<PAGE>
As filed with the Securities and Exchange Commission on July 27, 1999
Registration Statement No. 333-80513
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------
PRE-EFFECTIVE AMENDMENT NO.1 TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
-------------------------
BOSTON PROPERTIES, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 04-2473675
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
800 BOYLSTON STREET
BOSTON, MASSACHUSETTS 02199
(617) 236-3300
(Address, including zip code, and telephone number, including area code of
Registrant's principal executive offices)
MORTIMER B. ZUCKERMAN, CHAIRMAN
EDWARD H. LINDE, PRESIDENT AND CHIEF EXECUTIVE OFFICER
BOSTON PROPERTIES, INC.
800 BOYLSTON STREET
BOSTON MASSACHUSETTS 02199
(617) 236-3300
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
-------------------------
Copy to:
GILBERT G. MENNA, P.C.
ETTORE A. SANTUCCI, P.C.
GOODWIN, PROCTER & HOAR LLP
EXCHANGE PLACE
BOSTON, MASSACHUSETTS 02109-2881
(617) 570-1000
-------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this form is used to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================
<PAGE>
*************************************************************************
* The information in this prospectus is not complete and may be *
* changed. These securities may not be sold until the registration *
* statement filed with the Securities and Exchange Commission is *
* effective. This prospectus is not an offer to sell these securities *
* and it is not soliciting an offer to buy these securities in any *
* state where the offer or sale is not permitted. *
*************************************************************************
SUBJECT TO COMPLETION. DATED JULY 27, 1999.
PROSPECTUS
- ----------
592,916 SHARES OF COMMON STOCK
BOSTON PROPERTIES, INC.
------------
The selling stockholders identified in this prospectus, and any of their
pledgees, donees, transferees or other successors in interest, may offer to sell
up to an aggregate of 592,916 shares of common stock of Boston Properties, Inc.
The selling stockholders may only offer the common stock for sale if they
exercise their right to tender their units of Boston Properties Limited
Partnership, our operating partnership, for cash, and we exercise our right to
issue common stock to them instead of cash. We will not receive any of the
proceeds from the sale of the common stock by the selling stockholders, but we
have agreed to bear the expenses of registering such shares.
Our common stock is listed on the New York Stock Exchange under the symbol
"BXP."
--------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES, OR DETERMINED IF
THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. IT IS ILLEGAL FOR ANY PERSON TO TELL
YOU OTHERWISE.
--------------------
The date of this prospectus is July __, 1999.
<PAGE>
PROSPECTUS SUMMARY
This summary only highlights the more detailed information appearing
elsewhere in this prospectus or incorporated herein by reference. As this is a
summary, it may not contain all information that is important to you. You
should read this entire prospectus carefully before deciding whether to invest
in our common stock.
Unless the context otherwise requires, all references to "we," "us" or "our
company" in this prospectus refer collectively to Boston Properties, Inc., a
Delaware corporation, and its subsidiaries, including Boston Properties Limited
Partnership, a Delaware limited partnership, and their respective predecessor
entities for the applicable periods, considered as a single enterprise.
--------------------
ABOUT BOSTON PROPERTIES, INC.
Boston Properties, Inc. is a real estate investment trust or "REIT."
We are one of the largest owners and developers of office properties in the
United States, with a significant presence in Greater Boston; Midtown Manhattan;
Greater Washington, D.C.; Greater San Francisco; Princeton/East Brunswick,
New Jersey; Richmond, Virginia; and Baltimore, Maryland. We conduct
substantially all our business through Boston Properties Limited Partnership.
As of March 31, 1999, we owned 124 properties, aggregating more than 32 million
square feet. Our properties consist of 111 office properties, consisting of
79 Class A office buildings, including eight under development and 32 properties
that support both office and technical uses, nine industrial properties, three
hotels and one parking garage. We are the sole general partner and the owner of
approximately 67.3% of the economic interests in Boston Properties Limited
Partnership. Our principal executive office is located at 800 Boylston Street,
Boston, Massachusetts 02199; telephone number (617) 236-3300. Our common stock
is listed on the New York Stock Exchange under the symbol "BXP."
Additional information regarding Boston Properties, including our audited
financial statements and descriptions of Boston Properties, is contained in the
documents incorporated by reference in this prospectus. See "Where You Can Find
More Information" on page 17.
2
<PAGE>
THE OFFERING
This prospectus relates to up to 592,916 shares of our common stock that
may be offered for sale by the selling stockholders if, and to the extent that,
they tender their common units of Boston Properties Limited Partnership for
cash, and we exercise our right to issue common stock to them instead of cash.
Boston Properties Limited Partnership originally issued these units to the
selling stockholders in connection with our May 28, 1998 acquisition of a parcel
of land in Montgomery County, Maryland, known as Tower Oaks. Each selling
shareholder is a direct or indirect former owner of the Tower Oaks property.
In connection with this acquisition, we entered into a registration rights and
lock-up agreement with the selling stockholders. Under the terms of that
agreement, the selling stockholders could not tender their units for redemption
until after May 29, 1999. We are registering the common stock covered by this
prospectus in order to fulfill our contractual obligations under the
registration rights and lock-up agreement. Registration of the common stock does
not necessarily mean that all or any portion of such stock will be offered for
sale by the selling stockholders.
Pursuant to the Second Amended and Restated Agreement of Limited
Partnership of Boston Properties Limited Partnership, as amended, unitholders
may tender their common units of Boston Properties Limited Partnership for cash
equal to the value of an equivalent number of shares of our common stock.
In lieu of delivering cash, however, we may, at our option, choose to acquire
any units so tendered by issuing common stock in exchange for the units. The
common stock will be exchanged for units on a one-for-one basis. This one-for-
one exchange ratio may be adjusted to prevent dilution.
We have agreed to bear the expenses of the registration of the common stock
under federal and state securities laws, but we will not receive any proceeds
from the sale of any common stock offered under this prospectus.
TAX STATUS OF BOSTON PROPERTIES, INC
We have elected to qualify as a real estate investment trust under Sections
856 through 860 of the Internal Revenue Code. As long as we qualify for
taxation as a real estate investment trust, we generally will not be subject to
federal income tax on that portion of our ordinary income and capital gains that
is currently distributed to our stockholders. Even if we qualify for taxation
as a real estate investment trust, we may be subject to state and local taxes on
our income and property and to federal income and excise taxes on our
undistributed income.
3
<PAGE>
RISK FACTORS
Before you purchase shares of our common stock from the selling
stockholders you should be aware that there are various risks in making such an
investment, including those described below. You should consider carefully these
risk factors together with all of the information included or incorporated by
reference in this prospectus before you decide to purchase shares of our common
stock. This section includes or refers to certain forward-looking statements.
You should refer to the explanation of the qualifications and limitations on
such forward-looking statements discussed on page 18.
WE MAY BE UNABLE TO MANAGE EFFECTIVELY OUR RAPID GROWTH AND EXPANSION INTO NEW
MARKETS.
We have grown rapidly since our initial public offering in June 1997 and
have entered or significantly expanded our real estate holdings in new markets.
If we do not effectively manage our rapid growth, we may not be able to make
expected distributions to our securityholders.
OUR PERFORMANCE AND VALUE ARE SUBJECT TO RISKS ASSOCIATED WITH OUR REAL ESTATE
ASSETS.
Our economic performance and the value of our real estate assets, and
consequently the value of your investment, are subject to the risk that if our
office, industrial, and hotel properties do not generate revenues sufficient to
meet our operating expenses, including debt service and capital expenditures,
our cash flow and ability to pay dividends to you will be adversely affected.
The following factors, among others, may adversely affect the revenues generated
by our office, industrial, and hotel properties:
. downturns in the national and local economic climate;
. competition from other office, industrial, hotel and other commercial
buildings;
. local real estate market conditions, such as oversupply or reduction
in demand for office, industrial, hotel or other commercial space;
. vacancies or inability to rent spaces on favorable terms; and
. increased operating costs, including insurance premiums, utilities,
and real estate taxes.
Significant expenditures associated with each investment, such as debt
service payments, real estate taxes, insurance and maintenance costs are
generally not reduced when circumstances cause a reduction in revenues from a
property.
WE FACE RISKS ASSOCIATED WITH SPECIFIC LOCAL MARKET CONDITIONS.
Our current properties are located primarily in seven regional markets:
greater Boston; midtown Manhattan; greater Washington, D.C.; greater San
Francisco; Princeton/East Brunswick, New Jersey; Richmond, Virginia; and
Baltimore, Maryland. Local economic conditions in these markets may affect the
ability of our tenants to make lease payments. The economic climate in each of
these local markets may depend on a limited number of industries, and therefore
a downturn in one of these industry sectors could adversely affect our
performance in the affected market.
OUR INVESTMENT IN PROPERTY DEVELOPMENT MAY BE MORE COSTLY THAN ANTICIPATED.
We intend to continue to develop and substantially renovate office,
industrial and hotel properties. Our development and construction activities may
be exposed to the following risks:
4
<PAGE>
. we may be unable to proceed with the development of properties because
we cannot obtain financing with favorable terms;
. we may incur construction costs for a development project which exceed
our original estimates due to increased materials, labor or other
costs, which could make completion of the project uneconomical because
we may not be able to increase rents to compensate for the increase in
construction costs;
. we may be unable to obtain, or face delays in obtaining, required
zoning, land-use, building, occupancy, and other governmental permits
and authorizations, which could result in increased costs and could
require us to abandon our activities entirely with respect to a
project;
. we may abandon development opportunities after we begin to explore
them and as a result we may fail to recover expenses already incurred;
. we may expend funds on and devote management's time to projects which
we do not complete;
. we may be unable to complete construction and leasing of a property on
schedule, resulting in increased debt service expense and construction
or renovation costs;
. we may lease developed properties at below expected rental rates; and
. occupancy rates and rents at newly completed properties may fluctuate
depending on a number of factors, including market and economic
conditions, and may result in our investment not being profitable.
OUR USE OF JOINT VENTURES MAY LIMIT OUR FLEXIBILITY WITH JOINTLY OWNED
INVESTMENTS.
We intend to develop properties in joint ventures with other persons or
entities when circumstances warrant the use of this structure. The use of a
joint venture vehicle creates a risk of a dispute with our joint venturers and a
risk that we will have to acquire a joint venturer's interest in a development
for a price at which or at a time when we would otherwise not purchase such
interest. Our joint venture partners may have different objectives from us
regarding the appropriate timing and pricing of any sale or refinancing of
properties.
WE FACE RISKS ASSOCIATED WITH PROPERTY ACQUISITIONS.
Since our initial public offering, we have made large acquisitions of
properties and portfolios of properties. We intend to continue to acquire
properties and portfolios of properties, including large portfolios that could
continue to significantly increase our size and alter our capital structure.
Our acquisition activities and their success may be exposed to the following
risks:
. we may be unable to acquire a desired property because of competition
from other well capitalized real estate investors, including both
publicly traded real estate investment trusts and institutional
investment funds;
. even if we enter into an acquisition agreement for a property, it is
usually subject to customary conditions to closing, including
completion of due diligence investigations to our satisfaction;
. even if we are able to acquire a desired property, competition from
other real estate investors may significantly increase the purchase
price;
. we may be unable to finance acquisitions on favorable terms;
5
<PAGE>
. acquired properties may fail to perform as we expected in analyzing
our investments;
. our estimates of the costs of repositioning or redeveloping acquired
properties may be inaccurate;
. acquired properties may be located in new markets, where we may face
risks associated with a lack of market knowledge or understanding of
the local economy, lack of business relationships in the area and
unfamiliarity with local governmental and permitting procedures; and
. we may be unable to quickly and efficiently integrate new
acquisitions, particularly acquisitions of portfolios of properties,
into our existing operations, and as a result our results of
operations and financial condition could be adversely affected.
We may acquire properties subject to liabilities and without any recourse,
or with only limited recourse, with respect to unknown liabilities. As a
result, if liability were asserted against us based upon those properties, we
might have to pay substantial sums to settle it, which could adversely affect
our cash flow. Unknown liabilities with respect to properties acquired might
include:
. liabilities for clean-up of undisclosed environmental contamination;
. claims by tenants, vendors or other persons dealing with the former
owners of the properties;
. liabilities incurred in the ordinary course of business; and
. claims for indemnification by general partners, directors, officers
and others indemnified by the former owners of the properties.
POTENTIAL INABILITY TO RENEW LEASES OR RE-LEASE SPACE.
We derive most of our income from rent received from our tenants. If a
tenant experiences a downturn in its business, it may be unable to make timely
rental payments. Also, when our tenants decide not to renew their leases, we
may not be able to relet the space. Even if tenants decide to renew, the terms
of renewals or new leases, including the cost of required renovations or
concessions to tenants, may be less favorable than current lease terms. As a
result, our cash flow could decrease and our ability to pay dividends to you
could be adversely affected.
WE FACE POTENTIAL ADVERSE EFFECTS FROM A TENANT'S BANKRUPTCY.
The bankruptcy or insolvency of a major tenant may adversely affect the
income produced by our properties. Although we have not experienced material
losses from tenant bankruptcies in the past, our tenants could file for
bankruptcy protection in the future. We cannot evict a tenant solely because of
its bankruptcy. On the other hand, a bankruptcy court might authorize the
tenant to reject and terminate its lease with us. In such case, our claim
against the bankrupt tenant for unpaid, future rent would be subject to a
statutory cap that might be substantially less than the remaining rent actually
owed under the lease, and, even so, our claim for unpaid rent would likely not
be paid in full. This shortfall could adversely affect our cash flow and results
from operations.
WE MAY HAVE DIFFICULTY SELLING OUR PROPERTIES LIMITING OUR FLEXIBILITY.
