder or (z) affect the Property, the Property
Owners, the Existing Partners or any interests therein, in a materially adverse
way or have a Material Adverse Effect.
(t) Plans and Specifications; Budgets. True, correct and complete
plans and specifications and other related drawings and documents (collectively,
the "PLANS AND SPECIFICATIONS") for the 206 Property and the 510 Property are
listed on Exhibit 5 and Exhibit 6, respectively. True, complete and correct
copies of the development and construction budgets (collectively, the
"CONSTRUCTION BUDGETS") for each of the Properties have been delivered to BPLP
prior to the date of this Agreement. As of the applicable Closing Date, all
amounts set forth in the Construction Budgets and all other amounts due or to
become due in connection with the development and construction of the Properties
shall have been paid in full by the Property Owners except items not capable of
being complete or for which bills were not yet rendered (all of which shall
remain the obligation of the Existing Partners of the applicable Property
Owner).
(u) Tax Treatment. To the extent that Units are delivered hereunder
in consideration for the transfer of partnership interests in the Property
Owners or any other assets (i) the Existing Partners will treat the transfer as
a contribution subject to Section 721 of the Code and (ii) the Existing Partners
will treat the Units for all tax and other financial reporting purposes as
equity interests in BPLP, except in each case as otherwise required by
applicable Law (not
<PAGE>
including any tax Law except to the extent required by any adjustment proposed
by the Internal Revenue Service in a 90-day letter) or contractual obligations
(such as loan agreements) of BPLP.
3.2 REPRESENTATIONS AND WARRANTIES OF BPLP. BPLP hereby represents and
warrants to the Landis Parties as of the date of this Agreement and as of the
Closing Date as follows:
(a) Existence and Power. Boston Properties and BPLP have been duly
formed and are validly existing as a Delaware corporation and a Delaware limited
partnership, respectively. Each of Boston Properties and BPLP has all power and
authority under their respective organizational documents to carry on its
business as presently conducted and to execute, deliver and perform its
obligations under this Agreement and the Related Agreements executed by such
party. Boston Properties and BPLP are each duly qualified to do business in all
jurisdictions where such qualification is necessary to carry on its business as
now conducted and, on the Closing Date, will be duly qualified in the
jurisdiction in which the Property is located.
(b) Authorization; No Contravention. The execution and delivery of
this Agreement and the performance of their respective obligations under this
Agreement, has been duly authorized by all requisite organizational action on
the part of Boston Properties and BPLP. This Agreement has been and each Related
Agreement to which BPLP is a party will on the Closing Date have been, duly
executed and delivered by BPLP and Boston Properties. None of the foregoing
will require any action by or in respect of, or filing with, any Authority or
contravene or constitute a default under any provision of applicable Law, any
organizational document of Boston Properties or BPLP or any agreement, judgment,
injunction, order, decree or other instrument binding upon Boston Properties or
BPLP. This Agreement constitutes and, upon the execution thereof the
Registration Rights Agreement and the other Related Agreements executed by
Boston Properties or BPLP, as applicable, will constitute, the valid, legal and
binding obligations of Boston Properties or BPLP, as applicable, enforceable in
accordance with their respective terms, subject to bankruptcy and similar laws
affecting the remedies or resources of creditors generally and principles of
equity. Except for the consents and other approvals which have been obtained on
or before the date of this Agreement, no consent of any lender, partner,
shareholder, beneficiary, tenant, creditor, investor, Authority or other person
is required in order for Boston Properties and BPLP to enter into this Agreement
or for the consummation of the transactions contemplated by this Agreement,
other than such consents where the failure to obtain would not have a material
adverse effect on Boston Properties or BPLP or on their ability to consummate
the transactions contemplated hereby.
(c) Partnership Agreement. BPLP has provided the Landis Parties with
correct and complete copies of the limited partnership agreement of BPLP (the
"PARTNERSHIP AGREEMENT") as in effect on the date of this Agreement. Between
the date of this Agreement and the Closing Date there will be no amendments or
modifications to, supplements to, or waivers with respect to, the Partnership
Agreement other than (x) as contemplated by this Agreement, including without
limitation, by the Certificate of Designation establishing the terms of the
Series One
<PAGE>
Preferred Units and as set forth on the Exhibit 2 attached to the Contribution
Agreement and (y) amendments, modifications, supplements and waivers in the
ordinary course of business and which do not have a material adverse effect on
the Landis Parties' interest in BPLP (including, without limitation, amendments
for the purpose of issuing Common Units and/ or Preferred Units and/or admitting
limited partners to BPLP). As of the Closing Date, the Certificate of
Designation establishing the terms of the Series One Preferred Units has been
duly adopted and will be effective as an amendment to the Partnership Agreement.
As of the date of this Agreement there are no outstanding Preferred Units and
there are no options, warrants, rights or other agreements to issue Series One
Preferred Units to any person other than pursuant to this Agreement and the
Related Agreements. BPLP qualifies as a partnership for Federal income tax
purposes.
(d) Units and Common Shares. The Units to be issued hereunder have
been duly authorized for issuance and, upon such issuance, will be validly
issued, fully paid and non-assessable and will not be subject to any preemptive
rights or rights of first refusal upon their issuance. The Common Shares to be
issued upon exchange of the Units, and the Common Units to be issued upon
exchange of the Preferred Units have been duly authorized for issuance and, upon
such issuance will be validly issued, fully paid and non-assessable and will not
be subject to any preemptive rights or rights of first refusal upon their
issuance. At the Closing each Landis Party receiving Units will receive such
Units free and clear of any claims, liens, voting agreements, options, charges,
or encumbrances or restrictions of any kind, nature or description (other than
as may be created pursuant to this Agreement (including under the Registration
Rights Agreement), the Partnership Agreement and other organizational documents
of BPLP, or by any Landis Party, and other than restrictions on transfer that
may be applicable under Securities Laws). Boston Properties has reserved for
issuance out of its authorized common stock, a number of Common Shares
sufficient to provide for the exchange of Units into Common Shares. If
applicable, BPLP is authorized to issue Common Units sufficient for the exchange
of Preferred Units into Common Units.
(e) Pending Actions. There is no existing or, to the best of BPLP's
knowledge, overtly (whether orally or in writing) threatened Action involving
Boston Properties or BPLP, any of their respective assets or the operation of
any of the foregoing, which, if determined adversely to either Boston Properties
or BPLP or their respective assets, would have a material adverse effect on the
consolidated financial position, stockholders' equity, results of operations or
business of either Boston Properties or BPLP or their respective assets or which
would interfere with the ability of either Boston Properties or BPLP to execute
or deliver, or perform their respective obligations under this Agreement or any
of the Related Agreements executed by it.
(f) Taxes. Boston Properties and BPLP have filed all federal, state
and local income and franchise tax returns required to be filed through the date
hereof and have paid all taxes due thereon, and no tax deficiency has been
determined adversely to Boston Properties or BPLP which has had (nor does Boston
Properties of BPLP have any knowledge of any tax deficiency which, if determined
adversely to Boston Properties or BPLP might have) a material
<PAGE>
adverse effect on the consolidated financial position, stockholders' equity,
results of operations or business of Boston Properties or BPLP. There is no
material tax controversy pending with respect to Boston Properties or BPLP for
which Boston Properties or BPLP, as applicable, has not made reasonable
provision.
(g) No Assignment. Neither Boston Properties nor BPLP nor any of their
subsidiaries has (i) made a general assignment for the benefit of the creditors,
(ii) filed any voluntary petition in bankruptcy or suffered the filing of an
involuntary petition by BPLP's or Boston Properties' creditors, (iii) suffered
the appointment of a receiver to take possession of all or substantially all of
BPLP's or Boston Properties' assets, (iv) suffered the attachment, or other
judicial seizure of all, or substantially all, of BPLP's or Boston Properties'
assets, (v) admitted in writing its inability to pay its debts as they come due,
or (vi) made an offer of settlement, extension or compromise to its creditors
generally.
(h) Private Placement. Assuming the accuracy of, and in reliance
upon, the representations and warranties of the Landis Parties set forth in
Section 3.1 hereof, Section 3.1 of the Contribution Agreement, and in the
Representation Letters delivered by each applicable Landis Party, (x) neither
BPLP nor Boston Properties nor any agent or other person acting on its behalf,
directly or indirectly, has done or caused to be done (or has omitted to do or
to cause to be done) any act which act (or which omission) would result in
bringing the issuance or sale of the Common Shares or Units within the
provisions of Section 5 of the Securities Act and (y) the granting and the sale
of the Units hereunder and the issuance and delivery of the Common Shares upon
the exchange of the Units by any person that has delivered a Representation
Letter, are exempt from registration under the Securities Act and under
applicable state securities and "blue sky" laws.
(i) Investment Company Act. Neither Boston Properties nor BPLP is an
"investment company" or an entity "controlled" by an "investment company" as
such terms are defined under the Investment Company Act.
(j) Boston Properties' Qualification. Boston Properties is organized
and operates, and intends to continue to operate, in a manner so as to qualify
as a "real estate investment trust" under Sections 856 through 860 of the Code.
To BPLP's Knowledge, Boston Properties has not received any written notice from
the Internal Revenue Service which specifically calls into question Boston
Properties' qualification as a "real estate investment trust" under Sections 856
through 860 of the Code and Boston Properties has taken no action that would
reasonably be expected to cause Boston Properties to cease to so qualify.
(k) Filings. Boston Properties has made all filings required by the
Securities Act and the Exchange Act (excepting only those filings the failure to
make of which will not render Boston Properties ineligible to file a
registration statement on Form S-11). All such filings made by Boston
Properties fairly present the financial condition of Boston Properties as of the
date
<PAGE>
of any balance sheet or similar financial statement contained therein and the
results of Boston Properties's operations for the period covered by any income
statement or similar financial statement contained therein, and none of such
filings contains, as of the date of such filing, any untrue statement of a
material fact or omits any information necessary to make the statements
contained therein not materially misleading, and since the date of the last such
filing, there has not occurred any material adverse change in the financial
condition, business, operations, assets or liabilities of Boston Properties or
BPLP.
(l) Tax Treatment. To the extent that Units are delivered hereunder
in consideration for the transfer of partnership interests in the Property
Owners or any other assets (i) BPLP will treat the transfer as a contribution
subject to Section 721 of the Code and (ii) BPLP will treat the Units for all
tax and other financial reporting purposes as equity interests in BPLP, except
in each case as otherwise required by applicable Law (not including any tax Law
except to the extent required by any adjustment proposed by the Internal Revenue
Service in a 90-day letter, provided, however, that BPLP shall have no
obligation to spend more than de minimis amounts of time or money in connection
therewith) or contractual obligations (such as loan agreements) of BPLP.
ARTICLE 4 - DEVELOPMENT AND OPERATION OF THE PROPERTY
4.1 DEVELOPMENT AND OPERATION. At all times prior to the Closing Date,
Property Owners shall cause the development and construction of the Properties
to be diligently and continuously undertaken in compliance with the Plans and
Specifications and Construction Budgets for each of the Properties, as set forth
in Exhibit 5, Exhibit 6 and Exhibit 7 hereto. Property Owners shall not modify,
amend or otherwise change in any material respect (including, without
limitation, change orders or similar actions) any of the Plans and
Specifications and the Construction Budgets without the prior written consent of
BPLP (which consent shall not be unreasonably withheld, and which consent, if
required to be given by Property Owner pursuant to the Leases as in existence on
the date of this Agreement, shall not be withheld, it being agreed that if BPLP
fails to deny such consent with respect to any such modification within ten (10)
business days after written request therefore, BPLP shall be deemed to have
granted such consent hereunder). Each Property Owner shall: (i) use its
reasonable efforts to preserve its relations with tenants and other entities
with which future business dealings are contemplated; (ii) not mortgage (except
only with respect to the 510 NML Loan, in accordance with this Agreement) or
encumber any part of the Property or take or suffer any other action affecting
title to the Property without the prior written consent of BPLP such consent not
to be unreasonably withheld or delayed (it being agreed that if BPLP fails to
deny such consent or approval with respect to any non-material, non-monetary
encumbrance within five (5) business days after written request therefore, BPLP
shall be deemed to have granted such consent or approval hereunder); (iii) not
make any commitment or incur any liability to any labor union, through
negotiations or otherwise, with respect to the Property not discharged at
Closing; (iv) not become a party to any new licenses, equipment leases,
contracts or agreements of any kind relating to the Property, except such
<PAGE>
contracts or agreements as will be terminated at or prior to Closing without
cost or expense to BPLP or contracts which BPLP agrees to assume at Closing such
consent not to be unreasonably withheld or delayed (it being agreed that if BPLP
fails to deny such consent or approval with respect to any such contract within
five (5) business days after written request therefore, BPLP shall be deemed to
have granted such consent or approval hereunder).
If, to the Landis Parties' Knowledge, it is probable that there will be an
Identified Breach on the Confirmation Certificate to be delivered on any Closing
Date, then Alan B. Landis shall notify BPLP in writing of such fact a reasonable
period of time prior to the scheduled Closing Date or, if earlier, as soon as
practicable after such determination by the Landis Parties. If there is or will
be an Identified Breach, the Landis Parties' will cooperate in providing such
information as BPLP reasonably requests with respect thereto.
4.2 INSURANCE. Through the Closing Date, Property Owners shall maintain
at their sole cost and expense all insurance referred to in Section 3.1(l) or
similar replacement coverage.
4.3 LEASING/ESTOPPELS. Each Property Owner agrees that from and after the
date of this Agreement to the Closing Date, such Property Owner (i) will not,
with respect to the Property, cancel or terminate, modify or amend the Leases,
enter into any new leases, or consent to the assignment, subletting or
mortgaging of any lease or space, without in each instance having obtained the
prior written consent of BPLP except as may be required under the terms of any
such lease; (ii) will comply with and perform all provisions and obligations to
be complied with and/or performed by such Property Owner under the applicable
Lease; (iii) will, promptly upon receipt, provide BPLP with copies of all
written notices delivered or received under the Leases, correspondence received
from architects, engineers, contractors, tenants, neighboring property owners,
any insurance company which carries insurance on the Property, from any
Authorities or from any other person or entity with respect to the Property or
any portion thereof. BPLP shall grant or deny all consents or approvals
requested by the Property Owners under this Section 4.3 within five (5) business
days after request therefore (it being agreed that if BPLP fails to deny such
consent or approval within such five (5) business day period, BPLP shall be
deemed to have granted such consent or approval hereunder). Property Owners
shall send to the tenants of the Properties a letter (in form reasonably
acceptable to BPLP and the Landis Parties) and an estoppel certificate in the
form attached hereto as Exhibit 2. Property Owners shall, promptly upon
receipt, deliver to BPLP copies of all correspondence or other matters received
by Property Owners in connection with such estoppel certificates. Property
Owners shall use good faith efforts (without the obligation to expend any
amounts in connection therewith, other than de minimis amounts) to obtain all
such certificates.
4.4 OPERATING AGREEMENTS. Except as set forth in Section 4.1 or Section
4.3 above, Property Owners shall not enter into any Contract affecting the
Property, or any amendment of any Contract, that will be binding on the Property
or BPLP. Notwithstanding provision (i) of the foregoing sentence, either
Property Owner may enter into a Contract which by its own terms shall
<PAGE>
terminate prior to the Closing Date or is terminable by such Property Owner
prior to the Closing Date (which shall be terminated by such Property Owner
unless such Contract has been designated as an Assigned Contract by BPLP) and
which shall not create any liability for or be binding on the Property or BPLP
on or after the Closing Date, provided however, that any such Contract shall not
violate the provisions of clause (ii) of the preceding sentence. Property Owners
shall not waive, compromise or settle any rights of Property Owners under any
Assigned Contract, without in each case obtaining BPLP's prior written consent
thereto, such consent not to be unreasonably withheld or delayed and to be based
upon then prevailing market terms and conditions. Notwithstanding anything to
the contrary contained herein, BPLP shall grant or deny all consents requested
by the Property Owners under this Section 4.4 within five (5) business days
after request therefore (it being agreed that if BPLP fails to deny such consent
or approval within such five (5) business day period, BPLP shall be deemed to
have granted such consent or approval hereunder).
4.5 DAMAGE OR DESTRUCTION; CONDEMNATION. Property Owners shall deliver to
BPLP written notice of any casualty involving in excess of $50,000 to repair or
any taking involving the Property promptly upon learning of such casualty or
taking. If, prior to the Closing, either of the Properties (each a "DAMAGED
PROPERTY") is damaged or destroyed by casualty such that the cost to repair
and/or restore such damage and/or destruction (which cost, for purposes of this
Section, shall be deemed to include reasonably anticipated post-Closing rental
loss not covered by rental loss insurance through completion of such repair
and/or restoration) would exceed Five Million Dollars ($5,000,000) with respect
to any one of the Properties, or Seven Million Five Hundred Thousand Dollars
($7,500,000) in the aggregate with respect to both Properties, and the Damaged
Property cannot be repaired and/or restored to substantially the same condition
as immediately prior to such casualty without termination, amendment or
modification of the applicable Lease or other material agreement relating to the
Damaged Property (any such event, a "MAJOR CASUALTY"), within twelve (12) months
after the Closing Date, then BPLP shall have the right to terminate its
obligation to complete the transaction contemplated under this Agreement with
respect to such Damaged Property by delivery of written notice thereof to
Property Owners within ten (10) Business Days after BPLP's first learning of the
occurrence of such casualty and Property Owners' good faith estimate of the cost
of such repair and/or restoration, timing for completion of such repair and/or
restoration and confirmation that no Leases or other material agreements will be
terminated, amended or modified as a result of such casualty. If all or any
part of the Property is damaged and/or destroyed by fire or other casualty prior
to the Closing but (i) the event is not a Major Casualty or (ii) the event is a
Major Casualty but BPLP does not terminate its obligation to complete the
transaction contemplated under this Agreement with respect to such Damaged
Property (or the Agreement in its entirety, as applicable) pursuant to this
Section 4.5 as a result thereof, then the Closing Date shall occur as scheduled
with respect to such Property notwithstanding such damage or destruction, and
Property Owners' interest in all proceeds of insurance payable by reason of such
casualty, including, without limitation, for rental loss to the extent allocable
to the period after the Closing Date, shall be assigned to BPLP as of the
Closing Date or credited to BPLP if previously received by Property Owners, and
Property Owners shall be responsible for the amount of any deductible under such
insurance (and such amount shall be
<PAGE>
credited to BPLP at the Closing). If, prior to Closing, an Authority commences
any eminent domain or condemnation proceeding to take any portion of the
Property or either Property Owner enters into an agreement in lieu thereof, and
the portion of the Property lost thereby would have a material adverse effect on
the operations of the Property (a "MAJOR CONDEMNATION," and the effected
Property, a "CONDEMNED PROPERTY"), then BPLP shall have the option to terminate
its obligation to complete the transaction contemplated under this Agreement
with respect to such Condemned Property by delivery of written notice thereof to
Property Owners within ten (10) Business Days after BPLP first learns of such
commencement or entry. If, prior to the Closing Date, an Authority commences any
eminent domain or condemnation proceeding to take any portion of the Property or
either Property Owner enters into an agreement in lieu thereof but (i) such
event does not constitute a Major Condemnation or (ii) the event is a Major
Condemnation, but BPLP does not terminate its obligation to complete the
transaction contemplated under this Agreement with respect to such Condemned
Property pursuant to this Section 4.5 as a result thereof, then the Closing Date
shall occur as scheduled notwithstanding such proceeding or entry, and Property
Owners' interest in all awards or payments arising out of such proceedings or
agreement shall be assigned to BPLP as of the Closing Date or credited to BPLP
if previously received by Property Owners. Property Owners' obligations under
this Section shall survive the Closing.
4.6 TESTS AND INSPECTIONS.
(a) Property Owners hereby authorize BPLP, its authorized
representatives, agents and employees to enter upon the Properties on reasonable
prior notice and in coordination with the applicable Property Owner so that the
timing thereof does not materially interfere with the construction of the
Property, from time to time to perform such tests and inspections as BPLP deems
necessary or appropriate in its reasonable discretion, including, without
limitation, such soil boring and compacting tests, test well and water table,
soil porosity and liquid absorption tests, other environmental inspections and
tests and engineering tests. Any entry by BPLP onto the Properties in
connection with its due diligence shall not unreasonably interfere with
construction work being performed on the Properties. BPLP hereby agrees to
repair any damage to the Properties resulting from the conduct of any test or
inspection performed by BPLP and to indemnify and hold Landis Indemnified
Partners harmless from and against any and all Losses arising on account of any
test or inspection performed by BPLP, including, without limitation, for
mechanic's liens to the extent attributable to any test or inspection performed
by BPLP. This provision shall survive a termination of the obligations to
complete the transaction contemplated under this Agreement or Closing.
(b) BPLP, its authorized representatives, its agents and its
employees shall have the right to conduct, from the date hereof until each
Closing Date, any and all due diligence relative to the Property as may be
deemed necessary or appropriate by BPLP in its sole discretion, provided,
however, that BPLP shall not unreasonably interfere with the operations of the
Properties. Without limiting the foregoing, Property Owners shall make
available to BPLP for
<PAGE>
review and copying at BPLP's election, in a manner which does not unreasonably
interfere with the operations of the Properties, all of its materials, files,
books, records, information and documents relating to the Property, including,
without limitation, all construction contracts, construction management
contracts, architectural contracts, architectural, mechanical and engineering
plans and specifications, the original development budget, construction
financing documentation, contractors' invoices received to date, change
requests, the original construction schedule, management's analysis of whether
the Properties are expected to be completed within their original budgets, site
plan approvals, Leases, management agreements entered into or expected to be
entered into, maintenance files, tenant correspondence, certificates of
occupancy, plans and other construction records for the Improvements, existing
surveys, permits and other similar or dissimilar materials, to the extent not
previously delivered to BPLP. BPLP shall have the right to talk with third-
parties selected by BPLP in the performance of its due diligence on the
Properties.
4.7 MORTGAGE DEBT. Prior to each Closing, the Property Owner will
endeavor to keep all debt service payments and other payments owed in connection
with the Mortgage Debt and 510 Construction Financing current on the Property
and will endeavor not permit or suffer to exist any monetary or material non-
monetary default under any document evidencing the Mortgage Debt. All costs,
fees and charges required to be paid to a holder of Mortgage Debt or on behalf
of such holder in connection with the repayment or assumption (or other
continued existence) and amendment of the Mortgage Debt shall be paid by the
Property Owner at or prior to the Closing (except only, with respect to the 510
NML Loan, the NML Closing Costs as and to the extent set forth in Section 1.6
above). Prior to the 510 Closing Date, 510 Associates shall diligently and in
good faith undertake to completion the refinancing of the 510 Construction
Financing encumbering the 510 Property in accordance with the 510 NML Commitment
and the terms and conditions of this Agreement.
4.8 AVAILABILITY OF RECORDS. Property Owners and the Existing Partners
agree to cooperate with BPLP to permit BPLP to obtain any information needed
from Property Owners and Existing Partners to enable BPLP to file any necessary
tax returns. Upon written request of BPLP, for a period of two (2) years after
the Closing, Property Owners and the Existing Partners shall (i) make their
respective records relating to the Properties, the Property Owners and the
Partnership Interests, available to BPLP for inspection, copying and audit by
BPLP's designated accountants at BPLP's sole cost and expense, and (ii)
cooperate with BPLP to the extent reasonably necessary to obtain any applicable
Licenses not in existence on the Closing Date and necessary for the operation of
the Properties. Without limiting the foregoing and in addition thereto, for the
period of time commencing on the date of this Agreement and continuing through
the second (2nd) anniversary of the Closing Date, Property Owners and Existing
Partners shall, from time to time, upon reasonable advance notice from BPLP,
provide BPLP and its representatives, agents and employees with access to all
financial and other information in its possession relating to the Properties,
the Property Owners and the Partnership Interests pertaining to the period of
Property Owners ownership and operation of the Properties, which information
<PAGE>
is relevant and reasonably necessary, in the opinion of BPLP's outside, third
party accountants (the "ACCOUNTANTS"), to enable BPLP and its Accountants to
prepare financial statements in compliance with any or all requirements of (a)
Rule 3-14 of Regulation S-X of the Commission; (b) any other rule issued by the
Commission and applicable to BPLP; and (c) any registration statement, report or
disclosure statement filed with the Commission by or on behalf of BPLP. Property
Owners and Existing Partners acknowledge and agree that the following is a
representative description of the information and documentation that BPLP and
the Accountants may require in order to comply with (a), (b) and (c) above.
Property Owners and the Existing Partners shall provide such information and
documentation in existence as of the date of this Agreement. Obligations of
Property Owners and the Existing Partners under this Section 4.8 shall survive
the Closing.
(a) Property Owners' internally-prepared operating statements;
(b) Access to the Leases;
(c) Property Owners' budgeted annual and monthly income and expenses,
and actual annual and monthly income and expenses;
(d) Access to Property Owners' cash receipt journal(s) and bank
statements for the Properties;
(e) Property Owners' general ledgers with respect to the Properties;
(f) Property Owners' schedule, if one exists, of expense
reimbursements required under the Leases;
(g) Schedule, if one exists, of those items of construction and
development performed and capital expenditure and fixed asset additions made by
or at the direction of Property Owners, during Property Owners' final fiscal
year in which Property Owners owned their respective Property (the "FINAL FISCAL
YEAR").
(h) Access to Property Owners' invoices with respect to expenditures
made during the Final Fiscal Year;
(i) Access (during normal and customary business hours) to
responsible personnel to answer accounting questions; and
(j) A representation letter, signed by the individual(s) responsible
for Property Owners' financial reporting, as prescribed by generally accepted
auditing standards promulgated by the Auditing Standards Division of the
American Institute of Certified Public Accountants,
<PAGE>
which representation letter may be reasonably required to assist the Accountants
in rendering an opinion on such financial statements.
4.9 TITLE AND SURVEY DEFECTS. Property Owners shall not knowingly and
voluntarily encumber or create any exception to title to the Properties that is
not removed on or before Closing.
4.10 COOPERATION WITH BPLP. Property Owners and BPLP shall cooperate with
each other and do all acts as may be reasonably required or requested by the
other with regard to the fulfillment of any condition to Property Owners' or
BPLP's, as the case may be, obligations hereunder, provided, however, in no
event shall the obligations of Property Owners and BPLP which arise exclusively
as a result of this Section 4.10 increase the liability on the part of each such
person under this Agreement other than de minimis amounts.
4.11 COVENANTS OF ALL EXISTING PARTNERS. Each Existing Partner agrees that
from the date of this Agreement to the Closing Date, it will not voluntarily
encumber, assign, transfer or convey any of the Partnership Interests which are
the subject of this Agreement (except only to another Landis Party and only
after written notice of such transfer or other action has been given to BPLP).
Each Existing Partner shall cooperate and do all acts (including executing and
delivering a copy of the completed Schedule A-1 as contemplated by Section
2.1(s)) as may be reasonably required or requested by BPLP or the Properties
Owners to fulfill any condition to BPLP's obligations hereunder.
4.12 TAX APPEALS. Property Owners agree that they will not, without the
prior written consent of BPLP, such consent not to be unreasonably withheld or
delayed (it being agreed that if BPLP fails to deny such consent within ten (10)
business days after request therefore, BPLP shall be deemed to have granted such
consent hereunder), settle prior to the Closing Date, any proceeding or
application for a reduction in the real estate tax assessment of the Property
for the current tax year unless required by a tenant pursuant to such tenant's
Lease.
4.13 TAX TREATMENT NOTIFICATION. If, to BPLP's Knowledge, BPLP receives
written notice of any challenge or examination by the Internal Revenue Service
with respect to the treatment of the Units as equity interests in BPLP for
federal income tax purposes, BPLP shall promptly thereafter notify Alan B.
Landis of the existence of any such challenge or examination.
ARTICLE 5 - CLOSING ADJUSTMENTS
All apportionments with respect to each Property shall be made in
accordance with customary practice in the county in which the Property is
located, except as expressly provided herein.
<PAGE>
5.1 TAXES, ASSESSMENTS AND UTILITIES. All real estate taxes, charges and
assessments affecting the Properties, to the extent not paid by tenants, and all
charges for water, sewer, electricity, gas, telephone and all other utilities
with respect to the Properties, shall be apportioned on a per diem basis as
provided below. General real estate taxes payable for the fiscal year in which
the applicable Closing occurs shall be prorated by Property Owners and BPLP as
of the applicable Closing Date. The full amount of any bonds or assessments
against the Property, including, without limitation, interest payable therewith,
including, without limitation, any bonds or assessments that may be payable
after the applicable Closing Date as a result of or in relation to the
construction of any improvements on the Land or any public improvements that
took place or for which any assessment was levied prior to the applicable
Closing Date shall be pro rated by Property Owners and BPLP as of the applicable
Closing Date. If any prorations under this Section cannot be calculated finally
on the applicable Closing Date, then they shall be estimated at the Closing and
calculated finally as soon after the applicable Closing Date as feasible. The
parties' obligations under this Section 5.1 shall survive the Closing.
5.2 RENT. All rights of Property Owners with respect to any amounts held
by Property Owners under the Leases (including, without limitation, security
deposits and prepaid rent, together with interest thereon) shall be assigned or
otherwise transferred to BPLP under the Conveyancing Documents, and Property
Owners shall not have any rights to or in future rental income realized with
respect to the Properties, under the Leases or otherwise. Promptly following
the Closing Date, the applicable Existing Partners shall request any tenants who
have posted letters of credit as security deposits to have such security
deposits amended or re-issued, if necessary, so that they run to the benefit of
BPLP, if applicable, as landlord under the Leases. If any prorations under this
Section cannot be calculated finally on the Closing Date, then they shall be
estimated at the Closing and calculated finally as soon after the Closing Date
as feasible. This Section 5.2 shall survive the Closing.
(a) Monthly rent and Additional Rent (as defined below) payable by
tenants shall be adjusted as of 11:59 p.m. on the day immediately preceding the
Closing Date, and any such rent and tenant charges paid for the month in which
the Closing occurs) and other credits for the account of tenants shall be paid
by or credited to BPLP by adjustment to the Contribution Price. Estimated
adjustments will be made on the applicable Closing Date on a reasonable basis
for estimated operating expenses paid by tenants as additional rent.
Notwithstanding anything to the contrary contained in Section 5.1 above or in
this Section 5.2, it is the intent of the Landis Parties and BPLP that
prorations of all operating expenses and Additional Rent shall be allocated as
between the Landis Parties and BPLP on the basis of full year 1998 amounts as
follows: all operating expenses and Additional Rent received by the Landis
Parties and/or BPLP which relate to the calendar year 1998 (or calendar year
1999, if the closing occurs in such year) shall be remitted or credited to BPLP
either at the Closing or, if later, when received, and all operating expenses
incurred by the Landis Parties with respect to calendar year 1998 (or calendar
year 1999, if the closing occurs in such year) shall be reimbursed or credited
to the Landis Parties at Closing, by agreement of the parties hereto. It is the
intention of the parties hereto that neither the Landis
<PAGE>
Parties nor BPLP will benefit from the pro-rating of operating expenses
inequitably during calendar year 1998.
(b) (i) Any of the following charges and/or rents provided for by any
Lease (but without duplication), if any exist: (A) the payment of additional
rent based upon a percentage of the tenant's business during a specified annual
or other period (sometimes referred to as "percentage rent"), (B) common area
maintenance or "CAM" charges, (C) "escalation rent" or additional rent based
upon real estate taxes, insurance, operating expenses, labor costs, cost of
living, or other index including the consumer price index or otherwise, or (D)
any other items of additional rent, however determined, e.g., charges for
electricity, water, utilities, cleaning, overtime services, sundries and/or
miscellaneous charges and building expenses, shall be adjusted and prorated on
an if, as and when collected basis (such percentage rent, CAM charges,
escalation rent and other additional rent being collectively called "ADDITIONAL
RENT").
(ii) BPLP agrees that as to any Additional Rent for accounting
periods prior to the Closing that are to be paid to BPLP after the Closing,
after payment of all expenses and other amounts attributable thereto (e.g.,
after payment of any operating expenses attributable to the period prior to
Closing which are not paid by the applicable Property Owner prior to Closing),
to pay all remaining amounts over to the applicable Existing Partners who are
partners of the Property Owner which owns the Real Property which is the subject
of the payment of such Additional Rent, upon receipt thereof. BPLP agrees that
it will (x) promptly render bills for any such Additional Rent, (y) bill tenants
such Additional Rent on a monthly basis for a period of six (6) consecutive
months thereafter, and (z) use commercially reasonable efforts to collect such
Additional Rent; provided, however, that BPLP shall have no obligation to expend
any amounts other than de minimis amounts in connection therewith, declare a
default under the applicable Lease or commence any actions or proceedings to
collect any such Additional Rent.
(iii) Additional Rent for an accounting period in which the Closing
Date occurs shall be apportioned between the applicable Existing Partners and
BPLP as of the Closing Date, with the applicable Existing Partners being
entitled to receive the proportion of such Additional Rent that the portion of
such accounting period prior to the Closing Date bears to such entire accounting
period, and BPLP being entitled to receive the proportion of such Additional
Rent that the portion of such accounting period from and after the Closing Date
bears to such entire accounting period. If, prior to the Closing, the applicable
Existing Partners (or the Property Owner in which such Existing Partners are
partners) shall receive any installments of Additional Rent attributable to
Additional Rent for periods from and after the Closing Date, such sum shall be
apportioned at the Closing. If, after the Closing, BPLP shall receive any
installments of Additional Rent attributable to Additional Rent for periods
prior to the Closing, such Additional Rent shall be paid by BPLP to the
applicable Existing Partners in accordance with paragraph (ii)(A) above.
<PAGE>
(iv) Any payment by a tenant on account of Additional Rent (but only
after the payment of all base or fixed rent under the applicable Lease) shall be
applied to Additional Rent then due in the following order of priority: (A)
first, in payment of Additional Rent for the accounting period in which the
Closing Date occurs; (B) second, in payment of Additional Rent for all
accounting periods succeeding the accounting period in which the Closing Date
occurs; and (C) third, in payment of Additional Rent for all accounting period
preceding the accounting period in which the Closing Date occurs.
(v) To the extent that any portion of Additional Rent is required to
be paid monthly by tenants, on account of estimated amounts for any calendar
year (or, if applicable, any Lease year or any other applicable accounting
period), and at the end of such calendar year (or Lease year or other applicable
accounting period, as the case may be), such estimated amounts are to be
recalculated based upon the actual expenses, taxes and other relevant factors
for that calendar year, Lease year or other applicable accounting period, with
the appropriate adjustments being made with such tenants, then such portion of
the Additional Rent shall be prorated between the applicable Existing Partners
and BPLP at the Closing based on such estimated payments (i.e., with the
applicable Existing Partners entitled to retain all monthly or other periodic
installments of such amounts paid with respect to periods prior to the calendar
month or other applicable installment period in which the Closing occurs; the
applicable Existing Partners to pay to BPLP at the Closing all monthly or other
periodic installments of such amounts theretofore received by such Existing
Partners (or the Property Owner in which such Existing Partners are partners)
with respect to periods following the calendar month or other applicable
installment period in which the Closing occurs, and the applicable Existing
Partners and BPLP to apportion as of the Closing Date all monthly or other
periodic installments of such amounts with respect to the calendar month or
other applicable installment period in which the Closing occurs).