Large and high quality office, industrial and hotel properties like the
ones that we own can be hard to sell, especially if local market conditions are
poor. This may limit our ability to change our portfolio promptly in response
to changes in economic or other conditions. In addition, federal tax laws limit
our ability to sell properties that we have owned for fewer than four years, and
this may affect our ability to sell properties without adversely affecting
returns to our stockholders. These
6
<PAGE>
restrictions reduce our ability to respond to changes in the performance of our
investments and could adversely affect our financial condition and results of
operations.
OUR PROPERTIES FACE SIGNIFICANT COMPETITION.
We face significant competition from developers, owners and operators of
office, industrial and other commercial real estate. Substantially all of our
properties face competition from similar properties in the same area. Such
competition may effect our ability to attract and retain tenants and may reduce
the rents we are able to charge. These competing properties may have vacancy
rates higher than our properties, which may result in their owners being willing
to make space available at lower prices than the space in our properties.
BECAUSE WE OWN HOTEL PROPERTIES, WE FACE GENERAL RISKS ASSOCIATED WITH SUCH
PROPERTIES.
We own three hotel properties. We lease these hotel properties to ZL Hotel
LLC, in which Mortimer B. Zuckerman, chairman of our board of directors, and
Edward H. Linde, our president and chief executive officer, are the sole member-
managers and have a 9.8% economic interest; two unaffiliated public charities
have a 90.2% economic interest in ZL Hotel LLC. Marriott International, Inc.
manages these hotel properties under the Marriott/(R)/ name pursuant to a
management agreement with ZL Hotel LLC. ZL Hotel LLC pays us a percentage of
the gross receipts that the hotel properties receive. Because the lease
payments we receive are based on a participation in the gross receipts of the
hotels, if the hotels do not generate sufficient receipts, our cash flow would
be decreased, which could reduce the amount of cash available for distribution
to our securityholders. The following factors, among others, are common to the
hotel industry, and may reduce the receipts generated by our hotel properties:
. our hotel properties compete for guests with other hotels, a number of
which have greater marketing and financial resources than our hotel-
operating business partners;
. if there is an increase in operating costs resulting from inflation
and other factors, our hotel-operating business partners may not be
able to offset such increase by increasing room rates;
. our hotel properties are subject to the fluctuating and seasonal
demands of business travelers and tourism; and
. our hotel properties are subject to general and local economic
conditions that may affect demand for travel in general.
COMPLIANCE OR FAILURE TO COMPLY WITH THE AMERICANS WITH DISABILITIES ACT AND
OTHER SIMILAR LAWS COULD RESULT IN SUBSTANTIAL COSTS.
The Americans with Disabilities Act generally requires that public
buildings, including office buildings and hotels, be made accessible to disabled
persons. Noncompliance could result in imposition of fines by the federal
government or the award of damages to private litigants. If, pursuant to the
Americans with Disabilities Act, we are required to make substantial alterations
and capital expenditures in one or more of our properties, including the removal
of access barriers, it could adversely affect our financial condition and
results of operations, as well as the amount of cash available for distribution
to our stockholders.
We may also incur significant costs complying with other regulations. Our
properties are subject to various federal, state and local regulatory
requirements, such as state and local fire and life safety requirements. If we
fail to comply with these requirements, we could incur fines or private damage
awards. We believe that our properties are currently in material compliance
with all of these regulatory requirements. However, we do not know whether
existing requirements will change or
7
<PAGE>
whether compliance with future requirements will require significant
unanticipated expenditures that will affect our cash flow and results from
operations.
SOME POTENTIAL LOSSES ARE NOT COVERED BY INSURANCE.
We carry comprehensive liability, fire, flood, extended coverage and rental
loss insurance, as applicable, on our properties. We believe our coverage is of
the type and amount customarily obtained for or by an owner of similar
properties. We believe all of our properties are adequately insured. However,
there are certain types of losses, such as from wars or catastrophic acts of
nature, for which we cannot obtain insurance or for which we cannot obtain
insurance at a reasonable cost. In the event of an uninsured loss or a loss in
excess of our insurance limits, we could lose both the revenues generated from
the affected property and the capital we have invested in the affected property.
We would, however, remain obligated to repay any mortgage indebtedness or other
obligations related to the property. Any such loss could materially and
adversely affect our business and financial condition and results of operations.
We carry earthquake insurance on our properties located in areas known to
be subject to earthquakes in an amount and subject to deductions which we
believe are commercially reasonable. However, the amount of our earthquake
insurance coverage may not be sufficient to cover losses from earthquakes.
In addition, we may discontinue earthquake insurance on some or all of our
properties in the future if the premiums exceed the value of the coverage
discounted for the risk of loss. If we experience a loss which is uninsured or
which exceeds policy limits, we could lose the capital invested in the damaged
properties as well as the anticipated future revenue from those properties.
Moreover, if the damaged properties are subject to recourse indebtedness, we
would continue to be liable for the indebtedness, even if the properties were
irreparable.
POTENTIAL LIABILITY FOR ENVIRONMENTAL CONTAMINATION COULD RESULT IN SUBSTANTIAL
COSTS.
Under federal, state and local environmental laws, we may be required to
investigate and clean up the effects of releases of hazardous or toxic
substances or petroleum products at our properties, regardless of our knowledge
or responsibility, simply because of our current or past ownership or operation
of the real estate. If unidentified environmental problems arise, we may have to
make substantial payments which could adversely affect our cash flow and our
ability to make distributions to our securityholders because:
. as owner or operator we may have to pay for property damage and for
investigation and clean-up costs incurred in connection with the
contamination;
. the law typically imposes clean-up responsibility and liability
regardless of whether the owner or operator knew of or caused the
contamination;
. even if more than one person may be responsible for the contamination,
each person who shares legal liability under the environmental laws
may be held responsible for all of the clean-up costs; and
. governmental entities and third parties may sue the owner or operator
of a contaminated site for damages and costs.
These costs could be substantial and in extreme cases could exceed the
value of the contaminated property. The presence of hazardous or toxic
substances or petroleum products or the failure to properly remediate
contamination may materially and adversely affect our ability to borrow against,
sell or rent an affected property. In addition, applicable environmental laws
create liens on contaminated sites in favor of the government for damages and
costs it incurs in connection with a contamination.
8
<PAGE>
Environmental laws also govern the presence, maintenance and removal of
asbestos. Such laws require that owners or operators of buildings containing
asbestos:
. properly manage and maintain the asbestos;
. notify and train those who may come into contact with asbestos; and
. undertake special precautions, including removal or other abatement,
if asbestos would be disturbed during renovation or demolition of a
building.
Such laws may impose fines and penalties on building owners or operators who
fail to comply with these requirements and may allow third parties to seek
recovery from owners or operators for personal injury associated with exposure
to asbestos fibers.
Some of our properties are located in urban and industrial areas where fill
or current or historic industrial uses of the areas have caused site
contamination. Independent environmental consultants have conducted Phase I
environmental site assessments at all of our properties. These assessments
included, at a minimum, a visual inspection of the properties and the
surrounding areas, an examination of current and historical uses of the
properties and the surrounding areas and a review of relevant state, federal and
historical documents. Where appropriate, on a property-by-property basis, these
consultants have conducted additional testing, including sampling for asbestos,
for lead in drinking water, for soil contamination where underground storage
tanks are or were located or where other past site usages create a potential
environmental problem, and for contamination in groundwater. Even though these
environmental assessments have been conducted, there is still the risk that:
. the environmental assessments and updates did not identify all
potential environmental liabilities;
. a prior owner created a material environmental condition that is not
known to us or the independent consultants preparing the assessments;
. new environmental liabilities have developed since the environmental
assessments were conducted; and
. future uses or conditions such as changes in applicable environmental
laws and regulations could result in environmental liability for us.
WE FACE RISKS ASSOCIATED WITH THE USE OF DEBT TO FUND ACQUISITIONS AND
DEVELOPMENTS, INCLUDING REFINANCING RISK.
We are subject to the risks normally associated with debt financing,
including the risk that our cash flow will be insufficient to meet required
payments of principal and interest. We anticipate that only a small portion of
the principal of our debt will be repaid prior to maturity. Therefore, we are
likely to need to refinance at least a portion of our outstanding debt as it
matures. There is a risk that we may not be able to refinance existing debt or
that the terms of any refinancing will not be as favorable as the terms of the
existing debt. If principal payments due at maturity cannot be refinanced,
extended or repaid with proceeds from other sources, such as new equity capital,
our cash flow will not be sufficient to repay all maturing debt in years when
significant "balloon" payments come due.
RISING INTEREST RATES WOULD INCREASE INTEREST COSTS.
We currently have, and may incur more, indebtedness that bears interest at
variable rates. Accordingly, if interest rates increase, so will our interest
costs, which would adversely affect our cash flow, our ability to service debt
and our ability to make distributions to our securityholders.
9
<PAGE>
WE HAVE NO CORPORATE LIMITATION ON THE AMOUNT OF DEBT WE CAN INCUR.
Our management and board of directors have discretion under our certificate
of incorporation and bylaws to increase the amount of our outstanding debt. Our
decisions with regard to the incurrence and maintenance of debt are based on
available investment opportunities for which capital is required, the cost of
debt in relation to such investment opportunities, whether secured or unsecured
debt is available, the effect of additional debt on existing financial ratios
and the maturity of the proposed new debt relative to maturities of existing
debt. We could become more highly leveraged, resulting in increased debt service
costs that could adversely affect our cash flow and the amount available for
payment of dividends. If we increase our debt we may also increase the risk we
will be unable to repay our debt.
OUR FINANCIAL COVENANTS COULD ADVERSELY AFFECT OUR FINANCIAL CONDITION.
The mortgages on our properties contain customary negative covenants such
as those that limit our ability, without the prior consent of the lender, to
further mortgage the applicable property or to discontinue insurance coverage.
In addition, our credit facilities contain certain customary restrictions,
requirements and other limitations on our ability to incur indebtedness,
including total debt to assets ratios, secured debt to total asset ratios, debt
service coverage ratios and minimum ratios of unencumbered assets to unsecured
debt which we must maintain. Our ability to borrow under our credit facilities
is subject to compliance with our financial and other covenants. We rely on
borrowings under our credit facilities to finance acquisitions and development
activities and for working capital, and if we are unable to borrow under our
credit facilities, or to refinance existing indebtedness our financial condition
and results of operations would likely be adversely impacted. If we breach
covenants in our debt agreements, the lender can declare a default and require
us to repay the debt immediately and, if the debt is secured, can immediately
take possession of the property securing the loan. In addition, our credit
facilities are cross-defaulted to our other indebtedness, which would give the
lenders under our credit facilities the right also to declare a default and
require immediate repayment.
OUR DEGREE OF LEVERAGE COULD LIMIT OUR ABILITY TO OBTAIN ADDITIONAL FINANCING OR
AFFECT THE MARKET PRICE OF OUR STOCK.
Debt to Market Capitalization Ratio is a measure of our total debt as a
percentage of the aggregate of our total debt plus the market value of our
outstanding common stock and interests in Boston Properties Limited Partnership.
Our Debt to Market Capitalization Ratio was approximately 48.7% as of March 31,
1999. To the extent that our board of directors uses our Debt to Market
Capitalization Ratio as a measure of appropriate leverage, the total amount of
our debt could increase as our stock price increases, even if we may not have a
corresponding increase in our ability to service or repay the debt. Our degree
of leverage could affect our ability to obtain additional financing for working
capital, capital expenditures, acquisitions, development or other general
corporate purposes. Our degree of leverage could also make us more vulnerable
to a downturn in business or the economy generally. There is a risk that
changes in our Debt to Market Capitalization Ratio, which is in part a function
of our stock price, or our ratio of indebtedness to other measures of asset
value used by financial analysts may have an adverse effect on the market price
of our stock.
FURTHER ISSUANCES OF STOCK MAY BE DILUTIVE TO CURRENT STOCKHOLDERS.
The interests of our existing stockholders could be diluted if additional
equity securities are issued to finance future developments and acquisitions
instead of incurring additional debt. Our ability to execute our business
strategy depends on our access to an appropriate blend of debt financing,
including unsecured lines of credit and other forms of secured and unsecured
debt, and equity financing, including common and preferred equity.
10
<PAGE>
FAILURE TO QUALIFY AS A REAL ESTATE INVESTMENT TRUST WOULD CAUSE US TO BE TAXED
AS A CORPORATION, WHICH WOULD SUBSTANTIALLY REDUCE FUNDS AVAILABLE FOR PAYMENT
OF DIVIDENDS.
If we fail to qualify as a real estate investment trust for federal income
tax purposes, we will be taxed as a corporation. We believe that we are
organized and qualified as a real estate investment trust, and intend to operate
in a manner that will allow us to continue to qualify as a real estate
investment trust. However, we cannot assure you that we are qualified as such,
or that we will remain qualified as such in the future. This is because
qualification as a real estate investment trust involves the application of
highly technical and complex provisions of the Internal Revenue Code as to which
there are only limited judicial and administrative interpretations, and involves
the determination of facts and circumstances not entirely within our control.
In addition, future legislation, new regulations, administrative interpretations
or court decisions may significantly change the tax laws or the application of
the tax laws with respect to qualification as a real estate investment trust for
federal income tax purposes or the federal income tax consequences of such
qualification.
If we fail to qualify as a real estate investment trust we will face
serious tax consequences that will substantially reduce the funds available for
payment of dividends for each of the years involved because:
. we would not be allowed a deduction for dividends paid to stockholders
in computing our taxable income and would be subject to federal income
tax at regular corporate rates;
. we also could be subject to the federal alternative minimum tax and
possibly increased state and local taxes;
. unless we are entitled to relief under statutory provisions, we could
not elect to be subject to tax as a real estate investment trust for
four taxable years following the year during which we were
disqualified; and
. all dividends will be subject to tax as ordinary income to the extent
of our current and accumulated earnings and profits.