(vi) At the time(s) of final calculation and collection from (or
refund to) each tenant of the amounts in reconciliation of actual Additional
Rent for a period for which estimated amounts paid by such tenant have been
prorated, there shall be a re-proration between the applicable Existing Partners
and BPLP. If, with respect to any tenant, the recalculated Additional Rent
exceeds the estimated amount paid by such tenant, (i) the entire excess (but
only to the extent of the amounts actually paid by such tenant and received by
BPLP, and net of all applicable expenses attributable thereto) shall be paid by
BPLP to the applicable Existing Partners, if the accounting period for which
such recalculation was made expired prior to the Closing, and (ii) such excess
shall be apportioned between the applicable Existing Partners and BPLP as of the
Closing Date (on the basis described in paragraph (a) above), if the Closing
occurred during the accounting period for which such recalculation was made,
with BPLP paying to the applicable Existing Partners the portion of such excess
which such Existing Partners are so entitled to receive (but only to the extent
of the amounts actually paid by such tenant and received by BPLP, and net of all
applicable expenses attributable thereto), and with the applicable Existing
Partners paying to BPLP the portion of such excess which BPLP is entitled to
receive (but only to the extent of the amounts actually paid by such tenant and
received by the Existing Partners). If, with respect to
<PAGE>
any tenant, the recalculated Additional Rent is less than the estimated amount
paid by such tenant, (1) the entire shortfall shall be paid by the applicable
Existing Partners to BPLP, if the accounting period for which such recalculation
was made expired prior to the Closing, and (2) such shortfall shall be
apportioned between the applicable Existing Partners and BPLP as of the Closing
Date (on the basis described in paragraph (a) above), if the Closing occurred
during the accounting period for which such recalculation was made, with the
applicable Existing Partners paying to BPLP the portion of such shortfall so
allocable to such Existing Partners.
(c) Rent and such tenant charges (including Additional Rent) which are due
but uncollected as of the Closing Date shall not be adjusted.
5.3 PAYMENTS ON PERMITTED EXCEPTIONS. All payments of principal and
interest, and all other amounts of any kind or nature on the Mortgage Debt
(including amounts related to repayment or assumption of the Mortgage Debt
according to the terms hereof, except only the NML Closing Costs) shall be the
sole cost and expense of Property Owners. Payments, if any, owing under and any
Permitted Exceptions shall be apportioned on a per diem basis as of 11:59 p.m.
on the date immediately preceding the applicable Closing Date.
5.4 CONSTRUCTION AGREEMENT PAYMENTS AND OTHER EXPENSES. Payments under
all Assigned Contracts shall be apportioned on a per diem basis as of 11:59 p.m.
on the date immediately preceding the applicable Closing Date to the extent
possible. All such expenses accruing prior to such Closing Date shall be deemed
to be the responsibility of the applicable Existing Partners and all such
expenses accruing as of such Closing Date and thereafter shall be expenses of
BPLP. If final bills are not available as of the applicable Closing, amounts to
be prorated under this Section shall be prorated on the basis of the most
current bills then available and promptly re-prorated on receipt of final bills.
All such expenses for the period preceding the applicable Closing Date shall be
the responsibility of the applicable Existing Partners, and all such expenses
commencing as of such Closing Date shall be deemed to be expenses of BPLP. This
Section 5.4 shall survive the Closing.
5.5 PARTNERS' ELECTIONS. All costs and expenses associated with
preparing, printing, distributing and collecting the Consents, including,
without limitation, all federal and state securities filings associated
therewith (excluding, however state and federal "blue sky" filings), shall be
the responsibility of the Existing Partners.
5.6 REIMBURSEMENT FOR DEPOSITS. At the Closing, (a) all cash balances
maintained by the Property Owners in unrestricted bank accounts may be withdrawn
and retained by the Existing Partners, (b) all receivables of the applicable
Property Owners set forth on Schedule DD of the Contribution Agreement (as they
relate to the Properties) shall be treated as a credit to the Existing Partners
for the purposes of adjustments made pursuant to this Article 5 and (c) BPLP
shall replace all letters of credit, bond deposits, sinking funds, escrows,
similar funds and other amounts relating to the Properties as set forth on
Schedule DD of the Contribution Agreement. All of the
<PAGE>
foregoing payments shall be made in cash at the Closing and none of the
foregoing shall have any effect on the calculation of the Contribution Price
under this Agreement.
5.7 POST-CLOSING AUDIT. On or before March 31, 1999 (or March 31, 2000 if
with respect to a Property which is acquired during 1999), BPLP shall cause a
post-Closing audit to be conducted by Coopers & Lybrand, LLP (or such other
accounting firms as may be selected by BPLP and reasonably satisfactory to the
Landis Parties) to determine the accuracy of all prorations made under this
Article (the "POST-CLOSING AUDIT"). The Landis Parties shall have the right to
review and reasonably approve the results of such Post-Closing Audit. In the
event the Landis Parties do not so approve the results of such Post-Closing
Audit, BPLP and the Landis Parties shall jointly retain another accounting firm
(which accounting firm shall be reasonably satisfactory to BPLP and the Landis
Partners) to review such Post-Closing Audit. Any decision of such other
accounting firm with respect to such Post-Closing Audit shall be binding upon
BPLP and the Landis Parties. Any party owing another party a sum of money based
on post-Closing prorations required under this Article or the Post-Closing
Audit, as reasonably approved by BPLP and the Property Owners, shall promptly
pay such sum to the other party, together with interest thereon at twelve
percent (12%) per annum from the Closing Date to the date of payment if payment
is not made within ten (10) days after delivery of a bill therefor. This
Section 5.7 shall survive Closing.
ARTICLE 6 - DEFAULTS AND REMEDIES
6.1 DEFAULTS. In the event of (i) any conditions precedent set forth in
Article 2 above, to the obligations of a party have not been satisfied (or
waived in writing by the other party) on or before the Closing Date (as the same
may be extended pursuant to this Agreement or by agreement of the parties), and
any such conditions precedent remains unsatisfied for more than fifteen (15)
days following receipt of notice thereof from the other party or (ii) of a
failure by a party to perform any of its obligations hereunder in any material
respect, which failure continues for more than thirty (30) days following
receipt of notice thereof from the other party, then the other party shall have
the right to terminate its obligation to complete the transaction contemplated
under this Agreement by delivery of notice thereof to the other party; provided
that with respect to any Willful Breach, such thirty (30) day cure period shall
extend for so long as the applicable Property Owner or Alan B. Landis is curing
such Willful Breach, as described in the definition of "Willful Breach." This
Agreement may also be terminated in accordance with Section 1.2 above. In the
event of a failure of a condition to a party's obligations under this Agreement,
such party shall, as its sole and exclusive remedy (except as set forth in this
Article below), either elect to terminate its obligation to complete the
transaction contemplated under this Agreement or to waive satisfaction of such
condition, each by delivery of notice thereof to the other party. Subject to the
terms of this Article set forth below, upon any such termination or any
termination otherwise permitted under this Agreement, all rights and obligations
of the parties under this Agreement, other than those that by their terms
survive termination, shall terminate without recourse, and this Agreement shall
be of no further force or effect.
<PAGE>
6.2 REMEDIES OF BPLP. In addition to its right to terminate this
Agreement, as provided elsewhere in this Agreement, upon the occurrence on or
before the second Closing Date hereunder of a willful breach by a Property Owner
and/or any Existing Partner in the performance of any of their respective
obligations under this Agreement, which willful breach continues for more than
fifteen (15) days following receipt of notice thereof, BPLP shall also have the
right, as its sole and exclusive remedy other than termination, to seek and
obtain specific performance of the terms of this Agreement, including, without
limitation the right to seek and obtain specific performance of the conveyance
to BPLP (in accordance with the terms and procedures contained in this
Agreement) of the Partnership Interests and/or Fee Properties.
6.3 OPTION PAYMENTS.
(a) Simultaneously with the execution and delivery of this Agreement, and
as consideration for the Property Owners entering into this Agreement, BPLP
shall pay to the applicable Property Owner the amount of $5,854,000 with respect
to the 206 Property (the "206 PROPERTY OPTION PAYMENT") and $1,385,000 with
respect to the 510 Property (the "510 PROPERTY OPTION PAYMENT" and, together
with the 206 Property Option Payment, the "OPTION PAYMENTS"), in cash. BPLP
acknowledges that Property Owners shall be entitled to receive and retain the
Option Payments prior to Closing or earlier termination of this Agreement, and
that BPLP shall not be entitled to the return of the Option Payments under any
circumstance hereunder. Upon any termination of its obligation to complete the
transaction contemplated by this Agreement by Property Owners under Section 6.1
or otherwise, the Landis Parties, as their sole and exclusive remedy under this
Agreement, and in consideration of the payment by BPLP of the Option Payments,
shall have the right to terminate this Agreement and the Landis Parties
obligations hereunder.
(b) Simultaneously with the execution and delivery of this Agreement, BPLP
shall deposit with 510 Associates the amount of $5,360,400 and shall deposit
with 206 Associates the amount of $3,573,600 (collectively, the "REFUNDABLE
OPTION PAYMENT"), in cash, with respect to the 206 Property and the 510
Property, respectively. BPLP acknowledges that the Landis Parties shall have
use of the Refundable Option Payments prior to Closing or earlier termination of
this Agreement. Notwithstanding anything to the contrary contained in this
Section 6.3, or elsewhere in this Agreement, upon the satisfaction of all
Closing Trigger Events, the Refundable Option Payment shall become, for all
purposes hereunder, a "NONREFUNDABLE OPTION PAYMENT", and shall, upon such
satisfaction, be fully earned and nonrefundable by the Landis Parties hereunder.
Upon any termination by BPLP of its obligation to complete the transaction
contemplated under this Agreement as a result of a Willful Breach or, in
accordance with its terms on July 1, 2010 BPLP shall be entitled to return of
the Refundable Option Payment (except only if and to the extent that such
Refundable Option Payment has become a Nonrefundable Option Payment hereunder)
and the Landis Parties shall promptly return and repay such Refundable Option
Payment (except only if and to the extent that such Refundable Option Payment
has become a Nonrefundable Option Payment hereunder) to BPLP. Upon any
termination of this Agreement
<PAGE>
by the Landis Parties pursuant to the terms of this Agreement (other than as a
result of the termination of this Agreement on July 1, 2010), the Landis Parties
shall be entitled to retain the Refundable Option Payment (or the Nonrefundable
Option Payment, as applicable) as its sole and exclusive remedy.
6.4 LIQUIDATED DAMAGES. THE LANDIS PARTIES HEREBY AGREE THAT THEY SHALL
NOT BE ENTITLED TO ACTUAL DAMAGES UPON A TERMINATION OF THIS AGREEMENT AND THAT
IF THE LANDIS PARTIES TERMINATE THIS AGREEMENT WHEN PERMITTED HEREUNDER PURSUANT
TO SECTION 6.1, THE LANDIS PARTIES SHALL ONLY BE ENTITLED TO THE REFUNDABLE
OPTION PAYMENT (OR THE NONREFUNDABLE OPTION PAYMENT, AS APPLICABLE), AS
DESCRIBED ABOVE IN THIS ARTICLE. THE LANDIS PARTIES AGREE THAT IT IS IMPOSSIBLE
TO CALCULATE WHAT THEIR ACTUAL DAMAGES WOULD BE IN THE EVENT OF SUCH A
TERMINATION, AND THE LANDIS PARTIES AGREE THAT THE SUM OF THE REFUNDABLE OPTION
PAYMENT (OR THE NONREFUNDABLE OPTION PAYMENT, AS APPLICBLE) IS A REASONABLE
ESTIMATION THEREOF. THEREFORE, THE LANDIS PARTIES ACKNOWLEDGE THAT THEIR RIGHT
TO RETAIN THE REFUNDABLE OPTION PAYMENT (OR THE NONREFUNDABLE OPTION PAYMENT, AS
APPLICABLE) SHALL CONSTITUTE LIQUIDATED DAMAGES AND THEIR SOLE RIGHT AND REMEDY
UPON A TERMINATION BY THEM OF THIS AGREEMENT PURSUANT TO SECTION 6.1.
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS SECTION, NOTHING
CONTAINED IN THIS SECTION SHALL BE DEEMED TO LIMIT BPLP'S LIABILITY UNDER ITS
INDEMNITY CONTAINED IN SECTION 7.2.
6.5 POST-CLOSING REMEDIES. The parties hereto acknowledge and agree that
the limitations on remedies contained in this Article only apply in the event
that the transactions contemplated under this Agreement do not occur and do not,
subject to the terms of Article 7, apply post-Closing. As to Properties which
have been acquired by BPLP, the sole remedies from and after the applicable
Closing Date with respect to such Properties shall be as set forth in Article 7.
ARTICLE 7 - INDEMNIFICATION
7.1 SURVIVAL.
(a) All representations and warranties of Alan B. Landis and the
Existing Partners contained in this Agreement or in the Representation Letter
shall survive the Closing regardless of any investigation made as follows: (x)
the representations and warranties set forth in Section 3.1(a), the first
sentence of Section 3.1(b), Section 3.1(m), Section 3.1(n) and Section 9.1 of
this Agreement and in the Representation Letter, shall survive the Closing
indefinitely (the "SPECIFIED REPRESENTATIONS") and (y) (i) the representations
and warranties set forth in Section
<PAGE>
3.1(j), shall survive only until (but excluding) the date which is the second
anniversary of the Closing) and (ii) the representations and warranties set
forth in Section 3.1(u), shall survive only until (but including) the expiration
of the statute of limitations with respect to the contribution of Partnership
Interests as contemplated by this Agreement and (z) all other representations
and warranties shall survive only until (but excluding) the date which is the
first anniversary of the Closing (such representations and warranties in clauses
(y) and (z), the "LIMITED SURVIVAL REPRESENTATIONS") provided that, if a Notice
of Claim asserting a claim for breach of any such Limited Survival
Representations or a claim for indemnification under this Article 7 with respect
to any such Limited Survival Representations shall have been given prior to the
expiration of such Limited Survival Representations, such Limited Survival
Representations shall survive, to the extent of the claim only, until such claim
is resolved.
(b) All representations and warranties of BPLP contained in this
Agreement shall survive the Closing regardless of any investigation made as
follows: (x) the representations and warranties set forth in Section 3.2(a),
the first sentence of Section 3.2(b), Section 3.2(d), the first sentence of
Section 3.2(j) and Section 9.1 of this Agreement shall survive the Closing
indefinitely (the "SPECIFIED TRANSFEREE REPRESENTATIONS") and (y) the
representations and warranties set forth in Section 3.2(l), shall survive only
until (but including) the expiration of the statute of limitations with respect
to the contribution of Partnership Interests as contemplated by this Agreement
and (z) all other representations and warranties shall survive only until (but
excluding) the date which is the first anniversary of the Closing (such
representations and warranties in clauses (y) and (z), the "LIMITED SURVIVAL
TRANSFEREE REPRESENTATIONS") provided that, if a Notice of Claim asserting a
claim for breach of any such Limited Survival Transferee Representations or a
claim for indemnification under this Article 7 with respect to any such Limited
Survival Transferee Representations shall have been given prior to the
expiration of such Limited Survival Transferee Representations, such Limited
Survival Transferee Representations shall survive, to the extent of the claim
only, until such claim is resolved.
(c) With respect to any claim by a party hereto for indemnification
for a Loss resulting from the breach of the representations or warranties
contained in this Agreement (or, with respect to the applicable Landis Parties,
the Representation Letters), notice of such claim ("NOTICE OF CLAIM") must be
given to the relevant other party within the survival period for the relevant
representation or warranty. Notwithstanding the foregoing, claims brought by
(i) any Transferee Indemnified Party in connection with any Limited Survival
Representation which is untrue as a result of fraud by the party making it or
(ii) any Landis Indemnified Party in connection with any Limited Survival
Transferee Representation which is untrue as a result of fraud by the party
making it, may be brought at any time, without regard to the limitations on
survival set forth in this Section 7.1 above.
7.2 INDEMNIFICATION BY THE LANDIS PARTIES. Subject to the limitations on
the indemnification obligations set forth in this Article 7, if the Closing
occurs, from and after the Closing Date, (i) Alan B. Landis agrees to indemnify,
defend and hold harmless the BPLP
<PAGE>
Indemnified Parties from and against all Losses which are incurred or suffered
by any one or more of them based upon, arising out of, in connection with or by
reason of (A) the breach by Alan B. Landis of the representations and warranties
in his Representation Letter or the breach by any Landis Party of the Limited
Survival Representations and/or the Specified Representations under this
Agreement (except that, with respect to the Limited Survival Representations
only, Alan B. Landis' liability under this Article 7 shall be limited to the
Units pledged or other collateral provided to Transferee pursuant to Section 7.8
below) or (B) any Excluded Liability or (C) any Partnership Claim and (ii) each
Existing Partner (severally and not jointly) agrees to indemnify, defend and
hold harmless the BPLP Indemnified Parties from and against all Losses which are
incurred or suffered by any one or more of them based upon or arising out of (A)
any breach of representation or warranty made by such person in this Agreement
or in such person's Representation Letter or (B) any Excluded Liability which is
or was a liability of such Existing Partner of Assignor.
7.3 LIMITATIONS ON CERTAIN INDEMNIFICATION OBLIGATIONS OF THE LANDIS
PARTIES. With respect to the indemnification obligations under Section 7.2, the
following provisions, if and to the extent applicable, shall apply:
(a) Time Limit Regarding Limited Survival Representations. The
indemnity obligations shall not apply to any Loss based upon a breach of the
Limited Survival Representations as to which the BPLP Indemnified Party did not
give a timely Notice of Claim in accordance with Section 7.1(c).
(b) Minimum Threshold for Claims for Losses: Credit. Alan B. Landis
and the Existing Partners shall have no liability to the BPLP Indemnified
Parties under this Agreement for the first $500,000 of Losses incurred by the
BPLP Indemnified Parties under this Agreement and Article 7 of the Contribution
Agreement (i.e. the $500,000 threshold hereunder shall be reduced both for
losses incurred by the BPLP Indemnified Parties under this Agreement and under
the Contribution Agreement). Notwithstanding the foregoing limitation on
liability, Alan B. Landis and the Existing Partners shall have liability for all
Losses incurred by the BPLP Indemnified Parties which relate to or arise from
(i) Excluded Liabilities which relate to the Northwestern Mutual Commitment,
(ii) obligations with respect to lease commissions and tenant allowances
(including without limitation, the Covance-Studley Lease Commission and the
Covance Tenant Improvement Allowance), except to the extent BPLP has received a
credit for such amounts pursuant to this Agreement. In addition, the BPLP
Indemnified Parties shall, upon the applicable Closing, be deemed to have waived
any right to indemnification with respect to Losses which relate solely to an
Identified Breach, if such Identified Breach was a Material Adverse Effect, and
BPLP nevertheless elected to consummate the transactions contemplated by this
Agreement on the applicable Closing Date hereunder, notwithstanding the
existence of such Material Adverse Effect.
(c) Maximum Liability for Breaches of Limited Survival
Representations: Cap. Except in the case of fraudulent conduct, the aggregate
liability of Alan B. Landis and the Existing
<PAGE>
Partners for Losses incurred with respect to Limited Survival Representations
shall not exceed $15,000,000 minus the aggregate liability actually paid by Alan
B. Landis, the Existing Partners and the Assignors (other than with respect to
the AT&T Obligations) (all such terms as defined in the Contribution Agreement)
with respect to Limited Survival Representations (as defined in the Contribution
Agreement) pursuant to Article 7 of the Contribution Agreement (i.e., the
$15,000,000 maximum hereunder shall be reduce both for claims paid with respect
to Limited Survival Representations under Article 7 of this Agreement and under
Article 7 of the Contribution Agreement, other than with respect to AT&T
Obligations).
(d) Third Party Recoveries. There shall be netted from any payment
for a Loss required under Section 7.2: (i) the amount of any indemnification
received by the indemnified party from an unrelated party with respect to such
Loss and (ii) the amount of any insurance proceeds or other cash receipts paid
to the indemnified party against any such Loss provided, however, that any such
recoveries from unrelated parties and/or insurers shall not reduce the maximum
aggregate liability of the applicable Landis Parties under Section 7.3(c) above.
(e) Pledged Units. The indemnity obligations of the Landis Parties
under this Article 7 shall be satisfied by any BPLP Indemnified Party in all
cases first against Units pledged or other collateral provided under Section 7.8
below. In the event that notwithstanding such requirement, for any reason an
indemnification claim is paid by any Landis Party Indemnitor under Section 7.2
hereof (whether by judgment, arbitration award, settlement or otherwise) to any
BPLP Indemnified Party then BPLP shall release Units or other collateral, if
applicable, from the pledge under Section 7.8 having a value equal to the amount
so paid.
7.4 INDEMNIFICATION BY BPLP. Subject to the limitations on the
indemnification obligations set forth in this Article 7, if the Closing occurs,
from and after the Closing Date, BPLP agrees to indemnify, defend and hold
harmless the Landis Indemnified Parties from and against all Losses which are
incurred or suffered by any one or more of them (A) based upon, arising out of,
in connection with or by reason of the breach of any of the representations or
warranties of BPLP in this Agreement, (B) based upon, arising out of, in
connection with or by reason of any Assumed Liability, (C) based upon, arising
out of, in connection with or by reason of any claim for personal liability
brought by any holder of the 510 NML Loan against any Landis Indemnified Party
pursuant to guaranty or other provisions contained in the documents evidencing
such 510 NML Loan as of the Closing Date, but only if and to the extent such
liability arises and relates solely to the period from and after the Closing
Date, or (D) based upon or arising out of BPLP's operation or ownership of the
Property Owners (or their successors and assigns) or their respective assets
after the Closing Date, but only if and to the extent such liability arises and
relates solely to the period from and after the Closing Date (and further, only
to the extent that the BPLP Indemnified Parties are not entitled to
indemnification by any Landis Party under this Article 7).
<PAGE>
7.5 LIMITATIONS ON CERTAIN INDEMNIFICATION OBLIGATIONS OF BPLP. With
respect to the indemnification obligations under Section 7.4, the following
provisions, if and to the extent applicable, shall apply:
(a) Time Limit. The indemnity obligations shall not apply to any Loss
based upon a breach of the Limited Survival Transferee Representations as to
which the Landis Indemnified Parties did not give a timely Notice of Claim in
accordance with Section 7.1(c).
(b) Third Party Recoveries. There shall be netted from any payment
for a Loss required under Section 7.4: (i) the amount of any indemnification
received by the indemnified party from an unrelated party with respect to such
Loss and (ii) the amount of any insurance proceeds or other cash receipts paid
to the indemnified party against any such Loss.
7.6 INDEMNIFICATION PROCEDURE.
(a) Notice of Claim: In the event that any party shall incur or
suffer any Losses in respect of which indemnification may be sought by such
party pursuant to the provisions of this Article 7, the party seeking to be
indemnified hereunder (the "INDEMNITEE") shall promptly provide a Notice of
Claim to the party from whom indemnification is sought (the "INDEMNITOR")
stating the nature and basis of such claim, and the estimated amount of the
claim, to the extent specified or otherwise known or reasonably estimated. In
the case of Losses arising by reason of any third party claim, the Notice of
Claim shall be given promptly after the filing of any such claim against the
Indemnitee or the determination by Indemnitee that a claim will ripen into a
claim for which indemnification will be sought, but the failure of the
Indemnitee to give the Notice of Claim within such time period shall not relieve
the Indemnitor of any liability that the Indemnitor may have to the Indemnitee
except to the extent that the Indemnitor is prejudiced thereby and then only to
the extent of such prejudice.
(b) Information: The Indemnitee shall provide to the Indemnitor on
request all information and documentation in the possession or under the control
of the Indemnitee reasonably necessary to support and verify any Losses which
the Indemnitee believes give rise to a claim for indemnification hereunder and
shall give the Indemnitor reasonable access to all books, records and personnel
in the possession or under the control of the Indemnitee which would have
bearing on such claim.
(c) Third Party/Other Claims: In the case of third party claims for
which indemnification is sought, the Indemnitor shall have the option (x) to
conduct any proceedings or negotiations in connection therewith, (y) to take all
other steps to settle or defend any such claim (provided that the Indemnitor
shall not, without the consent of the Indemnitee, settle any such claim on terms
which provide for (a) a criminal sanction or fine, (B) injunctive relief or (C)
monetary damages in excess of the amount that the Indemnitor is required to pay
hereunder) and (z) to employ counsel, which counsel shall be reasonably
acceptable to the Indemnitee, to contest
<PAGE>
any such claim or liability in the name of the Indemnitee or otherwise. In any
event, the Indemnitee shall be entitled to participate at its own expense and by
its own counsel in any proceedings relating to any third party claim; provided,
however, that if the defendants in any such action or claim include both the
Indemnitee and the Indemnitor and the Indemnitee shall have reasonably concluded
that there would be a conflict of interest under DR 5-105 of the Code of
Professional Responsibility or other applicable federal or state law were the
same counsel to represent the Indemnitee and the Indemnitor, the Indemnitee
shall be entitled to be represented by separate counsel at the Indemnitor's
expense (provided, however, that Indemnitor shall only be obligated to pay for
one (1) additional counsel with respect to all Indemnitees). So long as the
Indemnitor has assumed defense of an action or claim, such action or claim shall
not be settled without the Indemnitor's consent, which shall not unreasonably be
withheld. The Indemnitor shall, within thirty (30) days of receipt of the Notice
of Claim, notify the Indemnitee of its intention to assume the defense of such
claim. Until the Indemnitee has received notice of the Indemnitor's election
whether to defend any claim, the Indemnitee shall take reasonable steps to
defend (but may not settle) such claim. If the Indemnitor shall decline to
assume the defense of any such claim, or shall fail to notify the Indemnitee
within thirty (30) days after receipt of the Notice of Claim of the Indemnitor's
election to defend such claim, the Indemnitee may defend against and/or settle
such claim. The expenses of all proceedings, contests or lawsuits in respect of
the claims described in the preceding sentence shall be borne by the Indemnitor
but only if the Indemnitor is responsible pursuant hereto to indemnify the
Indemnitee in respect of the third party claim and, if applicable, only as
required within the limitations set forth in Sections 7.2 or 7.4 as the case may
be. Regardless of which party shall assume the defense of the claim, the parties
agree to cooperate fully with one another in connection therewith.
(d) Payment of Losses: In the case of a claim for indemnification
made under Section 7.2 or 7.4, (i) if (and to the extent) the Indemnitor is
responsible pursuant hereto to indemnify the Indemnitee in respect of the third
party claim, then within five (5) Business Days after the occurrence of a final
non-appealable determination with respect to such third party claim (or sooner
if required by such determination), the Indemnitor shall pay the Indemnitee (or
sooner if required by such determination) and delivery of notice from the
Indemnities to the Indemnitor thereof, in immediately available funds, the
amount of any Losses (or such portion thereof as the Indemnitor shall be
responsible for pursuant to the provisions hereof) and (ii) in the event that
any Losses incurred by the Indemnitee do not involve payment by the Indemnitee
of a third party claim, then, if (and to the extent) the Indemnitor is
responsible pursuant hereto to indemnify the Indemnitee against such Losses, the
Indemnitor shall within five (5) Business Days after agreement on the amount of
Losses or the occurrence of a final non-appealable determination of such amount
pay to the Indemnitee, in immediately available funds, the amount of such Losses
(or such portion thereof as the Indemnitor shall be responsible for pursuant to
the provisions hereof) (such notices under clauses (i) or (ii),a "DEMAND FOR
PAYMENT").
<PAGE>
7.7 COOPERATION IN DEFENSE. Each party indemnified under any indemnity
contained in this Agreement shall cooperate in all reasonable respects in the
defense of the third-party claim pursuant to which the indemnifying party is
alleged to have liability.
7.8 PLEDGE OF UNITS. Simultaneously with the execution and delivery of
this Agreement, and upon the first Closing Date under the Contribution
Agreement, Alan B. Landis and Linda Landis executed and delivered a Pledge and
Security Agreement pursuant to which Alan B. Landis and Linda Landis pledged a
portion of the Units received by them upon such first Closing Date, which Pledge
and Security Agreement provides security for certain obligations of the Landis
Parties (as defined in the Contribution Agreement), including without
limitation, the indemnification obligations of such Landis Parties under Article
7 of the Contribution Agreement. Notwithstanding anything to the contrary
contained in the Contribution Agreement or in this Agreement, such Pledge and
Security Agreement shall also, from and after the date of this Agreement,
provide security for the Landis Parties' (as defined in this Agreement)
obligations under this Article 7, including, without limitation, to satisfy any
Losses incurred by BPLP as a result of any breach of a representation, warranty,
covenant or indemnification of the Landis Parties under this Agreement.
ARTICLE 8 - INTENTIONALLY OMITTED
ARTICLE 9 - MISCELLANEOUS
9.1 BROKERS. Each party to this Agreement represents and warrants that
neither it nor any of its Affiliates has had any contact or dealings regarding
the Properties, or any communication in connection with the subject matter of
the transaction contemplated by this Agreement, through any real estate broker
or other person who can claim a right to a commission or finder's fee in
connection therewith (other than Eastdil Realty Company, L.L.C. and Bear,
Stearns & Co., Inc., who shall be paid by Property Owners on or prior to the
applicable Closing). In the event that any broker or finder claims a commission
or finder's fee based upon any contact, dealings or communication, the party
through whom or through whose Affiliate such broker or finder makes its claim
shall be responsible for the commission or fee and all costs and expenses
(including, without limitation, reasonable attorneys' fees and disbursements)
incurred by the other party and its Affiliates in defending against the same.
The party through whom or through whose Affiliate such broker or finder makes a
claim shall hold harmless, indemnify and defend the other party hereto and its
Affiliates and their respective, agents, employees, officers and directors, and
the Properties from and against any and all Losses, arising out of, based on, or
incurred as a result of such claim. The provisions of this Section shall survive
the Closing or termination of the parties' obligations to complete the
transaction contemplated by this Agreement.
<PAGE>
9.2 MARKETING. During the term of this Agreement, the Landis Parties
agree not to market the Properties for sale or entertain or discuss any offer to
purchase or acquire the Properties with any Person other than BPLP and its
Affiliates.
9.3 ENTIRE AGREEMENT; NO AMENDMENT. This Agreement (together with the
Related Agreements) represents the entire agreement among each of the parties
hereto with respect to the subject matter hereof. It is expressly understood
that no representations, warranties, guarantees or other statements with respect
to the subject matter hereof shall be valid or binding upon a party unless
expressly set forth in this Agreement. It is further understood that any prior
agreements or understandings between the parties with respect to the subject
matter hereof have merged in this Agreement, which alone fully expresses all
agreements of the parties hereto as to the subject matter hereof and supersedes
all such prior agreements and understandings. This Agreement may not be amended,
modified or otherwise altered except by a written agreement signed by the party
hereto against whom enforcement is sought. It is agreed that no obligation under
this Agreement which by its terms is to be performed or continue to be performed
after Closing and no provision of this Agreement which is expressly to survive
Closing shall merge upon Closing, but shall survive Closing.
9.4 CERTAIN EXPENSES. Each party hereto will pay all of its own expenses
incurred in connection with this Agreement and the transaction contemplated
hereby (whether or not the Closing shall take place), including, without
limitation, all costs and expenses herein stated to be borne by such party and
all of its respective accounting, legal, investigatory and appraisal fees.
Property Owners shall be responsible for paying (i) all amounts required to be
paid to the holders of the Mortgage Debt in connection with the repayment and/or
assumption of the Mortgage Debt, as applicable (except only the NML Closing
Costs, as set forth in Section 1.6 above), (ii) all applicable State, County and
City transfer taxes and/or transfer fees due in connection with transfer of the
Properties to BPLP, (iii) all costs associated with obtaining an "as-built"
survey required under Section 2.1(b) and (iv) all costs associated with the
applicable UCC searches required under Section 2.1(j)(xi). Any escrow fees
incurred in connection with the transfer of title to the Properties as
contemplated by this Agreement shall be split evenly between BPLP and Property
Owners. All other costs and charges in connection with the conveyance of the
Properties contemplated by this Agreement not otherwise provided for in this
Agreement shall be allocated by standard accounting and conveyancing practices
in the relevant jurisdiction where the Properties are located. The cost of
recording any deeds or other documents of conveyance (but excluding any transfer
taxes and/or transfer fees or other similar taxes, fees or charges) shall be
paid by BPLP. All sales taxes incurred in connection with the sale of personal
property hereunder shall be paid by BPLP. This provision shall survive Closing.
9.5 INTENTIONALLY OMITTED.
<PAGE>
9.6 NOTICES. Any notice or communication required under or otherwise
delivered in connection with this Agreement to any of the parties hereto shall
be written and shall be delivered to such party at the following address:
If to any Landis Party:
The Landis Group
101 Carnegie Center
Princeton, New Jersey 08540
Attn: Alan B. Landis and
Mitchell Landis
Fax: (609) 452-1453
with copies to:
Fried, Frank, Harris, Shriver & Jacobson
1 New York Plaza
New York, New York 10004
Attn: Jonathan L. Mechanic, Esq.
Fax: (212) 859-8582
And
Motola Klar & Dinowitz, LLP
185 Madison Avenue
New York, New York 10016
Attn: Jeffrey D. Stanger, Esq.
Fax: (212) 683-5555
If to BPLP to:
Boston Properties Limited Partnership
c/o Boston Properties, Inc.
8 Arlington Street
Boston, Massachusetts 02116
Attn: Douglas T. Linde, Vice President and
Frederick J. DeAngelis, Esq., General Counsel
Fax: (617) 536-4562
<PAGE>
with a copy to:
Goodwin, Procter & Hoar LLP
599 Lexington Avenue
New York, New York 10022
Attn: Ross D. Gillman, Esq.
Fax: (617) 227-8591 and
(212) 355-3333
Each notice shall be in writing and shall be sent to the party to receive it,
postage prepaid by certified mail, return receipt requested, or by a nationally
recognized overnight courier service that provides tracking and proof of
receipt. Inclusion of fax numbers is for conveniences only, and notice by fax
shall neither be sufficient nor required. Notices shall be deemed delivered
upon receipt. Each party may change its address for notice by giving notice to
all other parties in the manner required under this Section 9.6.