In addition, if we fail to qualify as a real estate investment trust, we
will no longer be required to pay dividends. As a result of all these factors,
our failure to qualify as a real estate investment trust could impair our
ability to expand our business and raise capital, and would adversely affect the
value of our common stock.
IN ORDER TO MAINTAIN OUR REAL ESTATE INVESTMENT TRUST STATUS, WE MAY BE FORCED
TO BORROW FUNDS ON A SHORT-TERM BASIS DURING UNFAVORABLE MARKET CONDITIONS.
In order to maintain our real estate investment trust status, we may need
to borrow funds on a short-term basis to meet the real estate investment trust
distribution requirements, even if the then prevailing market conditions are not
favorable for these borrowings. To qualify as a real estate investment trust,
we generally must distribute to our stockholders at least 95% of our net taxable
income each year, excluding capital gains. In addition, we will be subject to a
4% nondeductible excise tax on the amount, if any, by which dividends paid by us
in any calendar year are less than the sum of 85% of our ordinary income, 95% of
our capital gain net income and 100% of our undistributed income from prior
years. We may need short-term debt to fund required distributions as a result
of differences in timing between the actual receipt of income and the
recognition of income for federal income tax purposes, or the effect of non-
deductible capital expenditures, the creation of reserves or required debt or
amortization payments.
LIMITS ON CHANGES IN CONTROL MAY DISCOURAGE TAKEOVER ATTEMPTS BENEFICIAL TO
STOCKHOLDERS.
Provisions in our certificate of incorporation and bylaws, our shareholder
rights agreement and the agreement of limited partnership of Boston Properties
Limited Partnership, as well as provisions of the Internal Revenue Code and
Delaware corporate law, may:
11
<PAGE>
. delay or prevent a change of control over us or a tender offer, even
if they might be beneficial to our stockholders; and
. limit our stockholders' opportunity to receive a potential premium for
their shares of common stock over then-prevailing market prices.
STOCK OWNERSHIP LIMIT
Primarily to facilitate maintenance of our qualification as a real estate
investment trust, our corporate charter generally prohibits ownership, directly,
indirectly or beneficially, by any single stockholder of more than 6.6% of the
number of outstanding shares of any class or series of our equity stock. We
refer to this limitation as the "ownership limit." Our board of directors may
waive or modify the ownership limit with respect to one or more persons if it is
satisfied that ownership in excess of this limit will not jeopardize our status
as a real estate investment trust for federal income tax purposes. In addition,
under our corporate charter each of Messrs. Zuckerman and Linde, along with
their family and affiliates, as well as, in general, pension plans and mutual
funds, may actually and beneficially own up to 15% of the number of outstanding
shares of any class or series of our equity common stock. Shares owned in
violation of the ownership limit will be subject to the loss of rights to
distributions and voting and other penalties. The ownership limit may have the
effect of inhibiting or impeding a change in control.
OPERATING PARTNERSHIP AGREEMENT
We have agreed in the agreement of limited partnership of Boston Properties
Limited Partnership not to engage in business combinations unless limited
partners of Boston Properties Limited Partnership other than Boston Properties,
Inc. receive, or have the opportunity to receive, the same consideration for
their partnership interests as holders of our common stock in the transaction.
If these limited partners do not receive such consideration, we cannot engage in
the transaction unless 75% of these limited partners vote to approve the
transaction. In addition, we have agreed in the partnership agreement that we
will not consummate business combinations in which we received the approval of
our stockholders unless these limited partners are also allowed to vote and the
transaction would have been approved had these limited partners been able to
vote as stockholders on the transaction. Therefore, if our stockholders approve
a business combination that requires a vote of stockholders, the partnership
agreement requires the following before we can consummate the transaction:
. holders of interests in Boston Properties Limited Partnership
(including Boston Properties, Inc.) must vote on the matter;
. Boston Properties, Inc. must vote its partnership interests in the
same proportion as our stockholders voted on the transaction; and
. the result of the partners' vote must be such that had such vote been
a vote of stockholders, the business combination would have been
approved.
As a result of these provisions, a potential acquiror may be deterred from
making an acquisition proposal and we may be prohibited by contract from
engaging in a proposed business combination even though our stockholders approve
of the combination.
SHAREHOLDER RIGHTS PLAN
We have adopted a shareholder rights plan. Under the terms of this
agreement, we can in effect prevent a person or group from acquiring more than
15% of the outstanding shares of our common stock, because, unless we approve of
the acquisition, after the person acquires more than 15% of our outstanding
common stock, all other stockholders will have the right to purchase securities
from us at a price that is less than their then fair market value, which would
substantially
12
<PAGE>
reduce the value and influence of the stock owned by the acquiring person. Our
board of directors can prevent the agreement from operating by approving of the
transaction, which gives us significant power to approve or disapprove of an
acquiror's efforts to acquire a large interest in our company.
WE MAY CHANGE OUR POLICIES WITHOUT OBTAINING THE APPROVAL OF OUR STOCKHOLDERS.
Our operating and financial policies, including our policies with respect
to acquisitions, growth, operations, indebtedness, capitalization and dividends,
are determined by our board of directors. Accordingly, as a stockholder, you
will have little direct control over these policies.
OUR SUCCESS DEPENDS ON KEY PERSONNEL WHOSE CONTINUED SERVICE IS NOT GUARANTEED.
We depend on the efforts of key personnel, particularly Mortimer B.
Zuckerman, Chairman of our board of directors, and Edward H. Linde, our
President and Chief Executive Officer. Among the reasons that Messrs. Zuckerman
and Linde are important to our success is that each has a national reputation
which attracts business and investment opportunities and assists us in
negotiations with lenders. If we lost their services, our relationships with
lenders, potential tenants and industry personnel would diminish.
Our other executive officers who serve as managers of our offices have
strong regional reputations. Their reputations aid us in identifying
opportunities, having opportunities brought to us, and negotiating with tenants
and build-to-suit prospects. While we believe that we could find replacements
for these key personnel, the loss of their services could materially and
adversely effect our operations because of diminished relationships with
lenders, prospective tenants and industry personnel.
Mr. Zuckerman has substantial outside business interests, including serving
as Chairman of the board of directors of U.S. News & World Report, The Atlantic
Monthly, The New York Daily News and Applied Graphics Technologies, and serving
as a member of the board of directors of Snyder Communications. Such outside
business interests could interfere with his ability to devote time to our
business and affairs. Over the last twenty years, Mr. Zuckerman has devoted a
significant portion, although not a majority, of his business time to the
affairs of Boston Properties and its predecessors. We have no assurance that he
will continue to devote any specific portion of his time to us, although at
present, he has no commitments which would prevent him from maintaining his
current level of involvement with our business.
CONFLICTS OF INTEREST EXIST WITH HOLDERS OF INTERESTS IN BOSTON PROPERTIES
LIMITED PARTNERSHIP.
SALES OF PROPERTIES AND REPAYMENT OF RELATED INDEBTEDNESS WILL HAVE
DIFFERENT EFFECTS ON HOLDERS OF INTERESTS IN BOSTON PROPERTIES LIMITED
PARTNERSHIP THAN ON OUR STOCKHOLDERS.
Some holders of interests in Boston Properties Limited Partnership,
including Messrs. Zuckerman and Linde, would incur adverse tax consequences upon
the sale of certain of our properties and on the repayment of related debt which
differ from the tax consequences to us and our stockholders. Consequently, such
holders of interests in Boston Properties Limited Partnership may have different
objectives regarding the appropriate pricing and timing of any such sale or
repayment of debt. While we have exclusive authority under the agreement of
limited partnership of Boston Properties Limited Partnership to determine when
to refinance or repay debt or whether, when, and on what terms to sell a
property, subject, in the case of certain properties, to the contractual
commitments described below, any such decision would require the approval of our
board of directors. As directors and executive officers, Messrs. Zuckerman and
Linde have substantial influence with respect to any such decision. Their
influence could be exercised in a manner inconsistent with the interests of
some, or a majority, of our stockholders, including in a manner which could
prevent completion of a sale of a property or the repayment of indebtedness.
13
<PAGE>
AGREEMENT NOT TO SELL SOME PROPERTIES.
Under the terms of the agreement of limited partnership of Boston
Properties Limited Partnership, we have agreed not to sell or otherwise transfer
some of our properties, prior to specified dates, in any transaction that would
trigger taxable income, without first obtaining the consent of Messrs. Zuckerman
and Linde. However, we are not required to obtain their consent if, during the
applicable period, each of them does not hold at least 30% of his original
interests in Boston Properties Limited Partnership. In addition, we have
entered into similar agreements with respect to other properties that we have
acquired in exchange for interests in Boston Properties Limited Partnership.
There are a total of 26 properties subject to these restrictions, and those
26 properties are estimated to have accounted for approximately 52% of our
total revenue on a pro forma basis for the year ended December 31, 1998.
Boston Properties Limited Partnership has also entered into agreements
providing Messrs. Zuckerman and Linde and others with the right to guarantee our
additional and/or substitute indebtedness in the event that certain other
indebtedness is repaid or reduced.
The agreements described above may hinder actions that we may otherwise
desire to take because we would be required to make payments to the
beneficiaries of such agreements if we violate these agreements.
MESSRS. ZUCKERMAN AND LINDE WILL CONTINUE TO ENGAGE IN OTHER ACTIVITIES.
Messrs. Zuckerman and Linde have a broad and varied range of investment
interests. Either one could acquire an interest in a company which is not
currently involved in real estate investment activities but which may acquire
real property in the future. However, pursuant to Mr. Linde's employment
agreement and Mr. Zuckerman's non-compete agreement, Messrs. Zuckerman and Linde
will not, in general, have management control over such companies and,
therefore, they may not be able to prevent one or more such companies from
engaging in activities that are in competition with our activities.
CHANGES IN MARKET CONDITIONS COULD ADVERSELY AFFECT THE MARKET PRICE OF OUR
PUBLICLY TRADED SECURITIES.
As with other publicly traded equity securities, the value of our common
stock depends on various market conditions which may change from time to time.
Among the market conditions that may affect the value of our publicly traded
securities are the following:
. the extent of investor interest in us;
. the general reputation of real estate investment trusts and the
attractiveness of our equity securities in comparison to other equity
securities, including securities issued by other real estate-based
companies;
. our financial performance; and
. general stock and bond market conditions.
The market value of equity securities is based primarily upon the market's
perception of our growth potential and our current and potential future earnings
and cash dividends. Consequently, our equity securities, including our common
stock, may trade at prices that are higher or lower than our net asset value per
share of common stock. If our future earnings or cash dividends are less than
expected, it is likely that the market price of our common stock will diminish.
14
<PAGE>
MARKET INTEREST RATES MAY HAVE AN EFFECT ON THE VALUE OF OUR PUBLICLY TRADED
SECURITIES.
One of the factors that investors may consider important in deciding
whether to buy or sell shares of a real estate investment trust is the dividend
with respect to such real estate investment trust's shares as a percentage of
the price of such shares, relative to market interest rates. If market interest
rates go up, prospective purchasers of shares of a real estate investment trust
may expect a higher distribution rate on our common stock. Higher market
interest rates would not, however, result in more funds for us to distribute
and, to the contrary, would likely increase our borrowing costs and potentially
decrease funds available for distribution. Thus, higher market interest rates
could cause the market price of our publicly traded securities to go down.
THE NUMBER OF SHARES AVAILABLE FOR FUTURE SALE COULD ADVERSELY AFFECT THE MARKET
PRICE OF OUR STOCK.
We have entered into a number of private placement transactions where
shares of capital stock of Boston Properties, Inc. or interests in Boston
Properties Limited Partnership were issued both at the time of our initial
public offering and thereafter to owners of properties we acquired or to
institutional investors. This stock, or stock issuable in exchange for such
interests in Boston Properties Limited Partnership, may be sold in the public
market over time pursuant to registration rights. Additional stock reserved
under our employee benefit and other incentive plans, including stock options,
may also be sold in the public at some time in the future. Future sales of
stock in the public securities markets could adversely affect the price of our
stock. We can not predict the effect that perception in the market that such
sales may occur will have on the market price of our stock.
WE COULD BE ADVERSELY AFFECTED IF WE HAVE UNDERESTIMATED OUR YEAR 2000 COMPUTER
PROBLEMS.
The Year 2000 issue relates to how computer systems and programs that will
recognize and process dates after December 31, 1999. Most computer systems and
programs that use two digits to specify a year, if not modified prior to the
year 2000, will be unable to properly recognize dates. This could result in
system failures or miscalculations that could result in disruptions of normal
business operations. The Year 2000 issue can also affect embedded technology
systems and programs of our properties such as:
. building automation;
. security card access;
. fire and life safety;
. elevators; and
. office equipment.
WE DID NOT OBTAIN NEW OWNER'S TITLE INSURANCE POLICIES IN CONNECTION WITH
PROPERTIES ACQUIRED DURING OUR INITIAL PUBLIC OFFERING.
We acquired many of our properties from our predecessors at the completion
of our initial public offering in June 1997. Before we acquired these
properties each of them was insured by a title insurance policy. We did not,
however, obtain new owner's title insurance policies in connection with the
acquisition of such properties. Nevertheless, because in many instances we
acquired these properties indirectly by acquiring ownership of the entity which
owned the property and those owners remain in existence as our subsidiaries,
some of these title insurance policies may continue to benefit us. Many of
these title insurance policies may be for amounts less than the current values
of the applicable properties. If there was a title defect related to any of
these properties, or to any of the properties acquired at the time of our
initial public offering, that is no longer covered by a title insurance policy,
we could lose both our capital invested in and our anticipated profits from such
property.
15
<PAGE>
We have obtained title insurance policies for all properties that we
have acquired after our initial public offering.
WE FACE POSSIBLE ADVERSE CHANGES IN TAX AND ENVIRONMENTAL LAWS.
Generally, we pass through to our tenants costs resulting from increases in
real estate taxes. However, we generally do not pass through to our tenants
increases in income, service or transfer taxes. Similarly, changes in laws
increasing the potential liability for environmental conditions existing on our
properties or increasing the restrictions on discharges or other conditions may
result in significant unanticipated expenditures. These increased costs could
adversely affect our financial condition and results of operations and the
amount of cash available for payment of dividends.
16
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We are subject to the informational requirements of the Securities Exchange
Act of 1934, as amended, and we are required to file reports and proxy
statements and other information with the Securities and Exchange Commission.
You may read and copy these reports, proxy statements and information at the
public reference facilities maintained by the Securities and Exchange Commission
at Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549,
and at the Securities and Exchange Commission's Regional Offices at 7 World
Trade Center, 13th Floor, New York, New York 10048, and Citicorp Center, 500 W.
Madison Street, Suite 1400, Chicago, Illinois 60661-2511. You may also obtain
copies at the prescribed rates from the Public Reference Section of the
Securities and Exchange Commission at its principal office in Washington, D.C.
You may call the Securities and Exchange Commission at 1-800-SEC-0330 for
further information about the public reference rooms. The Securities and
Exchange Commission maintains a web site that contains reports, proxy and
information statements and other information regarding registrants, including,
Boston Properties, Inc., that file electronically with the Securities and
Exchange Commission. You may access the Securities and Exchange Commission's web
site at http://www.sec.gov.
INCORPORATION OF DOCUMENTS BY REFERENCE
The Securities and Exchange Commission allows us to incorporate by
reference the information that we file with them. Incorporation by reference
means that we can disclose important information to you by referring you to
other documents that are legally considered to be part of this prospectus
supplement or the attached prospectus, and later information that we file with
the Securities and Exchange Commission will automatically update and supersede
the information in this prospectus, any supplement and the documents listed
below. We incorporate by reference the specific documents listed below and any
future filings made with the Securities and Exchange Commission under Section
13(a), 13(c), 14, or 15(d) of the Securities Exchange Act until we sell all of
the securities:
. our Annual Report on Form 10-K for the year ended December 31, 1998;
. our Proxy Statement dated March 31, 1999 prepared in connection with
our Annual Meeting of Stockholders held on May 5, 1999;
. our Quarterly Report on Form 10-Q for the three months ended March 31,
1999;
. our Current Reports on Form 8-K dated April 27, 1999 and May 25, 1999;
. the description of our common stock contained in our Registration
Statement on Form 8-A, filed on June 12, 1997 and all amendments and
reports updating such description; and
. the description of the rights to purchase shares of our Series E
Junior Participating Cumulative Preferred Stock contained in our
registration statement on Form 8-A, filed on June 12, 1997, and the
description contained in our registration statement on Form 8-A/A
filed on June 16, 1997 amending such description, and all amendments
and reports updating that description.
You should rely only on the information incorporated by reference or
provided in this prospectus. We have not authorized anyone to provide you with
different information. You should not assume that the information in this
prospectus or the documents incorporated by reference is accurate as of any date
other than the date on the front of this prospectus or those documents.
17
<PAGE>
FORWARD-LOOKING STATEMENTS
Statements incorporated by reference or made under the captions "Risk
Factors" and "The Company" and elsewhere in this prospectus are "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. When we use the words
"anticipate," "assume," "believe," "estimate," "expect," "intend" and other
similar expressions, they generally identify forward-looking statements.
Forward-looking statements include, for example, statements relating to
acquisitions and related financial information, development activities, business
strategy and prospects, future capital expenditures, sources and availability of
capital, environmental and other regulations and competition.
You should exercise caution in interpreting and relying on forward-looking
statements since they involve known and unknown risks, uncertainties and other
factors which are, in some cases, beyond our control and could materially affect
our actual results, performance or achievements. Some of the factors that could
cause our actual results, performance or achievements to differ materially from
those expressed or implied by forward-looking statements include, but are not
limited to, the following:
. we are subject to general risks affecting the real estate industry,
such as the need to enter into new leases or renew leases on favorable
terms to generate rental revenues, and dependence on our tenants'
financial condition;
. we may fail to identify, acquire, construct or develop additional
properties; we may develop properties that do not produce a desired
yield on invested capital; or we may fail to effectively integrate
acquisitions of properties or portfolios of properties;
. financing may not be available, or may not be available on favorable
terms;
. we need to make distributions to our stockholders for us to qualify as
a real estate investment trust, and if we need to borrow the funds to
make such distributions such borrowings may not be available on
favorable terms;
. we depend on the primary markets where our properties are located and
these markets may be adversely affected by local economic and market
conditions which are beyond our control;
. we are subject to potential environmental liabilities;
. we are subject to complex regulations relating to our status as a real
estate investment trust and would be adversely affected if we failed to
qualify as a real estate investment trust; and
. market interest rates could adversely affect the market prices for our
common stock, as well as our performance and cash flow.
We caution you that, while forward looking statements reflect our good
faith beliefs, they are not guarantees of future performance. In addition, we
disclaim any obligation to publicly update or revise any forward-looking
statement, whether as a result of new information, future events or otherwise.
18
<PAGE>
OUR COMPANY
BOSTON PROPERTIES, INC.
. We are one of the largest owners and developers of office properties in
the United States , with a significant presence in Greater Boston;
Midtown Manhattan; Greater Washington, D.C.; Greater San Francisco,
Princeton/East Brunswick, New Jersey; Richmond, Virginia; and
Baltimore, Maryland.
. As of March 31, 1999, we owned 124 properties, aggregating more than
32 million square feet. Our properties consist of 111 office
properties, consisting of 79 Class A office buildings, including eight
under development and 32 properties that support both office and
technical uses, nine industrial properties, three hotels and one
parking garage.
. We are a Delaware corporation formed in 1997 to continue and expand the
operations of our predecessor organization founded by Messrs. Mortimer
B. Zuckerman and Edward H. Linde. We have elected to be taxed as a real
estate investment trust for federal income tax purposes and operate
principally through Boston Properties Limited Partnership, a Delaware
limited partnership. We are currently an approximate 67.3% economic
owner of the common equity of Boston Properties Limited Partnership.
We control Boston Properties Limited Partnership as its sole general
partner.
. Our executive offices are located at 800 Boylston Street, Boston,
Massachusetts 02199 and our telephone number is (617) 236-3300.
19
<PAGE>
DESCRIPTION OF COMMON STOCK
The following is a summary of the material terms and provisions of our
common stock. It may not contain all the information that is important to you.
You can access complete information by referring to our certificate of
incorporation, bylaws, our shareholder rights plan and the Delaware General
Corporate Law. Our shareholder rights plan is summarized below. Our shareholder
rights plan, certificate of incorporation and bylaws are incorporated by
reference into the registration statement of which this prospectus is a part.
GENERAL
Under our certificate of incorporation, we have authority to issue
250,000,000 shares of common stock, par value $.01 per share. As of May 13,
1999, 63,548,144 shares of common stock were issued and outstanding. In
addition, as of May 13, 1999, 23,816,811 common units of Boston Properties
Limited Partnership which are exchangeable for common stock on a one-for-one
basis were outstanding. We may issue common stock from time to time. Our board
of directors must approve the amount of stock we sell and the price for which it
is sold. Holders of our common stock do not have any preferential rights or
preemptive rights to buy or subscribe for capital stock or other securities that
we may issue. However, each outstanding share of our common stock currently has
attached to it one preferred share purchase right issued under our shareholder
rights plan, which is summarized below. Our common stock does not have any
redemption or sinking fund provisions or any conversion rights.
All of our common stock, when issued, will be duly authorized, fully paid
and nonassessable. This means that the full price for our outstanding common
stock will have been paid at the time of issuance and that any holder of our
common stock will not later be required to pay us any additional money for such
common stock.
DIVIDENDS
Subject to the preferential rights of any other shares of our stock and the
provisions of our certificate of incorporation regarding excess shares, holders
of our common stock may receive dividends out of assets that we can legally use
to pay dividends, when and if, they are authorized and declared by our board of
directors. Each common stockholder shares in the same proportion as other common
stockholders out of assets that we can legally use to pay distributions after we
pay or make adequate provision for all of our known debts and liabilities in the
event we are liquidated, dissolved or our affairs are wound up.
VOTING RIGHTS
Subject to the provisions of our certificate of incorporation regarding
excess shares, holders of common stock will have the exclusive power to vote on
all matters presented to our stockholders, including the election of directors,
except as otherwise provided by Delaware law or as provided with respect to any
other shares of our stock. Holders of our common stock are entitled to one vote
per share. There is no cumulative voting in the election of our directors, which
means that at any meeting of our stockholders, the holders of a majority of the
outstanding common stock can elect all of the directors then standing for
election.
OTHER RIGHTS
Subject to the provisions of our certificate of incorporation regarding
excess shares, all shares of our common stock have equal dividend, distribution,
liquidation and other rights, and have no preference, appraisal or exchange
rights, except for any appraisal rights provided by Delaware law.
Holders of our common stock have no conversion, sinking fund or redemption
rights, or preemptive rights to subscribe for any of our securities.
20
<PAGE>
Delaware law generally requires that we obtain the approval of a majority
of the outstanding shares of our common stock that are entitled to vote before
we may consolidate our stock or merge with another corporation. However,
Delaware law does not require that we seek approval of our stockholders to enter
into a merger in which we are the surviving corporation following the merger if:
. our certificate of incorporation is not amended in any respect by the
merger;
. each share of our stock outstanding prior to the merger is to be an
identical share of stock following the merger; and
. any shares of common stock (together with any other securities
convertible into shares of common stock) to be issued or delivered as a
result of the merger represent no more than 20% of the number of shares
of our common stock outstanding immediately prior to the merger.
RESTRICTIONS ON OWNERSHIP
For us to qualify as a real estate investment trust under the Internal
Revenue Code, no more than 50% in value of our outstanding stock may be owned,
actually or constructively, by five or fewer individuals during the last half of
a taxable year. To assist us in meeting this requirement, we may take actions
such as the automatic conversion of shares in excess of this ownership
restriction into excess shares to limit the ownership of our outstanding equity
securities, actually or constructively, by one person or entity. See "Limits on
Ownership of Stock" beginning on page 24.
TRANSFER AGENT
The transfer agent and registrar for our common stock is BankBoston, N.A.
PREFERRED SHARES
Under our certificate of incorporation, we have authority to issue up to
50,000,000 shares of preferred stock. At May 13, 1999, we had outstanding
2,000,000 shares of Series A Convertible Redeemable Preferred Stock. The general
terms of our Series A convertible redeemable preferred stock are as follows:
. Dividends on our Series A stock are cumulative from the date of
original issuance and payable quarterly generally at a rate of 5.0% per
annum through March 31, 1999; 5.5% through December 31, 1999; 5.625%
through December 31, 2000; 6.0% through December 31, 2001; 6.5% through
December 31, 2002; 7.0% until May 12, 2009; and 6.0% thereafter.
. On or after December 31, 2002, shares of our Series A stock are
convertible, at the holder's election, into shares of our common stock
at a conversion price of $38.10 per share of common stock.
. Beginning on May 12, 2009, the Series A stock may be redeemed in six
annual tranches at the election of either the holder or us. The
liquidation preference of our Series A stock is $50 per share.
Under our certificate of incorporation, we have authority to issue up to
150,000,000 shares of Series E Junior Participating Cumulative Preferred Stock.
At May 13, 1999, none of the Series E Junior Participating Cumulative Preferred
Stock were issued or outstanding. Shares of our Series E Junior Participating
Cumulative Preferred Stock may be issued under our shareholder rights plan,
which is summarized beginning on page 22.
21
<PAGE>
We do not have any other preferred stock outstanding as of the date of this
prospectus. We may issue preferred stock from time to time, in one or more
series, as authorized by our board of directors. Prior to issuance of shares of
each series, our board of directors is required by the Delaware General
Corporation Law and our certificate of incorporation to fix for each series,
subject to the provisions of our certificate of incorporation regarding excess
shares, the terms, preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends or other distributions, qualifications
and terms or conditions of redemption, as are permitted by Delaware law. The
preferred stock will, when issued, be fully paid and nonassessable and will have
no preemptive rights. Our board of directors could authorize the issuance of
preferred stock with terms and conditions that could have the effect of
discouraging a takeover or other transaction that holders of our common stock
might believe to be in their best interests or in which holders of some, or a
majority, of our common stock might receive a premium for their shares over the
then market price of such common stock.
SHAREHOLDER RIGHTS PLAN
In 1997, our board of directors adopted a shareholder rights plan and
entered into a shareholder rights agreement with BankBoston, N.A., as rights
agent. The purpose of our Shareholder rights plan is to enhance our board of
directors' ability to protect our stockholders' interests by ensuring that such
stockholders receive fair treatment in the event that any coercive takeover
attempt of Boston Properties is made in the future. The rights plan is intended
to provide our board of directors with sufficient time to consider any and all
alternatives to such an action. The rights may discourage, delay or prevent
hostile takeovers. They are not intended, however, to interfere with any merger
or other business combination approved by our board of directors.
Under our shareholder rights plan, one preferred stock purchase right is
attached to each outstanding share of our common stock. We refer to these
preferred stock purchase rights as the "rights." Each share of common stock
issued in the future will also receive a right until any of the rights become
exercisable. Until a right is exercised, the holder of a right does not have
any additional rights as a stockholder. These rights will expire on June 11,
2007, unless previously redeemed or exchanged by us as described below. These
rights trade automatically with our common stock and will separate from the
common stock and become exercisable only under the circumstances described
below.
In general, the rights will become exercisable when the first of the
following events happens:
1. ten calendar days after a public announcement that a person or group has
acquired beneficial ownership of 15% or more of the sum of our
outstanding common stock and excess stock; or
2. ten business days, or such other date determined by our board of
directors, after the beginning of a tender offer or exchange offer that
would result in a person or group beneficially owning 15% or more of the
sum of our outstanding common stock and excess stock.