9.7 NO ASSIGNMENT. Except as provided in this Section below, neither this
Agreement nor any of the rights or obligations hereunder may be assigned by any
party hereto without the prior written consent of the other parties. Transferee
may, without such consent, assign all or any portion of its rights and
obligations hereunder to an Affiliate provided such Affiliate assumes all
obligations and liabilities of Transferee hereunder effective as of the date of
any such assignment. An assignment by Transferee shall not release Transferee
from responsibility for performance of its obligations hereunder. Each Existing
Partner (other than Alan B. Landis) may, without such consent, transfer all or
any portion of its Partnership Interests to any other Landis Party provided such
Landis Party assumes all obligations and liabilities of such Existing Partner
with respect to such transferred Partnership Interests hereunder effective as of
the date of any such transfer. A transfer by an Existing Partner shall not
release such Existing Partner from responsibility for performance of its
obligations hereunder.
9.8 GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York (without regard, to the
fullest extent permitted by law, to any conflict of laws rules which might
result in the application of the laws of any other jurisdiction).
9.9 MULTIPLE COUNTERPARTS. This Agreement may be executed in multiple
counterparts. If so executed, all of such counterparts shall constitute but one
agreement, and, in proving this Agreement, it shall not be necessary to produce
or account for more than one such counterpart.
9.10 FURTHER ASSURANCES. From and after the date of this Agreement and
after the Closing, the parties hereto shall take such further actions and
execute and deliver such further documents and instruments as may be reasonably
requested by the other party and are necessary to provide to the respective
parties hereto the benefits intended to be afforded hereby.
<PAGE>
9.11 MISCELLANEOUS. Whenever herein the singular number is used, the same
shall include the plural, and the plural shall include the singular where
appropriate, and words of any gender shall include the other gender when
appropriate. The headings of the Articles and the Sections contained in this
Agreement are for convenience only and shall not be taken into account in
determining the meaning of any provision of this Agreement. The words "hereof"
and "herein" refer to this entire Agreement and not merely the Section in which
such words appear. If the last day for performance of any obligation hereunder
is not a Business Day, then the deadline for such performance or the expiration
of the applicable period or date shall be extended to the next Business Day.
9.12 INVALID PROVISIONS. If any provision of this Agreement (except the
provisions relating to the Property Owners' and Assignors' obligations to
contribute or cause the contribution of the Property and the transfer of the
Assets or BPLP's obligation to issue the Units, the invalidity of which shall
cause this Agreement to be null and void) is held to be illegal, invalid or
unenforceable under present or future laws, such provision shall be fully
severable, this Agreement shall be construed and enforced as if such illegal,
invalid or unenforceable provision had never comprised a part of this Agreement,
and the remaining provisions of this Agreement shall remain in full force and
effect and shall not be affected by the illegal, invalid or unenforceable
provision or by its severance from this Agreement.
9.13 CONFIDENTIALITY; PUBLICITY. The Property Owners agree that this
Agreement shall not be recorded in any public real estate registry. Transferee
agrees to maintain in confidence through Closing, unless otherwise required by
applicable Law, reporting requirements or accounting or auditing standards to
disclose, all material and information received from the Property Owners or
otherwise regarding the Property. In the event the parties' obligations to
complete the transaction contemplated by this Agreement are terminated, upon
Property Owners' written request, Transferee shall promptly return to the
Property Owners, or destroy, all materials delivered to Transferee by the
Property Owners and all copies thereof. The Property Owners and Transferee
agree that, prior to the Closing Date, none of them, without the prior written
consent of the other, shall publicly or privately reveal any information
relating to the existence or terms and conditions of the transaction
contemplated hereby, except as permitted below in this Section or in any other
Confidentiality Agreement entered into by of the parties hereto. The parties
agree that nothing in this Section shall prevent a party from disclosing any
information otherwise deemed confidential under this Section (i) in connection
with its enforcement of its rights hereunder, or (ii) pursuant to any legal
requirement, including, without limitation, any Securities Laws, any reporting
requirement or any accounting or auditing standard or any court order. The
Property Owners and Transferee further agree that nothing in this Section shall
prevent any of them from disclosing any information otherwise deemed
confidential under this Section to its respective agents, employees, counsel and
other third parties to the extent reasonably necessary to perform due diligence
and complete the transaction contemplated hereby. Notwithstanding anything to
the contrary contained herein, all publicity concerning the transaction
contemplated by this Agreement shall be subject to the reasonable approval of
Transferee and the Property Owners. This provision shall survive termination of
this Agreement.
<PAGE>
9.14 TIME OF ESSENCE. Time is of the essence with respect to this
Agreement.
9.15 LANDIS PARTIES' REPRESENTATIVE. Notwithstanding anything to the
contrary contained in this Agreement, the Landis Parties hereby agree that Alan
B. Landis shall have the power and authority to act on behalf of the Landis
Parties, including without limitation to grant any consent, waiver or approval
or make any decision or take any action, including receiving or giving notices
hereunder or terminating this Agreement in accordance with Section 6.1 above, on
behalf of and as the duly authorized agent and representative of the Landis
Parties. The Existing Partners and the Assignors, acknowledging that the
Transferee will rely on such appointment, hereby irrevocably and unconditionally
appoint Alan B. Landis as their authorized agent and representative to act in
connection with and to settle and otherwise agree to any adjustment, proration
or other reduction in the aggregate consideration to be paid to each such
Existing Partner and Assignor in accordance with this Agreement.
[The remainder of this page is left blank intentionally]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Contribution
Agreement as an instrument under seal as of the date and year first above
written.
BOSTON PROPERTIES LIMITED PARTNERSHIP
By: Boston Properties, Inc., its general partner
/s/ William J. Wedge
By:__________________________________
William J. Wedge
Senior Vice President
PROPERTY OWNERS
206 ASSOCIATES LIMITED PARTNERSHIP
By: ABL Capital Corp., its general partner
By: /s/ Alan B. Landis
----------------------------------
Name: Alan B. Landis
Title:
CARNEGIE 510 ASSOCIATES, L.L.C.
By: 510 Associates Limited Partnership, its
managing member
By: 500 Capital Corp., its general partner
By: /s/ Alan B. Landis
--------------------------------
Name: Alan B. Landis
Title:
<PAGE>
CONTRIBUTION AGREEMENT
ASSIGNOR SIGNATURE PAGE
Reference is made to that certain Contribution Agreement (the "CONTRIBUTION
AGREEMENT") entered into as of June 30, 1998 by and among Boston Properties
Limited Partnership and the Landis Parties named therein, pursuant to which
properties and assets (or indirect interests therein) located in Mercer County,
New Jersey are to be contributed and conveyed to Boston Properties Limited
Partnership and/or its subsidiaries. The undersigned, by its execution hereof,
becomes a signatory to and agrees to be bound by and under the Contribution
Agreement as an "Existing Partner" (therein defined) and as party thereto.
Signature Line for Individual: ___________________________________
Name (print):______________________________
State of Residence:________________________
Signature Line for Entity:
Name of Entity (print):____________________
By:________________________________________
Name:______________________________________
Title:_____________________________________
<PAGE>
AGREED TO WITH RESPECT
TO THE OBLIGATIONS SET
FORTH IN SECTION 6.3 AND
SECTION 7.8
/s/ Alan B. Landis
- ----------------------
Alan B. Landis
AGREED TO WITH RESPECT
TO THE OBLIGATIONS SET
FORTH IN SECTION 7.8
/s/ Linda Landis
- ----------------------
Linda Landis
<PAGE>
Exhibit 99.5
REGISTRATION RIGHTS AND LOCK-UP AGREEMENT
BY AND AMONG
BOSTON PROPERTIES, INC., BOSTON PROPERTIES LIMITED PARTNERSHIP
AND THE
HOLDERS NAMED HEREIN
June 30, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. Certain Definitions..................................................... 2
2. Disposition Restrictions................................................ 5
3. Registration............................................................ 8
4. State Securities Laws................................................... 13
5. Expenses................................................................ 13
6. Indemnification by the Company.......................................... 14
7. Covenants of Holders.................................................... 14
8. Indemnification Procedures.............................................. 14
9. Suspension of Registration Requirement; Restriction on Sales............ 15
10. Black-Out Period........................................................ 16
11. Additional Shares....................................................... 17
12. Contribution............................................................ 17
13. Amendments and Waivers.................................................. 18
14. Notices................................................................. 18
15. Successors and Assigns.................................................. 18
16. Counterparts............................................................ 19
17. Governing Law........................................................... 19
18. Severability............................................................ 19
19. Entire Agreement........................................................ 19
SCHEDULE A LIST OF HOLDERS......................................................... 22
SCHEDULE B LIST OF PERMITTED DISTRIBUTEES.......................................... 23
SCHEDULE C LANDIS GROUP............................................................ 24
</TABLE>
1
<PAGE>
REGISTRATION RIGHTS AND LOCK-UP AGREEMENT
This Registration Rights and Lock-Up Agreement (this "Agreement") is
entered into as of June 30, 1998 by and among Boston Properties, Inc., a
Delaware corporation (the "Company"), Boston Properties Limited Partnership, a
Delaware limited partnership (the "Partnership" and, with the "Company,"
collectively, the "Acquiror"), and the Persons whose names are set forth on
Schedule A hereto (each a "Holder" and, collectively, the "Holders").
WHEREAS, the Holders have received on the date hereof units of limited
partnership interest in the Partnership denominated as "Common Units" and/or
"Series One Preferred Units" (collectively, "Units"), pursuant to that certain
Contribution and Conveyance Agreement dated June 30, 1998 among the Company,
the Partnership and the parties defined as "Property Owners," "Existing
Partners" and "Assignors" therein (the "Contribution Agreement");
WHEREAS, the Units are being issued to the Holders in a private placement
transaction and accordingly constitute restricted securities;
WHEREAS, upon the presentation of Common Units (including Common Units
acquired upon conversion of Series One Preferred Units) for redemption in
accordance with the terms hereof and the terms of the Limited Partnership
Agreement of the Partnership, the Common Units may be acquired by the Company
for shares of the Company's common stock, par value $.01 per share ("Common
Shares"), and the Company has agreed to provide certain registration rights to
the Holders in respect of such Common Shares and the Holders have agreed to
certain restrictions on the transferability and redemption of the Units and such
Common Shares;
WHEREAS, it is a condition precedent under the Contribution Agreement that
each of the Company, the Partnership and the Holders enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing, the mutual promises and
agreements set forth herein, and other valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. Certain Definitions.
As used in this Agreement, the following capitalized terms shall have the
following meanings (such definitions to be equally applicable to both the
singular and plural forms of the terms defined):
"Competitor" means a Person that directly or indirectly controls the
management of more than 1,000,000 net rentable square feet of commercial real
estate assets and that is substantially engaged in the business of owning and
operating commercial (i.e., non-
2
<PAGE>
residential) real estate for occupancy by third party tenants; provided, that in
the context of a bona fide pledge of Units or Common Shares to a commercial
bank, savings and loan institution, investment bank or similar lending or
financial institution that does not principally or primarily engage in the
ownership and operation of commercial (i.e., non-residential) real estate, such
bank or institution shall not be deemed to be a Competitor.
"Dispose" and "Disposition" means any offer, pledge, sale, contract to
sell, grant of an option to sell or other disposition, whether direct or
indirect; provided, that redemption of the Units, the exchange or conversion of
the Preferred Units into Common Units or Common Units into Common Shares and any
exchange of Common Shares or Units in a merger, reorganization, recapitalization
or other similar transaction with respect to the Partnership shall not be
included in this definition.
"The Landis Group" means collectively Alan B. Landis and the other persons
or entities listed on Schedule C hereto, and any transferee thereof who is
required to become a party to this Agreement in accordance with the terms
hereof, so long as such person holds Common Shares or Units, unless the Company
consents otherwise in writing.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"NASD" means the National Association of Securities Dealers, Inc.
"Permitted Distributee" means a direct or indirect holder of equity
interests in a Holder that is listed on Schedule B hereto and that has delivered
to the Company a Representation Letter (as defined in the Contribution
Agreement).
"Person" shall mean an individual, partnership, corporation, trust or
unincorporated organization, or a government or agency or political subdivision
thereof.
"Prospectus" shall mean the prospectus included in a Registration
Statement, including any preliminary prospectus, as amended or supplemented by
any prospectus supplement with respect to the terms of the offering of any
portion of the Registrable Shares covered by such Registration Statement, and by
all other amendments and supplements to such prospectus, including post-
effective amendments, and in each case including all material incorporated by
reference therein.
"Registrable Shares" (a) when used with respect to a Holder, shall mean the
Shares of such Holder, excluding (i) Shares for which a Registration Statement
relating to the issuance or sale thereof shall have become effective under the
Securities Act and which have been issued or disposed of under such Registration
Statement, (ii) Shares sold pursuant to Rule 144 or (iii) Shares eligible for
sale pursuant to Rule 144(k) (or any successor provision) and (b) when used
without reference to a Holder, shall mean the Registrable Shares of all Holders.
3
<PAGE>
"Registration Expenses" shall mean any and all expenses incident to
performance of or compliance with this Agreement, including, without limitation:
(i) all SEC, stock exchange or NASD registration and filing fees; (ii) all fees
and expenses incurred in connection with compliance with state securities or
"blue sky" laws (including reasonable fees and disbursements of counsel in
connection with "blue sky" qualification of any of the Registrable Shares and
the preparation of a Blue Sky Memorandum) and compliance with the rules of the
NASD; (iii) all expenses of any Persons in preparing or assisting in preparing,
word processing, printing and distributing any Registration Statement, any
Prospectus, certificates and other documents relating to the performance of and
compliance with this Agreement; (iv) all fees and expenses incurred in
connection with the listing, if any, of any of the Registrable Shares on any
securities exchange or exchanges pursuant to Section 5 hereof; and (v) the fees
and disbursements of counsel for the Company and of the independent public
accountants of the Company, including the expenses of any special audit or "cold
comfort" letters required by or incident to such performance and compliance.
Registration Expenses shall specifically exclude underwriting discounts and
commissions relating to the sale or disposition of Registrable Shares by a
selling Holder, the fees and disbursements of counsel representing a selling
Holder, and transfer taxes, if any, relating to the sale or disposition of
Registrable Shares by a selling Holder, all of which shall be borne by such
Holder in all cases.
"Registration Statement" shall mean any registration statement of the
Company which covers the issuance or resale of any of the Registrable Shares on
an appropriate form, and all amendments and supplements to such registration
statement, including post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and all materials
incorporated by reference therein.
"Rule 144" shall mean Rule 144 under the Securities Act (or any successor
provision).
"Rule 144 Transaction" means a transfer of Shares (A) complying with Rule
144 under the Securities Act as such rule is in effect on the date of such
transfer (but only including a sale pursuant to a "brokered transaction" as
defined in clauses (1) and (2) of paragraph (g) of such rule as in effect on the
date hereof) and (B) occurring at a time when Shares are registered pursuant to
Section 12 of the Exchange Act (or any successor to such Section).
"Securities Act" shall mean the Securities Act of 1933, as amended.
"SEC" shall mean the Securities and Exchange Commission.
"Shares" (a) when used with respect to a Holder, shall mean any Common
Shares issued or issuable to the Holder upon redemption or in exchange for
Common Units which are held by such Holder and which Common Units were issued by
the Partnership pursuant to the Source Agreements (or upon conversion of Series
One Preferred Units which were issued by the Partnership pursuant to the Source
Agreements), and (b) when used without reference to a Holder, shall mean the
Shares of all Holders; provided, that any Common Shares issued in
4
<PAGE>
respect of Shares as a stock dividend or in connection with a stock split,
reorganization, reclassification, merger, consolidation or similar event shall
also be deemed to be "Shares" for purposes of this Agreement.
"Source Agreements" means (i) the Contribution Agreement and (ii) the
Properties Under Development Contribution Agreement and the Development
Agreement referred to in the Contribution Agreement.
"Underwriting Limit Number" means one-half of the total number of Common
Shares that are issuable upon conversion and exchange of all Units issued under
the Source Agreements (as adjusted to reflect any splits, conversions or the
like after the date hereof).
"Volume Limit Number" means one-third of the total number of Common Shares
that are issuable upon conversion and exchange of all Units issued under the
Source Agreements (as adjusted to reflect any splits, conversions or the like
after the date hereof).
2. Disposition Restrictions.
(a) Non-Redemption Period. Each Holder hereby agrees that for a period of
three hundred seventy-five (375) days after the date hereof (the "Non-Redemption
Period") or, if later, the date of issuance of such Unit, such Holder will not
seek the redemption of the Common Units which were issued by the Partnership
pursuant to the Source Agreements or upon conversion of the Series One Preferred
Units, and prior to the expiration of such period the Partnership and the
Company will be under no obligation to recognize with respect thereto the
redemption rights under Article 8 of the Partnership Agreement of the
Partnership. Commencing on the 375th day after the date hereof, all such Common
Units shall be redeemable, at the option of each Holder thereof, all in
accordance with the exchange features and other rights, preferences and
privileges more particularly provided in the Limited Partnership Agreement of
the Partnership.
(b) Lock-Up Period. Each Holder hereby agrees that for a period of one
year after the date hereof (the "Lock-Up Period"), it will not Dispose of any
Units without the written consent of the Company, which consent may be withheld
in its sole discretion; provided, however, that, subject to Sections 2(d), (e)
and (f), such Holder may:
(i) Dispose of Units to a Permitted Distributee;
(ii) Dispose of Units pursuant to a grant of a pledge or security
interest in a bona fide transaction with an unrelated and
unaffiliated person who is not known by the transferor to be a
Competitor at the time such interest is granted;
5
<PAGE>
(iii) Dispose of Units to a Holder who is not known by the transferor
at the time of such Disposition to be a Competitor; and
(iv) Dispose of Units on his or her death to such Holder's estate,
executor, administrator or personal representative or to such
Holder's beneficiaries pursuant to a devise or bequest or by
laws of descent and distribution;
and provided, further, that the transferor shall, in connection with any
Disposition, at the reasonable request of the Company, provide evidence
reasonably satisfactory to the Company that the transfer is exempt from the
registration requirements of the Securities Act.