Under our shareholder rights plan, our common stock that may be issued in
exchange for outstanding common units of limited partnership interest in Boston
Properties Limited Partnership are not included in the definition of beneficial
ownership.
However, if a person who became a limited partner of Boston Properties
Limited Partnership at the time of our initial public offering acquires
beneficial ownership of 15% or more of the sum of our common stock and excess
stock, the rights will not become exercisable unless the acquisition results in
that person acquiring a greater percentage of the outstanding shares of our
outstanding common stock plus outstanding common units of limited partnership
interest of Boston Properties Limited Partnership than the percentage of
outstanding shares of common stock plus outstanding common units of limited
partnership interest of Boston Properties Limited Partnership that person held
at the
22
<PAGE>
completion of our initial public offering. In addition, no group of which
a person who became a partner of Boston Properties Limited Partnership at the
time of our initial public offering is a member will be deemed to beneficially
own our common stock and excess stock owned by that person. Common units of
limited partnership interest of Boston Properties Limited Partnership held by
Boston Properties are excluded in making these calculations.
If the rights become exercisable, holders of the rights will be able to
purchase from us a unit of preferred stock equal to one ten-thousandth of a
share of our Series E Junior Participating Cumulative Preferred Stock at a price
of $100 per unit, subject to adjustment. We have designated 200,000 shares of
Series E Junior Participating Cumulative Preferred Stock and have reserved such
shares for issuance under our shareholder rights plan. However, all rights owned
by any persons or groups triggering the event shall be void.
In addition, if at any time following a public announcement that a person
or group has acquired beneficial ownership of 15% or more of the sum of our
outstanding common stock and excess stock:
. we enter into a merger or other business combination transaction in
which we are not the surviving entity;
. we enter into a merger or other business combination transaction in
which all or part of our common stock is exchanged; or
. we sell, transfer or mortgage 50% or more of our assets or earning
power,
then each holder of a right, other than rights held by the person or group who
triggered the event, will be entitled to receive, upon exercise, common stock
of the acquiring company equal to two times the purchase price of the right.
At any time after our public announcement that a person or group has
acquired beneficial ownership of 15% or more of the sum of our outstanding
common stock and excess stock, our board of directors may, at its option,
exchange all or any part of the then outstanding and exercisable rights for
shares of our common stock or units of Series E Preferred Stock at an exchange
ratio of one share or one unit per right. However, our board of directors
generally will not be empowered to effect such exchange at any time after any
person becomes the beneficial owner of 50% or more of our outstanding common
stock.
We may redeem the rights at $.001 per right at any time before the date
that is ten days after a public announcement that a person or group has acquired
beneficial ownership of 15% or more of the sum of our outstanding common stock
and excess stock. We may extend this redemption period at any time while the
rights are still redeemable. The rights will expire at the close of business on
June 11, 2007 unless we redeem them before that date.
The above description of our shareholder rights plan is not intended to be
a complete description. For a full description of the shareholder rights plan,
you should read the rights agreement. You may obtain a copy of the rights
agreement at no charge by writing to us at the address listed on page 19.
23
<PAGE>
LIMITS ON OWNERSHIP OF OUR STOCK
OWNERSHIP LIMITS
For us to qualify as a real estate investment trust under the Internal
Revenue Code, among other things, not more than 50% in value of our outstanding
stock may be owned, actually or constructively, by five or fewer individuals
during the last half of a taxable year other than the first year, and such stock
must be beneficially owned by 100 or more persons during at least 335 days of a
taxable year of 12 months other than the first year or during a proportionate
part of a shorter taxable year. In order to protect us against the risk of
losing our status as a real estate investment trust due to a concentration of
ownership among our stockholders, our certificate of incorporation provides that
generally no holder may beneficially own, or be deemed to own by virtue of the
attribution provisions of the Internal Revenue Code, more than 6.6% of any class
or series of our stock. Under our certificate of incorporation, a person
generally "beneficially owns" shares if:
. such person has direct ownership of such shares,
. such person has indirect ownership of such shares taking into account
the constructive ownership rules of Section 544 of the Internal Revenue
Code, as modified by Section 856(h)(1)(B) of the Internal Revenue Code,
or
. such person would be deemed to beneficially own such shares pursuant to
Rule 13d-3 under the Exchange Act of 1934, as amended.
Our certificate of incorporation allows two exceptions to the 6.6%
ownership limit:
15% Related party ownership limit:
Each of Messrs. Zuckerman and Linde, together with their respective heirs,
legatees, devisees and any other person whose beneficial ownership of our
common stock would be attributed under the Internal Revenue Code to them,
are subject to an ownership limit of 15% for each of them together with
such persons related to them.
15% Look-through entity ownership limit:
Pension plans described in Section 401(a) of the Internal Revenue Code and
mutual funds registered under the Investment Company Act of 1940 are
subject to an ownership limit of 15%. Pension plans and mutual funds are
among the entities that are not treated as stockholders under the "five or
fewer requirement." Rather, the beneficial owners of such entities will be
counted as stockholders for this purpose.
The foregoing restrictions will not apply if our board of directors
determines that it is no longer in our best interests to attempt to qualify, or
to continue to qualify, as a real estate investment trust. In addition, the
foregoing restrictions do not apply with respect to an offeror in the event of
an all cash tender offer by it which has been accepted by at least two-thirds of
our outstanding stock.
SHARES IN EXCESS OF OWNERSHIP LIMITS
Transfers of our stock or any security convertible into our stock or other
events that would create a direct or indirect ownership of our stock that would:
. violate the 6.6% ownership limit;
. violate the 15% ownership limit for related parties;
24
<PAGE>
. violate the 15% ownership limit for look-through entities; or
. result in our disqualification as a real estate investment trust,
including any transfer that results in:
. our stock being owned by fewer than 100 persons,
. Boston Properties being "closely held" with the meaning of Section
856(h) of the Internal Revenue Code, or
. Boston Properties constructively owning 10% or more of one of our
tenants
shall be null and void and of no effect with respect to the shares in excess of
the applicable limit. Any such shares in excess of an applicable limitation will
be converted automatically into an equal number of shares of our excess stock
that will be transferred by operation of law to a trust for the benefit of a
qualified charitable organization selected by us, but not affiliated with us.
As soon as practicable after the transfer of shares to the trust, the trustee of
the trust will be required to sell such excess shares to a person or entity who
could own such shares without violating the applicable limit and distribute to
the original transferee-stockholder an amount equal to the lesser of:
. the proceeds of such sale, or
. the price paid for our stock in excess of the applicable limit by the
original transferee-owner or, in the event that the original violative
transfer was a gift or an event other than a transfer, the fair market
value of the excess shares on the date they are sold by the trust.
All dividends and other distributions received with respect to the excess
shares prior to their sale by the trust and any proceeds from the sale by the
trust in excess of the amount distributable to the original transferee-owner
will be distributed to the beneficiary of the trust.
RIGHT TO PURCHASE EXCESS SHARES
In addition to the foregoing transfer restrictions, we have the right, for
a period of 90 days during the time any excess shares are held by the trust, to
purchase all or any portion of the excess shares for the lesser of the price
paid for the shares in excess of the applicable limit by the original
transferee-stockholder or the market price of our stock on the date we exercise
our option to purchase, which amount will be paid to the original transferee-
stockholder. The market price will be determined in the manner set forth in our
certificate of incorporation. The 90-day period begins on the date of the
violative transfer if the original transferee-stockholder gives notice to us of
the transfer or, if no such notice is given, the date on which the board of
directors determines that a violative transfer has been made.
DISCLOSURE OF STOCK OWNERSHIP BY OUR STOCKHOLDERS
Each of our stockholders will upon demand be required to disclose to us in
writing any information with respect to the direct, indirect and constructive
ownership of shares of our stock as our board of directors deems necessary to
comply with the provisions of the Internal Revenue Code applicable to real
estate investment trusts, to comply with the requirements of any taxing
authority or governmental agency or to determine any such compliance.
These ownership limitations may have the effect of precluding the
acquisition of control of Boston Properties unless our board of directors
determines that our maintenance of real estate investment trust status is no
longer in our best interests.
25
<PAGE>
IMPORTANT PROVISIONS OF DELAWARE LAW AND
OUR CERTIFICATE OF INCORPORATION AND BYLAWS
The following is a summary of important provisions of Delaware law and our
certificate of incorporation and bylaws which affect us and our stockholders.
The description below is intended as only a summary. You can access complete
information by referring to Delaware General Corporation Law and our certificate
of incorporation and bylaws.
BUSINESS COMBINATIONS WITH INTERESTED STOCKHOLDERS UNDER DELAWARE LAW
Section 203 of the Delaware General Corporation Law prevents a publicly
held corporation from engaging in a "business combination" with an "interested
stockholder" for a period of three years after the date of the transaction in
which the person became an interested stockholder, unless:
. before the date on which the person became an interested stockholder,
the board of directors of the corporation approved either the business
combination or the transaction in which the person became an interested
stockholder;
. the interested stockholder owned at least 85% of the outstanding voting
stock of the corporation at the beginning of the transaction in which
it became an interested stockholder, excluding stock held by directors
who are also officers of the corporation and by employee stock plans
that do not provide participants with the rights to determine
confidentially whether shares held subject to the plan will be tendered
in a tender or exchange offer; or
. after the date on which the interested stockholder became an interested
stockholder, the business combination is approved by the board of
directors and the holders of two-thirds of the outstanding voting stock
of the corporation voting at a meeting, excluding the voting stock
owned by the interested stockholder.
As defined in Section 203, an "interested stockholder" is generally a
person owning 15% or more of the outstanding voting stock of the corporation.
As defined in Section 203, a "business combination" includes mergers,
consolidations, stock and assets sales and other transactions with the
interested stockholder.
The provisions of Section 203 may have the effect of delaying, deferring or
preventing a change of control of Boston Properties.
AMENDMENT OF OUR CERTIFICATE OF INCORPORATION AND BYLAWS
Amendments to our certificate of incorporation must be approved by our
board of directors and generally by the vote of a majority of the votes entitled
to be cast at a meeting of our stockholders. However, a 75% stockholder vote is
required for amendments dealing with fundamental governance provisions of our
certificate of incorporation, such as:
. stockholder action
. the powers, election of, removal of and classification of directors
. limitation of liability
. amendment of our certificate of incorporation
Unless otherwise required by law, our board of directors may amend our
bylaws by a majority vote of our directors then in office. Our bylaws may also
be amended by a majority stockholder vote if our board of directors recommends
the approval of the amendment, and otherwise by a 75% stockholder vote.
26
<PAGE>
MEETINGS OF STOCKHOLDERS
Under our bylaws, we will hold annual meetings of our stockholders at such
date and time as determined by our board of directors, Chairman or President.
Our bylaws require advance notice for our stockholders to make nominations of
candidates for our board of directors or bring other business before an annual
meeting of our stockholders. Only our board of directors can call special
meetings of our stockholders and any special meeting is restricted to
considering and acting upon matters set forth in the notice of that special
meeting.
BOARD OF DIRECTORS
Our board of directors is divided into three classes. As the term of each
class expires, directors in that class will be elected for a term of three years
and until their successors are duly elected and qualified.
Our certificate of incorporation provides that a 75% vote of our board of
directors is required to approve fundamental changes or actions, including:
. a change of control of Boston Properties or of Boston Properties
Limited Partnership
. any amendment to the limited partnership agreement of Boston Properties
Limited Partnership
. any waiver of the limitations on ownership contained in our certificate
of incorporation
. certain issuances of equity securities by Boston Properties
. termination of our status as a REIT.
SHAREHOLDER RIGHTS PLAN AND OWNERSHIP LIMITATIONS
We have adopted a shareholder rights agreement. In addition, our
certificate of incorporation contains provisions that limit the ownership by any
person of shares of any class or series of our capital stock. See "Shareholder
rights plan" beginning on page 22 and "Limits on ownership of our stock"
beginning on page 24.
LIMITATION OF DIRECTORS' AND OFFICERS' LIABILITY
Our certificate of incorporation generally limits the liability of our
directors to Boston Properties to the fullest extent permitted by Delaware law,
as it now exists or may in the future be amended. The Delaware General
Corporation Law permits a corporation to indemnify its directors, officers,
employees or agents and expressly provides that the indemnification provided for
under the Delaware General Corporation Law shall not be deemed exclusive of any
indemnification right under any bylaw, vote of stockholders or disinterested
directors, or otherwise. Delaware law permits indemnification against expenses
and certain other liabilities arising out of legal actions brought or threatened
against such persons for their conduct on behalf of a corporation, provided that
each such person acted in good faith and in a manner that he or she reasonably
believed was in or not opposed to the corporation's best interests and, in the
case of a criminal proceeding, provided such person had no reasonable cause to
believe his or her conduct was unlawful. Delaware law does not allow
indemnification of directors in the case of an action by or in the right of a
corporation unless the directors successfully defend the action or
indemnification is ordered by the court.
27
<PAGE>
Our bylaws provide that our directors and officers will be, and, in the
discretion of our board of directors, non-officer employees may be, indemnified
by Boston Properties to the fullest extent authorized by Delaware law, as it now
exists or may in the future be amended, against all expenses and liabilities
actually and reasonably incurred in connection with service for or on behalf of
Boston Properties. Our bylaws also provide that the right of directors and
officers to indemnification shall be a contract right and shall not be exclusive
of any other right now possessed or hereafter acquired under any bylaw,
agreement, vote of stockholders, or otherwise.
Our certificate of incorporation contains a provision permitted by Delaware
law that generally eliminates the personal liability of directors for monetary
damages for breaches of their fiduciary duty, including breaches involving
negligence or gross negligence in business combinations, unless the director has
breached his or her duty of loyalty, failed to act in good faith, engaged in
intentional misconduct or a knowing violation of law, paid a dividend or
approved a stock repurchase in violation of the Delaware General Corporation Law
or obtained an improper personal benefit. This provision does not alter a
director's liability under the federal securities laws. In addition, this
provision does not affect the availability of equitable remedies, such as an
injunction or rescission, for breach of fiduciary duty.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or persons controlling Boston Properties
pursuant to the foregoing provisions, we have been informed that in the opinion
of the SEC such indemnification is against public policy as expressed in the
Securities Act and is therefore unenforceable.
INDEMNIFICATION AGREEMENTS
We have entered into indemnification agreements with each of our directors
and executive officers. The indemnification agreements require, among other
things, that we indemnify our directors and executive officers to the fullest
extent permitted by law and advance to our directors and executive officers all
related expenses, subject to reimbursement if it is subsequently determined that
indemnification is not permitted. Under these agreements, we must also indemnify
and advance all expenses incurred by our directors and executive officers
seeking to enforce their rights under the indemnification agreements and cover
our directors and executive officers under our directors' and officers'
liability insurance. Although the form of indemnification agreement offers
substantially the same scope of coverage afforded by our certificate of
incorporation and our bylaws, it provides greater assurance to our directors and
executive officers that indemnification will be available, because, as a
contract, it cannot be modified unilaterally in the future by our board of
directors or by our stockholders to eliminate the rights it provides.
28
<PAGE>
FEDERAL INCOME TAX CONSIDERATIONS AND CONSEQUENCES OF YOUR INVESTMENT
The following is a general summary of the material federal income tax
considerations and consequences associated with an investment in our common
stock. The following discussion is not exhaustive of all possible tax
considerations and is not tax advice. Moreover, this summary does not deal with
all tax aspects or consequences that might be relevant to you in light of your
personal circumstances; nor does it deal with particular types of stockholders
that are subject to special treatment under the Internal Revenue Code, such as
insurance companies, financial institutions and broker-dealers. The Internal
Revenue Code provisions governing the federal income tax treatment of real
estate investment trusts are highly technical and complex, and this summary is
qualified in its entirety by the applicable Internal Revenue Code provisions,
rules and regulations promulgated thereunder, and administrative and judicial
interpretations thereof. The following discussion is based on current law and on
representations from us concerning our compliance with the requirements for
qualification as a real estate investment trust.
WE URGE YOU, AS A PROSPECTIVE INVESTOR, TO CONSULT YOUR OWN TAX ADVISOR
WITH RESPECT TO THE SPECIFIC FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX
CONSEQUENCES TO YOU OF THE PURCHASE, HOLDING AND SALE OF OUR COMMON STOCK.
FEDERAL INCOME TAXATION
In the opinion of our tax counsel, Goodwin, Procter & Hoar LLP, commencing
with our first taxable year ended December 31, 1997, we have been organized in
conformity with the requirements for qualification as a real estate investment
trust under the Internal Revenue Code, and our method of operation will enable
us to continue to meet the requirements for qualification and taxation as a real
estate investment trust under the Internal Revenue Code, provided that we have
operated and continue to operate in accordance with various assumptions and
factual representations made by us concerning our business, properties and
operations. We may not, however, have met or continue to meet such requirements.
Qualification as a real estate investment trust depends upon us having met and
continuing to meet the various requirements imposed under the Internal Revenue
Code through actual operating results. Goodwin, Procter & Hoar LLP has relied on
our representations regarding our operations and has not and will not review
these operating results. No assurance can be given that actual operating results
have met or will meet these requirements.
If we have qualified and continue to qualify for taxation as a real estate
investment trust, we generally will not be subject to federal corporate income
taxes on that portion of our ordinary income or capital gain that is currently
distributed to stockholders. The real estate investment trust provisions of the
Internal Revenue Code generally allow a real estate investment trust to deduct
dividends paid to its stockholders. This deduction for dividends paid to
stockholders substantially eliminates the federal double taxation on earnings
that usually results from investments in a corporation. "Double taxation" refers
to taxation of income once at the corporate level when earned and once again at
the stockholder level when distributed. Additionally, a real estate investment
trust may elect to retain and pay taxes on a designated amount of its net long-
term capital gains, in which case the stockholders of the real estate investment
trust will include their proportionate share of the undistributed long-term
capital gains in income and receive a credit or refund for their share of the
tax paid by the real estate investment trust.
FAILURE TO QUALIFY
If we fail to qualify for taxation as a real estate investment trust in any
taxable year and the relief provisions do not apply, we will be subject to tax
on our taxable income at regular corporate rates, including any applicable
alternative minimum tax. Distributions to stockholders in any year in which we
fail to qualify will not be deductible by us nor will they be required to be
made. In such event, to the extent of current or accumulated earnings and
profits, all distributions to stockholders will be dividends, taxable as
ordinary income, and subject to limitations of the Internal Revenue Code,
corporate distributees may be eligible for the dividends-received deduction.
Unless we are
29
<PAGE>
entitled to relief under specific statutory provisions, we also will be
disqualified from taxation as a real estate investment trust for the four
taxable years following the year during which qualification was lost. It is not
possible to state whether in all circumstances we would be entitled to such
statutory relief. For example, we must derive a minimum percent of our gross
income from specified sources in order to qualify as a real estate investment
trust. If we fail to satisfy these gross income tests because nonqualifying
income that we intentionally incur exceeds the limit on such income, the
Internal Revenue Service could conclude that our failure to satisfy the tests
was not due to reasonable cause, which is a condition to qualification for
relief from the four-year disqualification rule.
TAXATION OF UNITED STATES STOCKHOLDERS AND POTENTIAL TAX CONSEQUENCES OF THEIR
INVESTMENT IN OUR COMMON STOCK
When we refer to a United States stockholder, we mean a holder of common
stock that is for federal income tax purposes
. an individual who is a citizen or resident of the United States;
. a corporation created or organized in or under the laws of the
United States, any state thereof or the District of Columbia; or
. a partnership, trust or estate treated as a domestic partnership,
trust or estate.
For any taxable year for which we qualify for taxation as a real estate
investment trust, amounts distributed to taxable United States stockholders will
be taxed as follows.
Distributions generally. Distributions other than capital gain dividends
to United States stockholders will be taxable as dividends to the extent of our
current or accumulated earnings and profits as determined for federal income tax
purposes. For purposes of determining whether distributions are out of current
or accumulated earnings and profits, our earnings and profits will be allocated
first to any of our outstanding preferred shares and then to our common stock.
Such dividends will be taxable to the stockholders as ordinary income and will
not be eligible for the dividends-received deduction for corporations. To the
extent that we make a distribution to a United States stockholder in excess of
current or accumulated earnings and profits, the distribution will be treated
first as a tax-free return of capital with respect to the shares, reducing the
United States stockholder's tax basis in the shares, and the distribution in
excess of a United States stockholder's tax basis in the shares will be taxable
as gain realized from the sale of the shares. Dividends declared by us in
October, November or December of any year payable to a stockholder of record on
a specified date in any such month shall be treated as both paid by us and
received by the stockholder on December 31 of the year, provided that the
dividend is actually paid by us during January of the following calendar year.
United States stockholders may not include on their own federal income tax
returns any of our tax losses.
Capital gain dividends. Dividends to United States stockholders that are
properly designated by us as capital gain dividends will be treated as long-term
capital gains, to the extent they do not exceed our actual net capital gains,
for the taxable year without regard to the period for which the stockholder has
held its common stock. However, corporate stockholders may be required to treat
up to 20% of particular capital gain dividends as ordinary income. Capital gain
dividends are not eligible for the dividends-received deduction for
corporations.
Retained capital gains. A real estate investment trust may elect to
retain, rather than distribute, its net long-term capital gains received during
the year. To the extent designated by the real estate investment trust in a
notice to its stockholders, the real estate investment trust will pay the income
tax on such gains and the real estate investment trust stockholders must include
their proportionate share of the undistributed long-term capital gains so
designated in income. Each real estate investment trust stockholder will be
deemed to have paid its share of the tax paid by the real estate investment
trust, which will be credited or refunded to the stockholder. The basis of each
30
<PAGE>
stockholder's real estate investment trust shares will be increased by its
proportionate amount of the undistributed long-term capital gains, net of the
tax paid by the real estate investment trust, included in such stockholder's
long-term capital gains.
Passive activity loss and investment interest limitations. Distributions,
including deemed distributions of undistributed long-term capital gains, from us
and gain from the disposition of common stock will not be treated as passive
activity income, and therefore stockholders may not be able to apply any passive
losses against such income. Dividends from us, to the extent they do not
constitute a return of capital, will generally be treated as investment income
for purposes of the investment income limitation on the deductibility of
investment interest. However, net capital gain from the disposition of common
stock or capital gain dividends, including deemed distributions of undistributed
long-term capital gains, generally will be excluded from investment income.
Sale of the common stock. Upon the sale or exchange of common stock, the
United States stockholder will generally recognize gain or loss equal to the
difference between the amount realized on such sale and the tax basis of the
common stock sold or exchanged. Assuming such shares are held as a capital
asset, such gain or loss will be a long-term capital gain or loss if the shares
have been held for more than one year. However, any loss recognized by a United
States stockholder on the sale of common stock held for not more than six months
and with respect to which capital gains were required to be included in such
stockholder's income will be treated as a long-term capital loss to the extent
of the amount of such capital gains so included.
Treatment of tax-exempt stockholders. Distributions, including deemed
distributions of undistributed long-term capital gains, from us to a tax-exempt
employee pension trust or other domestic tax-exempt stockholder generally will
not constitute unrelated business taxable income unless the stockholder has
borrowed to acquire or carry its common stock. However, certain qualified trusts
that hold more than 10% by value of the shares of a particular real estate
investment trust may be required to treat a specified percentage of these
distributions, including deemed distributions of undistributed long-term capital
gains, as unrelated business taxable income.
BACKUP WITHHOLDING
Under the backup withholding rules, a United States stockholder may be
subject to backup withholding at the rate of 31% with respect to dividends paid
on, and gross proceeds from the sale of, the common stock unless such
stockholder (1) is a corporation or comes within other specific exempt
categories and, when required, demonstrates this fact or (2) provides a correct
taxpayer identification number, certifies as to no loss of exemption from backup
withholding and otherwise complies with applicable requirements of the backup
withholding rules. A United States stockholder who does not provide us with its
current taxpayer identification number may be subject to penalties imposed by
the Commissioner of the Internal Revenue Service. Any amount paid as backup
withholding will be creditable against the stockholder's income tax liability.
We will report to stockholders and the Internal Revenue Service the amount
of any reportable payments, including any dividends paid, and any amount
withheld with respect to the common stock during the calendar year.
STATE AND LOCAL TAX
Boston Properties and our stockholders may be subject to state and local
tax in various states and localities, including those in which we or our
stockholders transact business, own property or reside. The tax treatment of us
and our stockholders in such jurisdictions may differ from the federal income
tax treatment described above. CONSEQUENTLY, AS A PROSPECTIVE INVESTOR, YOU
SHOULD CONSULT YOUR OWN TAX ADVISORS REGARDING THE EFFECT OF STATE AND LOCAL TAX
LAWS ON AN INVESTMENT IN OUR COMMON STOCK.
31
<PAGE>
REGISTRATION RIGHTS OF THE SELLING STOCKHOLDERS
The following is a summary of the material terms and provisions of the
registration rights and lock-up agreement, which we entered into in connection
with our May 28, 1998 acquisition of a parcel of land in Montgomery County,
Maryland. It may not contain all the information that is important to you. You
can access complete information by referring to the registration rights and
lock-up agreement.
Under the registration rights and lock-up agreement, we are obligated to
file a registration statement covering the sale by the selling stockholders of
the common stock that they may acquire in exchange for the common units of
Boston Properties Limited Partnership that they received when we acquired the
land on May 28, 1998. Under the terms of the registration rights and lock-up
agreement, the selling stockholders may not exchange their units for common
stock until after May 29, 1999. Under the registration rights and lock-up
agreement, we must use reasonable efforts to cause the registration statement to
be declared effective by the Securities and Exchange Commission and to keep the
registration statement continuously effective until the earlier of:
. the date on which the selling stockholders no longer hold any exchanged
common stock or any units issued in connection with the acquisition or
. the date on which all of the exchanged common stock held or acquired in
the future by the selling stockholders has become eligible for sale
under Rule 144(k) of the Securities Act of 1933.
Any common stock sold by the selling stockholders pursuant to this prospectus
will no longer be entitled to the benefits of the registration rights and lock-
up agreement.
The registration rights and lock-up agreement requires that we bear all
expenses of registering the common stock with the exception of brokerage and
underwriting commissions and taxes of any kind and any legal, accounting and
other expenses incurred by the selling stockholders. We also agreed to indemnify
the selling stockholders and their officers, directors and other affiliated
persons and any person who controls a selling stockholder against all losses,
claims, damages, actions, liabilities, costs and expenses arising under the
securities laws in connection with the registration statement or this
prospectus, subject to limitations specified in the registration rights and
lock-up agreement. In addition, the selling stockholders agreed to indemnify us
and our directors, officers and any person who controls our company against all
losses, claims, damages, actions, liabilities, costs and expenses arising under
the securities laws if they result from:
. written information furnished to us by the selling stockholders for use
in the registration statement or this prospectus or any amendments to
the registration statement or any prospectus supplements or
. the selling stockholders' failure to deliver, or cause to be delivered,
this prospectus or any amendments or prospectus supplements to any
purchaser of common stock covered by this prospectus from the selling
stockholders through no fault of ours.