(c) After expiration of the Lock-up Period, each Holder agrees that it
will not Dispose of any Units, except that (subject to Sections 2(d), (e) and
(f)):
(i) a Holder who is a natural person may Dispose of Units to
his or her spouse, siblings, grandparents, parents (or spouses of such
persons) or any natural or adopted children or other descendants or to
any trust in which any such family members or such Holder retains a
majority of the beneficial interest or to a Person with respect to
which such Holder together with such Holder's family members maintains
and continues to maintain a majority of the voting and economic
interests;
(ii) a Holder that is a corporation, partnership, limited
liability company, joint venture or other business entity may Dispose
of Units to one or more Persons who have an ownership interest in such
Holder or to one or more other entities that are majority owned and
controlled, legally and beneficially, by such Holder or by one or more
of the Persons who have an ownership interest in such Holder;
(iii) a Holder may Dispose of Units as a gift or other transfer
without consideration;
(iv) a Holder may Dispose of Units pursuant to a pledge, grant
of security interest or other encumbrance effected in a bona fide
transaction with an unrelated and unaffiliated person who is not known
by such holder at the time of such Disposition to be a Competitor;
(v) a Holder may Dispose of Units to any other Holder, in any
transaction of a type permitted under Section 2(b), to any
institutional investor who represents that it is acquiring such Units
in the ordinary course of business and without the purpose or effect
of influencing control of the Company or the Partnership, to the
Company, and with the written consent of the Company (such consent not
to be unreasonably withheld or delayed);
6
<PAGE>
provided, however, that in the case of any transfer of Shares or Units pursuant
to clauses (i), (ii), (iv) and (v), the transferor shall, at the request of the
Company, provide evidence satisfactory to the Company that the transfer is
exempt from the registration requirements of the Securities Act; provided,
further, that any transaction that could be consummated through a series of
transactions under this Section 2(c) may also be consummated at once as a single
transaction without completing any of the intermediary transactions.
(d) Volume Limitation. Except as provided in the last sentence of this
paragraph, without the prior written approval of the Company, which shall not be
unreasonably withheld or delayed, so long as the Holders hold in excess of 1.0%
of the issued and outstanding Common Shares (including for purposes of such
determination (in both the numerator and the denominator), the Common Shares
that may be issued to the Holders upon the presentation of Units for redemption
but not including Common Shares underlying any other Units, options or other
derivative securities), the Holders shall not, collectively, Dispose of more
than the Volume Limit Number of Common Shares in any one hundred eighty (180)
day consecutive period, and the Company may place a restrictive legend on any
Common Shares issued upon conversion of Common Units for the purpose of
monitoring compliance with this provision. In determining the number of Common
Shares that have been Disposed in any one hundred eighty (180) day consecutive
period for purposes of the previous sentence, there shall be excluded any
Dispositions of Common Shares which are exempt from registration (and are not
registered) under the Securities Act and any block trades of Common Shares
executed outside of the normal New York Stock Exchange trading of Common Shares
and which, in either case, are taken by the transferee subject to the continued
restrictions in this agreement. The Company agrees to maintain records of
transfers by the Holders of which the Holders inform the Company and upon any
inquiry by a Holder will provide up-to-date information as to the Volume Limit
Number of Common Shares remaining at any time as of any specified date based on
such information. Notwithstanding the foregoing, (i) any sales of Common Shares
made pursuant to a firm commitment underwriting may, when aggregated with prior
sales by the Holders during the previous one hundred seventy-nine (179) days,
exceed the Volume Limit Number but not the Underwriting Limit Number of Common
Shares and (ii) this paragraph shall not prevent the Holders from Disposing of
Shares in connection with a tender or exchange offer made to all holders of
Common Shares.
The provisions of the prior paragraph shall not apply to sales by the
Holders at any time that the Company is in default in paying quarterly
distributions on Series One Preferred Units when due, and such suspension shall
remain in effect until all accumulated distributions on the Series One Preferred
Units have been paid.
(e) Competitors. Each Holder agrees that, without the consent of the
Company, it will not, knowingly, directly or indirectly Dispose of any Shares or
Units to a Competitor; provided, that this provision shall not apply:
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<PAGE>
(i) with respect to a Disposition pursuant to a tender offer or
exchange offer made to substantially all holders of Common Shares or any
tender offer or exchange offer made by the Company or any affiliate of the
Company or any merger, consolidation or recapitalization of the Company;
(ii) with respect to any Disposition of Shares which is effected by
means of (i) a registered, underwritten public offering or (ii) pursuant to
a Rule 144 Transaction (or other sale) which is effected in the ordinary
course on the New York Stock Exchange (or other exchange where the Shares
may be listed), and which is not in either case engaged in for the purpose
of directly or indirectly Disposing of Shares to a Competitor, provided,
that prior to engaging in such transaction the Holder informs the broker
that may be effecting such sale of the restrictions set forth herein;
(iii) with respect to any Disposition of Shares which is effected
pursuant to a public offering effected with the engagement of a nationally
recognized placement agent (who has been informed of the restrictions in
this provision) involving sales to more than 10 persons, provided, that no
person in such sale who (alone or together with persons the Holder knows to
be affiliates of such person) acquires Shares for an aggregate purchase
price of more than $1,500,000 is known by such Holder to be a Competitor;
and
(iv) to a Disposition of Shares or Units to the Company or to
another Holder who is not known by the transferring Holder at the time of
such Disposition to be a Competitor.
(f) Binding Obligation; Certain Provisions of Organizational Documents. If
a Holder Disposes of Shares or Units under any provision of this Section 2
(other than a Disposition of the type described in Sections 2(e)(i), (ii) or
(iii)), such Shares and Units shall remain subject to this Agreement and, as a
condition of the validity of such disposition, the transferee shall be required
to execute and deliver a counterpart of this Agreement (except that a pledgee
shall not be required to execute and deliver a counterpart of this Agreement
until it forecloses upon such Units). Thereafter, such transferee shall be
deemed to be the Holder for purposes of this Agreement. The provisions set forth
in this Agreement permitting Dispositions of the Shares and Units shall not be
deemed in any manner to limit any provision of the Company's Certificate of
Incorporation or the Partnership's Limited Partnership Agreement which set forth
restrictions or limitations on the transferability of Shares or Units.
3. Registration.
(a) Filing of Resale Shelf Registration Statement. Subject to the
conditions set forth in this Agreement, the Company shall cause to be filed by
the expiration of the Non-Redemption Period a Registration Statement under Rule
415 under the Securities Act relating to (i) the sale by any Holder who is an
affiliate of the Company (as defined in Rule 144(a)
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under the Securities Act) of all of the Registrable Shares of such Holder or
Holders in accordance with the terms hereof and (ii) the sale by any Holder of
Registrable Shares as may be required under Section 3(b)(ii), and shall use
reasonable efforts to cause such Registration Statement to be declared effective
by the SEC as soon as practicable thereafter. The Company agrees to use
reasonable efforts to keep the Registration Statement, after its date of
effectiveness, continuously effective with respect to the Registrable Shares of
a particular Holder until the earlier of (a) the date on which such Holder no
longer holds any Registrable Shares or (b) the date on which all of the
Registrable Shares held by such Holder have become eligible for sale pursuant to
Rule 144(k) (or any successor provision) (hereinafter referred to as the "Resale
Shelf Registration Expiration Date").
(b) Registration Statement Covering Issuance of Common Shares.
(i) The Company will, by the expiration of the Non-Redemption Period,
file a registration statement (the "Issuance Registration Statement") under
Rule 415 under the Securities Act relating to the issuance to the Holders
of Registrable Shares upon the redemption of Common Units or in exchange
for Common Units. Thereupon, the Company shall use reasonable efforts to
cause such Registration Statement to be declared effective by the SEC for
all Common Shares covered thereby. The Company agrees to use reasonable
efforts to keep the Issuance Registration Statement continuously effective
until and including the date on which all Holders have redeemed or
exchanged their Common Units (including any Common Units that may be issued
upon conversion of Series One Preferred Units) for Common Shares or cash
(the "Issuance Registration Expiration Date").
(ii) In the event that the Company determines that it is unable to
cause such Issuance Registration Statement to be declared effective by the
SEC within ninety (90) days after the expiration of the Non-Redemption
Period or (except as otherwise permitted by Sections 9(b) and 10) is unable
or it is impracticable to keep such Issuance Registration Statement
effective until the date on which each Holder has redeemed or exchanged
such Holder's Common Units (including any Common Units that may be issued
upon Conversion of Series One Preferred Units) for Common Shares, then each
Holder shall have the rights set forth in Section 3(a) above whether or not
such Holder is an affiliate of the Company.
(c) Demand Registration. Subject to the conditions set forth in this
Agreement, at any time after the later of the Resale Shelf Registration
Expiration Date and the Issuance Registration Expiration Date and while any
Registrable Shares are outstanding, the Company shall, at the written request of
any Holder who is unable to sell its Registrable Shares pursuant to Rule 144(k)
(or any successor provision), cause to be filed as soon as practicable after the
date of such request by such Holder a Registration Statement under Rule 415
under the Securities Act relating to the sale by the Holder of all of the
Registrable Shares held by such Holder in accordance with the terms hereof, and
shall use reasonable efforts to cause such
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<PAGE>
Registration Statement to be declared effective by the SEC as soon as
practicable thereafter. The Company may, in its sole discretion, elect to file
the Registration Statement before receipt of notice from any Holder. The Company
agrees to use reasonable efforts to keep the Registration Statement continuously
effective, after its date of effectiveness, until the date on which such Holder
no longer holds any Registrable Shares.
(d) Piggyback Registration. Following that date that is ninety (90) days
after the expiration of the Non-Redemption Period, if, at any time thereafter,
while any Registrable Shares are outstanding and (except as otherwise permitted
by Sections 9(b) and 10) a Registration Statement applicable to Holders under
Sections 3(a), 3(b) or 3(c) is not effective, the Company proposes to file a
registration statement under the Securities Act with respect to an offering
solely of Common Shares solely for cash (other than a registration statement (i)
on Form S-8 or any successor form to such Form or in connection with any
employee or director welfare, benefit or compensation plan, (ii) on Form S-4 or
any successor form to such Form or in connection with an exchange offer, (iii)
in connection with a rights offering exclusively to existing holders of Common
Shares, (iv) in connection with an offering solely to employees of the Company
or its subsidiaries, or (v) relating to a transaction pursuant to Rule 145 of
the Securities Act), for its own account, the Company shall give prompt written
notice of such proposed filing to the Holders. The notice referred to in the
preceding sentence shall offer Holders the opportunity to register such amount
of Registrable Shares as each Holder may request (a "Piggyback Registration").
Subject to the provisions of Section 4 below, the Company shall include in such
Piggyback Registration, in the registration and qualification for sale under the
blue sky or securities laws of the various states and in any underwriting in
connection therewith all Registrable Shares for which the Company has received
written requests for inclusion therein within ten (10) calendar days after the
notice referred to above has been given by the Company to the Holders. Holders
of Registrable Shares shall be permitted to withdraw all or part of the
Registrable Shares from a Piggyback Registration at any time prior to the
effective date of such Piggyback Registration. If a Piggyback Registration is
an underwritten primary registration on behalf of the Company and the managing
underwriter advises the Company that the total number of Common Shares requested
to be included in such registration by the Holders and holders under similar
registration rights agreements exceeds the number of Common Shares that can be
sold in such offering without impairing the pricing or other commercial
practicality of such offering, the Company will include in such registration in
the following priority: (i) first, all Common Shares the Company proposes to
sell, (ii) second, up to the full number of applicable Common Shares requested
to be included in such registration by any holders identified in that certain
Registration Rights and Lock-Up Agreement dated June 23, 1997, as amended from
time to time, by and among the Company and such holders, and (iii) third, up to
the full number of applicable Registrable Shares requested to be included in
such registration by any Holders and any other holders under similar
registration rights agreements with the Company which, in the case of this
clause (iii), in the opinion of such managing underwriter, can be sold without
adversely affecting the price range or probability of success of such offering
(with, to the extent necessary, Registrable Shares allocated pro rata among the
Holders and such other
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<PAGE>
holders on the basis of the total number of Common Shares requested to be
included in such registration by all such holders). If in connection with any
registration under this Section 3(d), the Common Shares to be registered will be
distributed by or through one or more underwriters, then the Company will make
reasonable efforts, upon the request of any Holder requesting registration of
Registrable Shares under this Section 3(d), to arrange for such underwriters to
include the Registrable Shares of such Holder among the Shares to be distributed
by or through such underwriters.
(e) Notification and Distribution of Materials. The Company shall notify
each Holder of the effectiveness of any Registration Statement applicable to the
Shares of such Holder and shall furnish to each such Holder such number of
copies of the Registration Statement (including any amendments, supplements and
exhibits), the Prospectus contained therein (including each preliminary
prospectus and all related amendments and supplements) and any documents
incorporated by reference in the Registration Statement or such other documents
as such Holder may reasonably request in order to facilitate its sale of the
Registrable Shares in the manner described in the Registration Statement.
(f) Amendments and Supplements. The Company shall prepare and file with
the SEC from time to time such amendments and supplements to the Registration
Statement and Prospectus used in connection therewith as may be necessary to
keep the Registration Statement effective and to comply with the provisions of
the Securities Act with respect to the disposition of all the Registrable Shares
until the earlier of (a) such time as all of the Registrable Shares have been
issued or disposed of in accordance with the intended methods of disposition by
the Holder (in the case of a Registration Statement filed pursuant to Section
3(a) hereof) or issued in accordance with the intended method of issuance by the
Company (in the case of a Registration Statement filed pursuant to Section 3(b)
hereof) or (b) the date on which the Registration Statement ceases to be
effective in accordance with the terms of this Section 3. Upon ten (10) business
days' notice, the Company shall file any supplement or post-effective amendment
to the Registration Statement with respect to the plan of distribution or such
Holder's ownership interests in Registrable Shares that is reasonably necessary
to permit the sale of the Holder's Registrable Shares pursuant to the
Registration Statement. The Company shall file any necessary listing
applications or amendments to the existing applications to cause the Shares
registered under any Registration Statement to be then listed or quoted on the
primary exchange or quotation system on which the Common Shares are then listed
or quoted.
(g) Notice of Certain Events. The Company shall promptly notify each
Holder of, and confirm in writing, the filing of the Registration Statement or
any Prospectus, amendment or supplement related thereto or any post-effective
amendment to the Registration Statement and the effectiveness of any post-
effective amendment.
At any time when a Prospectus relating to the Registration Statement is
required to be delivered under the Securities Act by a Holder to a transferee,
the Company shall immediately notify each Holder of the happening of any event
as a result of which the Prospectus included
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<PAGE>
in such Registration Statement, as then in effect, includes an untrue statement
of a material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. In such event, the
Company shall promptly prepare and furnish to each applicable Holder a
reasonable number of copies of a supplement to or an amendment of such
Prospectus as may be necessary so that, as thereafter delivered to the
purchasers of Registrable Shares, such Prospectus shall 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 light of the
circumstances under which they are made, not misleading. The Company will, if
necessary, amend the Registration Statement of which such Prospectus is a part
to reflect such amendment or supplement.
(h) Underwritten Offerings. In the case of an underwritten offering of
Registrable Shares in which Holders will offer a number of Registrable Shares
with an aggregate offering price to the public of at least $50 million, the
Company shall permit Holders who hold a majority of all Registrable Shares held
by the Holders who are participating in such offering to select the investment
banker(s) and manager(s) who will administer such offering, subject to the
approval of the Company which will not be unreasonably withheld. In connection
with any such underwritten offering, the Company (upon reasonable advance
notice) will (i) enter into underwriting and related agreements reasonably
acceptable to the Company with customary terms (including representations and
warranties and indemnification provisions, such provisions to be, to the extent
customary, in favor of the selling Holders as well as the underwriters, but
which terms, however, shall be no less favorable to the Company than the most
recent underwriting agreement entered into by the Company); (ii) to the extent
not otherwise disruptive of the Company's operations, reasonably cooperate with
the underwriter(s); (iii) provide customary closing documentation; (iv) to the
extent necessary, amend the Registration Statement; (v) to the extent not
otherwise disruptive of the Company's operations, provide such information and
make available appropriate personnel as may reasonably be requested by the
Holders or the managing underwriters, and (vi) to the extent not otherwise
disruptive of the Company's operations, provide such Holder and underwriters and
their respective counsel and accountants, if any, the opportunity to participate
in the preparation of such Registration Statement, provided, that (a) Company
personnel will not be required to participate in road show presentations (but,
upon reasonable advance notice and to the extent not unduly disruptive of the
Company's operations, Company personnel whose identity and office may be
reasonably determined by the Company will be available to participate in a
reasonable number of conference calls) and (b) the Company will be reimbursed by
the Holders participating in the offering (who shall be jointly and severally
liable for such reimbursement) for any out of pocket costs and expenses in
connection with such cooperation to the extent such expenses are greater than
the expenses, or are not the type of expenses, which would be borne by the
Company in the case of other Registration Statements filed hereunder (e.g., the
cost of preparing glossy prospectuses with pictures and the cost of any road
show presentations which the Company may in its sole discretion may elect to
participate in).