32
<PAGE>
THE SELLING STOCKHOLDERS
The following table sets forth the number of shares of common stock and
units beneficially owned by the selling stockholders as of May 13, 1999, the
number of shares of common stock covered by this prospectus and the total number
of shares of common stock and units which the selling stockholders will
beneficially own upon completion of this offering. This table assumes that the
selling stockholders exchange for common stock all of the units issued by Boston
Properties Limited Partnership in connection with our acquisition of a parcel of
land in Montgomery County, Maryland, and that the selling stockholders offer for
sale all of those shares of common stock.
The common stock offered by the prospectus may be offered from time to time
by the selling stockholders named below, or by any of their pledges, donees,
transferees or other successors in interest. The amounts set forth below are
based upon information provided to us by representatives of the selling
stockholders, or on our records, as of May 13, 1999 and are accurate to the best
of our knowledge. It is possible, however, that the selling stockholders may
acquire or dispose of additional shares of common stock or units from time to
time after the date of this prospectus.
<TABLE>
<CAPTION>
COMMON STOCK UNITS
BENEFICIALLY BENEFICIALLY COMMON STOCK AND
OWNED AS OF OWNED AS OF COMMON STOCK UNITS TO BE OWNED
NAME MAY 13, 1999(1) MAY 13, 1999(2) OFFERED HEREBY(3) AFTER OFFERING(4)
- ------------------- --------------- --------------- -------------------- -------------------
<S> <C> <C> <C> <C>
Amy S. Rubenstein 0 6,458 6,458 0
Beth Dana Rubenstein 0 6,458 6,458 0
Barton S. Rubenstein 0 6,458 6,458 0
Lishil Enterprises
Limited Partnership 0 20,697 20,697 0
Dawson Enterprises
Limited Partnership 0 40,073 40,073 0
Tower Capital, LLC 0 512,772 512,772 0
------ ------- ------- ------
TOTAL 0 592,916 592,916 0
====== ======= ======= ======
</TABLE>
- --------------
(1) Does not include common stock that may be issued in exchange for units
beneficially held as of May 13, 1999.
(2) All units listed in this column may be exchanged, under circumstances set
forth in the partnership agreement of Boston Properties Limited
Partnership, for an equal number of shares of common stock. All information
is as of May 13, 1999.
(3) These shares of common stock represent the common stock that the selling
stockholders may acquire upon presentation of the units for redemption.
Such redemption may occur at any time after May 29, 1999.
(4) Assumes that all common stock issuable upon redemption of the units will be
sold by the selling stockholders. In the case of each selling stockholder,
the percentage of our common stock that will be held by such selling
stockholder (assuming all remaining units held by such person are presented
for redemption and are exchanged for common stock) after completion of this
offering will be less than one percent (1%). The total number of shares of
common stock outstanding used in calculating such percentage (i) is based
on the total number of shares of common stock outstanding as of May 13,
1999 (63,548,144 shares) and (ii) assumes that none of the remaining units
held by other persons will be exchanged for common stock.
33
<PAGE>
USE OF PROCEEDS
We will not receive any of the proceeds of the sale by the selling
stockholders of the common stock covered by this prospectus.
PLAN OF DISTRIBUTION
This prospectus relates to the possible sale from time to time of up to an
aggregate of 592,916 shares of common stock by the selling stockholders, or any
of their pledgees, donees, transferees or other successors in interest. If the
selling stockholders present units to Boston Properties Limited Partnership for
redemption, we may, at our election, acquire such units in exchange for common
stock in accordance with the terms of Boston Properties Limited Partnership's
agreement of limited partnership, as amended. We are registering the common
stock pursuant to our obligations under the registration rights and lock-up
agreement, but the registration of the common stock does not necessarily mean
that any of the common stock will be offered or sold by the selling
stockholders.
The distribution of the common stock may be effected from time to time in
one or more underwritten transactions at a fixed price or prices, which may be
changed, or at market prices prevailing at the time of sale, at prices related
to prevailing market prices or at negotiated prices. Any underwritten offering
may be on a "best efforts" or a "firm commitment" basis. In connection with any
underwritten offering, underwriters or agents may receive compensation in the
form of discounts, concessions or commissions from the selling stockholders.
Underwriters may sell the common stock to or through dealers, and such dealers
may receive compensation in the form of discounts, concessions or commissions
from the underwriters and/or commissions from the purchasers for whom they may
act as agents.
The selling stockholders and any underwriters, dealers or agents that
participate in the distribution of the common stock may be deemed to be
underwriters under the Securities Act of 1933, and any profit on the sale of the
common stock by them and any discounts, commissions or concessions received by
any underwriters, dealers or agents might be deemed to be underwriting discounts
and commissions under the Securities Act of 1933. At any time a particular
offer of common stock is made by the selling stockholders, a prospectus
supplement, if required, will be distributed that will, where applicable:
. identify any underwriter, dealer or agent;
. describe any compensation in the form of discounts, concessions,
commissions or otherwise received by each underwriter, dealer or agent
and in the aggregate to all underwriters, dealers and agents;
. identify the amounts underwritten;
. identify the nature of the underwriter's obligation to take the common
stock; and
. provide any other required information.
The sale of common stock by the selling stockholders may also be effected
by selling common stock directly to purchasers or to or through broker-dealers.
In connection with any such sale, any such broker-dealer may act as agent for
the selling stockholders or may purchase from the selling stockholders all or a
portion of the common stock as principal, and may be made pursuant to any of the
methods described below. Such sales may be made on the New York Stock Exchange
or other exchanges on which the common stock are then traded, in the over-the-
counter market, in negotiated transactions or otherwise at prices and at terms
then prevailing or at prices related to the then-current market prices or at
prices otherwise negotiated.
34
<PAGE>
Common stock may also be sold in one or more of the following transactions:
. block transactions in which a broker-dealer may sell all or a portion
of such shares as agent but may position and resell all or a portion of
the block as principal to facilitate the transaction;
. purchases by any such broker-dealer as principal and resale by such
broker-dealer for its own account pursuant to any supplement to this
prospectus;
. a special offering, an exchange distribution or a secondary
distribution in accordance with applicable New York Stock Exchange or
other stock exchange rules;
. ordinary brokerage transactions and transactions in which any such
broker-dealer solicits purchasers;
. sales "at the market" to or through a market maker or into an existing
trading market, on an exchange or otherwise, for such shares; and
. sales in other ways not involving market makers or established trading
markets, including direct sales to purchasers.
In effecting sales, broker-dealers engaged by the selling stockholders may
arrange for other broker-dealers to participate. Broker-dealers will receive
commissions or other compensation from the selling stockholders in amounts to be
negotiated immediately prior to the sale that will not exceed those customary in
the types of transactions involved. Broker-dealers may also receive
compensation from purchasers of the common stock which is not expected to exceed
that customary in the types of transactions involved.
To comply with applicable state securities laws, the common stock will be
sold, if necessary, in such jurisdictions only through registered or licensed
brokers or dealers. In addition, common stock may not be sold in some states
unless they have been registered or qualified for sale in the state or an
exemption from such registration or qualification requirement is available and
is complied with.
All expenses relating to the offering and sale of the common stock, other
than commissions, discounts and fees of underwriters, broker-dealers or agents,
will be paid by us. We have agreed to indemnify the selling stockholders
against some losses, claims, damages, actions, liabilities, costs and expenses,
including liabilities under the Securities Act of 1933. See "Registration
Rights of the Selling Stockholders."
EXPERTS
The financial statements and schedule for the year ended December 31, 1998
referred to and incorporated by reference in this prospectus and elsewhere in
this registration statement have been so included in reliance upon the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in accounting and auditing.
LEGAL MATTERS
Certain legal matters, including the validity of the common stock offered
through this prospectus, will be passed upon for us by Goodwin, Procter & Hoar
LLP. Gilbert G. Menna, the sole stockholder of Gilbert G. Menna, P.C., a partner
of Goodwin, Procter & Hoar LLP, serves as an Assistant Secretary of Boston
Properties. Certain partners of Goodwin, Procter & Hoar LLP or their affiliates,
together with Mr. Menna, own approximately 20,000 shares of our common stock.
Goodwin, Procter & Hoar LLP occupies approximately 26,000 square feet at 599
Lexington Avenue, New York, NY under a lease with Boston Properties that expires
in 2002.
35
<PAGE>
VALIDITY OF COMMON STOCK
The validity of the common stock we are offering will be passed upon for us by
Goodwin, Procter & Hoar LLP, Boston, Massachusetts.
36
<PAGE>
===============================================
You should rely only on the information
contained in this prospectus, incorporated
herein by reference or contained in a
prospectus supplement. Neither we nor the
selling stockholders have authorized anyone
else to provide you with different or
additional information. The selling
stockholders are not making an offer of these
securities in any state where the offer is not
permitted. You should not assume that the
information in this prospectus, or incorporated
herein by reference, or in any prospectus
supplement is accurate as of any date other
than the date on the front of those documents.
--------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary........................ 2
Risk Factors.............................. 4
Where You Can Find More Information....... 17
Incorporation of Documents By Reference... 17
Forward-Looking Statements................ 18
Our Company............................... 19
Description of Common Stock............... 20
Limits on Ownership of Stock.............. 24
Important Provisions of Delaware Law and
Our Certificate of Incorporation and
Bylaws................................. 26
Federal Income Tax Considerations and
Consequences of Your Investment........ 29
Registration Rights of the Selling
Stockholders........................... 32
The Selling Stockholders.................. 33
Use of Proceeds........................... 34
Plan of Distribution...................... 34
Experts................................... 35
Legal Matters............................. 35
Validity of Common Stock.................. 36
</TABLE>
--------------------
===============================================
===============================================
592,916 SHARES
OF COMMON STOCK
BOSTON PROPERTIES, INC.
--------------------
PROSPECTUS
--------------------
JULY __, 1999
===============================================
<PAGE>
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
-------------------------------------------
The expenses in connection with the issuance and distribution of the
securities being registered are set forth in the following table (all amounts
except the registration fee are estimated):
<TABLE>
<CAPTION>
<S> <C>
Registration fee -- Securities and Exchange Commission.. $ 5,795
Accountants' fees and expenses.......................... 5,000
Blue Sky fees and expenses.............................. 1,500
Legal fees and expenses (other than Blue Sky)........... 7,500
Printing expenses....................................... 2,000
Miscellaneous........................................... 1,705
-------
TOTAL................................................... $23,500
=======
</TABLE>
All expenses in connection with the issuance and distribution of the
securities being offered shall be borne by Boston Properties, Inc.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
-----------------------------------------
Our certificate of incorporation and bylaws provide certain limitations on
the liability of our directors and officers for monetary damages to Boston
Properties. Our certificate of incorporation and bylaws obligate Boston
Properties to indemnify its directors and officers, and permit Boston Properties
to indemnify its employees and other agents, against certain liabilities
incurred in connection with their service in such capacities. These provisions
could reduce the legal remedies available to Boston Properties and our
stockholders against these individuals.
Our certificate of incorporation limits the liability of our directors and
officers to Boston Properties to the fullest extent permitted from time to time
by the Delaware General Corporation Law. The Delaware General Corporation Law
permits, but does not require, a corporation to indemnify its directors,
officers, employees or agents and expressly provides that the indemnification
provided for under the Delaware General Corporation Law shall not be deemed
exclusive of any indemnification right under any bylaw, vote of stockholders or
disinterested directors, or otherwise. The Delaware General Corporation Law
permits indemnification against expenses and certain other liabilities arising
out of legal actions brought or threatened against such persons for their
conduct on behalf of the corporation, provided that each such person acted in
good faith and in a manner that he reasonably believed was in or not opposed to
the corporation's best interests and in the case of a criminal proceeding, had
no reasonable cause to believe his or her conduct was unlawful. The Delaware
General Corporation Law does not allow indemnification of directors in the case
of an action by or in the right of the corporation (including stockholder
derivative suits) unless the directors successfully defend the action or
indemnification is ordered by the court.
Our certificate of incorporation contains a provision permitted by Delaware
law that generally eliminates the personal liability of directors for monetary
damages for breaches of their fiduciary duty, including breaches involving
negligence or gross negligence in business combinations, unless the director has
breached his or her duty of loyalty, failed to act in good faith, engaged in
intentional misconduct or a knowing violation of law, paid a dividend or
approved a stock repurchase in violation of the Delaware General Corporation Law
or obtained an improper personal benefit. The provision does not alter a
director's liability under the federal securities laws. In addition, this
provision does not affect the availability of equitable remedies, such as an
injunction or rescission, for breach of fiduciary duty.
Our bylaws provide that our directors and officers will be, and, in the
discretion of the board of directors, non-officer employees may be, indemnified
by us to the fullest extent authorized by Delaware law, as it now exists or may
in the future be amended, against all expenses and liabilities actually and
reasonably incurred in connection with service for or on behalf of Boston
Properties. Our bylaws also provide that the right of directors and officers to
indemnification shall be a contract right and shall not be exclusive of any
other right now possessed or hereafter acquired under any bylaw, agreement, vote
of stockholders, or otherwise.
II-1
<PAGE>
We have entered into indemnification agreements with each of our directors
and executive officers. The indemnification agreements require, among other
matters, that we indemnify our directors and officers to the fullest extent
permitted by law and advance to the directors and officers all related expenses,
subject to reimbursement if it is subsequently determined that indemnification
is not permitted. Under these agreements, we must also indemnify and advance
all expenses incurred by directors and officers seeking to enforce their rights
under the indemnification agreements and may cover directors and officers under
our directors' and officers' liability insurance. Although the form of
indemnification agreement offers substantially the same scope of coverage
afforded by law, it provides additional assurance to directors and officers that
indemnification will be available because, as a contract, it cannot be modified
unilaterally in the future by the board of directors or our stockholders to
eliminate the rights it provides. It is the position of the SEC that
indemnification of directors and officers for liabilities under the Securities
Act is against public policy and unenforceable pursuant to Section 14 of the
Securities Act.