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<PAGE>
4. State Securities Laws. Subject to the conditions set forth in this
Agreement, the Company shall, in connection with the filing of any Registration
Statement hereunder, file such documents as may be necessary to register or
qualify the Registrable Shares under the securities or "Blue Sky" laws of such
states as any Holder may reasonably request, and the Company shall use its best
efforts to cause such filings to become effective; provided, however, that the
Company shall not be obligated to qualify as a foreign corporation to do
business under the laws of any such state in which it is not then qualified or
to file any general consent to service of process in any such state. Once
effective, the Company shall use its best efforts to keep such filings effective
until the earlier of (a) such time as all of the Registrable Shares have been
disposed of in accordance with the intended methods of disposition by the Holder
as set forth in the Registration Statement, (b) in the case of a particular
state, a Holder has notified the Company that it no longer requires an effective
filing in such state in accordance with its original request for filing or (c)
the date on which the Registration Statement ceases to be effective.
5. Expenses. Except as provided in Section 3(h), the Company shall bear
all Registration Expenses incurred in connection with the registration of the
Registrable Shares pursuant to this Agreement, except that each Holder shall be
responsible for any brokerage or underwriting commissions and taxes of any kind
(including, without limitation, transfer taxes) with respect to any disposition,
sale or transfer of Registrable Shares sold by it and for any legal, accounting
and other expenses incurred by it.
6. Indemnification by the Company. The Company agrees to indemnify each
of the Holders and their respective officers, directors, employees, agents,
representatives, fiduciaries and affiliates, and any underwriter (as defined in
the Securities Act (unless a formal underwriting agreement is entered into
between the Company and such underwriter, in which case the indemnification
provisions, if any, set forth therein shall apply), and each person or entity,
if any, that controls a Holder within the meaning of the Securities Act, and
each other person or entity, if any, subject to liability because of his, her or
its connection with a Holder (each, an "Indemnitee"), against any and all
losses, claims, damages, actions, liabilities, costs and expenses (including
without limitation reasonable fees, expenses and disbursements of attorneys and
other professionals), joint or several, arising out of or based upon any
violation by the Company of the Securities Act or of any rule or regulation
promulgated thereunder (i) applicable to the Company and relating to action or
inaction required of the Company in connection with any Registration Statement
or Prospectus, or (ii) upon any untrue or alleged untrue statement of material
fact contained in the Registration Statement or any Prospectus, or any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided, that the
Company shall not be liable to such Indemnitee or any person who participates as
an underwriter in the offering or sale of Registrable Shares or any other
person, if any, who controls such underwriter within the meaning of the
Securities Act, in any such case to the extent that any such loss, claim,
damage, liability (or action or proceeding in respect thereof) or expense arises
out of or is based upon (a) an untrue statement
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<PAGE>
or alleged untrue statement or omission or alleged omission made in such
Registration Statement or in any such Prospectus in reliance upon and in
conformity with information regarding such Indemnitee or its plan of
distribution or ownership interests which was furnished in writing by such
person to the Company for use in connection with the Registration Statement or
the Prospectus contained therein by such Indemnitee or (b) such Holder's failure
to send or give a copy of the final, amended or supplemented prospectus
furnished to the Holder by the Company at or prior to the time such action is
required by the Securities Act to the person claiming an untrue statement or
alleged untrue statement or omission or alleged omission if such statement or
omission was corrected in such final, amended or supplemented prospectus.
7. Covenants of Holders. Each of the Holders (severally and not jointly)
hereby agrees (a) to cooperate with the Company and to furnish to the Company
all such information concerning its plan of distribution and ownership interests
with respect to its Registrable Shares in connection with the preparation of a
Registration Statement with respect to such Holder's Registrable Shares and any
filings with any state securities commissions as the Company may reasonably
request, (b) to deliver or cause delivery of the Prospectus contained in such
Registration Statement (other than an Issuance Registration Statement) to any
purchaser of the shares covered by such Registration Statement from the Holder
and (c) to indemnify the Company, its officers, directors, employees, agents,
representatives and affiliates, and each person, if any, who controls the
Company within the meaning of the Securities Act, and each other person, if any,
subject to liability because of his connection with the Company, against any and
all losses, claims, damages, actions, liabilities, costs and expenses
(including, without limitation, reasonable fees, expenses and disbursements of
attorneys and other professionals) arising out of or based upon any untrue
statement or alleged untrue statement of material fact contained in either such
Registration Statement or the Prospectus contained therein, or any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, if and to the extent that such statement
or omission occurs from reliance upon and in conformity with written information
regarding such Holder, its plan of distribution or its ownership interests,
which was furnished to the Company by such Holder expressly for use therein
unless such statement or omission was corrected in writing to the Company not
less than three (3) business days prior to the date of the final prospectus (as
supplemented or amended, as the case may be) or (ii) the failure by the Holder
to deliver or cause to be delivered the Prospectus contained in such
Registration Statement (as amended or supplemented, if applicable) furnished by
the Company to the Holder to any purchaser of the shares covered by such
Registration Statement from the Holder through no fault of the Company.
Notwithstanding the provisions of this Section 7, no Holder shall be required to
pay as indemnification hereunder any amount in excess of the gross proceeds from
the sale of Shares by such Holder which gave rise to the incurrence of such
indemnification.
8. Indemnification Procedures.
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Any person entitled to indemnification under this Agreement shall notify
promptly the indemnifying party in writing of the commencement of any action or
proceeding with respect to which a claim for indemnification may be made
hereunder, but the failure of any indemnified party to provide such notice shall
not relieve the indemnifying party of its obligations hereunder, except to the
extent the indemnifying party is materially prejudiced thereby and shall not
relieve the indemnifying party from any liability which it may have to any
indemnified party otherwise than hereunder. In case any action or proceeding is
brought against an indemnified party and it shall notify the indemnifying party
of the commencement thereof, the indemnifying party shall be entitled to
participate therein and, unless in the reasonable opinion of outside counsel to
the indemnified party a conflict of interest between such indemnified and
indemnifying parties may exist in respect of such claim, to assume the defense
thereof (alone or jointly with any other indemnifying party similarly notified),
to the extent that it chooses, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party that it so chooses, the indemnifying party shall not be liable
to such indemnified party for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense thereof; provided,
however, that (i) if the indemnifying party fails to take reasonable steps
necessary to defend diligently the action or proceeding within twenty (20)
business days after receiving notice from such indemnified party that the
indemnified party believes it has failed to do so; or (ii) if such indemnified
party who is a defendant in any action or proceeding which is also brought
against the indemnifying party reasonably shall have reasonably concluded, based
on the advice of counsel, that there may be one or more legal defenses available
to such indemnified party which are not available to the indemnifying party; or
(iii) if representation of both parties by the same counsel is otherwise
inappropriate under applicable standards of professional conduct, then, in any
such case, the indemnified party shall have the right to assume or continue its
own defense as set forth above (but with no more than one firm of counsel for
all indemnified parties in each jurisdiction, except to the extent any
indemnified party or parties reasonably shall have concluded, based on the
advice of counsel, that there may be legal defenses available to such party or
parties which are not available to the other indemnified parties or to the
extent representation of all indemnified parties by the same counsel is
otherwise inappropriate under applicable standards of professional conduct) and
the indemnifying party shall be liable for any expenses therefor. No
indemnifying party shall, without the written consent of the indemnified party
(which shall not be unreasonably withheld), effect the settlement or compromise
of, or consent to the entry of any judgment with respect to, any pending or (to
the knowledge of the indemnifying party) threatened action or claim in respect
of which indemnification or contribution may be sought hereunder (whether or not
the indemnified party is an actual or potential party to such action or claim)
unless such settlement, compromise or judgment (A) includes an unconditional
release of the indemnified party from all liability arising out of such action
or claim and (B) does not include a statement as to or an admission of fault,
culpability or a failure to act, by or on behalf of any indemnified party.
9. Suspension of Registration Requirement; Restriction on Sales.
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(a) The Company shall promptly notify each Holder of, and confirm in
writing, the issuance by the SEC of any stop order suspending the effectiveness
of a Registration Statement with respect to such Holder's Registrable Shares or
the initiation of any proceedings for that purpose. The Company shall use its
best efforts to obtain the withdrawal of any order suspending the effectiveness
of such a Registration Statement at the earliest possible moment.
(b) Notwithstanding anything to the contrary set forth in this Agreement,
the Company's obligation under this Agreement to cause a Registration Statement
and any filings with any state securities commission to become effective or to
amend or supplement a Registration Statement shall be suspended in the event and
during such period as unforeseen circumstances exist (including without
limitation (i) an underwritten primary offering by the Company if the Company is
advised by the underwriters that the sale of Registrable Shares under the
Registration Statement would impair the pricing or commercial practicality of
the primary offering or (ii) pending negotiations relating to, or consummation
of, a transaction or the occurrence of an event that would require additional
disclosure of material information by the Company in the Registration Statement
or such filing, as to which the Company has a bona fide business purpose for
preserving confidentiality or which renders the Company unable to comply with
SEC requirements) (such unforeseen circumstances being hereinafter referred to
as a "Suspension Event") that would make it impractical or unadvisable to cause
the Registration Statement or such filings to become effective or to amend or
supplement the Registration Statement, but such suspension shall continue only
for so long as such event or its effect is continuing. The Company shall notify
the Holders of the existence and, in the case of circumstances referred to in
clause (i) of this Section 9(b), nature of any Suspension Event.
(c) Each holder of Registrable Shares agrees, if requested by the Company
in the case of a Company-initiated non-underwritten offering or if requested by
the managing underwriter or underwriters in a Company-initiated underwritten
offering, not to effect any public sale or distribution of any of the securities
of the Company, including a sale pursuant to Rule 144, during the fifteen (15)
day period prior to, and during the sixty (60) day period beginning on, the date
of commencement of such Company-initiated offering (such period, or such lesser
period as the Company may specify, a "Company Sale Period"), subject to its
rights under Section 3(d) hereof, and provided, that any such request shall be
made no more then three times in any twelve-month period.
(d) Notwithstanding anything to the contrary in this Agreement, in no
event shall Suspension Events be permitted to take effect more than twice in any
twelve-month period and in no event shall Suspension Events and Company Sale
Periods be permitted to take effect for more than an aggregate of one hundred
eighty (180) days in any twelve-month period.
10. Black-Out Period. Each Holder agrees that, following the
effectiveness of any Registration Statement (except an Issuance Registration
Statement) relating to Registrable Shares of such Holder, such Holder will not
effect any sales of the Registrable Shares pursuant to the Registration
Statement or any filings with any state Securities Commission at any time
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<PAGE>
after such Holder has received notice from the Company to suspend sales as a
result of the occurrence or existence of any Suspension Event or so that the
Company may correct or update the Registration Statement or such filing. During
such period, the Company will not be obligated to effect redemptions of Units
under an Issuance Registration Statement. The Holder may recommence effecting
sales of the Shares pursuant to the Registration Statement or such filings, and
the Company will be obligated to resume effecting redemptions of Units under an
Issuance Registration Statement, and all other obligations which are suspended
as a result of a Suspension Event shall no longer be so suspended, following (i)
further notice to such effect from the Company, which notice shall be given by
the Company not later than five (5) business days after the conclusion of any
such Suspension Event, or (ii) if earlier, the date on which the Company sells
Common Shares under a registration statement filed under the Securities Act
(except for sales made under a registration statement on Form S-8 (or a
successor form or procedure for selling securities pursuant to employee benefit
plans and compensation arrangements) or a sale made in connection with a
dividend or interest reinvestment or direct stock purchase plan.)
11. Additional Shares. The Company, at its option, may register, under
any Registration Statement and any filings with any state securities commissions
filed pursuant to this Agreement, any number of unissued Common Shares of the
Company or any Common Shares of the Company owned by any other shareholder or
shareholders of the Company.
12. Contribution. If the indemnification provided for in Sections 6 and 7
is unavailable to an indemnified party with respect to any losses, claims,
damages, actions, liabilities, costs or expenses referred to therein or is
insufficient to hold the indemnified party harmless as contemplated therein,
then the indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages, actions, liabilities, costs or expenses
in such proportion as is appropriate to reflect the relative fault of the
Company, on the one hand, and the Indemnitee, on the other hand, in connection
with the statements or omissions which resulted in such losses, claims, damages,
actions, liabilities, costs or expenses as well as any other relevant equitable
considerations. The relative fault of the Company, on the one hand, and of the
Indemnitee, on the other hand, shall be determined by reference to, among other
factors, whether the untrue or alleged untrue statement of a material fact or
omission to state a material fact relates to information supplied by the Company
or by the Indemnitee and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission;
provided, however, that in no event shall the obligation of any indemnifying
party to contribute under this Section 12 exceed the amount that such
indemnifying party would have been obligated to pay by way of indemnification if
the indemnification provided for under Sections 6 or 7 hereof had been available
under the circumstances.
The Company and the Holders agree that it would not be just and equitable
if contribution pursuant to this Section 12 were determined by pro rata
allocation or by any other
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method of allocation that does not take account of the equitable considerations
referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 12, no Holder shall be
required to contribute any amount in excess of the amount by which the gross
proceeds from the sale of Shares exceeds the amount of any damages that the
Holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission. No indemnified party guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any indemnifying party who was not guilty
of such fraudulent misrepresentation.
13. Amendments and Waivers. The provisions of this Agreement may not be
amended, modified, or supplemented or waived without the prior written consent
of the Company and members of the Landis Group holding in excess of two-thirds
of the aggregate of all Shares held by (or issuable to) such members.
14. Notices. Except as set forth below, all notices and other
communications provided for or permitted hereunder shall be in writing and shall
be deemed to have been duly given if delivered personally or sent by registered
or certified mail (return receipt requested), postage prepaid or courier or
overnight delivery service to the respective parties at the following addresses
(or at such other address for any party as shall be specified by like notice,
provided, that notices of a change of address shall be effective only upon
receipt thereof):
If to the Company: Boston Properties, Inc.
8 Arlington Street
Boston, MA 02116
Attn: Edward H. Linde, President
Telecopy: (617) 536-4233
with a copy to: Goodwin, Procter & Hoar LLP
Exchange Place
Boston, MA 02109
Attn: Edward M. Schulman, Esq.
Telecopy: (617) 523-1231
If to the Holders: As listed on the applicable Holder Signature Page
In addition to the manner of notice permitted above, notices given pursuant to
Sections 9 and 10 hereof may be effected telephonically and confirmed in writing
thereafter in the manner described above.
15. Successors and Assigns. This Agreement shall be binding upon the
parties hereto and their respective successors and assigns and shall inure to
the benefit of the parties
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hereto and their respective successors and assigns. This Agreement may not be
assigned by any Holder and any attempted assignment hereof by any Holder will be
void and of no effect and shall terminate all obligations of the Company
hereunder; provided, that any Holder may assign its rights hereunder to any
person to whom such Holder may Dispose of Shares and/or Units pursuant to
Section 2 hereof.
16. Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
17. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware applicable to contracts made
and to be performed wholly within said State.
18. Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions contained herein shall not be in any way impaired
thereby, it being intended that all of the rights and privileges of the parties
hereto shall be enforceable to the fullest extent permitted by law.
19. Entire Agreement. This Agreement is intended by the parties as a
final expression of their agreement and intended to be the complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein, with respect to such subject matter. This Agreement supersedes all
prior agreements and understandings between the parties with respect to such
subject matter.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
BOSTON PROPERTIES, INC.
By: /s/ William J. Wedge
__________________________
William J. Wedge
Senior Vice President
BOSTON PROPERTIES LIMITED
PARTNERSHIP
By: Boston Properties, Inc.,
its general partner
By: /s/ William J. Wedge
__________________________
William J. Wedge
Senior Vice President
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<PAGE>
REGISTRATION RIGHTS AND LOCK-UP AGREEMENT
HOLDER SIGNATURE PAGE
Reference is made to that certain Registration Rights and Lock-Up Agreement
(the "Registration Rights Agreement") entered into on June 30, 1998 by and
among Boston Properties, Inc., Boston Properties Limited Partnership, and the
Holders named therein in connection with the contribution and conveyance of
properties and assets (or indirect interests therein) located in Princeton, New
Jersey and East Brunswick, New Jersey. The undersigned, by its execution
hereof, agrees to be bound by all the terms of a Holder thereunder.
____________________________________
Name (print):
Date:
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<PAGE>
Exhibit 99.6
NON-COMPETITION AGREEMENT
AGREEMENT (this "Agreement") made as of the 30th day of June, 1998 by and
between Alan B. Landis residing at 983 Park Avenue, New York, New York 10028
("Mr. Landis") and Boston Properties, Inc., a Delaware corporation, with a
principal place of business at 8 Arlington Street, Boston, Massachusetts 02116
(together with its subsidiaries, the "Company").
WHEREAS, Mr. Landis is a party to a certain Contribution and Conveyance
Agreement dated as of June 30, 1998 (as may be amended, supplemented or modified
from time to time, the "Contribution Agreement") providing for the contribution
and conveyance to the Company of certain partnership interests and assets; and
WHEREAS, it is a condition to the closing of the Contribution Agreement
that Mr. Landis be appointed to the Board of Directors of the Company (the
"Board"); and
WHEREAS, it is a condition to such appointment that Mr. Landis enter into
the non-competition, confidentiality and other agreements set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements contained herein, and intending to be legally bound hereby, Mr.