ITEM 16. EXHIBITS.
--------
4.1 Amended and Restated Certificate of Incorporation of Boston Properties,
Inc. (incorporated herein by reference to Boston Properties, Inc.'s
Registration Statement on Form S-11 (File No. 333-25279)).
4.2 Amended and Restated Bylaws of Boston Properties, Inc. (incorporated
herein by reference to Boston Properties, Inc.'s Registration Statement
on Form S-11 (File No. 333-25279)).
4.3 Second Amended and Restated Agreement of Limited Partnership of Boston
Properties Limited Partnership (incorporated herein by reference to
Boston Properties, Inc.'s Current Report on Form 8-K dated June 30,
1998, filed with the Commission on July 15, 1998).
4.4 Shareholder Rights Agreement dated as of June 16, 1997 between Boston
Properties, Inc. and BankBoston, N.A., as Rights Agent (incorporated
herein by reference to Boston Properties, Inc.'s Registration Statement
on Form S-11 (File No. 333-25279)).
*5.1 Opinion of Goodwin, Procter & Hoar LLP as to the legality of the
securities and interests being registered.
8.1 Opinion of Goodwin, Procter & Hoar LLP as to certain tax matters.
23.1 Consent of PricewaterhouseCoopers LLP, Independent Public Accountants.
23.2 Consent of Goodwin, Procter & Hoar LLP (included as part of Exhibits 5.1
and 8.1).
24.1 Powers of Attorney (included on the signature page of the Registration
Statement as filed).
*99.1 Registration Rights and Lock-Up Agreement, dated May 28, 1998, by and
among Boston Properties, Inc., Amy S. Rubenstein, Beth Dana Rubenstein,
Barton S. Rubenstein, Lishil Enterprises Limited Partnership, Dawson
Enterprises Limited Partnership and Tower Capital, LLC.
* Previously filed.
II-2
<PAGE>
ITEM 17. UNDERTAKINGS.
------------
(a) Boston Properties, Inc. hereby undertakes:
(1) To file, during any period in which offers or sales are being made
pursuant to this Registration Statement, a post-effective amendment to this
Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this
Registration Statement; and
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in this Registration Statement or
any material change to such information in this Registration Statement.
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
- --------- --------
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Securities and Exchange Commission by Boston Properties pursuant to Section 13
or 15(d) of the Securities Exchange Act of 1934 that are incorporated by
reference in this Registration Statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(b) Boston Properties hereby undertakes that, for purposes of determining
any liability under the Securities Act of 1933, each filing of Boston
Properties' annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in this
Registration Statement shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
Boston Properties pursuant to the foregoing provisions, or otherwise, Boston
Properties has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
Boston Properties of expenses incurred or paid by a director, officer or
controlling person of Boston Properties in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, Boston Properties will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Boston
Properties, Inc. certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Boston, the Commonwealth of Massachusetts, on
this 27th day of July, 1999.
BOSTON PROPERTIES, INC.
By: /s/ Edward H. Linde
-------------------------------------------
Name: Edward H. Linde
Title: President and Chief Executive
Officer
KNOW ALL BY THESE PRESENTS that each individual whose signature appears
below constitutes and appoints each of Mortimer B. Zuckerman, Edward H. Linde
and David G. Gaw as such person's true and lawful attorney-in-fact and agent
with full power of substitution and resubstitution, for such person in such
person's name, place and stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this Registration Statement
(or any Registration Statement for the same offering that is to be effective
upon filing pursuant to Rule 462(b) under the Securities Act of 1933), and to
file the same, with all exhibits thereto, and all documents in connection
therewith, with the Securities and Exchange Commission, granting unto each said
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as such person might or could do
in person, hereby ratifying and confirming all that any said attorney-in-fact
and agent, or any substitute or substitutes of any of them, may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
/s/ Mortimer B. Zuckerman Chairman of the Board of Directors July 27, 1999
- --------------------------
Mortimer B. Zuckerman
/s/ Edward H. Linde President and Chief Executive July 27, 1999
- -------------------------- Officer, Director (Principal
Edward H. Linde Executive Officer)
/s/ David G. Gaw Chief Financial Officer (Principal July 27, 1999
- -------------------------- Financial Officer and
David G. Gaw Principal Accounting Officer)
/s/ Alan J. Patricof Director July 27, 1999
- --------------------------
Alan J. Patricof
/s/ Ivan G. Seidenberg Director July 27, 1999
- --------------------------
Ivan G. Seidenberg
/s/ Martin Turchin Director July 27, 1999
- --------------------------
Martin Turchin
/s/ Alan B. Landis Director July 27, 1999
- --------------------------
Alan B. Landis
/s/ Richard E. Salomon Director July 27, 1999
- --------------------------
Richard E. Salomon
II-4
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
4.1 Amended and Restated Certificate of Incorporation of Boston
Properties, Inc. (incorporated herein by reference to Boston
Properties, Inc.'s Registration Statement on Form S-11 (File No.
333-25279)).
4.2 Amended and Restated Bylaws of Boston Properties, Inc. (incorporated
herein by reference to Boston Properties, Inc.'s Registration
Statement on Form S-11 (File No. 333-25279)).
4.3 Second Amended and Restated Agreement of Limited Partnership of
Boston Properties Limited Partnership (incorporated herein by
reference to Boston Properties, Inc.'s Current Report on Form 8-K
dated June 30, 1998, filed with the Commission on July 15, 1998).
4.4 Shareholder Rights Agreement dated as of June 16, 1997 between
Boston Properties, Inc. and BankBoston, N.A., as Rights Agent
(incorporated herein by reference to Boston Properties, Inc.'s
Registration Statement on Form S-11 (File No. 333-25279)).
*5.1 Opinion of Goodwin, Procter & Hoar LLP as to the legality of the
securities and interests being registered.
8.1 Opinion of Goodwin, Procter & Hoar LLP as to certain tax matters.
23.1 Consent of PricewaterhouseCoopers LLP, Independent Public
Accountants.
23.2 Consent of Goodwin, Procter & Hoar LLP (included as part of Exhibits
5.1 and 8.1).
24.1 Powers of Attorney (included on the signature page of the
Registration Statement as filed).
*99.1 Registration Rights and Lock-Up Agreement, dated May 28, 1998, by
and among Boston Properties, Inc., Amy S. Rubenstein, Beth Dana
Rubenstein, Barton S. Rubenstein, Lishil Enterprises Limited
Partnership, Dawson Enterprises Limited Partnership and Tower
Capital, LLC.
* Previously filed.
<PAGE>
EXHIBIT 8.1
GOODWIN, PROCTER & HOAR LLP
COUNSELORS AT LAW
EXCHANGE PLACE
BOSTON, MASSACHUSETTS 02109-2881
July 27, 1999
Boston Properties, Inc.
800 Boylston Street
Boston, MA 02119
Re: Federal Income Tax Matters
--------------------------
Ladies and Gentlemen:
This opinion is furnished to you in our capacity as counsel to Boston
Properties, Inc., a Delaware corporation (the "Company"), regarding the
Company's qualification for federal income tax purposes as a real estate
investment trust within the meaning of Sections
856-860 of the Internal Revenue Code of 1986, as amended (the "Code"). This
opinion is rendered in connection with the filing of a registration statement
(file number 333-80513) on Form S-3, as amended through the date hereof (the
"Registration Statement"), pursuant to the Securities Act of 1933, as amended,
relating to the resale of up to 592,916 shares of common stock, par value $.01
per share, by a holder thereof, if and to the extent that the Company elects to
issue such shares to such holder to acquire common units of limited partnership
interests in Boston Properties Limited Partnership, a Delaware limited
partnership (the "Operating Partnership").
In rendering the following opinion, we have examined the Amended and
Restated Certificate of Incorporation and Bylaws of the Company, the
Registration Statement, the Amended and Restated Limited Partnership Agreement
of the Operating Partnership, and such other records, certificates and documents
as we have deemed necessary or appropriate for purposes of rendering the opinion
set forth herein. We have reviewed the investment activities, operations and
governance of the Company and its subsidiaries. We have relied upon
representations of duly appointed officers of the Company and the Operating
Partnership (including without limitation, representations contained in a letter
dated as of this date (the "Officer's Certificate")), principally relating to
the Company's organization and operations. We assume that each such
representation is and will be true, correct and complete and that all
representations that speak in the future, or to the intention, or to the best of
the belief and knowledge of any person(s) or party(ies) are and will be true,
correct and complete as if made without such qualification. Nothing has come to
our attention which would cause us to believe
<PAGE>
Boston Properties, Inc.
July 27, 1999
Page 2
that any of such representations are untrue, incorrect or incomplete. We assume
that the Company will be operated in accordance with the applicable laws and the
terms and conditions of applicable documents. In addition, we have relied upon
certain additional facts and assumptions described below.
In rendering the opinion set forth herein, we have assumed (i) the
genuineness of all signatures on documents we have examined, (ii) the
authenticity of all documents submitted to us as originals, (iii) the conformity
to the original documents of all documents submitted to us as copies, (iv) the
conformity of final documents to all documents submitted to us as drafts,
(v) the authority and capacity of the individual or individuals who executed any
such documents on behalf of any person, (vi) the accuracy and completeness of
all records made available to us, and (vii) the factual accuracy of all
representations, warranties and other statements made by all parties. In
addition, we assume that all interests in the Operating Partnership have been
and will be issued in a transaction (or transactions) that are not required to
be registered under the Securities Act of 1933, as amended, and that no interest
in the Operating Partnership offered for sale outside the United States would
have been required to be registered under the Securities Act of 1933, as
amended, if such interest had been offered for sale within the United States.
We have further assumed that during its short 1997 taxable year ending
December 31, 1997 and subsequent taxable years, the Company has operated and
will operate in such a manner that has made and will make the representations
contained in the Officer's Certificate true for all such years, and that the
Company and its subsidiaries will not make any amendments to its organizational
documents after the date of this opinion that would affect the Company's
qualification as a real estate investment trust for any taxable year.
For purposes of our opinion, we have made no independent investigation of the
facts contained in the documents and assumptions set forth above, the
representations set forth in the Officer's Certificate, or the Registration
Statement. No facts have come to our attention, however, that would cause us to
question the accuracy and completeness of such facts or documents in a material
way.
The discussion and conclusion set forth below are based upon the Code, the
Income Tax Regulations and Procedure and Administration Regulations promulgated
thereunder and existing administrative and judicial interpretation thereof, all
of which are subject to change. No assurance can therefore be given that the
federal income tax consequences described below will not be altered in the
future. Based on the documents and assumptions set forth above and the
representations set forth in the Officer's Certificate, and provided that the
Company continues to meet the applicable asset composition, source of income,
shareholder diversification, distribution, and other requirements of the Code
necessary for a corporation to qualify as a real estate investment trust, we are
of the opinion that:
<PAGE>
Boston Properties, Inc.
July 27, 1999
Page 3
(1) Commencing with the Company's initial taxable year ended December 31,
1997, the Company has been organized in conformity with the requirements for
qualification as a "real estate investment trust" under the Code, and its method
of operation enables it to meet the requirements for qualification as a "real
estate investment trust" under the Code, provided that the Company continues to
meet the applicable asset composition, source of income, shareholder
diversification, distribution, record keeping and other requirements of the Code
necessary for a corporation to qualify as a real estate investment trust, and
(2) The information in the Registration Statement under the caption
"Certain Federal Income Tax Considerations and Consequences of Your Investment"
to the extent that it constitutes matters of law or legal conclusions, have been
reviewed by us and is correct in all material respects, and our opinion set
forth in such discussion is confirmed.
We will not review on a continuing basis the Company's compliance with the
documents or assumptions set forth above, or the representations set forth in
the Officer's Certificate. Accordingly, no assurance can be given that the
actual results of the Company's operations for any given taxable year will
satisfy the requirements for qualification and taxation as a real estate
investment trust under the Code. The ability of the Company to continue to meet
the requirements for qualification and taxation as a real estate investment
trust will be dependent upon the Company's ability to continue to meet in each
year the applicable asset composition, source of income, shareholder
diversification, distribution, and other requirements of the Code necessary for
a corporation to qualify as a real estate investment trust. The foregoing
opinion is limited to the federal income tax matters addressed herein, and no
other opinion is rendered with respect to other federal tax matters or to any
issues arising out of the tax laws of any state or locality. We express no
opinion with respect to the transactions described herein other than those
expressly set forth herein. You should recognize that our opinion is not
binding on the Internal Revenue Service and that the Internal Revenue Service
may disagree with the opinion contained herein. Although we believe that our
opinion will be sustained if challenged, there is no guarantee that this will be
the case. Except as specifically discussed above, the opinion expressed herein
is based upon the laws that currently exist. Consequently, future changes in
the law may cause the federal income tax treatment of the transactions herein to
be materially and adversely different from that described above.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm under the caption
"Federal Income Tax Considerations and Consequences of Your Investment" in the
Registration Statement. In giving such consent, we do not thereby admit that we
are in the category of persons whose consent is required under Section
<PAGE>
Boston Properties, Inc.
July 27, 1999
Page 4
7 of the Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission thereunder.
Very truly yours,
/s/ Goodwin, Procter & Hoar LLP
<PAGE>
PRICEWATERHOUSECOOPERS
- --------------------------------------------------------------------------------
PricewaterhouseCoopers LLP
One Post Office Square
Boston MA 02109
Telephone (617) 478-5000
Facsimile (617) 478-5900
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of our report dated January 24, 1999 except for Note 10
for which the date is February 10, 1999 relating to the financial statements and
financial statement schedule which appears in Boston Properties' Annual Report
on Form 10-K for the year ended December 31, 1998. We also consent to the
reference to our firm under the caption "Experts" in such Registration
Statement.
/s/ PricewaterhouseCoopers LLP
July 27, 1999