Landis and the Company agree as follows:
1. Noncompetition.
(a) Except as provided in subparagraph 1(c) below, Mr. Landis
covenants and agrees that for so long as he serves as a director of the Company,
Mr. Landis shall not, without the prior written consent of the Company (which
shall be authorized by approval of the Board, including the approval of a
majority of the independent Directors of the Company), directly or, to his
knowledge indirectly, take any of the following actions (any such action, a
"Restricted Action") except on behalf of the Company or its affiliates or
pursuant to a written agreement with the Company:
(i) engage, participate or assist in, either individually or as an
owner, partner, employee, consultant, director, officer, trustee, or agent of
any business that engages or attempts to engage in, directly or indirectly, the
acquisition, development, construction, operation, management, or leasing of any
commercial real estate property (other than any property acquired, developed,
constructed, operated, managed or leased by any company or person incidentally
as part of its business, primarily for its own occupancy; provided that the
reference to "business" in this clause (i) shall not include any person or
entity which is not meaningfully engaged in commercial real estate activities
for profit and for which commercial real estate activities are an insignificant
part of its overall business activities;
<PAGE>
(ii) intentionally interfere with, disrupt or attempt to
disrupt the relationship, contractual or otherwise, between the Company or its
affiliates and any tenant, supplier, contractor, lender, employee, or
governmental agency or authority; or
(iii) compete for, solicit, divert, or take away, or attempt
to divert or take away, any of the tenants or employees of the Company or its
affiliates, either for himself or for any other business, operation,
corporation, partnership, association, agency, or other person or entity.
(b) Notwithstanding the foregoing, none of the following actions
shall constitute Restricted Actions:
(i) acquisitions of, sales of, exercise of voting rights,
exercise or conversion of options or convertible
securities, and other actions with respect to, Minority
Interest Passive Investments;
(ii) actions taken in the capacity as a director of, or advisor
to, any charitable or other tax exempt organization on
behalf of such organization;
(iii) any action taken in connection with the Contribution
Agreement, the Properties Under Development Agreement, or
the Development Agreement (but only with respect to the
Service Companies, the Properties Under Development, the
Development Properties and any Withdrawn Properties under
(and as defined in) such agreements);
(iv) any action involving the management, maintenance and
operation of the following property interests currently
owned, leased or managed by Alan Landis: Brunswick Hilton
Hotel & Tower in East Brunswick, New Jersey; and East
Brunswick Racquet Club in East Brunswick, New Jersey.
(v) any action taken in his capacity as a member of the Board;
or
(vi) any action taken in accordance with the Management
Agreement made as of April 18, 1995 between Essential
Facilities XIV, Inc. and Diversified Management Services,
L.P.
A "Minority Interest Passive Investment" means (x) an investment in any
securities (including partnership interests or membership interests in limited
liability companies) that represent a non-controlling, minority interest in an
entity or (y) an investment made in any debt securities or loans or the making
of loans (a "Debt Investment"), in the case of either (x) or (y) with the
purpose or intent of obtaining a return on such investment but without
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<PAGE>
management by Mr. Landis of the property or business to which such investment
directly or indirectly relates and without any meaningful business or strategic
consultation by Mr. Landis with such entity.
(c) This Paragraph 1 shall not apply and shall be of no force or
effect following a Change of Control. For this purpose a "Change of Control"
shall be deemed to occur if persons who, as of the effective date of Mr. Landis'
appointment to the Board, constitute the Company's Board of Directors (the
"Incumbent Directors") cease for any reason, including, without limitation, as a
result of a tender offer, proxy contest, merger or similar transaction, to
constitute at least a majority of the Board of Directors, provided that any
person becoming a director of the Company subsequent to such date whose election
was approved by a vote of at least two-thirds of the Incumbent Directors or
whose nomination for election was approved by a nominating committee comprised
of Incumbent Directors shall, for purposes of this Agreement, be considered an
Incumbent Director.
2. Records/Nondisclosure/Company Policies.
(a) General. All records, financial statements and similar documents
obtained, reviewed or compiled by Mr. Landis in the course of the performance by
him of his duties to the Company, whether or not confidential information or
trade secrets, shall be the exclusive property of the Company. Mr. Landis shall
have no rights in such documents under any circumstances.
(b) Confidential Information. For a period of three years following
the date upon which Mr. Landis ceases to serve as a director of the Company,
except as required by applicable law, the rules of the New York Stock Exchange
or as may be required in connection with any registration under the Registration
Rights Agreement (as defined in the Contribution Agreement) or otherwise in
connection with the performance of his duties to the Company, Mr. Landis will
not disclose to any person or entity (other than the Company, other members of
the Board or executive officers of the Company or any attorney engaged by Mr.
Landis (provided that Mr. Landis shall obtain appropriate assurances as to the
confidential treatment of such information by any such attorney)), or use for
his own benefit or gain, any confidential information of the Company obtained by
him incident to his role as a director of the Company or otherwise. Mr. Landis
shall take all reasonable steps to safeguard any confidential information and to
protect such confidential information against disclosure, misuse, loss, or
theft. The term "confidential information" includes, without limitation,
financial information, business plans, prospects, and opportunities which have
been discussed or considered by the management of the Company, but does not
include any information which has become part of the public domain or which has
been generally disseminated on a non-confidential basis to third parties, in
either case by means other than Mr. Landis' non-observance of his obligations
hereunder.
This Paragraph 2 shall survive the termination of this Agreement.
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<PAGE>
3. Reasonable and Necessary Restrictions. Mr. Landis acknowledges and
agrees that the restrictions contained in Paragraphs 1 and 2 are reasonable,
fair and equitable in scope, term and duration, in view of the business in which
the Company is engaged, Mr. Landis' role as a director of the Company and Mr.
Landis' participation as a party to the Contribution Agreement and related
agreements. Mr. Landis further acknowledges that such restrictions are
necessary to protect the legitimate business interests of the Company and are
supported by the substantial benefits that will accrue to him as a result of the
closing of the Contribution Agreement and related agreements and his appointment
as a director of the Company.
4. Conflicting Agreements. Mr. Landis hereby represents and warrants
that the execution of this Agreement and the performance of his obligations
hereunder will not breach or be in conflict with any other agreement to which he
is a party or is bound, and that he is not now subject to any covenants against
competition or similar covenants which would affect the performance of his
obligations hereunder.
5. Notices. All notices, requests, demands, and other communications
under this Agreement shall be in writing and shall be deemed duly given (i) if
delivered by hand and receipted for by the party addressee, on the date of such
receipt or (ii) if mailed by domestic certified or registered mail with postage
prepaid, on the third business day after the date postmarked. Addresses for
notice for the parties are as shown above, or as subsequently modified by
written notice.
6. Miscellaneous. This Agreement (i) constitutes the entire agreement
between the parties concerning the subjects hereof and supersedes any and all
prior agreements or understandings and (ii) in connection with a sale of
substantially all of the assets of Boston Properties, Inc., or a merger or
consolidation of Boston Properties, Inc. into another person, may be assigned by
the Company and shall be binding upon, and inure to the benefit of, the
Company's successors and assigns. Headings herein are for convenience of
reference only and shall not define, limit or interpret the contents hereof.
The term "person" as used herein includes any individual, corporation,
partnership, limited liability company, trust or other entity.
7. Amendment. No term or provision of this Agreement may be amended,
modified or supplemented except by the mutual consent of the parties in writing.
8. Arbitration; Other Disputes. Any dispute or controversy arising under
or in connection with this Agreement shall be settled exclusively by arbitration
in New York, New York, in accordance with the rules of the American Arbitration
Association then in effect. The award of the arbitrators shall be final and
binding and non-appealable and may if necessary be enforced by any court of
competent jurisdiction. Notwithstanding the foregoing, either party may apply
to any court located in New York, New York or Boston, Massachusetts, with
competent jurisdiction, and seek interim provisional injunctive or equitable
relief until the arbitration award is rendered or the controversy is otherwise
resolved.
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<PAGE>
9. Severability. If any provision of this Agreement shall to any extent
be held void or unenforceable (as to duration, scope, activity, subject or
otherwise) by an arbitration in accordance with paragraph 8 or by a court of
competent jurisdiction, such provision shall be deemed to be modified so as to
constitute a provision conforming as nearly as possible to the original
provision while still remaining valid and enforceable. In such event, the
remainder of this Agreement (or the application of such provision to persons or
circumstances other than those in respect of which it is deemed to be void or
unenforceable) shall not be affected thereby. Each other provision of this
Agreement, unless specifically conditioned upon the voided aspect of such
provision, shall remain valid and enforceable to the fullest extent permitted by
law; any other provisions of this Agreement that are specifically conditioned on
the voided aspect of such invalid provision shall also be deemed to be modified
so as to constitute a provision conforming as nearly as possible to the original
provision while still remaining valid and enforceable to the fullest extent
permitted by law.
10. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York (without regard, to the
fullest extent permitted by law, to any conflicts of law rules which might apply
the laws of any other jurisdiction).
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<PAGE>
IN WITNESS WHEREOF, this Agreement is entered into as of the date and year
first above written.
BOSTON PROPERTIES, INC.
By: /s/ William J. Wedge
-----------------------------------------
William J. Wedge
Senior Vice President
/s/ Alan B. Landis
-----------------------------------------
Alan B. Landis
[Signature Page to Non-Competition Agreement]
6
<PAGE>
Exhibit 99.7
AGREEMENT REGARDING DIRECTORSHIP
THIS AGREEMENT REGARDING DIRECTORSHIP (this "Agreement") is entered into as
of this 30th day of June, 1998, by and between Boston Properties, Inc., a
Delaware corporation (the "Company"), and Alan B. Landis (the "Nominee").
Reference is made to that certain Contribution and Conveyance Agreement, dated
as of June 30, 1998, by and among the Company, the Nominee and certain other
persons named therein (as may be amended, supplemented or modified from time to
time, the "Contribution Agreement"). Capitalized terms used herein and not
otherwise defined shall have the meanings ascribed to them in the Contribution
Agreement.
WHEREAS, the Nominee and the Company have entered into the Contribution
Agreement and desire to consummate the transactions contemplated thereby;
WHEREAS, it is a condition precedent to the obligations of the Landis
Parties (including the Nominee) under the Contribution Agreement that the Board
of Directors of the Company (the "Board") appoint the Nominee to the Board, and
it is a condition of the Nominee that to accept such appointment the Nominee
enter into this Agreement; and
WHEREAS, the Board has appointed the Nominee to the Board (subject to the
execution of this Agreement and the completion of the Closing) and the Nominee
desires to accept such appointment.
NOW THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound hereby, do hereby agree as follows:
SECTION 1. APPOINTMENT. The Board has appointed the Nominee as a Class
I director of the Company, to serve for a term expiring at the Company's annual
meeting of stockholders in 2001 (subject to the Nominee's earlier death,
resignation or removal by the stockholders of the Company), effective upon (i)
the completion of the Closing and (ii) the Nominee's execution and delivery of
this Agreement, the Non-Competition Agreement referred to in Section 8, and the
Director's Questionnaire referred to in Section 7.
SECTION 2. RESIGNATION. The Nominee agrees to tender his resignation
as a director of the Company if on the last business day of a calendar quarter
the Nominee and his Related Parties (as defined below) do not continue to
Beneficially Own (as defined below) Common Shares, Common Units and Preferred
Units with an aggregate fair market value of at least $35,000,000.
For purposes of this Agreement, (i) a share of Common Stock shall be deemed
to have a fair market value as of any particular date equal to the average of
the closing prices of the
<PAGE>
Common Stock on the New York Stock Exchange on the immediately preceding twenty
(20) consecutive trading days, (ii) a Common Unit shall be deemed to have a fair
market value as of any particular date equal to the value of a share of Common
Stock on such date and (iii) a Preferred Unit shall be deemed to have a fair
market value as of any particular date equal to the value of the number of
Common Units into which a Preferred Unit may be converted.
As used herein, the term "Related Parties" refers to:
(x) the Nominee's spouse, siblings, parents, grandparents (or spouses of
such persons) or any natural or adopted children or other descendants
or to any personal trust in which any such family members retain a
majority of the beneficial interests, and
(y) any entity in which the Nominee and/or Related Parties under the
preceding clause (x) (together or alone) directly or indirectly
control (i) equity interests entitled to a majority of the cash
distributions to equity holders and (ii) a majority of the voting
stock or similar interests issued by the entity (except that such
entity shall be deemed for purposes of this Agreement to Beneficially
Own only the number of Common Shares, Common Units and Preferred Units
owned by such entity multiplied in each case by the percentage of the
voting stock or similar interests issued by such entity that are
directly or indirectly Beneficially Owned by the Nominee and the
Related Parties identified in the preceding clause (x)).
As used herein, the term "Beneficial Ownership" refers to beneficial
ownership within the meaning of Rule 13d-3 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), except that the Nominee and its Related
Parties shall not be deemed to Beneficially Own any shares of Common Stock or
Units with respect to which they no longer maintain substantially all of the
risk of economic detriment or the opportunity for economic benefit from the
Beneficial Ownership of such securities (e.g., because of the entry by Nominee
or a Related Party into a "collar" arrangement or other risk-eliminating
derivative arrangement which reduced such risk or benefit of Beneficial
Ownership to an insubstantial amount).
SECTION 3. RE-NOMINATION. The Company agrees that at each of the
Company's annual meetings of stockholders occurring in a year when the Nominee's
term as a director of the Company expires, the Board shall nominate the Nominee
for re-election as a Class I director of the Company, provided that this
obligation shall not exist if: (i) the Nominee is not serving as a director of
the Company immediately prior to the time of the nomination of directors for
election, (ii) the Nominee, in any calendar year since his last appointment or
re-election, shall have failed to attend a number of meetings of the Company's
board of directors or any committee thereof such that the Company was required
(or will be required) to report such failure to attend in the Company's annual
proxy statement pursuant to Rule 14a-101 under
2
<PAGE>
the Exchange Act (or any successor provision), (iii) the Nominee and its related
parties shall not continue to Beneficially Own at least 1.0% of the aggregate
number of outstanding Common Shares and Common Units (including for such
determination (a) in the numerator, the Common Units issuable upon the
conversion of Preferred Units, and (b) in the denominator, (x) the Common Units
issuable upon the conversion of Preferred Units and the conversion of any other
outstanding preferred units of limited partnership interest in BPLP then
convertible into Common Units and (y) any Common Shares issuable upon the
conversion of any outstanding shares of preferred stock in the Company then
convertible into Common Shares) or (iv) two-thirds of those directors other than
Nominee who are non-employee directors of the Company (which group shall in no
event include Mortimer B. Zuckerman or Edward H. Linde) shall have determined in
good faith (with the reason therefor stated in a resolution adopted by such
directors) that (x) Nominee has violated any of the policies identified in
Section 4 below and has failed to timely cure or cease such violation after
adequate notice thereof or (y) Nominee's continued membership on the Board of
Directors is not in the best interests of the stockholders of the Company.
SECTION 4. COMPLIANCE WITH BOARD POLICIES.
(a) The Nominee acknowledges receipt of the Company's Statement of
Company Policy on Insider Trading and Policy Regarding Special Trading
Procedures, which are attached hereto as Exhibit A, and the Nominee agrees that,
for so long as the Nominee is a director of the Company, the Nominee shall
comply with such policies as they may be amended from time to time.
(b) The Nominee agrees that, for so long as the Nominee is a director
of the Company, the Nominee shall comply with the policies of the Company's
Board of Directors regarding conflicts of interest, as such policies may be in
effect from time to time.
(c) The Nominee agrees that, for so long as the Nominee is a Director
of the Company, the Nominee shall comply with all other policies of the
Company's Board of Directors that are generally applicable to all directors, as
such policies may be in effect from time to time.
SECTION 5. INDEMNIFICATION. The Nominee and the Company shall, as of
the date hereof, enter into an Indemnification Agreement in the form attached
hereto as Exhibit B.
SECTION 6. SECTION 16 AND RULE 144. The Nominee represents to the
Company that the Nominee has been advised by counsel concerning the Nominee's
obligations as a director of the Company pursuant to Section 16 under the
Exchange Act and the limitation on transferability of Common Shares under Rule
144 under the Securities Act of 1933, as amended. Within ten (10) days after
the date hereof, the Nominee shall file a Form 3 with the Securities and
Exchange Commission as required under Section 16(a) of the Exchange Act.
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SECTION 7. DIRECTOR'S QUESTIONNAIRE. Prior to the date hereof, the
Nominee shall have completed and returned to the Company a Director's
Questionnaire in the form attached hereto as Exhibit C.
SECTION 8. NON-COMPETITION AGREEMENT. Simultaneously with his
execution hereof, Nominee is executing and delivering a Non-Competition
Agreement in the form attached hereto as Exhibit D.
SECTION 9. STATEMENT REGARDING OWNERSHIP. For the purpose of enabling
the Company to ascertain and verify the Beneficial Ownership of Common Shares
and Common Units by the Nominee and Related Parties for purposes of Section 2
and clause (iii) of Section 3, promptly upon request by the Company, the Nominee
shall provide such written statements, documentation and verifying information
as the Company may reasonably require.
SECTION 10. EFFECTIVENESS. This Agreement shall be effective upon the
completion of the Closing.
SECTION 11. NOTICE. All notices, requests, demands and other
communications under this Agreement shall be in writing and shall be deemed duly
given (i) if delivered by hand and receipted for by the party addressee, on the
date of such receipt or (ii) if mailed by domestic certified or registered mail
with postage prepaid, on the third business day after the date postmarked.
Addresses for notice to any party are as shown on the signature page of this
Agreement, or as subsequently modified by written notice.
SECTION 12. CHOICE OF LAW. This Agreement shall be governed by and its
provisions construed in accordance with the laws of the State of Delaware as
applied to contracts between Delaware residents entered into and to be performed
entirely within the State of Delaware.
SECTION 13. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original and all of which
together shall constitute a single agreement.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
BOSTON PROPERTIES, INC.
By: /s/ William J. Wedge
--------------------------------------
William J. Wedge
Senior Vice President
Address:
8 Arlington Street
Boston, MA 02116
Nominee
/s/ Alan B. Landis
--------------------------------------
Alan B. Landis
Address:
[Signature Page to Agreement Regarding Directorship]
5
